“Sandwich Generation”:  Simultaneously caring for children and parents.  What if your parents have not saved enough for retirement? According to the Schwarz Center, close to 20% of Americans retire with little or no money. If you have great parents, but they are bad savers, what should you do?

Keep Calm and Gather Data

Once you are aware that your parents are not in the best financial position, the first step is to take a deep breath. As the Schwarz Center for Economic Policy Analysis data noted, your parents are not alone! To create a game plan for your parents’ finances, it is important to gather as much information as possible and then help them to analyze it for potential solutions.

The easiest way to gather data is through two financial statements, the first being a personal balance sheet. Balance sheets are broken out into two sections: assets and liabilities. The asset portion represents items that your parents own, from cash on hand to retirement accounts, real estate, and beyond. Be sure to search your state’s unclaimed property website for any lost retirement or bank accounts, unclaimed wages, insurance proceeds and more.

The liability section of a balance sheet is the place to list any debts or loans that your parents owe, such as a mortgage, credit card debt, or auto loan. In addition to the current amount owed, it is helpful to note the terms of the debt, especially the interest rate and when the payments are supposed to end.

The second financial document to create is a cash flow statement. This document defines income streams and expenses. For your parents, “cash in” could include wages, pensions, Social Security, and/or annuity payments that they are receiving. “Cash out” should include all spending. Everything from food, personal items, and entertainment to rent and loan payments. Don’t forget to include any special occasion gifts that come to you or your children!  Once you have accounted for all inflows and outflows, tally them up, and subtract total expenses from total income to determine whether there is a surplus or a deficit.

Time for Tweaks

Now that you have consolidated their data, it’s time to analyze and make any necessary changes. Budgeting is universal. It applies to all ages and the rules stay the same: there are only two ways to reduce a bottom line deficit. You can either increase your income or decrease your expenses.

For retirees, it’s usually easier to reduce spending. Review your parents’ monthly budget for any fixed or variable costs that can be eliminated. Are they paying for a life insurance or disability policy they no longer need? Do they have a landline package or gym membership they can live without? Would they benefit from refinancing their mortgage or taking cash out to pay off other high-interest debt? Leave no stone unturned.

Another way to simplify their situation and generate some cash is to sell unwanted or unnecessary items. Nowadays, you can sell clothing, furniture, home décor, and even cars through DIY e-commerce sites like Facebook Marketplace, Craigslist, and eBay. Every little thing counts!

Big Changes

Made some tweaks and they are still coming up short? Below are a few drastic changes your parents should consider in order to bridge the gap and help everyone experience a less stressful retirement.

For many retirees, their house is their largest and most valuable asset. While it may be difficult for your parents, as well as you, to consider, a potential option is to sell their home, pay off the mortgage and other personal debts, and downsize into something more affordable. A smaller residence generally means lower utility bills and property taxes as well as less overall maintenance. On the other hand, this may be the time to consider eliminating the costs of homeownership by renting or moving in with a friend or family member.

If selling isn’t an appealing option, an often-overlooked solution is to take out a reverse mortgage and live on a monthly income stream or draw down from a line of credit. In order to make that happen, the homeowner must be at least age 62 and have around 50% equity in their home. A common misconception is that the bank owns the house, but that is not the case!  The homeowner retains ownership; however, that also means continuing to pay the property tax and homeowners insurance as well as the cost for general upkeep.

What about employment? Your parents may be ready to jump ship at their 9-5, but if they’re short on monthly cash flow, one way to fund the gap is by picking up a part-time job. There are several pros to this approach. Some employers, like Starbucks and Costco, offer benefits to part-time workers. If they are working and collecting Social Security before Full Retirement Age, beware that earning above a certain level may reduce their Social Security benefits.


It’s stressful to know that your parents haven’t prepared for retirement. It’s even more stressful to think that they may depend on you financially. Before you step in and risk your retirement, help them build a plan and discuss their options.

Kate Arndt, is a Financial Planner with Bedel Financial Consulting, Inc., a wealth management firm located in Indianapolis. For more information, visit their website at www.bedelfinancial.com or email Kate at karndt@bedelfinancial.com.

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