Ramit Sethi's Life-Saving Plan If Your Parents Have No Retirement Savings
When it comes to money, do you and your siblings have to step into the parent role for your parents?
Adult children whose parents have no retirement savings may assume they’ll “figure things out later.” But when something happens to their parents’ health, they can be forced to make snap decisions with incomplete information.
In a recent YouTube video, finance expert Ramit Sethi, host of “I Will Teach You To Be Rich,” outlined, step-by-step, what to do before you get to a crisis if your parents are slim on savings. Even if your parents have made all the right financial moves, these are good conversations to have in advance of an emergency, so that you aren't making poor decisions under stress and exhaustion.
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1. Start the Conversation Now
Many families make the mistake of waiting to talk until it’s too late. Then adult children must make potentially life-altering decisions on little sleep and with not enough information or control, Sethi said.
Sethi introduced Beth Pinsker, a financial journalist with a new book on helping aging parents. She recommended opening the conversation with baby steps; ask your parents to let you help with one small task at first and build up to more.
2. Get Legal Access
Adult children must understand “the harsh reality…that without the right legal documents, institutions can treat you like a legal stranger to your own parents,” Sethi said.
Adult children need to obtain the following three documents:
Durable power of attorney: To make financial decisions for your parents.
Healthcare proxy: To make medical decisions if they are incapacitated.
Legacy contact: To have legal access to their phone/digital life.
Be sure to have a digital copy and a physical back up copy of all key paperwork, too.
3. Get Clear on What Your Parents Actually Want
It’s important your parents clearly state — ideally in writing — what they actually want for legacy, healthcare directives and decisions about long-term care. Remember your parents’ dignity, Sethi pointed out.
“Your parents probably want agency. They want to feel heard,” he said.
4. Get Siblings Aligned
Even with clarity from parents, sibling dynamics can derail everything, Pinkser said. The more aligned you can get on everything earlier, the better for everyone.
Have explicit conversations to define roles, so you know which siblings oversee what components of a parent’s care and estate. Who is paying the bills? Who is in charge of arranging care? Who is making the big decisions? Put it all in writing.
5. Understand the Real Financial Picture
Sethi said many families operate on assumptions, not data. So, get the actual numbers before assuming your parents are broke or that you’ll have to step in.
Find out all income sources, like Social Security, pensions, cash savings and CDs and all expenses, particularly fixed expenses and healthcare.
You can’t help them if you don’t know the full picture.
6. Don’t Assume You Have To Pay
Many people are afraid to help their parents because they fear becoming financially responsible for them. Sethi reassured, "You are not legally required to support your parents… there's no law that says you have to bankrupt yourself."
Do get clarity on how they want their money or assets spent. Pinsker clarified, "Your parents' savings are there to take care of them… that money's for your parents. It's not for you."
7. Look for Benefits
Before you step in financially, check what support already exists. In the U.S. there are several safety nets designed to help seniors who don’t have any savings or income, such as:
Social Security
Medicaid
Veterans Association (VA) benefits
Many families simply don’t know to claim the benefits available to them because they didn’t look for them.
8. Take Just One Step
Even with everyone in agreement, this process can feel overwhelming. Sethi reminded: you don’t have to do everything at once. Just take one step in the first 24 hours, he recommended.
"One step creates momentum and momentum starts to build on itself," he said.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal, or tax advice.
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