Podcast Summary: "My Parents DO Need My Support!"

Podcast Information:

• Title: Jill on Money with Jill Schlesinger
• Host/Author: Audacy
• Episode: My Parents DO Need My Support!
• Release Date: January 21, 2025

Introduction

In the January 21, 2025 episode of Jill on Money with Jill Schlesinger, host Jill Schlesinger, CFP®, along with co-host Mark T. O'Connor, delves into the heartfelt and financially intricate situation of a listener named Sabrina. The episode focuses on the challenges Sabrina faces in supporting her aging parents, exploring practical solutions and strategic financial planning to balance familial obligations with personal financial stability.

Listener’s Story: Sabrina’s Challenge

Sabrina, a 52-year-old professional from the Midwest, reaches out to the show seeking guidance on supporting her parents, who are aged 76 and 77. Her parents are facing a shortfall in their monthly income, necessitating Sabrina's assistance to sustain their lifestyle and cover essential expenses.

Key Points:

• Parental Financial Overview: Sabrina's parents have a home valued at approximately $700,000 with an existing mortgage of $200,000 at a low 2% interest rate. Their monthly mortgage payment is $1,000.

• Income and Expenses: The parents' primary income consists of Social Security benefits totaling around $3,000 per month, supplemented by a lump sum reimbursement for health insurance. Their monthly expenses exceed their income by about $5,000, depleting their savings of approximately $150,000 (including $80,000 in retirement accounts).

• Sabrina’s Financial Situation: Sabrina and her husband, aged 52 and 57 respectively, have substantial retirement savings totaling over $1.5 million, along with a mortgage of $200,000 on their home valued at around $450,000. Both are employed full-time and are slated to receive pensions starting at age 65. Sabrina’s husband plans to retire at 60, enhancing their financial outlook with additional pension income.

Financial Analysis and Discussion

Jill and Mark meticulously assess Sabrina's situation, breaking down both her parents' and her own financial standings to identify viable support mechanisms without compromising her retirement plans.

Notable Insights:

1. Evaluating Support Options:

   • Reverse Mortgage Consideration: Jill suggests exploring a reverse mortgage as a potential avenue for tapping into her parents' home equity, providing them with additional monthly income without disrupting their current living situation.
     • Jill Schlesinger [12:51]: "I'm wondering whether a reverse mortgage might be helpful to them. ... can give them a little bit of money out of the equity that they have built up in the house."

2. Balancing Assistance with Personal Finances:

   • Jill recommends modeling different financial scenarios with a professional advisor to determine sustainable support levels.
     • Jill Schlesinger [20:16]: "What I would ask is you should be modeling what amount of money you can send to your parents every single month in order to keep them afloat, but not derail all of your retirement hopes and dreams."

3. Strategic Withdrawal and Savings Management:

   • Emphasis is placed on prioritizing the depletion of the parents' retirement accounts over their savings to preserve liquid assets.
     • Jill Schlesinger [23:20]: "I would pull what they need. Whatever it is this year it's, you know, 50 grand from the three retirement accounts. Just plow through these retirement accounts."

4. Future Financial Planning:

   • Sabrina is advised to continuously reassess her financial strategy, especially considering her husband’s retirement and the potential variability of her parents' investment returns.
     • Jill Schlesinger [22:04]: "And it's almost better if you say to this person up front, like, there's no way we're doing this because they live in a different place. But I need you to explain to me what you think would be possible based on having a half a million dollars of equity right now."

Recommendations and Action Steps

Jill and Mark offer Sabrina a structured approach to navigate her financial responsibilities toward her parents while safeguarding her own financial future:

1. Consult a Financial Advisor: Engage a professional to model various support scenarios, ensuring that any assistance provided does not jeopardize her retirement plans.

2. Explore Reverse Mortgage Options: Investigate the feasibility of a reverse mortgage for her parents to supplement their income without necessitating an immediate move or sale of the family home.

3. Prioritize Retirement Savings: Maintain substantial savings while strategically utilizing retirement accounts to cover necessary expenses, thereby preserving liquidity for unforeseen circumstances.

4. Document Financial Assistance: If providing financial support, ensure proper documentation and legal counsel to manage estate implications and familial agreements.

5. Prepare for Long-Term Adjustments: Recognize the fluid nature of financial needs as Sabrina’s parents age, and remain adaptable to evolving circumstances, including potential health care requirements.

Conclusion

The episode culminates with Jill and Mark reinforcing the importance of proactive financial planning and open communication within families facing similar dilemmas. They encourage listeners like Sabrina to seek personalized advice and to approach financial assistance with a balanced perspective that honors both familial obligations and personal financial goals.

Final Thoughts:

• Jill Schlesinger [26:05]: "It's so true. It's so true. God. All right, so listen, give us a holler if something is going on and let us know if we need to help you out in a different way."

Listeners are reminded to reach out for support and to utilize the resources available on the Jill on Money website for further assistance.

Key Quotes:

• Sabrina [05:40]: "They have a home, a car, and their property. But with their expenses and medical, they're between their income by about $5,000 a month."

• Jill Schlesinger [12:51]: "I'm wondering whether a reverse mortgage might be helpful to them... can give them a little bit of money out of the equity that they have built up in the house."

• Jill Schlesinger [20:16]: "You should be modeling what amount of money you can send to your parents every single month in order to keep them afloat, but not derail all of your retirement hopes and dreams."

• Sabrina [17:21]: "My goal is around 55, 57. Their projections are much more aggressive than mine. I tend to be a little more conservative."

Resources Mentioned:

• For personalized support and additional resources, visit jillonmoney.com and click the "Contact Us" button to reach out to Jill and Mark.

This episode provides a compassionate and strategic framework for individuals grappling with the financial responsibilities of supporting aging parents, emphasizing the balance between generosity and prudent financial management.