By Pamela Kramer
Half of your parents' retirement fund was invested in the stock market—at your urging—and the value of their portfolio has plummeted. Though they're trying to downplay their troubles, you can see the warning signs, including mounting unpaid bills, maxed-out credit cards, house repairs left undone. The stress is taking a toll on you and also causing arguments between you, your husband, and siblings.
Don't waste time and energy feeling guilty. Instead, address the problem head-on. Figure out how much they're coming up short each month, then look for immediate ways to cut expenses. "Simple cutbacks, like eating out less and canceling premium cable channels, can save a couple hundred dollars or more a month," says Pond.
At the same time, take steps to boost their income. One option is moving low-rate savings and money market funds into higher-yielding short-term money market accounts, CDs, and bond funds. "You could increase the yield by 2% without putting the principal at risk," says Pond. (To find the best rates, visit bankrate.com/cd or go to investinginbonds.com.) Encourage them to sell unnecessary possessions, like their stamp collection or the dining room furniture they never use.
You've also got to tackle their credit card debt. First, discourage your parents from racking up more charges. Then go to the National Foundation for Credit Counseling at nfcc.org to find an expert who can help them negotiate with their creditors and set up a payment plan. If you want to give them money to help pay off what they owe, talk with your spouse about how much you can afford. Then sit down with your siblings and ask them to contribute in a way that feels fair to everyone. Those who earn less could help out in another way, such as by taking your parents to doctor appointments. "You want to work together for their sake and keep past rivalries out of it," says Witkin. A plan that involves the entire family will ease your anxiety—and keep your spouse from feeling angry and resentful. If you can't come to an agreement, consider hiring a financial advisor or attorney to act as an intermediary.
If these steps don't bring their budget back in line, your parents may have to take out a reverse mortgage, which allows those 62 and over to borrow against the equity in their home. The loan doesn't have to be paid off until they move, sell the property, or pass away (you and your siblings will likely be responsible). Reverse mortgages typically have steep fees and aren't right for everyone. "A financial advisor can help you weigh the pros and cons," says Wyatt. For more information, visit the Reverse Mortgage Education Project at aarp.org/money.