How Your Parents’ Finances Could Become Your Liability

Saving money on parents finances could become does not have to be complicated. We rounded up the essentials so you can spend less and skip the guesswork.

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45% of baby boomers have no retirement savings -- a figure that may surprise their adult children. Here's what to know about how your parents' finances may impact you.

Written by Cameron Huddleston Last Updated: April 1, 2025 Reviewed by Jana Lynch

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There’s no question that numerous Americans’ finances have been hit hard by the COVID-19 pandemic. In a recent survey by investment management company Vanguard, 60% of respondents said the pandemic has hurt their finances.

What’s interesting, though, is that young adults aren’t just worried about their own finances as a result of COVID-19. The same Vanguard survey found that 1 in 4 millennials said one of their top financial concerns was the impact of the pandemic on their parents’ finances.

The truth is, millennials , as well as other adult children , should be worried about Mom and Dad’s money. Even before the pandemic, a significant percentage of baby boomers (the parents of numerous millennials) weren’t prepared financially for numerous of the costs they’ll face as they age. Now, they could be in even more dire straits. Young boomers have been the hardest hit of all the generations by the current economic downturn, the Vanguard study found.

But why should you be worried if your parents are having money problems? If they need to count on you for support, your parents’ financial woes could become yours.

Reasons Your Parents Might Need Financial Support

The pandemic’s impact on your parents’ finances should be cause for concern. However, there are plenty of issues facing their generation that could force you to become actively involved in your parents’ financial lives.

• Your parents might not have saved enough for retirement. A 2019 study by the Insured Retirement Institute (IRI) found that 45% of baby boomers ages 56 to 72 don’t have any retirement savings.
• Your parents’ savings might not last long enough. Even if your parents have saved for retirement, they might not have enough set aside if they live into their 80s or 90s. A report published by the Stanford Center on Longevity found that half of Americans aren’t financially prepared for longer lifespans.
• Your parents might be overwhelmed with medical costs. As people age, the risk of developing chronic health conditions increases, leading to increased medical costs. A majority of baby boomers don’t believe they have enough money for health care expenses in retirement, according to IRI.
• Your parents might need to move in with you. During and after the Excellent Recession of 2007 to 2009, a large number of millennials moved in with their parents. Now the tables are turning. A growing number of parents have been moving in with their adult children, according to an analysis by the Pew Research Center. That could put a strain on your finances if you unexpectedly add another member to your household.
• Your parents might need long-term care but have no way to pay for it. More than half of Americans turning 65 today will need long-term care, according to the Department of Health and Human Services. However, most people aren’t prepared to pay for the cost of that care. Medicare and traditional health insurance do not cover long-term care. Long-term care insurance does cover the cost of care, but only 11% of adults have it, according to the Bipartisan Policy Center. As a result, most people who need long-term care end up relying on family or friends to help.

If you are forced to get involved with your parents’ financial lives for these or other reasons, your finances could take a hit. It’s key to understand what impact this could have on your financial well-being and what steps you can take to limit the damage.

How Your Finances Could Be Impacted

Although most parents don’t want to be a burden on their kids, they might find they have no choice but to ask for financial help. It’s one thing to help pay some bills or let your parents move in with you because they can’t afford to live on their own. However, it’s a completely different circumstance if you have to provide long-term care for a parent who can’t afford to pay for professional care.

Speaking from experience, being a caregiver can be a full-time job. My mom was diagnosed with Alzheimer’s disease when she was 65 and I was 35. In the early stage of the disease, she just needed a little support from me. Within a few years of her diagnosis, though, she needed round-the-clock help preparing meals, taking medications, bathing, dressing, and other daily activities.

Fortunately, my mom had savings and an inheritance to pay for professional care. Otherwise, I would have had to quit my job as a financial journalist to care for her, potentially sacrificing my family’s financial well-being. Or I would have had to raid my retirement account - and my husband’s, too - to pay for her care, which has cost more than $400,000 over the eight years she has been in a memory care facility.

According to AARP’s Family Caregiving and Out-of-Pocket Costs report, on average, family caregivers spend 20% of their income on costs to help a loved one. As a result of those costs, caregivers report cutting back on vacations, eating out, groceries, personal medical care, and even their children’s education. They’ve had to reach into their savings, reduce contributions to retirement accounts, and take out loans.

And more than half of caregivers said they have had to take time off, reduce work hours, or quit their jobs to help family members.

In short, your budget, your retirement savings, your savings for your children’s college education, and even your job could be jeopardized if your parents have to count on you for support.

Related: 4 Reasons You Should Never Lend Money to Friends or Family

5 Things You Can Do to Prepare for Your Parents’ Financial Future

The sooner you and your parents start planning and taking action to improve their financial well-being, the less likely they will have to rely on you for support. Keep in mind, though, that you need to tread carefully. Show your parents respect, compassion, and love as you take steps to help them.

1. Start by talking.

Don’t wait for an emergency to start talking to your parents about their finances. Ideally, you should have family money conversations before your parents retire, and while they still are relatively young and healthy. That way, you can get an idea of where they stand financially or what planning they’ve done in case there is an emergency and you need to help them.

The pandemic offers a natural way to ask your parents about what sort of emergency planning they’ve done. You could start by telling them you’ve been thinking about their health and well-being, then ask what sort of information you would need to know about their finances and wishes if something were to happen to them. Or you could talk about how the pandemic prompted you to take steps such as starting an emergency fund, buying life insurance, or writing a will to be prepared.

Keep the conversation going by gathering more details about your parents’ finances. Then you might be able to work together to fill gaps in their financial plan and bolster your finances in case your parents are counting on you for support.

Related: Should Parents Pay for Their Children’s College Education?

2. Help your parents cut costs.

If it’s obvious your parents are struggling financially, don’t point out mistakes they’ve made or make them feel embarrassed for their lack of planning. Instead, offer to help them look

Final Thoughts

The bottom line: a little research on parents finances could become goes a long way. Compare your options, watch for seasonal offers, and never pay full price when a better deal is one click away.

Originally published at dollarsprout.com.