Dwindling retirement incomes and longer lifespans are sending some seniors to live in adult children’s homes. Moving in Mom or Dad may feel like the right thing to do in your heart. However, moving your parent into your home means everyone has to prepare for the emotional and financial impact. Here are three financial details to plan and budget for as you transition your parents into your home.
Budget for increased expenses
Discuss financial expectations upfront. Decide how much you and your parent can and will contribute to living expenses. Anticipate higher expenses such as groceries and increased utility costs, among other costs. Need to drive Dad or Mom to the doctor or around town? Add more gas money to your budget to cover extra trips. Jot down a list of monthly, quarterly and annual expenses. Then create a newly merged household budget.
Find a way to make space and pay for it
Depending on the space available in your home, you may need to add a bedroom or reconfigure another space before moving in your parent. Bathroom upgrades like a walk-in tub, chair lift and other safety features may be needed. Start by pricing out the cost of remodeling. Then consider a home equity line of credit to cover this need if cash isn’t immediately available.
Find a money source for unexpected household expenses
If your parent doesn’t have much cash available to contribute to household expenses, have him or her consider selling assets he or she is not using, like land, real estate or a car. Proceeds can be placed into a savings account to assist in covering increased household costs.
Combining households with a parent can be a joyous time, but can also be complicated by financial issues. In addition to the above conversations, talk with your parent about estate planning. Discuss the creation of a will, a durable power of attorney and health care power of attorney.
Article provided by Local Government Federal Credit Union.
The advice provided is for information purposes only. Consult your financial advisor for additional guidance.