Consider Financial Situation Before Helping Relatives
As individuals retire or age into Medicare, their insurance situation can change dramatically. There are a multitude of options open to those with Medicare. The terms are different, the prices are different, the products offered are dramatically different each year.
The purpose of this column is to give those who are eligible for Medicare, or soon to be eligible for Medicare, some understanding of their insurance options and how it could impact their health and finances.
These questions and answers are meant as a guide to help you understand the complex questions you are now thinking about.
Each individual’s specific situation may create a different solution. You shouldn’t necessarily do what your friends, family and neighbors do.
Q: My daughter wants me to help her purchase a home. Do you think this is a good idea for me?
A: I get this type of question more often than I used to. With the housing crisis, some individuals are having a difficult time getting mortgages and loans. A related question is: “Should I co-sign for my grandson’s car?”
In this situation we often look to family to help us. I know that I have borrowed money from my grandparents. I borrowed money to buy my first car.
When someone asks me this type of question, my question back to them is, “Can you afford to give them this house/car as a gift?” If you feel you can afford to pay for this item outright and it will not be a hardship for you, then by all means give them this gift, if you want to.
If making this payment each month or giving this house/car to them is a hardship for you, then you should not help them with this financial commitment. Does it really make sense to take out a mortgage at your age? Can you make the payment for that house/car from your current income?
Many times the answer to those two questions is “no.” If the answer is “no” to those questions, then you should also say “no” to their request. If making that car payment for your grandchild or child means that you don’t have enough money to pay your medical bills, you need to say, “I am sorry; I can’t help you with that purchase.” If your paying for their house means that you can’t get Medicaid because you have given away money that could have been used to pay for your needs, then you shouldn’t pay for that house.
I understand that we always want to help our family. You want to support your children and grandchildren in any way you can. There is a reason that the bank will not give them a loan on their own. That person is not a good financial risk. That could be because they have a history of paying bills late; maybe their income would be stretched to make that payment; maybe they were recently divorced and their previous spouse didn’t pay the bills as they should have. No matter what the reason, a bank doesn’t loan money if they don’t feel they have a reasonable guarantee of repayment. You shouldn’t give money away either if it will provide a hardship to you.
None of us is guaranteed the right to own our own home, buy a car when we want or vacation where we would like. Sometimes we have to wait to get or do those things. Sometimes we can never do those things. It is hard to say “no” to family. Sometimes we have to. It doesn’t mean that you don’t love them. It means that you can’t financially support them.
In today’s economy, many of your children and grandchildren are not as well off as you. Today’s younger generations do not have the same or higher earning potential as the generation before us. Many younger people are struggling in ways that they did not expect to struggle. I appreciate your desire to help. I wouldn’t necessarily recommend helping to buy that big-ticket item.
Janell Sluga is a geriatric care manager certified and works for Senior Life Matters, a program of Lutheran Senior Housing, and has worked in Chautauqua County with seniors for more than 18 years. She is HIICAP (Health Insurance Information, Counseling & Assistance Program) counselor-trained by Office for the Aging.
She does not sell insurance or represent any insurance company. She is an unbiased source of insurance and education to help seniors choose the best option for them.