Preparing Finances for Fall and How to Help Parents Who Haven’t Saved Enough

8:36Elizabeth Ayoola:Well, you can be nosy, and I'm going to answer because it's actually doing well. So mine is up around 16 % year-to-date, and that's compared to the S &P 500, which is at about 12.98 % last time I checked. Might have changed.

8:50Sean Pyles:Mine is up a little bit over 15 % year-to-date as of this recording, and I'm guessing that's because we are invested more heavily in stocks in our portfolios, Elizabeth, since we're on the younger side. And that's great. It feels wonderful to beat the market and see that number go up and up and up, but it just takes regular contributions and the stock market doing exceptionally well, which we know won't always be the case.

9:09Elizabeth Ayoola:No, the reds are heartbreaking when you log in and you see all that red, but green is on the way.

9:14Sean Pyles:It's, hey, it's part of the journey. It goes up and it goes down. It does. All right. Finally, question number five. Are you ready for the holidays? Elizabeth, I know the answer is certainly yes for you.

9:27Elizabeth Ayoola:It's a resounding yes. So, of course, the first thing when you're planning for the holidays, which I'm currently thinking about, is my budget. What's interesting, actually, as I'm thinking about my budget is I wasn't joking when I said I've started doing my goals for 2026. So I've been looking at how much I want to save for next year. And that's helping me rein in my spending, especially as I tend to overspend during the holidays. I'm also looking at gift lists. Who am I going to buy gifts for? What is my budget for each of their gifts? So that's one of the first things I think everyone can do.

9:57Sean Pyles:Do you have a designated fund for your holiday savings?

10:00Elizabeth Ayoola:I do not. I just lump all my savings together and then I budget it from my savings. So, nope. Okay.

10:06Sean Pyles:I've been thinking about doing that this year. You know that I'm a savings bucket fanatic, so I might start doing that. But with my honeymoon coming up and my partner and I going to Japan and South Korea, I'm planning on having that be the place where I get all of my holiday gifts for everyone. So spoiler alert to my friends and family, you'll be getting things from Asia this Christmas season.

10:25Elizabeth Ayoola:That is so clever. I wonder if when I'm going to London, I can do something like that, a variation. I think that's cute.

10:32Sean Pyles:Although it might be more expensive there. Oh, God, never mind. The conversion rate is not great. So that might be an expensive way to spend your money for the holidays. Maybe next time. And so how do you approach holiday travel planning? Because that's a big part of the holidays is knowing where you're going to go, how you're going to get there, what you're going to spend to get there.

10:48Elizabeth Ayoola:That's true. And lucky for me, I don't know if it's lucky, but honestly, I do not end up traveling much during the holidays because my family is bred so far apart. We don't tend to plan things together. So I think for the past three Christmases, I've been in my house. This year, actually, I do hope to have my sister and my niece come over, and I will be getting my niece's ticket. So I've been planning for that. And I see when I checked, I think, last week, they were pretty cheap, and I know the price will go up. So I'll definitely buy her ticket early.

11:15Sean Pyles:Well, for anyone who's planning on traveling this holiday season, now is a good time to start putting out feelers and seeing what flights might cost for Thanksgiving and for Christmas. You probably don't need to book your Christmas flights today, but just begin getting an understanding of where prices are so you can map them out accordingly and buy when the price is right.

11:30Elizabeth Ayoola:My last tip for you guys is I just want to reinforce that it's important to be overambitious like me and start thinking about 2026 goals so that when you want to start overspending during Christmas, it'll help you rein in your spending. Let me know how it goes if you try that out. Okay.

11:44Sean Pyles:We just gave you five questions, but we are greedy for questions on this podcast. So send us your money questions, whatever they're about. Maybe you're trying to figure out how you can budget properly for the holidays or you're thinking about how you can get started on a savings goal for 2026.

11:56Elizabeth Ayoola:Or maybe you have some questions around upcoming open enrollment. Whatever your money questions are, you can send them to us at the Nerd Hotline at 901-730-6373. That's 901-730-N-E-R-D. You can also send us an email at podcast at nerdwallet.com. All right, let's get to this episode's money question segment.

12:15Sean Pyles:That's coming up next. Stay with us.

12:21Sean Pyles:Today's episode is sponsored by Shopify. If you've been sitting on a business idea, Shopify makes it easy to make it happen. Everything you need to start selling is included and ready from day one.

12:31Elizabeth Ayoola:Including the moment your first customer is ready to pay. Shopify checkout helps more of them finish their purchase. And when they come back, their details are already saved. And one tap and they're done.

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13:01Elizabeth Ayoola:Start your free trial at shopify.com slash smart money.

13:05Sean Pyles:That's shopify.com slash smart money.

13:09Elizabeth Ayoola:Today's episode is sponsored by Quince.

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13:46Sean Pyles:I recently got some European linen sheets for my bedroom and they are so cozy and they really do get softer every time I wash them.

13:53Elizabeth Ayoola:It's summertime. Of course, it has been blazing hot. So I've been spending time by the pool and I have been rocking the bathing suit that I got from Quince. It is so washable. The fabric is so light and it feels like such good quality.

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14:23Sean Pyles:That's quince.com slash smartmoney for free shipping and 365-day returns. quince.com slash smartmoney. We're back and answering your money questions to help you make smarter financial decisions. This episode's question comes from Steph, who sent us an email. Here it is. Hi, Sean and Elizabeth. I hope you're doing well. I wanted to get your advice on how to best support my aging parents as they approach retirement. They're first-generation immigrants who have always lived paycheck to paycheck, and unfortunately, they don't have much in savings. They're hoping to rely on Social Security, but I know the amount they'll receive likely won't be enough to cover their needs.

15:00Sean Pyles:I'm trying to understand what options or programs might be available to help them. I'd also appreciate any guidance on what I should be prepared for as they near retirement, such as navigating Medicare plans or making other important healthcare or financial decisions. At the same time, I'm working on growing my own family, so I'm trying to figure out how to support them sustainably. Would it make sense to consider them as dependent on my taxes, or are there other ways I can help them financially without putting too much strain on my own future? Thank you. I've been a longtime fan of the podcast.

15:30Elizabeth Ayoola:To help us answer Steph's question on this episode of the podcast, we're joined by Kate Ashford. Welcome back to Smart Money, Kate. Hi, Elizabeth and Sean. Hey, Kate. Let's kick off the conversation by talking about how to have money conversation with your parents about their financial well-being. Now, this honestly can be a pretty awkward subject to broach. I have done it myself. So what advice do you have for those just starting out with these conversations, Kate? I have done it too. These conversations can feel really awkward, but they're also so important. I recommend people disguise money and estate planning questions in the form of asking for advice from your parents.

16:08Elizabeth Ayoola:So maybe you say, hey, mom, my spouse and I are working on our own estate planning, and I'm wondering what you both have done with yours. Or, hey, dad, we're trying to figure out how to estimate our retirement income and expenses. Have the two of you done that? And also, news headlines and acquaintance stories are a really great way into these discussions as well. I just saw a story about a woman who sold her home so she could spend her retirement on a cruise ship. True story. What are you doing with the house when you retire? Or, hey, a co-worker's parents didn't save enough for retirement. Now they're moving into her basement.

16:41Elizabeth Ayoola:What have you guys got planned? So have an approach.

16:44Sean Pyles:It's like you're backing into the topic without confronting them saying, hey, we need to make a plan for your finances because I'm worried about you, mom and dad. Exactly. Elizabeth, how did you handle this with your parents?

16:54Elizabeth Ayoola:Well, I have very old school or traditional parents who did not talk to me about money. And honestly, I was a little scared to ask, but I was a little more direct. And I was like, hey, you know, you're getting older. And you know, what plans do you have in place? And honestly, it was really bothering me, especially not knowing if my dad had life insurance, and how much I might have to pay when that time comes and budgeting for it, right? So I just asked him straight up, like, do you have any life insurance? What would you like to do with your assets? Because I know he has things that he holds very close to him.

17:28Elizabeth Ayoola:Like he has this humongous tiger that he's had as a stuffed animal since I was a kid.

17:33Sean Pyles:A literal tiger?

17:34Elizabeth Ayoola:Oh, no. A stuffed animal. But yes, it's humongous. So he's had it since we were kids. And he just has all these little funky things. And it's like, well, what do you want to do with them? So I think that helped to lighten the conversation because to him, it's like, well, I don't have much, but it's like these things are important. So where do you want them to go?

17:50Sean Pyles:On my end, I think that because of my experience now working at NerdWallet and as a CFP, my family just turns to me as the money person in the family. And I think that's made it a lot easier. So not everyone's going to have that role in their family, but I think it can be helpful if you have siblings to maybe designate one person as the one who's maybe the go-to for that. But make sure you're all in the loop on what's happening with your parents. So Steph and their parents, they probably have a lot of different financial topics to cover, you know, like income and expenses and how much Social Security they might expect to receive and even what kind of health care expenses they might anticipate.

18:24Sean Pyles:Kate, can you outline some other must-hit topics that Steph should discuss with their parents?

18:29Elizabeth Ayoola:Oh, yeah, there's a lot to discuss here. Steph should aim to get information on their income sources in retirement. If it's mostly Social Security, when are they hoping to claim it? How much should they expect to receive? And if they don't know, you can check this through their account on ssa.gov. And of course, you know, what are their retirement expenses going to look like? Are they living in a house that they've paid off? Will they still have a mortgage? Are they going to have rent payments? Do they have other debts they're paying down? And how much money will they have to put toward health care expenses?

18:57Elizabeth Ayoola:Because that's really going to dictate some of their Medicare options.

19:01Sean Pyles:I'm thinking, too, that it might be helpful to have a number of conversations about all these topics, starting with backing into the topic like you recommended, Kate, just to familiarize yourself with having this kind of conversation with your parents. And then maybe a couple weeks or maybe even months down the line, getting into the numbers because the numbers can bring a lot of anxiety and tension.

19:21Elizabeth Ayoola:I think this is well done as kind of a series, you know, a question here, a question there, question over the phone. So you're not just tackling your parents and hoping you get all their answers all at once.

19:31Sean Pyles:And it takes a long time to have these conversations too. So you want to understand, you know, kind of the scope of what you expect to get out of the first conversation and then map it out so down the road you can have a more in-depth, potentially time-consuming conversation about all these numbers that you just laid out. Exactly.

19:47Elizabeth Ayoola:And it makes me think, actually. So my dad is still working, and he is not or has delayed his Social Security payment, so we're having ongoing conversations about when he should actually retire and when he can afford to retire and what he could do to supplement his income. So I agree that it's an ongoing conversation.

20:04Sean Pyles:Well, let's turn now to how Steph can support their parents as they age. Something that I want to emphasize is that it's super important for Steph to make sure that their finances are really in a good shape first. I know it can be hard to do this when it seems like your parents need help. But, you know, it's like they say on airplanes, put on your mask before you help someone else with theirs.

20:25Elizabeth Ayoola:So, Sean, what would putting on their own mask first look like for Steph?

20:29Sean Pyles:Well, I think it would be smart for Steph to have at least a minimum emergency fund of$1 ,000 to$2 ,000. We don't really know a lot about Steph's financial situation from their question. Then resolving any high-interest debt, also saving for retirement is super important, and ensuring that their budget is in a good place. Because you don't want to throw off your own finances to help your parents who are already in a place struggling financially. And just in general, Steph will be able to help their parents if they're coming from a place of security and strength with their finances.

20:58Elizabeth Ayoola:All good advice. And maybe this goes without saying, but Steph should also try to avoid borrowing from any of their savings sources to help their parents. So do not take a loan from your 401k, even if it feels like that would be a good plan. It's not.

21:11Sean Pyles:Yeah, it's borrowing from your future to fund today. Yes.

21:14Elizabeth Ayoola:Oh, absolutely. And I know that sometimes you can feel guilt and also pressure and feel like you have to help your parents out. So another thing that I try to do is budget to help my parents out. And if it doesn't fit in my budget for that month, then unfortunately I can't help. But something else also to keep in mind that I do with my dad is looking for resources. So sometimes if you can't financially help them, you can point them to resources where they can get help. All right, now let's get into a few areas where Steph could help their parents. A few areas that come to mind are by supplementing their incomes, maybe covering some bills, potentially living together, and even contributing to retirement accounts for them.

21:51Elizabeth Ayoola:What are your thoughts here, Kate? So this is going to be dependent on what kind of shortfall Steph's parents may be facing and Steph's own financial situation, as Sean mentioned. It's one thing to cover a few of your parents' bills. It's another thing to move them into your home, although that arrangement can have a lot of benefits to both parties if you have the space and you like your parents enough to do this. Good point. But certainly, it's a factor. But certainly, Steph can cover certain expenses each month or send them a set monthly amount that can cover a shortfall. The advantage of covering specific bills is that Steph has kind of some control over where that money is going.

22:27Elizabeth Ayoola:NerdWallet had a survey last year that found that for Americans who say they're helping their parents financially, 60 % are paying for food, 41 % are paying for housing costs, and 48 % are paying for other things. And we can link that study in the show notes. Yeah.

22:41Sean Pyles:And on the retirement account front, Steph could actually contribute to IRAs for their parents, either a Roth or a traditional here, as long as the parents have enough earned income to cover the contribution amount. So that could be up to$8 ,000 per parent if they're over 50, which I assume they are at this point. And beyond the specific areas that we've just discussed, I'd also like to encourage Steph to talk with an elder care attorney who can outline a few different areas that Steph should be aware of as they try to help their parents navigate older age. So a big expense that we haven't addressed yet is housing, or we haven't addressed it in much detail.

23:17Sean Pyles:So if Steph parents haven't been able to save and are going to rely on just Social Security benefits for their income, they might not be able to afford a housing payment if they have one. And in that case, you know, if they're currently renting, they might want to consider getting on a waitlist for public or subsidized housing for seniors. These waitlists can be years long. So Steph and their parents should probably look into this sooner than later.

23:40Elizabeth Ayoola:That's good advice. And your local area agency on aging may have information on public or subsidized housing options in the area and any other supports that might help, like property tax breaks, for instance. And Steph also doesn't say where all of them are located. So there may be the option to either downsize or move to an area with a lower cost of living or both things. My dad is currently in a similar situation and he's exploring his housing options for when he finally does retire. And yeah, he's looking for subsidized housing and also considering, because he lives in Florida, moving out of the state because it's pretty expensive right now.

24:13Elizabeth Ayoola:So it's really about exploring all the different options you have because, you know, my biggest fear for my dad is him in retirement not being able to afford his rent or having housing insecurity, right? So it's important to budget for that.

24:27Sean Pyles:Have you talked about him maybe moving closer to where you or another family member is? I know that's really common as parents age a lot of find maybe like an anchor child to live near.

24:36Elizabeth Ayoola:Well, I'm sure many of us can relate with our parents as they age becoming our children. and in the sense of them being stubborn and wanting to do what they want to do. So my dad is a diehard Florida fan. He does not want to leave Florida. We have tried to coerce him even to move back to the UK because the welfare state is more generous over there, but he's not interested. So he's an adult at the end of the day. So if he wants to stay in Florida, well, what can we do?

25:01Sean Pyles:The weather's a little better in Florida than the UK. So it is, I'll give him that.

25:05Elizabeth Ayoola:I'll give him that. I'd also like to encourage Steph to see where their parents can help themselves as they plan for retirement. So it seems like money is really tight. Steph says their parents are living paycheck to paycheck, but even so, they should evaluate their expenses and also see where they might be able to cut back or what opportunities they might have to earn more money. Because at the end of the day, not having enough for retirement is a huge challenge, but it's also a simple cashflow issue. So Kate, do you think there are ways that they can bring more in to save more now? To the extent that they can cut back or earn more money every little bit is going to help.

25:41Elizabeth Ayoola:So do Steph's parents make something that they can sell on the side? Can they pick up any part-time or seasonal work? Can they walk dogs? Can they put together furniture? Honestly, can they keep working part-time in retirement? That can help a whole lot. And of course, there are other financial boxes to check, like paying down any high interest debt they have and making sure their emergency savings are somewhere earning some interest because several high-yield savings accounts are paying 4 % and higher right now. You can see those rates in NerdWallet's roundup of the best high-yield savings accounts, which we can also link to in today's episode description.

26:17Elizabeth Ayoola:But they want to go through that budget with a fine-tooth comb.

26:20Sean Pyles:Steph also asked about claiming their parents as dependents on their taxes. I looked into this a bit, and that's going to be a little more challenging in all likelihood, since there are specific requirements for claiming someone as a dependent. First, you have to provide more than half of their support for a year, which is going to be expensive. And the parents would have to be very limited in their income. They wouldn't be able to earn more than around$5 ,000 in 2025. Kate, are you aware of any other avenues that might help Steph and their parents tax-wise?

26:49Elizabeth Ayoola:Tax-wise, so they should look into state and local benefits. And again, your local agency and aging should have information on things that are helpful, like property tax breaks. There may be utility assistance, senior discounts, food benefits like the SNAP program, and where they can point you to other places where you can find things that can be helpful. USA.gov is also a good place to look. It's a government website that checks your eligibility for a bunch of federal, state, and local benefit programs.

27:18Sean Pyles:And also, this isn't really tax-related, but I would recommend that Steph's parents look into things like food banks to help offset some of these ongoing expenses.

27:27Elizabeth Ayoola:Kate, so Steph asked about Medicare too. Now, I know you have a lot of experience in this area. This is your Steph. What should Steph know about their parents' Medicare options? So Medicare is complicated, but the gist is that Steph's parents will have two options when they turn 65. They'll have original Medicare or Medicare Advantage. Original Medicare is offered by the government. Medicare Advantage is offered by private insurance companies like UnitedHealthcare, Humana. Covers the same things, but with a private insurance twist. So, for the most flexibility and risk management, original Medicare with a Medicare supplement plan is kind of the way to go.

28:06Elizabeth Ayoola:You can see any provider that accepts Medicare, and when you get medical care, most of your costs are covered by that supplement plan. But if you can't afford a supplement plan, and a lot of folks can't, then Medicare Advantage may be the better option because those plans often have no premiums and typically offer some dental and vision coverage, with the catch being that you have to get care from within that plan's network, which can be limiting depending on where you live. And when you get sick, you'll pay for care through things like a deductible and co-pays and co-insurance.

28:36Sean Pyles:And this stuff can get really confusing and can also vary pretty wildly by state that you live in. Are there any other resources that you think that staff can look into so that they can understand what their best options are for where they live?

28:48Elizabeth Ayoola:Absolutely. And this is a big decision and an important decision, and it does have ramifications for later on. So I recommend people look for their state health insurance assistance program. Every state has one. These are programs that offer free guidance on Medicare specifically, and you can find those at SHIPHELP.org.

29:06Sean Pyles:So SHIPHELP is actually an acronym. The SHIP part is the state health insurance assistance program. They just dropped the A in that acronym.

29:14Elizabeth Ayoola:Precisely. Yes.

29:15Sean Pyles:Got it.

29:16Elizabeth Ayoola:And not to get more confusing, but at a very low income level, Steph's parents may be eligible for Medicaid, which can lower medical costs. even more. So that's not in place of Medicare, but on top of it. If you go to Medicaid.gov, you can find your state's Medicaid page and get some information, or you can contact your state health department for help with this. Thank you, Kate. And I'm so thankful for all this information that you've shared because so much of it, I can also apply in helping my dad out. So do you have any other thoughts or suggestions you'd like to leave Steph and our listeners and me?

29:48Elizabeth Ayoola:Only that navigating retirement for parents who haven't saved much is stressful, but kudos to stuff for seeing this coming and trying to take proactive steps to make the situation more manageable because it's much easier to get information and make decisions now before anyone is in any kind of crisis. So yay for thinking about this early.

30:07Sean Pyles:That's right. Well, Kate, thank you so much for coming on.

30:09Elizabeth Ayoola:Thank you for having me.

30:10Sean Pyles:That's all we have for this episode. Remember, listener, that we are here to answer your money questions. So turn to the nerds, Call or text us your questions at 901-730-6373. That's 901-730-NERD. Or email us at podcast at nerdwallet.com.

30:25Elizabeth Ayoola:And of course, we want you to join us next time to hear us talk about how to change your financial habits as your financial goals evolve. Follow Smart Money on your favorite podcast app. That includes Spotify, Apple Podcasts, and iHeartRadio, so you can automatically download new episodes.

30:40Sean Pyles:Here's our brief disclaimer. We are not your financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.

30:50Elizabeth Ayoola:This episode is produced by Tess Vigland. Hilary Georgie helped with editing. Nick Karisimi mixed our audio. And a humongous, gigantic thank you to NerdWallet's editors for all their help.

31:01Sean Pyles:With that said, until next time, turn to the nerds.

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