{"id":6951,"date":"2024-10-30T08:17:11","date_gmt":"2024-10-30T08:17:11","guid":{"rendered":"https:\/\/finderica.com\/my-dad-says-i-owe-him-400-month-when-he-retires-is-this-fair\/"},"modified":"2024-10-30T08:17:11","modified_gmt":"2024-10-30T08:17:11","slug":"my-dad-says-i-owe-him-400-month-when-he-retires-is-this-fair","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=6951","title":{"rendered":"My Dad Says I Owe Him $400\/Month When He Retires. Is This Fair?"},"content":{"rendered":"\n
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\"ScoreCard<\/p>\n

Dear Penny,<\/span><\/p>\n

Within the last year as I\u2019ve learned more about finances, I\u2019ve realized that I grew up in a financially illiterate family, and so did my husband. Both of us grew up with poor but frugal parents, and our frugality has helped us manage so far.\u00a0<\/span><\/i><\/p>\n

We have a credit card, but we pay it off every month. We\u2019ve paid off our two used cars, and we pinched pennies to pay off our school loans before our two kids were born. We bought our first house in June 2020 and have a monthly payment of about $1,600, so the only debt we have is that mortgage. I am a stay-at-home parent and my husband\u2019s salary is $70,000 before taxes, insurance, etc., is taken out. We currently have about $13,600 between our checking and savings accounts, and my husband has a 401(k) through his employer with a 50% match, which we use.<\/span><\/i><\/p>\n

But here\u2019s the rub: When I was in college, some of my financial aid fell through. I had to face the fact that I couldn\u2019t afford to go back after that summer. I was distraught because I was young and dumb and could only think about missing my friends and boyfriend (now husband).\u00a0<\/span><\/i><\/p>\n

I don\u2019t remember how it got smoothed over, but it did. I was allowed to go back. Again, I was young and dumb and didn\u2019t give it another thought.<\/span><\/i><\/p>\n

Much later, I learned my father took loans in his name to pay for what my financial aid didn\u2019t cover. He paid off those loans with his and my mom\u2019s retirement savings. I didn\u2019t realize this until it was already done.\u00a0<\/span><\/i><\/p>\n

Now they are talking about retiring in the next few years. (The date keeps shifting, but currently they\u2019re talking about 2025 at the ages of 69 and 68.) They are missionaries living overseas and plan to move to the U.S. to the same state my brother and I live in.<\/span><\/i><\/p>\n

Because they currently have about $6,000 total to their name (no debt, but no other savings), my brother \u2014 who is financially better off than I \u2014 bought a condo this year and is renting it out until my parents retire. My understanding is that he and his wife had to juggle things to make this work. But they decided this real estate investment would help fund their own retirement someday, not just provide a place for our parents to live.<\/span><\/i><\/p>\n

My father now wants me to help pay for his and my mom\u2019s retirement since he helped pay for my college. The loans totaled $39,769, but he had to pay interest. At first he wanted us to pay back $45,000 split into monthly payments of $400 from the month they retire until the $45,000 is paid back after about 10 years or they both pass away, whichever comes first.\u00a0<\/span><\/i><\/p>\n

Now he\u2019s saying because of inflation, he wants us to cover \u201cabout three days a month of our retirement living costs \u2014 whatever inflated dollar figure that happens to be \u2014 for the first 15 years of our retirement, or until death. Whichever comes first.\u201d That\u2019s a quote from his email to me. He got that figure by taking their current monthly income, averaging 21 work days a month, and dividing it by the $400 a month, which is 3.3 days of their current income.<\/span><\/i><\/p>\n

We\u2019ve plateaued at our current savings level since buying our house last year. I realize we have a few years to prepare for paying $400 or whatever it will be a month, but I\u2019m at a loss for what to do or where to start. I\u2019m also worried that we aren\u2019t saving enough for our own retirement. What if we end up with no options like my parents and hurt our own children\u2019s finances in the future?\u00a0<\/span><\/i><\/p>\n

I\u2019ve been trying to learn about bonds, Roth IRAs, and so on. I\u2019m so overwhelmed by how little I understand.\u00a0<\/span><\/i><\/p>\n

This isn\u2019t legal debt, but I still owe my parents. They won\u2019t be able to live in retirement without my paying them back. My brother has already done so much by preparing housing and a used car for them. I can\u2019t ask him for more. Plus, it\u2019s my fault my parents don\u2019t have retirement savings, not my brother\u2019s.<\/span><\/i><\/p>\n

Can you please help me decide what our next steps should be? Do we hire a financial planner to give us custom guidance? Do I need to read books and take classes to understand how to manage all of this since Google results are going over my head?\u00a0<\/span><\/i><\/p>\n

I\u2019m considering taking a part-time job so its entire income can go toward paying back my parents, but I don\u2019t know if that\u2019s the right move either. I can\u2019t work full time right now because our kids are elementary-age, and paying for childcare would eat up nearly the whole salary.<\/span><\/i><\/p>\n

And don\u2019t get me started on my in-laws, who live in a different state. My father-in-law is incarcerated. My mother-in-law is living on only Social Security in my sister-in-law\u2019s apartment. My sister-in-law is single with two elementary-aged kids and is working full time while trying to earn a teaching degree. We are wealthy compared to that side of the family. We want to help them too, but we feel stuck!<\/span><\/i><\/p>\n

-Overwhelmed<\/span><\/i><\/p>\n<\/div>\n

Dear Overwhelmed,<\/p>\n

It\u2019s not your fault that your parents can\u2019t afford to retire. Responsibility for that rests on your parents\u2019 shoulders.<\/p>\n

The money your dad paid for these loans would certainly be helpful to your parents. But it\u2019s unlikely that $45,000 would have been enough to buy a comfortable retirement, even if your parents had left it invested.<\/p>\n

If your dad intended for you to pay back the loans for your college, he should have discussed that with you at the time. But I\u2019m not sure that this was actually his intention back then. It sounds like your parents are panicked as their retirement is approaching. Now they\u2019re going back and trying to stick you with part of the tab, plus a nonsense inflation adjustment.<\/p>\n

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Is Your Bank Holding You Back?<\/h3>\n

Got $1,000 in checking? These\u00a0smart moves<\/a> could help you reach your next big savings goal. <\/p>\n<\/div>\n

Your problem isn\u2019t financial illiteracy. You and your husband are doing a fine job of managing your money. The problem is that a $70,000 paycheck only goes so far. Your husband makes enough to cover your family of four. But that\u2019s not enough to pay for your parents\u2019 retirement or your in-laws\u2019 needs.<\/p>\n

I don\u2019t think you should agree to help out your parents just yet. That doesn\u2019t mean you\u2019re vowing to never help them out. But you need to focus on your own savings first. Since you have two young children and you\u2019re dependent solely on your husband\u2019s income, building up a six-month emergency fund on top of retirement savings should be the primary goal.<\/p>\n

You can be honest here: Tell your parents that you\u2019re not currently in a position to pay $400 a month, and you don\u2019t know if you will be in 2025. Say that you\u2019re grateful for their sacrifices. But make it clear that you didn\u2019t know they were raiding retirement accounts to pay for your education.<\/p>\n

What you should avoid is giving your parents a full accounting of your finances. Expect every piece of info you provide about your income and obligations to be used to make the case that they need your money more than you do. Don\u2019t give them that leverage. \u201cI\u2019m not in a position to give you $400 a month and I\u2019m not sure if I will be four years from now\u201d is sufficient.<\/p>\n

Knowing that their daughter isn\u2019t a guaranteed source of retirement income can help guide their financial decisions over the next few years. Regardless of whether you choose to help out later on, don\u2019t base this decision on the level of support your brother is providing. This is about what you and your family are willing and able to give.<\/p>\n

Robin Hartill is a certified financial planner and a senior writer at The SS. Send your tricky money questions to <\/i>[email\u00a0protected]<\/span><\/i> or chat with her in <\/i>The SS Community<\/i><\/a>.<\/i><\/p>\n

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