Dear Liz: My mother is 65 and refuses to plan for retirement. She has worked for the same organization for almost 20 years and, despite my begging her over the last decade, has not contributed a dime to her 403(b).
I am an only child in my late 30s and received no financial help from her from the age of 18. In addition, my father died when I was very young, leaving us fairly destitute with no life insurance. I feel that both of these legacies have contributed to my less-than-optimal financial situation.
I have had to work very hard on my own for everything, with very little support from anyone. I am now trying to catch up financially but am afraid that all of my efforts will be futile as I will be required to take care of my mother.
She says she expects to be able to live on Social Security and the $70,000 her company contributed to her 403(b) over the years. I've been advised by friends that I have no legal obligations to provide for her. I certainly have social ones though. What are her options once she becomes too old to work and doesn't have enough money to cover her expenses?
Answer: Your friends may be wrong about your legal obligations, because 29 states — including California — have what are called "filial responsibility" laws. These laws create a legal duty for adult children to support indigent parents.
Most states don't enforce these laws currently, but that doesn't mean they won't in the future, said elder-law attorney Michael Amoruso, a past president of the New York chapter of the National Academy of Elder Law Attorneys. States struggling with money issues may be tempted to step up enforcement, he said.
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Your mother isn't indigent yet, but she may be soon if she thinks Social Security and a five-figure retirement account will sustain her.
The good news is that you may still have time to influence her decision-making, because she hasn't quit work yet. You should tell her, gently, that you can't afford to support her if she runs out of money, and suggest that together you consult a fee-only financial planner about her future.
The planner can review your mother's financial situation and offer suggestions — which are likely to include delaying retirement and considering part-time work in retirement. The planner also can explain that her $70,000 nest egg will provide only about $200 a month if she withdraws 4% initially. Four percent is considered a sustainable withdrawal rate by many financial planners.
You can tell her that consulting a planner is a good idea for anyone considering retirement — since that's quite true. If you like the planner, you can book a session for yourself and learn some concrete strategies for getting your own finances on track. This may require an attitude adjustment.
You're still blaming your parents for your financial situation, but your father's been dead for decades and you've been on your own since age 18. In other words, the statute of limitations on blaming your folks has long since expired.
Your finances are the result of the choices you've made, just as your mother's situation reflects the choices she's made. Let's hope you both make better choices in the future.
Dear Liz: I'm trying to transfer some credit card balances to existing accounts that are now offering 0% for 12 to 18 months. If I come close to maxing out the credit limit using one of those offers, will that affect my credit score adversely? Or, should I open up a new card, since I've gotten several 0% offers recently?
Answer: Using all or even most of your credit line on any revolving account can hurt your credit scores.
Although opening a new card may ding your scores a few points, it's usually preferable to spread your debt over several accounts rather than pile it all on one card. This advice assumes you plan to use these offers to pay off your debt as rapidly as possible, rather than as an excuse to continue carrying balances.
If you can't pay off your balances before the teaser rates expire, consider getting a three-year personal loan from your local credit union and using that to get free of debt. The interest rate you pay may be somewhat higher initially but you'll likely save money in the long run.