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How much money will it cost to have your parent move in?
December 13, 2010
Considering Your Budget
Balancing the financial affairs of a multigenerational household should be approached in much the same way as a college roommate arrangement. That's the advice of Adriane Berg, author, CEO of the boomer consulting company Generation Bold, and a founder of the National Academy of Elder Law Attorneys. She advises writing two checks to the mortgage company or taking turns paying the mortgage each month. The same is true of paying for living expenses; consider creating a common fund.
Maintaining separate bank accounts is preferable if your senior loved one is of sound mind, according to Berg. "Seniors who stay in control of their finances thrive," she says. "Taking care of our own money is something we all want to try to do for as long as possible."
Berg outlines some financial advantages and disadvantages of sharing a home with your senior loved one:
The Financial Advantages
- Many expenses, such as heating and water, don't increase significantly when you move a loved one into your home.
- You can now buy many food staples in bulk, which can mean added savings.
- If grandpa and grandma are willing and in good health they could help care for your young children.
- You may also qualify for a dependency deduction for your older loved ones if they're living with you.
- What's more, the profit from the sale of a senior's home is no longer a dead asset. It can be invested in safe income such as a Certificate of Deposit.
The Financial Disadvantages
- While adult children can be impacted by tax issues, so can a senior -- in a negative way. If a senior sold his home, he could lose a homeowner's tax deduction.
- Capital gains issues should factor into your financial equation as well. Be sure to see a tax adviser before you make a move.
- An ill or frail older adult will need care. That can be a disruption of a household as well as loss of work income. You must factor that into your budget.
Calculate the CostsWhile money isn't the primary consideration in deciding whether your loved one should live independently or with you, it's important to understand both the financial impact and the options available to you in this situation. The Too Close for Comfort?® Calculator will help you consider basic budget items, major issues, and some often-overlooked matters that could affect your decision. |
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