Tell me if this sounds familiar: Your parents have failed to save enough money for retirement and their ability to work is limited. Or their savings were hit by the last debt and housing crisis and left them, well, broke.

We're talking about the kind of broke where they can't pay the mortgage, purchase new eye glasses or afford a plane ticket to visit their grandchildren. Their financial misfortune is threatening their homes, livelihood and freedom -- as well as your own.

This isn't a topic you're likely to hear discussed around the water cooler. Heck, your parents probably don't even want to talk about it with you. It's embarrassing, and their personal finances are their business, right?

What you need to realize is that your parents' insolvency affects you in ways you never imagined. So what's the answer? Here are nine steps to take before you reach for your checkbook or invite Mom to live in your spare bedroom.

1. Evaluate the Financial Situation

Financial consultant Deborah Hightower advises parents and children to sit down together to evaluate finances. They need to discuss:

  • Where's the money? Ask about assets, income, pension plans, IRAs, Social Security and equity in the home.
  • How can the money be accessed? Is it monthly through Social Security, the sale of a home or regular IRA distributions?
  • What are the penalties? How have the home and IRA market values depreciated?

2. Consider Downsizing Options

Parents who are living strictly on Social Security or other pension funds may need to make drastic changes to survive. That could mean moving to a more affordable home or negotiating new terms for debt. Short sales on homes or bankruptcy are a last resort but may be necessary.

3. Prioritize the Bills

Todd Mark, vice president of education for Consumer Credit Counseling Service of Greater Dallas, recommends prioritizing bills such as mortgage, utilities, car payment and food to make sure parents take care of those first. Mark's operation, a nonprofit agency with offices nationwide, offers such help.

If an elderly or widowed parent is incapable of tending to their bills, it might be time to step in and take over. Senior citizens are often prey for scammers both on and offline.

4. Help Out Responsibly

It's not uncommon for children to send $200 to $300 a month to help out with essential bills. But Mark warns against sacrificing your own retirement funds or maxing out credit cards so you can help. Some children choose to defer a year of 401(k) savings, but then one year turns into two and soon their long-term goals are compromised.

'There's no logic or rationale when it comes to helping family members,' he said. 'You'll do anything for your family if they're hurting and often without regard to yourself.'

5. Beware of Co-Signing Loans

Think twice before agreeing to co-sign a loan because you'll be on the hook to pay your parents' share of debt when they die.

6. Don't Let Your Help Be Taken for Granted

What happens when your spending philosophies don't jibe with your parents' attitude toward money? There's no contract that says you have to provide support if you feel it's being squandered or wasted. Some parents are reluctant to give up their comfortable lifestyle, choosing to charge those extras instead of cutting back. Their champagne taste on a beer budget may not warrant a blank check or any help at all.

7. Consider Hiring a Mediator

Have an honest conversation about the expectations that come with your financial support. If your parents aren't willing to listen, ask a third party -- such as a financial consultant, attorney or family counselor -- to intervene.

8. Utilize Trusts and Property

'Financially well-off children might consider setting up a trust for their parents,' said David Hryck, partner at law firm SNR Denton. A trustee could better regulate spending and reduce family tension. Parents also could choose to give their property to their children in an estate plan. They could remain living there, either free or through a lease back, but the children own the property and handle upkeep and expenses.

9. Consider Long-Term Care Insurance If They're Young Enough

Another consideration is long-term care insurance. Nobody plans to have a stroke or require nursing care, but these health issues are expensive with long-term consequences.

Here's the tricky part: Don't expect parents to be excited about this discussion. Parents don't want to give up control to their kids. 'Nobody wants to be told what to do,' Hightower said. 'Money doesn't have to do with money. It's about control and self-sufficiency.'

Don't delay having 'the talk' with your parents while they still are in good health. Be sure you don't compromise your own long-term savings goals when agreeing to help support your parents.

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