When you’re your parents’ retirement plan
When you’re your parents’ retirement plan
by Caitlyn Driehorst and the RightWise team
Published: July 9, 2025
Special thanks to RightWise Ambassador Stacey King for her support on this project
Financial advisors Hannah Farrow and Caitlyn Driehorst like to joke that they share “oldest daughter” energy: a little perfectionistic, a little maternal, maybe a little bossy. (Forgive us, Beyonce.)
It’s a combination of traits that is great in someone planning a group trip (or your personal finances.)
But it’s also an energy that can create a lot of stress if you are a high-earner whose parents — implicitly or explicitly — rely on you for financial support.
What if that’s you? What are some of the specific financial challenges that may emerge over time? And what financial moves can support financial success for both you and your parents?
Read on.
What’s it like to walk a mile in these shoes?
RightWise Ambassador Stacey King wanted to help our team dig into the lived experiences of MBA graduates who have built high-earning careers, all with the awareness that their success will be shared with parents and siblings. She wrote and distributed a survey in several first-generation communities to ask for anecdotes.
Here’s what she found in her survey:
First-generation high-earners are more likely to have debt from education.
Sure, we expected to hear, “How can I invest for my own retirement while helping to support my parents?” but above that, we heard a lot of “How can I invest for my own retirement AND support my parents AND also paying down debt?”
~45% of those who took this survey indicated that paying down debt is an active priority
High-earners supporting parents debate relocation:
Being physically close not only makes care easier, but also much cheaper, with avoided travel costs and lower cost-of-living outside of major metros. (Plus, also, the pleasure of time with people you love.) But it’s not a choice without tradeoffs, when your high-paying job and your community is in a major metro.
Quote: “Perhaps relocating to a lower cost of living area??”
Parents with government jobs springboarded higher-earning children, and pensions provide peace-of-mind:
Perhaps it was the GI Bill, a good union or a standardized promotion process that kept discriminatory “vibes” from interfering with career success. Regardless of how, government jobs helped many parents give their next generation class-changing opportunities. And those of us with parents who have a pension report less stress about our parents’ future. This insight is felt all-more keenly as our federal workforce is reduced by the current administration.
Quote: “I won’t have to support my mom financially given her pension and retirement plans”
Caretaking responsibilities can escalate quickly:
It’s easy to think of parents’ aging as being “some day,” but whether it’s a sudden event or the sudden realization of a gradual change, these responsibilities can move from hypothetical to urgent in the blink of an eye. That makes timing these difficult conversations challenging – and planning for responsibilities all the more daunting.
Quote: “It hits like a wall, because there is no time to prepare. I mean, it'll never be a *good* time, but financial conversations are usually a long-term conversation. This doesn't feel like a long-term conversation, it feels unfairly now. Suddenly you're visiting your parents at 29 and notice a weird loop in your mom's conversation, and it hits. This starts now. How do I start now?”
What do our financial advisors suggest?
Our financial advisor team at RightWise assembled to reflect on ideas for high-earners with caretaking responsibilities for parents or siblings:
Financial advisors Hannah Farrow, Caitlyn Driehorst and Chris Casale
Ideas From Hannah Farrow
Get your parents’ documents together while all of this is hypothetical:
“There’s never going to be a perfect time, so you may as well do it now,” says financial advisor Hannah Farrow. “Your parents need a will, and they may also want powers of attorney documents, HIPAA authorizations and living wills taken care of. You’ll want your parents to have a list of all their financial accounts prepared in one place, and you should make sure that the account beneficiary designations / transfer-on-death designations on each account are up-to-date. And it’s not enough that they have these somewhere on their computer; they should have physical documents available.” (Read our blog post about lost and forgotten wills.)
Having these documents organized and accessible isn’t just about paperwork. “It can ease decision-making down the line, prevent confusion or conflict among family members, and give everyone involved a real sense of peace,” Hannah adds. “It’s a big task, but one that saves a great deal of stress later on. You can tackle it with your parents now, when they can explain their choices and preferences, rather than trying to piece it all together in a harder moment.”
Understand whether you can claim your parent as a dependent on your taxes:
“If you support your parent(s) and they earn very little income, you may be able to claim them as a dependent on your taxes, even if they don’t live with you, which most people don’t realize,” financial advisor Hannah Farrow points out. “You may also be eligible for the Dependent Care Credit of $3,000, or to itemize unreimbursed medical expenses you’ve paid for your parents against your own taxes.”
“However,” Hannah cautions. “This is firmly CPA territory, not TurboTax DIY territory. The dollar amounts may also be small relative to the amount of complexity, and there can be some unintuitive disqualifications. This could be helpful but it wouldn’t be the first opportunity I’d jump for.”
Our article continues below
Do you want pointers on how to have these conversations, and details on the specific documents you should ask about?
Register for our next session of RightWise’s Webinar, “Difficult Financial Conversations with Aging Parents”
Want to learn more about what you should discuss with your parents about their end-of-life plans – and how to frame those challenging questions?
In this session, our financial advisors cover:
Tactical strategies to bring up these important questions, even with the squirmiest and most avoidant of parents
An overview of the personal admin associated with loss of loved one
Key documents you want your parents to have on hand
All of our webinars feature BCG-alum slide decks, helpful PDF handouts and recordings sent to you via email after the session.
Ideas From Chris Casale
Consider term life insurance matched to the life expectancy of anyone depending on you:
“Term life insurance provides coverage within a set number of years, thus ‘term,’ in the name” explains financial advisor Chris Casale. “The classic use for term life is matching the coverage to a child’s time horizon as a dependent, so that if anything happened to a parent, their child would be cared for. However, it can go the other way, too. If your parent or sibling depends on your earnings, consider taking out a policy on yourself matched to some idea of your dependent’s need. For example, if your mother is 70 and you’d anticipate caring for her until she’s 85, you could purchase a 15-year policy, in case anything happens to you during that timeframe.”
“One thing that’s great about term life,” Chris adds, “is that it’s relatively inexpensive, especially for someone who is in their 30s. Several hundred dollars a year can provide you with peace of mind that your parents would be cared for, if something happened to you.”
Evaluate a reverse mortgage as a source of cash for your parents in later life:
“Reverse mortgages can be pretty slick these days,” Chris points out. “Suppose your parents bought their home twenty years ago for $250,000 and today, it’s worth $750,000. A reverse mortgage can help your parents access some of that value in their home to support their living expenses. If your parents are over 62 and using the home as their primary residence, this could be a useful tool to explore.”
“You can help your parents by helping them evaluate options objectively, during a process that can be technically complex and sometimes emotional,” he adds. “Get quotes from more than one lender and compare the fees and interest rates, which can vary widely. If your parents propose a reverse mortgage to you, make sure they’re speaking to someone reputable and not fly-by-night. And know that if your parents move out of the home (say, for assisted living) then the loan will come due.”
Ideas From Caitlyn Driehorst
Establish a new family tradition of forward-thinking money habits:
“If you have younger siblings, suggest that they open and invest a Roth account with their earned income, even if the initial dollar amounts are small,” suggests RightWise CEO Caitlyn Driehorst. “With decades to go, those dollars can compound tax-free and build a nice little retirement nest egg. Starting early also helps establish a good savings habit as your sibling can watch the balance grow. And maybe don’t tell them this upfront, but if they are in a pinch, they can withdraw their original investment without penalties or taxes.”
Help your parents hire a good advisor – and help them avoid a bad advisor:
Caitlyn also had reflections from her experience helping her parents hire a financial advisor. “I really wanted my parents to have a neutral space to ask their own private questions, and to get specialist expertise, especially for healthcare planning,” she explains.
But even though Caitlyn works as an advisor, it was hard to find someone who was the right fit. “Unfortunately, there are some sales practices in the financial advice industry that are often contrary to investors’ interest. When I helped my parents hire an advisor, I told them to avoid advisors who work on commissions – these are often more expensive than alternatives and rife with conflicts of interest that can be difficult to decipher, even when disclosed – and to look for an advisor who has studied financial planning, not someone who only knows the company line. The CFP or a Masters in Financial Planning are good credentials to look for.”
Could a financial advisor help you make sense of competing priorities?
For those who are first-generation wealth, you may not have grown up with someone to teach you the ropes of taxes and investing.
There’s so many ways in which it’s cheaper to be rich than it is to be poor – but you may not know how to navigate these systems if you weren’t born into them.
A financial advisor can help you understand the technicals of your stock compensation package, or help you identify blind spots in your risk profile. Small changes in your investing profile in earlier years can compound to big differences later in life.
But more than that, an advisor can also advocate for your own interests, to help you know what you can safely give while ensuring that you are also taking care of your own needs – this is a learned skill when you were raised to think of others first.
When people depend on you, it can be lonely and isolating to be the strong person; a financial advisor is a safe space to come with vulnerability and leave with solutions.
Finally, you’re probably not drowning in spare time. A financial advisor can help you block and tackle your financial to-do list, to give you peace of mind and reduce the admin associated with knocking these out.
Learn about having less questions and
more answers in the most important
areas of your life.
“We have a financial planner now so I didn’t answer some questions above in your survey”
- Anonymous answer from Stacey’s survey
Discovery calls are a friendly, open start to a long conversation. Our financial advisor will introduce themselves, listen carefully to what matters to you, and help you understand next steps.
Author: Caitlyn Driehorst , Stacey King
Date Published: 7/9/2025
