Having the conversation

As your parents near retirement, you may be thinking about how you can help. Depending on your family’s unique circumstances and traditions, there might be expectations in place about your responsibilities in their retirement. If you anticipate needing or simply wanting to assist your parents financially as they make the transition to retirement, the first step is getting the conversation started so everyone is aligned.

Discussing your parents’ retirement, and ways that you can contribute, will require full disclosure of their financial lives. Depending on your relationship with your parents, and their willingness to share these details, this can be uncomfortable. However, this is a crucial first step in ensuring their successful and happy retirement.

You will want to make sure that you choose a time and setting that will foster comfortability. A place that is private and calm is best, allowing you to talk without distraction or fear of unwanted listeners overhearing private details. Empathy and respect will go a long way toward making the conversation as productive as possible. Recognize that this is a deeply personal and sensitive conversation, so make sure it is evident that you want to help, not take control.

To gain a sense of where they’re at financially, and what their goals are, start by asking open-ended questions such as “What does a successful retirement look like to you?” and “What are your biggest concerns regarding your retirement?” This will allow you to gain a big-picture perspective of their hopes for the future and uncover some potential obstacles.

As the conversation progresses, you will want to begin gathering information about where their retirement income will come from and how much it will be. This can include things like Social Security, pensions, retirement accounts and other investments. Compare this against what their expected expenses are, and any shortfalls will start to materialize. Small differences can often be made up through shifting budgets and prioritizing expenses, but if there is a major income gap you may need to consider directly contributing to your parents retirement.

What’s the best way to contribute?

If there is a significant gap between your parent’s retirement income and expected expenses, you may decide that you will need to help support them. The first step you will want to take after coming to this conclusion is to make sure you can comfortably support it, and to what level.

Should you decide you do want to contribute to your parent’s retirement, several factors must be considered. You will need to decide where the money will come from, either from your own retirement accounts or from non-qualified assets such as brokerage or checking accounts. For example, certain distributions from a Roth IRA may not be subject to taxes or penalties regardless of your age, and may be a good source of funds.

You must also consider the annual gift tax exclusion, which currently sits at $19,000 per year per recipient in 2025. That means that you can donate up to $19,000 to each of your parents in 2025 without having to report it as a taxable gift to the IRS.¹ Should you gift more than that, any amount over $19,000 will be considered a taxable gift. However, you will likely not have to pay any tax out of pocket until your lifetime gifts exceed $13.99 million.² Getting advice from a trust & estates lawyer and a tax professional can help you decide how you can assist your parents with your assets.

Timing your contributions

Whether or not you are able to contribute before your parents’ retirement will depend largely on when the conversation occurs. Should it occur pre-retirement, you will have the flexibility to contribute leading up to their retirement, during it or both. Gifting before retirement will allow the opportunity for the funds to be invested and grow until they are needed. However, their retirement needs may change as the years go by and the funds may not be sufficient. Gifting during retirement will allow a clearer picture on exactly what is needed from you.

You will also need to consider the timing of your contributions. They could be monthly, annually or all in one lump sum. Additionally, you will need to choose to give either before or during your parents retirement, or both.

Monthly contributions will typically make it easier on your parents to plan and budget, while avoiding a large one-time financial hit to your own accounts. These can also be adjusted in the future should the need arise. However, this may not be the best option if there is an immediate need for a large purchase.

Annual contributions will cause a more significant immediate financial hit to you, but will provide your parents with a larger lump sum amount while remaining fairly easy to plan for and adjust. On the other hand, a lump sum contribution could risk early depletion of the funds by your parents. It could also have gift tax implications. 

The bottom line

Helping to provide for your parents’ retirement is a very personal decision. It starts with having an open and honest conversation with them about their goals, lifestyle and retirement income level. This conversation can be part of a broader one involving how you can assist your parents including discussing adding a Trusted Contact Person on their accounts or providing a Power of Attorney. Should it be discovered that they will not have the funds needed to live the life they want, you may want to contribute some of your own funds to get them there. It is crucial to ensure that providing for their retirement will not prevent you from obtaining yours, or put you and your family’s current financial situation in jeopardy. If you determine that you’d like to give, make sure you take into account the source, timing, frequency and amounts of your gifts. Failing to do so could result in unwanted consequences like taxes and penalties. Connecting with your J.P. Morgan advisor prior to making any final decisions could save you a lot of trouble down the road.

Frequently asked questions