Elderly parent's fixed income leaves few solutions to pay off debt

Q: I have a 72-year-old mother receiving Social Security checks of approximately $617 per month. She lives in low-income housing, is on medical assistance, and has a credit-card debt of at least $5,000. What are her options?
E.F., via e-mail

A: This pretty much boils down to what she can do to improve her lifestyle in the absence of much money, says Craig Jergenson, president of the Financial Planning Association of Minnesota.

Up to approximately 40 percent of her income ($247 per month) can go toward her rent payments, he says. Her credit-card debt, while not a huge sum in contrast to most Americans, is another large drain on her cash flow and probably requires a minimum payment of $150 or so monthly. So that leaves $220 per month to live on.

While there aren't many things she can do on a fixed income, Mr. Jergenson suggests a few possible solutions.

If she is healthy, a part-time job may be an option. But "this works only if Mom really wants to be out in the hustle and bustle of American society," he notes.

Citing Mitch Anthony, cofounder of the Financial Life Planning Institute, Jergenson says well-to-do children can take some financial responsibility by creating a "parental pension." This would involve giving money to an elderly parent on a monthly basis. The money could be given directly or into a savings or investment account from which a monthly check is sent. Any money left in this account would be refunded upon the parent's death.

You might also consider helping your mother to pay off the credit-card debt, Jergenson suggests.