Are your parents' golden years tarnished with debt?

By Jennifer Rose Hale

How well do you know your parents? Do they dream of a retirement rocking on a porch swing with grandchildren, or climbing Machu Picchu with lifelong friends? You may have dreams of your own that straddle those categories.

But poor financial choices can make both of those options--or even retirement itself--an unachievable dream.

Like other demographics, seniors are paying for unwise use of credit cards and other forms of debt. A 2010 University of Michigan Law School study found a significant rise in bankruptcy filings by the elderly. Filers age 65 and older jumped to 7.0 percent of bankruptcy cases in 2007 from 2.1 percent in 1991. In fact, 66.6 percent of elder debtors blamed their situation on credit card use.

What should you do if you suspect Mom or Dad (or any older loved one) is facing retirement in the red?

Assess the situation…carefully

As long as your parents are still living, there is still hope of getting them back on solid financial footing. Depending on your relationship, you may have a good sense of your parents' financial circumstances, or you may find yourself surprised, as one daughter described in a New York Times story. If you have a hint that your parents are derailing their retirement with credit card debt without the means to pay it, you may want to ask tough questions…in a gentle way.

How you proceed, and how they respond, will depend on your relationship and how they feel about their circumstances. Consider this softball:

"I'm trying to figure out whether I'm preparing enough for retirement. Can you talk to me about what you're doing, and how you feel about it? Do you have any advice for me?"

Simple, neutral questions can open more conversational doors than direct accusations.

Talk to your parents about credit cards

If you can get your parents to open up, talk explicitly about the source of debt. If it's credit card debt, help them determine a plan to better manage the use of plastic and pay more than the minimum each month. Talk to them about their options for managing card debt; you'll find some ideas in the Senior Citizen Journal.

Depending on your relationship, you may want to help them out. If it will do no lasting harm to your own savings account, do so. But your own obligations may make it impossible, whether you have a family yourself or are just starting out and don't have anything to give.

Model good credit card habits

If your parents can turn their situation around, they may still achieve their retirement dreams. However, after a point, there is only so much you can do. The best strategy to protect yourself and the people who care about you is be responsible: save for retirement with gusto, for example. And model responsible use of your own credit cards.

With those goals in mind, you can ensure you have the choice between a Peruvian peak or your own porch swing.