Parents in 60s with very little in savings – help

My parents are 64M and 63F, and I just found out that they’re in a pretty bad spot financially. Relevant background info: my dad has been the primary earner their whole marriage, and was earning 175k until he got laid off in November. My mom stayed at home with the kids and has worked various part-time jobs over the years.

I sat down to go over finances with them and found out that they only have 200k saved for retirement!!! I have advised that they should both work until they hit 70 to max out social security. My dad is currently looking for another job, not many want to hire someone his age so we’re expecting his new income to be significantly lower.

Assets:
401K: $200,000
Traditional IRA: $50,000
Savings: $25,000 (about to start burning through this as his severance package has just run out)

Debts:
$200,000 remaining on mortgage
$5,000 remaining on car loan

Income:
Unemployment: $1,200 per month
Mom’s income: $15/hr, she usually works approx 25 hrs/week but is picking up extra shifts currently. Let’s say around $1,200 per month typically.
Severance pay has just ended.

Expenses: $3,700 fixed expenses, unknown variable expenses
Mortgage: $2,085
Auto insurance: $240 – this is about to go down as they get rid of an extra car they’re not using, but then they will (hopefully) be moving to my state which has more expensive car insurance so that may be a wash
Phone: $158
Cable: $232
Gas: $46
Electric: $201
Pest control: $141 quarterly-ish (they were unsure)
Water: $90
Life insurance: $81
Starting Oct. 1, if still unemployed he will have to pay $1,580 per month for COBRA
Variable expenses are unknown. This was a tough convo to have with them and they aren’t great about tracking. Groceries are at least $400 per month, then there’s gas, eating out, pool supplies, medical expenses, household expenses, etc.

I think I know the general shape of things here – my dad needs to find a job ASAP, they both need to work until 70, they need to prepare to have very little money in retirement.

They have a large house that would sell conservatively for at least $400-$450k. I want them to sell the house and move to my lower cost of living state to a much smaller property to lower expenses.

My main question that I need help with is the strategy around their new living situation. They could buy something small in my city for under $300k – is that the move? I’m worried about large expenses associated with home ownership as they will not have hardly any disposable income. Would renting be a better bet? If they do purchase a condo/home, should they put put all the proceeds from the sale of their current home toward making the mortgage as small as possible? What’s the play at their age?

Extra info: my elderly uncle is living with them as of the past year. He has nowhere else to go. He receives disability and is on Medicare. We are hoping to find him low income housing in my city as they’re all very fed up with sharing a living space.

I really appreciate any help/thoughts on their situation. Obviously they have massively fucked up over the years but there’s nothing to do now except find the best path forward.