How to Talk With Aging Parents About Money
The holidays can be a good time to find out if Mom or Dad needs help with their finances and to start a conversation about how you can lend a hand.
Talking to your elderly parents about their finances isn't a conversation most us want to have. It ranks right up thetr with talking about the birds and the bees with your kids. But if you think Mom or Dad might be having trouble managing money because of the effects of aging or dementia (see How Aging Imperils Your Finances), you need to take action. And a good time to do this is over the holidays.
I'm not suggesting that you bring up the topic as you ask Mom to pass the turkey and gravy. But if you're going to be spending several days with your parents over Thanksgiving or Christmas, you'll have the opportunity to look for clues that they might be having problems with money tasks and to find a way to start a conversation (possibly after the holidays) about ways you can help.
Even if your parents aren't having trouble managing their money, you should learn as much as you can about their financial situation in case you have to help them someday. It's better to have all the information you need before they can no longer take care of their finances. Otherwise, “it’s like trying to put together a jigsaw puzzle and you don’t always have the box to see what the ultimate outcome will be," says Greg Merlino, a financial planner and president of Ameriway Financial Services, in Voorhees, N.J.
For starters, you need to know whether they have wills, whether they have designated anyone as their power of attorney and whether they have living wills. These documents need to be drafted while your parents still are competent. There's plenty of other information you need to gather if you can. See What You Should Know About Your Parents' Finances for a list.
Your parents might be reluctant to share their financial information with you, though. Even if your parents are having trouble handling their finances, don’t expect them to reach out to you for help. "Parents sometimes will go through self impoverishment so they won’t have to be a burden," Merlino says. So here are some tips on starting the conversation and getting your parents to let you help -- based on my experience with my mom, who is diagnosed with Alzheimer's disease, and with conversations I have had with financial planners, elder-law attorneys and geriatric-care managers.
Talk about your own situation. Rather than talk about your parents' situation, discuss your own. For example, you could say "Mom and Dad, I recently met with a lawyer to draft powers of attorney for financial and health situations so that my spouse can handle things if I'm ever in a situation in which I can't." Then ask your parents what protections they have in place. Or you can mention an article you've recently read (such as this one) about the importance of getting your parents' personal-finance information in case they ever need help managing their money.
Use a story. Tell your parents that you've heard about scams targeting seniors and that you want to help protect them by going through their mail and monitoring their accounts for unusual activity. Help them get copies of their credit reports at Annualcreditreport.com to make sure they aren't victims of identity theft. And put your parents on do-not-call lists. Most telemarketers will stop calling once a number has been on the National Do Not Call Registry for 31 days. You can register home and cell-phone numbers free at www.donotcall.gov or by calling 888-382-1222.
Enlist the help of a third party. Your parents might be more willing to discuss their finances with you -- and let you help them -- if a third party suggests that they do so. So ask their doctor, accountant, financial planner or geriatric manager to speak with them about the importance of talking with their children about their financial situation and asking for help if they need it. Your parents might be more receptive if the advice comes from a professional they trust.
Offer to help lighten their load. Suggest that you take over one of their financial responsibilities, such as preparing their taxes, so that they have more time to do what they enjoy. Doing their tax return will give you insight into their sources of income, how much mortgage debt they may have and whether they're giving away a lot of their money to charity.
Offer to help them develop a spending plan (don't call it a budget). This will give you a chance to see how much money they have coming in and how they're spending it. If they're having a lot of trouble managing their finances, you'll need to limit their access to cash. You can start by setting up automatic payments for regular bills to reduce the number of checks that need to be written. If you have access to your parents' checking account, limit the amount of money in it by regularly transferring funds to a savings or money-market account.
If spending is out of control, consider giving your parents a secured credit card, which allows them to make a deposit that becomes their credit limit, and taking away other credit cards. If you find that your parents have been the victims of a scam or entered into a questionable financial relationship, consider putting them on a cash allowance. Tell your parents that you're giving them a certain amount each week or month to spend as they please and that you'll take care of the bills. And be sure to let them know that you're doing this not because you're trying to control them, but because you love them.