How to Talk to Your Aging Parents About Money – and 5 Signs They Need Your Help

Talking to your aging parents about their finances can be tricky, but is important because at some point, you may have to manage or be responsible for their finances. Consider these steps to make the conversation easier and more productive.

Putting Your Parents’ Finances Back Together If your parents need your help to manage their finances, they need to grant you financial power of attorney. You cannot get power of attorney if someone is incapacitated, so it is important to plan ahead. Good resources to better understand power of attorney include: Consumer Financial Protection Bureau American Bar Association AARP

 

Seniors face many hurdles in maintaining and managing their finances as they age. Loss of income, market fluctuations, and increased medical bills can erode their savings. As a result, one-third of senior households have no money left over each month after meeting essential expenses or are in debt, according to the National Council on Aging. In addition, seniors risk running short of money in retirement due to their increased likelihood of holding debt, according to a 2018 report published by the Employee Benefit Research Institute.

Could your aging parent or parents be at risk of running out of money?

Rather than waiting for a crisis such as failing health, an emergency, or a death to motivate you to talk about their finances, here’s how you can proactively help them now and approach the sensitive topic of money with concern and respect.

Getting Started

Talking about money with your parents is important because at some point, you may have to manage or be responsible for their finances. That could affect your own financial planning. In addition, when you know about their financial concerns, expectations, and wishes, you will be better prepared to carry out those wishes.

Before you start talking about money, set your own expectations. Talking with your aging parents about their finances will likely involve several conversations over time. Think about your first conversation as opening the door to the subject, not as a single once-and-done meeting.

Next, focus on outcomes and not money. You want information that will help you to help them if the need arises. Do your parents have enough income and assets to support themselves through all stages of retirement? Are they in debt? If so, how might that affect their ability to continue living independently? Are they counting on you for care or financial support? These are all important things you need to understand sooner rather than later.

Read over this checklist before talking to your parents and complete it with them over time:

Know how to locate:

• Important documents such as their wills, marriage and birth certificates, military records, titles to property, insurance policies, power of attorney documents, advanced directives such as a living will, mortgages, and tax returns
• Contact information for their insurance agent, attorney, and financial advisor
• Financial account information (including online login credentials) for checking, savings, and investment accounts
• Health insurance information, including Medicare, Medicaid, and supplemental insurance
• Credit card, loan, and lease documents
• Safe deposit boxes

Understand their financial situation as it relates to:

• Monthly bills and how they pay them – online or by check
• Monthly income
• Assets and the value of those assets
• Savings
• Long-term care insurance and health insurance coverage
• Debt

Know their wishes for:

• Home care or assisted living when the time comes
• Use of life-sustaining treatment if they become unconscious or terminally ill
• Financial power of attorney
• Medical power of attorney
• Help they want or expect from you in the future

The First Conversation

The purpose of the first conversation is simply to help your parents understand your concerns and make future conversations about financial planning more comfortable. Confer with your siblings and start by choosing a day and time when everyone can be relaxed and focused on the matter at hand. (The family holiday meal is not the time or place.)

Ask your parents to speak with you at that time to help you better understand basic details about their finances and their future wishes for how those finances are to be used, so you can help them when the time comes. It’s OK to explain that you feel awkward about the discussion, but that you know it is important for your and their peace of mind.

Once they agree to the first meeting, let them know you will only ask a few broad questions, such as where their important documents are kept and what their ideas are about care in late retirement. Be prepared to respectfully explain your concerns and to also listen to theirs.

Follow-up Conversations

Your first conversation will set the stage for follow-up talks, so don’t plan to get every detail by the close of that meeting. Remember to focus on the desired outcome: for everyone involved to feel better about financial management, not to get information about your inheritance. Your ultimate goal is to learn if your parents have sufficient means to meet their present and future needs and, if they do not, to put a plan in place to meet those needs.

In every conversation it is important to reassure your parents that you have no intention of taking advantage of them or being disrespectful. Take notes each time you discuss finances, and keep your notes in a safe place so you can reference them when the time comes.

While most of your discussions will be focused on future financial needs, you are likely to also discover ways you can help them take better control of their finances or make financial management easier in the present. For example, you could help them set up automatic bill pay or direct deposit, teach them how to do online banking, establish a joint checking account together, or show them how to consolidate their finances.

Remember, your parents may not want to share all their financial details with you in a few conversations. Be gently persistent and assure them that you want to know this information to alleviate your and their concerns about them running out of money and to prevent everyone from having the stress of needing to untangle their finances during a crisis.

5 Signs Your Parents Need Immediate Help With Their Finances

Talking about money with your parents and putting a plan in place that works for everyone is important. However, there may be a time when your parents need you to intervene immediately. The following could be signs of financial difficulty:

1. Unusual spending patterns: Does your father suddenly talk about his interest in new sweepstakes or contests where he hopes to win a lot of money? Does your mother suddenly over-buy necessities or make purchases that don’t fit with her needs or lifestyle? Unusual purchases or spending may signal your parents are victims of scams or indicate impaired judgment or early memory loss.
2. Stashes of unopened mail: Unopened mail could indicate your parents are getting behind on payments and don’t want to face the reality of the situation. It could also indicate changes in vision or joint and muscle function that make it difficult or impossible to properly manage bill paying.
3. A focus on money: If your parents suddenly exhibit an unusual or overriding need to complain about money, or you notice that they no longer participate in things they enjoy, they may be concerned that they are running out of money.
4. New junk mail offers: If you see new junk mail offers about investment opportunities, sweepstakes, vacation properties, or unfamiliar charities, it’s possible your parents are being targeted by scam artists.
5. Carelessness with cash: Do you notice a parent is hiding money in different places in the house or is holding onto checks instead of depositing them? These could be signs of forgetfulness that can impact financial management.

Start Talking About Money

Understanding your parents’ finances and keeping the lines of communication about money open are key to helping them enjoy financial stability throughout their golden years. Starting and then continuing the conversation over time will help your parents feel more empowered about their financial situation and give you peace of mind.

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