How to Discuss Finances With Aging Parents
Discussing finances with your aging parents may be difficult. In fact, there is data to indicate that many people think it is. Seventy percent of people report that they have difficulty discussing with their family who will handle finances if older parents lose their ability to manage finances.
The issue is widespread. Sometimes, older parents are reluctant to discuss their finances because they see it as an intrusion or a possible loss of independence. They may even see it as a burden on their children.
However, conditions like Alzheimer’s or dementia can cause senior citizens to lose the ability to take care of their finances, as can sudden events such as a stroke or a car accident. If these happen, your older parent needs to know that their finances will be taken care of — and so do their families. Insurance premiums, mortgage payments and even nursing care all require consistent management of existing financial arrangements and of the finances themselves.
Becoming involved with your parents’ finances can also help stop the financial abuse that many senior citizens experience. People take advantage of senior citizens by scamming them for a total cost of more than $2 billion annually in the U.S. alone. More than half of these abusers are strangers, while the rest are typically neighbors, family or friends. These abusers might ask to be wired money for illegitimate reasons or prey on kindness by taking out a loan with no intention of paying your parents back.
Having a handle on your parents’ finances will let you see if there are any red flags like recurring charges that aren’t for legitimate reasons. Seeing how much money is going in and going out can also ensure that scammers aren’t able to take advantage of your parents. Here’s how to help.
How to Discuss Finances With Aging Parents – How to Bring Up the Subject
Given the importance of consistent financial management to the well-being of your aging parents, what’s the best way to bring it up? First, plan to discuss it before there is a need — that way, their affairs can be managed in a comfortable way for all concerned.
There are five good times to broach the subject:
1) Link it to your own financial planning. You should be making financial plans relating to aging, just like your parents. All adults should have a will, for example, whether they have dependents or not. Every adult should have a medical directive. It’s a good idea for adults over 50 with dependents to keep a list of their financial obligations (assets like mutual funds and debits like mortgages, say) with their children or other trusted family member. The list ensures that the disposition of assets and meeting of obligations goes smoothly if something happens to an individual.
Therefore, you can broach the subject of financial management to your parents at a point where you’ve done this. If you’ve just made a will, for example, mention it to your parents and ask if they have one.
This method also enables you to approach the subject as a peer. This may make your parents more comfortable when discussing their financial future with you.
2) Link it to a recent event. Unfortunately, events like strokes or dementia do happen to older people. It may even have happened to another family member, a neighbor or friend. If your parents know someone whose sudden stroke made them unable to speak or remember, for example, and they had no will or no family member who could step in and make sure the mortgage was paid on time, the issue may loom large for your parents.
Use the incident as a way to gently bring up the need for information and for your parents’ participation in a plan for financial management of their affairs should they become incapacitated.
3) Link it to a family event. Having a discussion on a family event that recurs yearly is also a good idea. It could be a Fourth of July picnic or someone’s birthday. Because it’s a time that comes around annually, it may provide a comfortable setting to discuss the future.
4) Give them space when asking. Some parents simply don’t want to talk about finances even if they’re in good enough health to do so. Whether their decision is out of stubbornness, impatience or stress, you’ll need to find a way to address financial discussions indirectly.
Instead of keeping close tabs on parents’ finances, let them handle some aspects of it on their own. Gently ask them to fill out their financial information on their own time so they don’t feel pressured. This might take longer than you’d like, but with patience you’ll get the information you need.
5) Stress the benefits. It might help if you explain that sharing their financial information can help them obtain useful government benefits. Inputting their financial information on your state’s benefits websites will let you know what benefits they qualify for.
Most qualified people don’t take advantage of a number of programs out there. Only a third of people that qualify for benefits actually receive any, so having your parents’ information is important.
How to Discuss Finances With Aging Parents – Family Dynamics
Be aware of your family dynamics as you bring up the subject. Your parents have to be comfortable discussing their finances and other arrangements with you and with the other people around.
If you have brothers and sisters, decide who among your siblings might be the best person to bring it up. Perhaps one sibling is an accountant, and your parents have always been proud of her money-managing acumen. If that’s so, perhaps they would be happy to plan that she would manage their finances in case they were no longer able to do so.
How to Discuss Finances With Aging Parents –What You Need to Know
Once you’ve broached the subject, know what you need to know. Wills and health directives are primary. You also should know who your parents’ lawyer and financial advisers are. It’s a good idea to have a list of their obligations and assets. You should know their tax situation: Plan to see the lists and tax returns when they are still hale and hearty.
How to Discuss Finances With Aging Parents – Final Thoughts
Although thinking about discussing their financial situation with your aging parents can be difficult, it’s necessary for the family to do. Think about the best way to broach the discussion, treat your parents as peers and make a plan for what you need to know.
Anum Yoon is a personal finance blogger and writer. She created and maintains her personal finance blog Current on Currency. You can subscribe to her blog newsletter right here for her weekly updates.
