Typically, adult children wait far too long to discuss finances with their aging parents. They are usually motivated by a prompt, perhaps one parent falling ill, or something like damage to the parent’s home or car. But emergencies and their aftermath are the worst times to discuss as sensitive a topic as finances. That ought to be a conversation well in advance of when necessity dictates terms, so your aging parent can have as much autonomy as possible.
It sounds paradoxical at first. Relying upon a child’s financial help is in one sense becoming considerably more dependent. But an aging parent’s income is the main determinant of his or her ability to continue to have a quality of life in the future. And involving a trusted child in an aging parent’s finances can afford the parent a great deal of comfort and security. Absent that, the parent is likely to become financially dependent on the adult child, which might mean moving into that child’s home. That’s a fine option for many families, but it can place a great strain on the relationships of other aging parents and adult children.
Just as it can be very tough for adult children to talk to aging parents about sensitive topics like their health or moving to a senior living community, it’s best to tread carefully when talking about money.
Here are two strategies to consider:
1. Use an example.
When broaching the topic of finances with your aging parent, consider citing an example of your parent’s friends, who might be going through a recent loss or financial challenges. And lead with that example.
“Mom. Let’s have the conversation now, because I want to avoid this sort of heartache or difficulty with us down the road,” you might begin. “Let’s talk about this. Do you have a will? Are your finances in order? We need to know where those things are, because you never know what’s going to happen.”
One never wants to think about a parent getting into a car accident, or suffering any sort of injury. But one simply never knows what could happen, which is why it’s wise to prepare for the future.
“Let’s have a clear and stable plan in place,” you can add, “so that we can focus on meaningful activities, as opposed to trying to find and search for things that we have no idea where to find, like financial information and a will.”
“Let’s be organized. Let’s be thoughtful. And let’s plan for the future.”
2. Advocate for independence.
“Dad, I want you to be as independent as possible for as long as possible,” you might say. “How are we going to help you do that? What are the sorts of things we need to ensure are surrounding you in the long term that will provide for your independence in the future?”
You might discuss with your aging parent the benefits of engagement and activities and social interactions with their friends. But you’ll also want to talk about the financial things that will ensure his or her independence.
On the other hand, you’d do well to steer clear of the following:
1. Don’t let an emergency dictate terms.
As I noted above, waiting until the last minute isn’t very smart at all. It often causes people to act hastily rather than plan ahead. You might end up liquidating assets belonging to your aging parent only to learn that she or he actually had plenty of income coming in anyway or after all. And those assets that are now gone may appreciate.
Making a rash judgment here would clearly yield the wrong solution.
2. Don’t approach this from a self-centered standpoint.
Your parent will sense right away if you seem to have ulterior motives in discussing finances with her or him. Try to avoid being and sounding self-centered. Inheritances can be the elephant in the room, and it’s a very difficult topic to discuss. At the end of the day, remember that this conversation is about your parent. It’s a discussion focused on putting a plan in place to help your aging parent get organized, so you can identify her or his income-producing assets and investments, which will help ensure independence.
Keep the conversation focused on finding out all the things you need to know to help sort the situation out and have a clear plan.
The aim, at the end of the conversation, will be finding your way with your aging parent onto the same page. You’ll hammer out a well-organized, thoughtful plan. Once that’s in place, you’ll want to then enlist a financial planner – depending on the how much investment, income and assets there are – or a lawyer, so that there’s a professional third party involved. Everyone ought to do that, even if you are a lawyer or a financial planner.
These days, many geriatric care managers have financial training as well. They deal both with the assessment and care of seniors, as well as with the adult children to find the right resources for healthcare, finances, wills, estates and the like. If you find someone with that kind of holistic training, you’ll be in good shape.
The key, again, is to avoid waiting until there’s an emergency to have a thoughtful and caring conversation about finances.
“Mom,” you can say, drawing out the alternatives. “Don’t you want more clarity, so that if something happens to you or there is a fire in the house or something happens to the car that we will know what to do without fumbling around?”
And if these are some of the things you and your aging parent are grappling with, consider checking out our new e-book, “Managing senior finances: stepping up to help your parent,” which draws upon the wisdom and experience of others who are going through and have gone through the same thing. You can download it for free at stepupfinances.com.