How to help Mom and Dad with
money issues as they age
By Penelope Wang, with additional reporting by Walecia Konrad and Beth Braverman
Face it. Mom and Dad are getting up there in age, and their finances aren’t getting any simpler. Some of life’s trickiest money tasks—managing a large but basically fixed nest egg and figuring out how to make it last—are in the hands of people who at some point may not be up to handling it themselves. This means that in addition to managing your own finances, you have the tough new job of helping your parents manage their money.
It’s a delicate art. You’re used to Mom and Dad being the authority figures. So are they. But if your folks are over 70, you and your siblings should start getting them comfortable with the idea that you can help.
To get started, it helps to know more about how your parents’ lives have been changing with age. That can help you decide when and how you should step in.
What to Watch Out For
Old age brings enormous changes—not all of them physical—that could leave your parents feeling overwhelmed by the work of running their money.
THEY ARE DEALING WITH ISSUES THAT ARE NEW TO THEM
In many marriages—especially in your parents’ generation—husbands and wives split up financial duties. When one of your parents dies or becomes seriously ill, the other will very likely be handling unfamiliar problems, whether it’s picking mutual funds or making sure the utility bills are paid on time.
THEY’RE STILL SHARP BUT FIND MONEY TASKS MORE TAXING
Even normal aging can bring gradual changes in mental function. Those changes may not affect the ability to make sound financial decisions, but if Dad takes longer to work with numbers than he used to, he may become less diligent about checking his account statements.
General health issues can also make things harder. Russ Hendricks of Watertown, Tenn., helps his mom, Helen, 77, manage the bill paying. She’s been spending a lot of time caring for his dad, Harry, 81, and she recently had back surgery. Russ noticed Helen was having trouble balancing the checkbook. "My mom isn’t forgetting things, but she gets overwhelmed,” he says. Other possible red flags: increased complaints about having to fill out forms from an insurer or brokerage, trouble reading fine print or a general rise in stress about paying bills.
THEY ARE SHOWING SIGNS OF BIGGER PROBLEMS
About half of people in their eighties suffer from significant cognitive impairment. That includes Alzheimer’s but also other issues. This mental deterioration often takes families by surprise. “Older people may be able to answer questions and respond well in social situations, but people end up shocked when they finally look at their finances,” says Beth Kallmyer of the Alzheimer’s Association.
So what should you be on the lookout for? Your parent might have forgotten to pay utility bills or rent, or could be having trouble making change or writing checks. Or they may complain that money is missing from their bank account or that someone is stealing from them.
What to Do When They Simply Need a Hand
Get involved in small ways while your parents are still healthy. Let them know you are available for advice, and make routine tasks easier for them. This will make it easier to step in when bigger issues arise later.
DON’T START IN ASKING ABOUT MONEY PROBLEMS
It won’t be easy to get your parents to open up about their finances, which many consider a taboo topic. Get the conversation rolling by asking how they’ve prepared their financial accounts in case of an emergency. Where do they keep their accounts and insurance? Where would you find the paperwork? Who has the passwords? Those are straightforward questions, as you’re simply asking them whether they’ve made the contingency plans everyone ought to have.
TELL THEM ABOUT YOUR OWN FINANCES
They may also have an easier time talking if you keep them in their familiar parental role, says Miriam Zucker, a geriatric-care manager and social worker in New Rochelle, N.Y. Ask Dad for advice on how best to invest the money you put in his granddaughter’s college savings account. Or tell Mom you are revising your will and you’re wondering how they’d handle it. You could very well get good advice, and conversation will flow naturally from there.
ASK THEM TO HELP YOU
Tell your parents you’ve been worried and they could make you feel better if you knew more about their plans. “You’re asking them to do you a favor,” says Jake Harwood, an expert on communication and aging at the University of Arizona. Try citing the 40/70 rule, suggests Paul Hogan, head of a senior-care agency called Home Instead. The idea is that families should talk money when the parents turn 70 or the kids turn 40.
GET THEIR ACCOUNTS ONLINE
Russ Hendricks says online banking has been an important tool for helping to manage his parents’ finances. “I said, ‘Mom, I use electronic banking, and it makes my life so much easier. Let me help you do this,’ ” he says. Working with your parents to set up their accounts will also give you a glimpse at the state of their finances.
IF THEY USE AN ADVISER, ASK TO GO TO THEIR NEXT MEETING
Financial advisers and planners can be a huge help, in part because having a neutral third party can defuse family tensions. But don’t count on this person to sound the alarm if your parents are showing signs of Alzheimer’s, as advisers say they aren’t always comfortable broaching the issue with clients.
Ask your parents if you can come along next time they meet their adviser. Watch to see if they are following the conversation. Clarify any points of concern regarding any suggested new financial products, especially if there are up-front loads and commissions attached. And make sure your parents aren’t taking on too much risk.
When It’s Time to Help Them Make DecisionsAs your parents get older, you’ll have to do more. Enlist the help of your siblings, and make sure everyone stays informed about what’s going on so you don’t risk misunderstandings or bad feelings.
SET UP EARLY-WARNING SYSTEMS
With increased forgetfulness, your mom and dad may be at greater risk of making a major money misstep. They may also be targets for scams. So put some trip wires in place that will alert you if there are problems. Ask your parents to have you listed to receive automatic notification if they miss a bill payment. And consider getting them to give you access to their bank accounts so you can see their daily cash flow information.
One caveat: Be sure to check with the bank about what kind of account your parents have. Make sure you or your siblings are sharing a so-called convenience account, not becoming a joint owner with right of survivorship. That might run afoul of your parents’ estate plan, since you would inherit any leftover assets. It could also put your parents on the hook for the debts of anyone listed on the account, says Patricia Sitchler, an elder-law attorney in San Antonio.
DON’T RUSH TO TAKE OVER EVERYTHING
Remember, Mom and Dad are adults. It’s important to give them as much financial independence as they can handle. Staying active is essential to older people’s well-being, says Laura Carstensen, director of the Stanford Center on Longevity. That means getting out and socializing with friends, which can be difficult for them to do if they don’t have control over some money. Even if you and your siblings eventually have to manage most of their finances, make sure your parents have access to cash and perhaps credit cards, with modest limits, for as long as possible.
Adapted from the June 2011 issue of Money. © 2011 Time Inc. All rights reserved.
By Penelope Wang, with additional reporting by Walecia Konrad and Beth Braverman
Face it. Mom and Dad are getting up there in age, and their finances aren’t getting any simpler. Some of life’s trickiest money tasks—managing a large but basically fixed nest egg and figuring out how to make it last—are in the hands of people who at some point may not be up to handling it themselves. This means that in addition to managing your own finances, you have the tough new job of helping your parents manage their money.
It’s a delicate art. You’re used to Mom and Dad being the authority figures. So are they. But if your folks are over 70, you and your siblings should start getting them comfortable with the idea that you can help.
To get started, it helps to know more about how your parents’ lives have been changing with age. That can help you decide when and how you should step in.
What to Watch Out For
Old age brings enormous changes—not all of them physical—that could leave your parents feeling overwhelmed by the work of running their money.
THEY ARE DEALING WITH ISSUES THAT ARE NEW TO THEM
In many marriages—especially in your parents’ generation—husbands and wives split up financial duties. When one of your parents dies or becomes seriously ill, the other will very likely be handling unfamiliar problems, whether it’s picking mutual funds or making sure the utility bills are paid on time.
THEY’RE STILL SHARP BUT FIND MONEY TASKS MORE TAXING
Even normal aging can bring gradual changes in mental function. Those changes may not affect the ability to make sound financial decisions, but if Dad takes longer to work with numbers than he used to, he may become less diligent about checking his account statements.
General health issues can also make things harder. Russ Hendricks of Watertown, Tenn., helps his mom, Helen, 77, manage the bill paying. She’s been spending a lot of time caring for his dad, Harry, 81, and she recently had back surgery. Russ noticed Helen was having trouble balancing the checkbook. "My mom isn’t forgetting things, but she gets overwhelmed,” he says. Other possible red flags: increased complaints about having to fill out forms from an insurer or brokerage, trouble reading fine print or a general rise in stress about paying bills.
THEY ARE SHOWING SIGNS OF BIGGER PROBLEMS
About half of people in their eighties suffer from significant cognitive impairment. That includes Alzheimer’s but also other issues. This mental deterioration often takes families by surprise. “Older people may be able to answer questions and respond well in social situations, but people end up shocked when they finally look at their finances,” says Beth Kallmyer of the Alzheimer’s Association.
So what should you be on the lookout for? Your parent might have forgotten to pay utility bills or rent, or could be having trouble making change or writing checks. Or they may complain that money is missing from their bank account or that someone is stealing from them.
What to Do When They Simply Need a Hand
Get involved in small ways while your parents are still healthy. Let them know you are available for advice, and make routine tasks easier for them. This will make it easier to step in when bigger issues arise later.
DON’T START IN ASKING ABOUT MONEY PROBLEMS
It won’t be easy to get your parents to open up about their finances, which many consider a taboo topic. Get the conversation rolling by asking how they’ve prepared their financial accounts in case of an emergency. Where do they keep their accounts and insurance? Where would you find the paperwork? Who has the passwords? Those are straightforward questions, as you’re simply asking them whether they’ve made the contingency plans everyone ought to have.
TELL THEM ABOUT YOUR OWN FINANCES
They may also have an easier time talking if you keep them in their familiar parental role, says Miriam Zucker, a geriatric-care manager and social worker in New Rochelle, N.Y. Ask Dad for advice on how best to invest the money you put in his granddaughter’s college savings account. Or tell Mom you are revising your will and you’re wondering how they’d handle it. You could very well get good advice, and conversation will flow naturally from there.
ASK THEM TO HELP YOU
Tell your parents you’ve been worried and they could make you feel better if you knew more about their plans. “You’re asking them to do you a favor,” says Jake Harwood, an expert on communication and aging at the University of Arizona. Try citing the 40/70 rule, suggests Paul Hogan, head of a senior-care agency called Home Instead. The idea is that families should talk money when the parents turn 70 or the kids turn 40.
GET THEIR ACCOUNTS ONLINE
Russ Hendricks says online banking has been an important tool for helping to manage his parents’ finances. “I said, ‘Mom, I use electronic banking, and it makes my life so much easier. Let me help you do this,’ ” he says. Working with your parents to set up their accounts will also give you a glimpse at the state of their finances.
IF THEY USE AN ADVISER, ASK TO GO TO THEIR NEXT MEETING
Financial advisers and planners can be a huge help, in part because having a neutral third party can defuse family tensions. But don’t count on this person to sound the alarm if your parents are showing signs of Alzheimer’s, as advisers say they aren’t always comfortable broaching the issue with clients.
Ask your parents if you can come along next time they meet their adviser. Watch to see if they are following the conversation. Clarify any points of concern regarding any suggested new financial products, especially if there are up-front loads and commissions attached. And make sure your parents aren’t taking on too much risk.
When It’s Time to Help Them Make DecisionsAs your parents get older, you’ll have to do more. Enlist the help of your siblings, and make sure everyone stays informed about what’s going on so you don’t risk misunderstandings or bad feelings.
SET UP EARLY-WARNING SYSTEMS
With increased forgetfulness, your mom and dad may be at greater risk of making a major money misstep. They may also be targets for scams. So put some trip wires in place that will alert you if there are problems. Ask your parents to have you listed to receive automatic notification if they miss a bill payment. And consider getting them to give you access to their bank accounts so you can see their daily cash flow information.
One caveat: Be sure to check with the bank about what kind of account your parents have. Make sure you or your siblings are sharing a so-called convenience account, not becoming a joint owner with right of survivorship. That might run afoul of your parents’ estate plan, since you would inherit any leftover assets. It could also put your parents on the hook for the debts of anyone listed on the account, says Patricia Sitchler, an elder-law attorney in San Antonio.
DON’T RUSH TO TAKE OVER EVERYTHING
Remember, Mom and Dad are adults. It’s important to give them as much financial independence as they can handle. Staying active is essential to older people’s well-being, says Laura Carstensen, director of the Stanford Center on Longevity. That means getting out and socializing with friends, which can be difficult for them to do if they don’t have control over some money. Even if you and your siblings eventually have to manage most of their finances, make sure your parents have access to cash and perhaps credit cards, with modest limits, for as long as possible.
Adapted from the June 2011 issue of Money. © 2011 Time Inc. All rights reserved.
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