The Money Talk Part I: Helping Mom and Dad

February 26, 2019 · Written By Thomas Alvaré, CPA/PFS

Money affects everyone! No matter how much we avoid discussing it, psychologically and sociologically, money is a powerful force.

In our American culture, we see money as a measure of success and position in society. We keep the topic private for fear of adequacy (or scarcity) that might threaten our image. We are constantly challenging our self-worth based on how we compare ourselves to our perception of others like neighbors, friends, and family. Perhaps there is lack of confidence in one’s own financial knowledge or fear of appearing to be bragging or causing envy if we do discuss money publicly.

In a recent Wall Street Journal article1, 61% of people surveyed have never discussed retirement with their significant other! It is also well-documented that most people spend more time planning a vacation than their own retirement.

The bottom line: financial conversations can be difficult, but are still absolutely necessary. A challenge that affects people of all ages, it’s really a communication problem we can overcome. It’s also a deeply personal matter that can improve the lives of family members in so many ways.

Over a series of three articles, we’ll provide knowledge and tips on this topic. The first two will address how we can help our parents. If you are a parent, the guidance given will also be useful in your relationship with your adult children. The final section will cover how to discuss money with the next generation, starting at an early age and running through adulthood.

Why Parents Need Help

Nearly one-third of children end up helping parents financially, and if you face this potential, you’ll want to address it sooner rather than later while there may still be time to remedy issues.

As our parents age, there are so many ways they could need help. Many remain privately self-sufficient, but most will need assistance from others at some point. But what happens if no one is there to help when the need arises, and how do we know when the need arises?

If we are in close and frequent communication with our parents, the signs of growing needs will become evident. Some parents are more open about their finances with their adult children, making it easier to know when it’s time to step in.

Some parents are clearly financially secure and offer help to their adult children or grandchildren with gifts, guidance, and financial support. Families with a culture of funding younger generations often talk about finances more frequently and openly throughout their lives. These situations make it easier to know when or how to step in and offer help.

Once parents reach age 65, a family member or close friend should be in somewhat regular contact as physical, emotional, psychological, or financial issues often arise. Look for changes in activity levels or socialization, complaining about paying expenses, mention of health issues or frequent doctor visits, forgetfulness, or signs of dementia.

Starting the Conversation

Offer help and loving support as you see things getting more challenging. At first, avoid the topic of their financial situation. Instead, approach the conversation indirectly through discussions about lifestyle and happiness.

  • Ask soft questions about their housing arrangements and what they would do if it gets too difficult to manage everything.
  • Offer them help with technology and their use of the internet for managing their finances and paying their bills on time. Cyber security and fraud against the elderly are growing threats that could have devastating consequences. They may need advice on securing passwords and making them available to you, their spouse, or a service that someone could access in an emergency. This is a critical area for anyone who is the backup to the financial point person in the family.

Creating Candor

At this point, trust and transparency in conversation begins to build further. As they begin to “let you in” and see you as a supportive person who is looking out for their best interests, you can safely increase the sensitivity of the topics raised, such as:

  • Do they need help with their annual Medicare enrollment? The open enrollment period happens every year around the holidays. Most need a supplemental plan, or to choose Part C—the factors change annually, so the confusion level grows over time and opens the door for discussion.
  • Are they satisfied with their professional financial team—financial advisor, attorney, CPA, and insurance agent? Issues here or lack of help could reveal needs worth discussing.
  • What would they like you (and/or other family members) to do if they become incapacitated and cannot handle the family finances? Do they have current wills, trusts, powers of attorney, and health care directives so you know what to do or where to go if needed?

Many are surprised to find that once they tackle some of these questions, nerves begin to fade and related topics flow effortlessly. While you may not unearth all the answers to these questions right away, it will help begin the pattern of working together towards financial well-being.

In our next article, we will add to the list of ways to open the discussion with parents and provide specific suggestions on how to provide the help your parents need when they need it. Of course, you can always raise these questions about family members with your advisor and we will be happy to assist you.

1Gillers, H., Tergesen, A., & Scism, L. (2018, June 22). A Generation of Americans Is Entering Old Age the Least Prepared in Decades. Retrieved from wsj.com.