Your parents probably taught you most of what you know about money, from the value of hard work and saving to the mechanics of filling out the W-2 form for your first job. But as they get older, it often becomes time to repay the favor by checking in on how they’re holding up financially. This is not necessarily the easiest conversation to start — your parents may view the broaching of the subject as an intrusion, to you it may just feel awkward — but it’s an important topic to discuss. Older people are more susceptible to scams than the general population, and cognitive decline impacts more people than you may think (and the ability to manage finances is one of the first things to go). Plus, if your parents are running short of resources, that can take a toll on your financial plans as well. The sooner you know that’s a likelihood, the better. Here are some guidelines for talking to your aging parents about money:
Take a sensitive approach.
Baby Boomers tend to be more private about their personal lives — especially their finances — than people who are in their 40s and 50s, so don’t be surprised if they’re hesitant to share information with you. That means it’s important to approach the subject in the right way. “I think the first thing is you have to approach it with some sensitivity and realize that you may want to help them, but they may be less receptive or may not want to be as open,” says Walter Updegrave of Real Deal Retirement. The best way to go about this is to try to bring up the subject in a normal conversation, Updegrave adds. Ask how things are going, including how their investments are doing and whether they’ve had trouble meeting any bills or obligations, if you expect that may be the case. Don’t worry about being too sensitive if you suspect a serious problem. “When push comes to shove, you have to run the risk of maybe offending someone,” says Updegrave. “I’d rather run that risk then see them lose a big portion of their savings or not be able to support themselves.”
Watch out for red flags.
There are a few telltale signs that something could be wrong, including piles of mail, a lack of proper home maintenance, large changes in spending and money transfers. Other warning signals include changing the firm or advisor they work with or attending new financial seminars and classes, which are sometimes exploitative, warns Updegrave. If you are concerned about your parents’ finances, there are a few steps you can take to get more information. One is to ask them about adding you to their financial accounts, which will allow you to set up alerts about any missed payments or late fees. Another strategy is asking your parents if you can come with the next time they meet with their financial advisor — or if they’re not seeing one, suggest setting up an appointment together.
Look out for your own financial future.
Nearly half of Americans in their 40s and 50s count themselves as members of the “sandwich generation,” a cohort of people caring for both children and parents at the same time. This can have huge financial ramifications — in fact, the TransAmerica Institute found that one in five caregivers dips into their retirement savings as a result. Opening up a dialogue with elderly loved ones before there are signs of problems is the key to protecting your and your parents’ financial lives, says president of the TransAmerica Institute Catherine Collinson. “The worst thing that can happen is that the child isn’t involved until there’s some sort of catastrophic financial mistake,” she says. “Knowledge is always going to be power, so if you know the set of circumstances you’re dealing with, you can come up with a more effective course of action.” Offer to be a second pair of eyes on tax forms and financial statements, emphasizing the fact that everyone finds them tricky. Additionally, when it comes to nudging your parents to get their legal paperwork in order, the best strategy is to do your own first — and convince your siblings to do the same. It’s not only good practice for people of all ages, but your parents are more likely to get on board if it’s a family effort, says Collinson.
With Ellie Schroeder