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Aging with ease: There are ways to help elderly parents with their finances.

BY Dan Rafter, Northwest Indiana News

October 6, 2003

Times Correspondent Wayne Brumm understands why many of his clients don't want to talk to their elderly parents regarding financial matters.

It is uncomfortable for children -- no matter if they are 30, 40 or 50 -- to ask if their own mothers and fathers are struggling to pay their bills or save enough money to cover their health care costs.

But such questions, while awkward, are necessary, said Brumm, a certified public accountant and certified financial planner with Crown Point-based Wealth Consulting Group.

"This is an issue with many of my clients, whether they know it or not," Brumm said. "The problem is, it's not a topic that most of my clients really want to talk about. It's not a topic that most of my clients' parents want to talk about. And that's where the problem really starts."

People today live longer than ever. This means retirement savings have to stretch longer, too. And when they don't, it's often adult children who have to step in to help their elderly parents improve their financial health.

According to the U.S. Census Bureau, in 1960, about 52 percent of U.S. residents in their 50s had one parent alive. In 2000, about 27 percent had both parents alive.

In 1960, about 24 percent of people in their 60s had one parent alive, but by 2000 that number had jumped to 44 percent.

As these seniors age, many struggle to keep up with their finances.

Some pay their bills late or forget entirely. Others struggle to dig up enough money for their prescription medications. Still others run up large credit-card bills, generating a debt that threatens to overwhelm them.

Unfortunately, many of these same seniors are too embarrassed to talk to their adult children about these problems.

And their adult children either don't think to ask or feel too uncomfortable to question their mothers and fathers about how they're spending -- or saving -- their money.

But local financial planners and senior citizen advocates say adult children must overcome their natural anxiety and talk with their parents about financial matters. Those who don't, they say, are only asking for future problems. After all, it's easier to help parents recover from two missed credit-card payments than it is to help them when the phone and electric companies are threatening to cut their service.

"More people today are in a position of not only having to get their children all the way through college, but also find themselves in their 40s and 50s having to help take care of their parents," said Tim Scannell, president of Valparaiso-based Marquis Financial Wealth Management Group. "It's a hard topic. How do you ask mom and dad if they are capable of taking care of themselves? But by talking about it, adult children can help make sure that their parents stay out of financial trouble."

Fortunately, local financial and senior citizen experts have plenty of advice for helping adult children tackle the sticky subject of finances with their mothers and fathers.

Don't put it off: It's human nature to avoid as long as possible unpleasant tasks. And few tasks are as unpleasant as discussing finances with a parent. But those adult children who delay speaking to their mothers and fathers about money matters will only make this task more difficult.

Senior citizens need to have a plan to handle their money matters, Brumm said. And this plan needs to be detailed. It must spell out if elderly parents want to live in their own homes as they age or if they'd rather move into a retirement community or nursing home.

If they do want to live in a retirement community, the plan must include information on how they can pay for such an arrangement. A plan needs to spell out how seniors are budgeting money for medications. It should even include information on parents' wills.

The problem is that most people don't take the time to craft such plans.

"There seems to be a real reticence to discuss these issues among parents and children," Brumm said. "There shouldn't be, but there is."

Starting a conversation about finances can be tricky. Some elderly parents may mistakenly think their children are butting into their business, or they are only interested in their share of their mom's and dad's estate.

Scannell, though, said it's up to adult children to get past their parents' reluctance and to ask some key questions. Scannell recommends that children ask their parents if they have an overall financial plan, if bills are overwhelming them or if they're having trouble remembering to pay these bills. They should also ask if their health insurance coverage is adequate or if they're having trouble paying for their prescription medicine.

Children also shouldn't be afraid to ask about their parents' credit card bills, Scannell said. Some seniors do run up high balances on their cards.

Pick the right person: Different family members have different strengths. In most families there is someone considered a financial wizard, the one person everyone else turns to when they have questions about their income-tax returns or investments.

This person may be the right one to help mom and dad manage their money.

"In a way, this is an opportunity for different family members to determine who's going to do what with parent care," said Irene Wagner, Indiana state representative for AARP, the national organization dedicated to serving U.S. residents 55 and older.

In Wagner's family, for instance, her sister is a banker, so she handled her parents' financial matters. Wagner, though, handled health care and social care issues.

It's important for children to watch out for their parents as they age, Wagner said. Senior citizens are especially vulnerable to such financial traps as charity fraud and predatory lending, where mortgage lenders trick them into signing up for mortgage loans loaded with high and unnecessary fees.

Get an expert involved: Sometimes family members must turn to outside experts to help their parents with financial issues. Fortunately, there are a host of financial planners and certified public accountants out there to help.

One of the newer trends is for senior citizens to enlist the services of what are known as daily money managers.

Money managers work with clients to organize and handle all the daily aspects of money management. They help clients set up a bill-paying schedule, balance their checkbooks, organize their financial paperwork, negotiate with creditors, save money for retirement and meet any other financial goals a customer might have. Daily money managers often work with senior citizens, who many times are most in need of their services.

 

"The real positive about working with a daily money manager is that we don't have that emotional baggage that family members have. We can be impartial when we are looking at someone's financial situation," said Pat Manalio, president of the American Association of Daily Money Managers, a trade group based in Gaithersburg, Md. "Children get upset when they see their parents, who used to be so on top of things, paying their bills late, bouncing checks and letting mail pile up under the sofa. There is emotional baggage in seeing that with your own parents. But a professional can go in there, analyze the situation and really see what is happening."


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