When should you start talking with your aging parents about their money? According to new research in the Journal of the American Geriatric Society, you may want to have that talk sooner that you might have expected.
The study tracked more than 9,000 individuals over a 10-year period and found that nearly a quarter of people who were between the ages of 65 and 69 when the study started developed problems managing money before their 80th birthdays – much earlier than many people expect. Not surprisingly, most participants over the age of 85 – 69 percent – also struggled with their finances.
Researchers say the study’s findings underscore the need to talk to aging parents about their money relatively early. But if you’re like me and feel awkward talking with your parents about their finances, starting that conversation can be excruciatingly difficult.
According to a March 2017 survey by the financial services group TIAA, 30 percent of sons and 43 percent of daughters said they found it “uncomfortable” to talk with their parents about money.
The first time I tried talking about finances with my mother, I hesitated and stumbled over my words for several minutes before I could even broach a single question. Even though my mom and I are extremely close, I felt as if I was invading her privacy asking intimate questions about her and my stepdad’s finances and how prepared they are to meet potential challenges.
I also worried about how the questions might make my parents feel. My mom and stepdad are in their mid- and late 60s and are still healthy and active; they don’t seem anywhere near the point at which they would need help managing their finances. I didn’t want them to feel offended or saddened by my questions. But according to the Journal of the American Geriatric Society study, talking to parents in their 60s and 70s about money could be more important than you think – especially if their health begins to wane sooner than either you or they expect.
Preparing for the inevitable
According to study co-author Alexander K. Smith, people often don’t realize how soon they could start developing cognitive or other health-related problems that make it difficult to manage their money independently. As a result, they are often unprepared when their financial mistakes add up.
“Mismanagement of finances can lead to financial abuse and bankruptcy,” Smith wrote in an email. Numerous studies, for example, have shown that older adults tend to be more susceptible to scams and other forms of financial abuse – especially when they suffer from dementia or other age-related cognitive problems.
To guard against unnecessary losses, people need to prepare early for the possibility that their ability to handle finances could diminish more quickly than they anticipate, he says.
“While results were most striking for the ‘oldest old’ age 85+, even among the ‘youngest’ old in this group, age 65-69, a notable minority developed difficulty,” Smith said. “People need to prepare for these eventualities.” For example, retirees can set up a power of attorney for their finances in case they become mentally impaired. Some experts also recommend taking other actions.
For example, retirees can set up a power of attorney for their finances in case they become mentally impaired. Some experts also recommend taking other steps to ensure your parents don’t fall prey to financial scams or abuse. For example, you can try to persuade your parents to have you or a close family friend periodically examine credit card and other financial statements and flag anything that looks suspicious. Or you can look for an age-sensitive bank that specifically looks out for signs of elder abuse in their clients.
It gets easier to have financial conversations
It took a while for me to gain the courage to ask my mom about her finances, but once we got the conversation going, it became easier to talk about money matters.
Luckily, my parents are in a relatively good financial position and are unlikely to need much monetary support as they get older. As they grow older, though, they may need some kind of help, so we set up a date for the next time we see each other in person to go over personal details. For instance, we’ll review what banks they’re using, what kinds of wills and directives they have set up and any other important financial information.
My mom and stepdad struggled to persuade their own parents to accept less independence as they aged, so they are well aware of how difficult financial conversations can be.
“Because of the problems we had with our parents, we’re more cognizant of the problems that y’all might have,” my mom said in a recent conversation. But it’s also painful for them to think about giving up full control over their finances or other matters. “It’s really hard to accept that you’ll lose your independence forever,” she noted. “Because then you’re saying I’m not as capable and I will never be as capable. You don’t recognize that in yourself.”
Before diving into a conversation with your parents about their finances, be sensitive to the fact that this could be a difficult discussion for them. It may take more than a few conversations to break through, but for your parents’ security and your peace of mind, it’s worth the initial awkwardness.
See related: 5 tips for talking to elderly parents about credit card debt, Elder financial abuse: How families can cope, 6 smart ways to pay for assisted living