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3-Steps to Help Older Adults Manage their Finances

Kendall’s father seemed to be getting along fine on his own after his wife died, and whenever Kendall asked if she could help him with tasks like paying bills, he replied he had everything “under control.” Kendall took him at his word, because no one likes to pry into another person’s finances—certainly not your own father’s. As Kendall was about to learn, though, having the difficult “money conversation” is key to helping your parents preserve their assets and protect their bank accounts.

When Kendall’s dad was admitted to a skilled care facility for a couple of weeks to recover from pneumonia, he mentioned off-handedly that he had bills piling up at home. Kendall thought this was an odd statement since none of his monthly bills should be due yet, so she investigated. To her horror, she discovered her dad had not paid his home utility bills for months, so his services had been shut off. Worse, he apparently had been routinely writing large checks to various charities that sent solicitations in the mail. He had spent thousands of dollars from his meager retirement savings in exchange for address labels and other token gifts.

Kendall’s dad is not alone among older adults who slowly become less able to manage their own finances due to dementia or other challenges that can come with aging. Yet research conducted by Home Instead, Inc., franchisor of the Home Instead Senior Care® network showed that nearly one in five seniors said they found it more difficult to talk to their adult children about money than to discuss their sex life. That speaks volumes, doesn’t it?

The money conversation is important because it can allow you to help your parents preserve their assets and protect their bank accounts.

Fortunately, these simple three steps can help both you and your parents or other aging loved ones talk about finances together—before a situation like Kendall’s arises. The ACT approach is part of the 40-70 Rule®: An Action Plan for Successful Aging , designed for seniors to complete around age 70.

Step One: Assess

The goal of the assessment step is to determine where your finances currently stand and what your financial goals are, based on preferred lifestyle choices. Consider questions like, “Are you happy with your current standard of living?” “Do you expect to remain in your own home?” “Can you estimate the costs of living at home versus moving into a care community?”
Step Two: Consider

Many factors can affect a person’s financial needs in retirement. Try to consider the big picture in order to get a realistic idea of your potential expenses. Will you want to travel? How often? How much money will you budget for annual travel?

You will also want to consider questions like: How might your health costs affect your post-retirement finances? Do you have a chronic illness, such as COPD, that could require expensive care? Have you planned for long-term care needs?

As you consider the multitude of factors that could affect you in older age, you may want to consult a professional financial advisor who can help you see the whole picture and plan accordingly.

Step Three: Talk

Now that you have given the situation some thought, the next step is to discuss financial plans with your family members. Discussing your plans and goals can reveal hidden weaknesses in your strategy and ensure your wishes are carried out if you become incapacitated. Talking about your finances also might help you feel more in control of the situation.

Tip for family members: As you talk, remember not to judge others’ choices. Your vision of what your parents’ retirement should look like may be different from theirs, but they are free to make their own choices. If you believe your parents’ vision is unrealistic, bring in an independent financial planner to get the facts on the table without getting embroiled in family politics.

Conversation Starters

To overcome any awkwardness about initiating the financial conversation, try using these approaches:

For caregivers:

  • Ask open-ended questions: “If the cost of maintaining the house becomes difficult in the future, Dad, how do you feel about downsizing?”
  • Make respectful suggestions: “I know you’re very good at budgeting, Mom, but retirement planning can be so complicated. Why don’t I find you a financial planner to help you develop a strong plan to maintain your independence?”

For seniors:

  • Share your rationale: “I always said I never want to become a burden on my children in older age. I’d like to share my financial plans with you to set your mind at ease and so you can see how I’m planning to take care of myself.”
  • Ask for help directly: “I’m concerned I will not be able to maintain my standard of living in retirement. Can you help me create a financial plan?”
  • Acknowledge the awkwardness: “You’ve never tried to pry into my finances, son, and I realize this may feel awkward for you now. But I want to share some of my plans with you because I’m going to rely on you for help if I reach the point where I can’t manage my money on my own.”.
  • Kendall’s story had a happy ending. Although her dad had squandered some of his money, he was able to get back on track with the help of his daughter and professional financial planner. And the episode opened the door to a frank conversation about money.

Kendall’s story had a happy ending. Although her dad had squandered some of his money, he was able to get back on track with the help of his daughter and professional financial planner. And the episode opened the door to a frank conversation about money.

Discussing finances with your parents or adult children may feel uncomfortable at first, but once you get the conversation started you might experience a good deal of relief at bringing these issues out into the open. Download the ACT approach to get started.

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