If you suspect that your parents are financially struggling, here’s how to help
What are the signs of financial difficulties?
Many seniors carry debt as they approach retirement age, according to a research paper from the National Bureau of Economic Research in 2021 – partly due to student loans, unpaid medical bills, and family formation.
Signs of financial difficulties among seniors, according to Todd Christensen, a financial advisor at MoneyFit Debt Reduction Services, include:
- Unexpected overdraft fees from the bank
- Rapid accumulation of credit card bills or other debts
- Unpaid bills
- Communications from collection agencies
- Decreasing bank account balances
- Selling furniture or other valuable items
- Incidents of identity theft or fraud
Mood changes can also indicate embarrassment or anger about managing money, Christensen said. Additionally, “If we hear our parents talking about opportunities they can’t miss, or that they’ve met someone with a great opportunity to help secure their retirement, that is a big red flag,” and the opportunity could be as simple as a multi-level marketing opportunity (which requires a significant investment) or an actual pyramid scheme, according to him.
Agnew also warned of additional signs observed in seniors, including signing up for “cold call” products such as:
- Reverse mortgages
- Reverse annuities
- Policy settlements (selling life insurance policies for cash)
These products may have a place in some financial plans, but curiosity is natural. “Advertisements are enticing and sales representatives can be very persuasive,” but most commission-based products and sales reps do not have a legal obligation to work in their clients’ best interests.
If parents do not truly understand the programs or products, they may be showing a loss of ability to manage money, Agnew said. “If they are resorting to a nuclear option, there may be a larger financial problem lurking in the background,” she added. “If your senior parent tells you they’ve used one of these products or programs, you’re likely not getting the whole story.”
Many wonder if hoarding may be a sign of financial problems, and Agnew said that hoarding can be tied to financial trauma, but it isn’t always indicative of financial difficulties. If a family member becomes a hoarder, you should work through the underlying issues with a mental health professional.
How to start the conversation
In a survey conducted by GoBankingRates of Americans, 22% said they would have a conversation with their elderly parents about financial matters when they show signs of needing help, while another 22% said they would not have a conversation at all.
However, it is important to discuss financial hardships as soon as possible, as challenges increase with age, according to Kate Dorman, a financial therapist in Seattle at Sound Financial Therapy, LLC. Discussing financial issues at age seventy is easier than doing so at eighty. “This is a tough topic that stirs up emotions tied to money,” Agnew said.
Here are some other tips for discussing money issues with elderly parents:
Conversation guide to get started
Check in with yourself before starting the conversation. Make sure you understand your financial concerns about your parents’ lack of money. Are you worried about not having enough for yourself or are you concerned about your parents moving in with you? At a certain point, if your parents refuse to discuss money or make a series of financially damaging decisions, you may need to set your own boundaries about how much you can help physically, emotionally, or financially.
Start small. Do not expect any money-related conversation to be complete in one go, but beginning to establish a system of discussion is important. Expect that some topics will be left undiscussed, some questions will go unanswered, and some tasks will remain undone. “Say that you know the conversation will come back again, and maybe suggest a night every two weeks to talk with your parents about money more broadly,” according to Dorman.
Consider
Communication style, get to know your parents well, “Consider how that conversation might be comfortable for them, which may mean including siblings or not, having a one-on-one conversation with one parent, or having a more casual chat over dinner or drinks, or privacy at home,” she said. “Even the little things can be helpful to pay attention to, like having a conversation in the morning when they are relaxed.”
Talk to siblings, “Talk to siblings about any past hot topics to avoid, so you can keep the conversation focused on the present and future,” said Agnew. Then discuss family money issues openly and come up with a supportive plan everyone can agree on. Otherwise, money and parental care concerns might surface at family events and show up as distrust or secrecy. “Remember when you were little and your parents got mad when you and your brother were planning in whispers in the corner? They still don’t like that,” Agnew added.
Do not assume anything, come to the conversation with large reserves of curiosity, you may have noticed signs of financial worry, but try not to assume you know exactly what is going on. Express your desire to understand better and more deeply what is happening in their lives. For example, selling things could suggest a dwindling balance in the parents’ account, or they might just be trying to declutter before they pass away so the family doesn’t have to deal with that task.
Open up about yourself and your finances, “Asking for advice is a form of flattery,” according to Dorman. For example, mention that you have been thinking about buying a house or saving for retirement, and ask what they wish they knew about buying a home or saving. “Start talking about money in a way that acknowledges you could benefit from their knowledge, even if your parents are going through financial difficulties.”
Normalize issues, try to avoid embarrassment or blame regarding potentially awkward issues like credit card debt or falling victim to a phone scam, according to Dorman. Note that your parents will not be the first to fall for a scam, and how scammers improve their tactics after the news spread. To bring up the topic indirectly, “You might mention that you saw something about a new scam in the news or know someone who was recently scammed,” she said.
Express concern, “People are more willing to listen when someone expresses concern
Source: https://www.thebalancemoney.com/how-to-talk-to-your-parents-about-financial-woes-5547822
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