Caring for aging parents can be very trying emotionally as well as financially. Even if your parents are still relatively independent there will probably come a time when you will have to intervene in their lives to help them manage their finances, their medical issues and their living situation. Financial intervention can be a particularly sensitive matter, especially if your folks are fiercely independent people who may not realize that they are making unwise decisions about their money.
It can be particularly challenging to monitor your parents’ needs, financial or otherwise, if you don’t live near enough that you can visit them frequently. Witnessing their decline on a day to day basis carries its own type of stress and heartbreak, but stepping into their lives after being away from them for an extended period can be a brutal shock. With care and planning, you can keep the financial and emotional shocks and stresses to a minimum.
Aging can cause diminished financial capacity
That’s the first thing you need to know. Even if your parents are sharp and capable, with no signs of dementia, at some point it may become necessary to keep a closer eye on them so as to ensure that they aren’t making decisions that will wipe out their life savings or otherwise harm them.
Older people are notoriously susceptible to financial scams and fraud, and sometimes the folks that we think are doing just fine are most at risk. And it isn’t because they’re naïve or uneducated. The human brain changes as we age in ways that can not only diminish our critical-thinking abilities, making us more likely to believe a slick ad or a fast-talking telemarketer, but can also compromise our decision-making capabilities – including our financial acumen.
The brain shrinks with age, and one area that is particularly affected is the prefrontal cortex, which governs a variety of complex behaviors, including planning and problem solving. Dr. Erik Asp, a neuroscientist and assistant professor at Hamline University in St. Paul, Minnesota, has studied how aging adults process information. He explains that the prefrontal cortex is the last part of the brain to fully mature and, unfortunately, the first to decline. Dr. Asp says his study indicated that people with damage to their prefrontal cortex were more likely to believe deceptive ads they were shown, and unlikely to question even some of the most extravagant claims.
Another researcher, Marti DeLiema at Stanford University’s Center on Longevity in the Financial Security Division, said that some studies have shown that as people age they lose the ability to determine untrustworthiness in facial expressions, as well as their ability to control their impulses. She adds, “Managing money is actually generally the very first area of cognitive functioning that is impaired with age.”
It can all add up to a perfect storm for making disastrous financial decisions. And that’s why you may need to be on the lookout for signs that your parents are being taken advantage of or are making irrational financial decisions.
Be a guide, not a dictator
Unless your parents are completely incapacitated, your initial approaches will probably need to be more on the subtle side. But at some point, and sooner rather than later, you do need to sit down with them and have a frank discussion about their financial affairs – their accounts, income, bills, insurance, and estate-planning documents. This may be awkward but will be less so if you approach the conversation in a spirit of helpfulness and a desire to make their lives easier. Don’t come across as if you’re trying to take over their finances or are engaged in a money grab.
It may be difficult to get them to open up, but be patient. Talking about how you’ve gotten your own financial affairs in order (assuming you have, of course) may be a way to get them talking about their own situation. In any case the entire conversation needs to be framed in the assurance that you are there for assistance and support.
If your conversation with them – or your own observations – reveal that they are having financial difficulties, and you cannot help them out monetarily, make sure that they don’t get themselves into deeper difficulties by turning to an unscrupulous lender or a shady scheme. Help them comparison-shop for a reputable lender or other reasonable alternatives.
If you can’t get them to talk to you about their finances, at least suggest that they meet with an elder law attorney, financial planner or other professional who specializes in aging issues. It’s very likely that these professionals will encourage your folks to share their important financial information with you. And by the way, a competent elder law attorney can be worth his or her weight in gold.
Be prepared to get further involved
You may or may not be willing or able to be a full time caregiver for an aging parent, but at some point you will probably need to do more than just have a money talk with your folks. At the very least, you may have to become much more involved in sorting out their finances. And that in itself can be quite a shock. It is a situation that many grown children will have to face, whether they’re ready or not.
Reading about other people’s experiences and how they handled the challenges (see the link above) can give you an idea of what to expect, but perhaps nothing can completely prepare you for the reality of dealing with your own parents’ affairs. However, it can go a lot easier if you begin having necessary conversations with your parents before they become incapacitated or unable to live on their own. At least you will have an idea of what you’re getting into. And, of course, if you have siblings, get them involved as well. If you all share the responsibility it will be less burdensome.
The idea is to do the best you can for your parents without draining your own finances. Again, consulting with an elder law attorney or financial planner can be a very worthwhile investment.