Money can be a difficult topic in any relationship—especially between adult children and their aging parents. For many seniors, handling finances effectively can become a challenge as they age, particularly if cognitive decline is involved. Here, we’ll dig into what makes this issue so difficult, how to ensure you get the right support, and steps you can take if you think it might be time take financial control for an elderly loved one.
Tackling a Difficult Topic
Broaching the topic of finances with an aging parent or elderly loved one can be awkward at best. Many seniors don’t want to concede they need help, even if unpaid bills are piling up and the coffers are being drained. Most fear the loss of independence, so asking for support or giving the financial reins to someone else can be frightening. In addition, if cognitive impairment is involved, perceptions may be skewed, causing paranoia about whether someone is trying to take away their funds.
Because seniors are a vulnerable population, having a trusted party help with finances is a matter of protection as well. According to Money Management International, American seniors fall for scams to the tune of approximately $3 billion annually, and those with memory loss are particularly at risk.
Getting the Right Support
With the array of challenges involved, it’s important you get the right support. Ensure you have the appropriate team of experts to help—including an elder law attorney to provide guidance and draw up documents, your loved one’s physician to provide medical input as needed, financial and tax experts to help you stay on track, and social workers for the emotional support for yourself and your aging parent.
Seniors can face additional obstacles that might not be obvious. Rising costs for health care and housing and other challenges have created a society where 10% of seniors live below the poverty line and another 5.3% are categorized as near poor, according to a 2014 survey highlighted in a blog post about the aging poor by the online MSW program at the University of Southern California.
While the situation your parent is facing may not be as dire as poverty, the reality of overspending while on a limited income can easily put seniors at risk. The more you familiarize yourself with your parents’ financial situation now, the better off they are likely to be in the future.
Taking Specific Steps for Success
Regardless of how awkward it may be, if you are concerned about an elderly loved one’s finances, experts recommend you broach the topic now—before too much damage is done. As elder law attorney Shirley B. Whitenack notes, “If you wait until you notice the classic signs of financial problems, there’s a good chance that significant financial losses already will have occurred.”
Whitenack recommends an approach that starts with being sensitive, by not “calling a parent’s competence into question” initially. Instead, she recommends topics be introduced in the context of asking for advice, discussing what you may be doing with your own financial plan, and offering to help with financial tasks you know your parent doesn’t enjoy.
She and other experts recommend you work with your loved one to gain the proper authority to manage their affairs, which typically includes setting up a power of attorney in some form. Doing so prior to the need is key because everything becomes more complicated if cognitive impairment becomes a factor.
If it all works out and you take control of your loved one’s finances, Whitenack says to be sure to thoroughly document everything. “That way, if your parent, a sibling or anyone else ever questions your motives, you can prove that you always have acted in the parent’s best interests.”
Author Bio: Colleen O’Day is a marketing manager and supports community outreach for 2U Inc.’s social work, mental health, and education programs. Find her on Twitter @ColleenMODay.