Protecting Your Parents' Finances - protecting retirement finances

Black Enterprise, June, 1999 by Lynette Khalfani

Now is the time to get a handle on Mom and Dad's money matters. It could make the difference between a comfortable retirement or tarnished golden years.

Elsie Darby has been a homemaker for most of her life. The 72-year-old has been the kind of civic-minded woman who also regarded herself as being highly self-sufficient. Then, one day, a few years ago, the grandmother of eight found herself short of cash and unable to pay her monthly bills. "The first time it happened I was hysterical," she recalls. "I had never run out of money before. So what else could I do besides talk to my children and grandchildren?"

Luckily, Darby's family was there for her--but only after she had the courage to speak up about her situation. Unfortunately, she is a rarity. Most parents and grandparents' don't talk to their grown children about money matters. Moreover, adult children frequently have a hard time approaching elders about their financial status.

But there's never been a more urgent need for such intergenerational communication than now. Consider the following: the Census Bureau has found that Americans aged 85 and older now represent the fastest-growing segment of the population. In fact, senior citizens total 33 million people, or 13% of all U.S. citizens. And the baby boom generation will add to this aging population, reaching age 65 between the years 2010 and 2030. With these statistics in mind, BE talked to a variety of experts about how working professionals can best safeguard their parents' financial health. The challenge is even greater for members of the so-called sandwich generation, individuals who face the dual task of caring for their own kids and looking after their parents. Still, opening the lines of communication--from a parent's insurance policies to his or her burial wishes--can ultimately bring peace of mind and greater security for all involved.

BREAKING DOWN BARRIERS

If the thought of broaching this subject makes you a bit squeamish, recognize that you're hardly alone. Many adult children may not want to talk about the matter because to do so alters relationships.

To some, inquiring about your parents' economic well-being feels like a role reversal--one that's likely to be uncomfortable. Additionally, many adults have only a nebulous idea of how to manage their own dollars--let alone someone else's. Says Susan Richards, a certified financial planner in Prescott, Arizona: "Children don't feel knowledgeable enough to approach their parents about how money should be handled."

Then there's the thorny issue of family politics. A son or daughter may wonder: "Should I talk to Mom and Dad or should one of my siblings?" Sometimes adult children fret so much about who should make the approach that a discussion never takes place. Children also worry that their financial questions will be seen as prying and intrusive, says Richards, author of Protect Your Parents and Their Financial Health. Talk With Them Before It's Too Late (Dearborn Publishing, $19.95).

Of course, the parents are often apprehensive too. Many parents' pride, sense of autonomy and self-worth are tied to their roles as caretakers and providers for their kids. So it may be difficult for some elders to confront anything that suggests that they need help running their affairs.

How do you begin--and when is a good time to bring up the topic? Richards recommends that you first think about this as a process--and not a one-time event. You'll have to devise a comprehensive plan of action, which includes rehearsing the actual conversation, thinking about how to handle your emotions and getting prepared for negative remarks.

M. Eileen Dorsey, a certified financial planner in St. Louis, believes that an ideal time to start the dialogue is shortly before Mom's or Dad's retirement. Or consider reviewing a parent's financial health after the death of a spouse. In such cases, Dorsey maintains that the surviving parent wants help "because it always seems like the one that dies first is the one that was managing the finances. "But even if both parents are alive well into retirement, it's never too late to offer assistance.

GETTING PAPERWORK IN ORDER

Begin with small things. For instance, ask parents whether they need you to mail off monthly bills, organize files or keep track of quarterly or annual payments such as property taxes or homeowner's insurance. As you build a better rapport, ask Mom and Dad to write a list of their assets, liabilities and other pertinent financial information. You should know where to find this information in the event your parents become physically or mentally incapacitated. Explain to them that your intention is not to be nosy but to locate records in case of an emergency. The single best thing you can do is make sure that they have a variety of documents in order--and that you or another designated person can readily access them. Experts recommend that aging parents draw up wills, create a central location for storing paperwork and grant powers of attorney to a trustworthy individual.