you open the door and greet your mother or father during
the holidays, itís probably not a good idea to follow
the hug with: "Gee, youíre looking old."
hereís another idea that might not play well but is
worth a try: During some quiet moment with a parent or
parents, adult children should start a discussion thatís
being called "the talk."
gingerly as possible, mention that eventually mom and
dad may need help with their finances, and itís best
to get the mechanics set up long before it becomes
families tend not to do this. Neither aging parents nor
adult children want to imply anyoneís getting older,
or incapable. So they skip the talk until a parentís
in the hospital or drowning in unpaid bills, dogged by
debt collectors or embarrassed after being cheated by a
nice-sounding broker pushing a lousy investment.
after a financial mess, parents might not tell their
adult children they could use help. Case in point:
91-year-old Dorothy. She called me at my newspaper
office one day because she was worried she was running
out of money, and wanted me to look at what her broker
had been doing with the savings she had left since her
husbandís death. At one point, it was a decent nest
egg, but the broker was running up fees on investments
that werenít ideal for Dorothy. So she was losing
money. There was no fraud, just questionable help.
asked if her family could help her, and Dorothy told me
her daughter ó a certified public accountant with
plenty of money experience ó wanted to help her. But
Dorothy wouldnít consider it. Rather than giving her
family a look at her money, she preferred calling me,
someone sheíd never met, and relying on a broker who
wasnít safeguarding her money.
studies by David Laibson, a Harvard economics professor,
suggest money messes like Dorothyís are widespread
among aging people. Many consumers make poor financial
choices, but older adults are particularly vulnerable.
of people over age 80 have "cognitive
impairment," he reported in a 2009 study. And since
they donít realize their weaknesses, they often resist
help. Laibson once told a Morningstar financial planning
conference about a man who had been an accomplished
stock trader while working. As he aged he began making
simple mistakes with basic financial decisions but had
no idea he needed help.
recent study by Fidelity also shows seniors are
reluctant to open up their financial lives to their
a national study, six in 10 seniors said they knew older
adults who were no longer capable of handling their
financial affairs, but they didnít connect that
reality to themselves. Only 9 percent thought theyíd
ever lose their ability to manage their money.
a bit of an ostrich syndrome," said Suzanne
Schmitt, vice president of family engagement for
Fidelity. "They are desperately afraid of losing
control over how they spend on their own. They canít
cope with losing that independence."
bringing children into their financial lives doesnít
have to mean a loss of control. Itís the opposite:
Parents risk having decisions made against their wishes
if they leave the future to chance. Parents end up in
the hospital and family members might not have the right
to participate in medical decisions. When parents are
released from the hospital they may end up in a
rehabilitation facility they donít want or with a
family member they donít prefer. While they are
recovering, their taxes, utilities and other bills may
go unpaid as children canít find financial records,
donít know whatís left undone, or donít have the
right to access records.
avoid problems, people need to set up a health care
power of attorney, or designate a health care proxy, so
a specific family member can make medical decisions if a
parent is unable to make them. For financial matters,
there needs to be a power of attorney to give a child or
other family member the right to check on accounts such
as bank accounts, health insurance, home insurance, auto
insurance and bills of all types.
need to make a list of all possessions and accounts,
including account numbers and passwords and locations of
documents. If that information is in a safety deposit
box or in a computer and a person hasnít been given
legal access, it will do no good.
will is also necessary and should be reviewed whenever
thereís a change in the family such as a divorce,
death, remarriage or birth. Accounts such as IRAs should
have beneficiaries listed.
suggests that adult children accompany parents to
meetings with financial advisers, attorneys and doctors
so there is a relationship in place while parents are
still active and so children hear their parentsí
if you are together now for the holidays, you could take
your calendars out and pick a time for the meeting.