Aging Parents and Money — Difficult Conversations that Need to be Had

I was recently at a dinner with the inimitable Britt Harris, CIO of UTIMCO, where he was sharing his considerable insights about how to be a successful person. The closing message of the evening was that successful people “speak the truth with love”. These are actually 3 distinct actions:

1) First, you must speak up. All of the good ideas on the world do no one any good if you don’t have the courage to share them.

2) The Truth. It may be tempting at times to “soften the blow” of a difficult message by fading the truth- but to accomplish anything sustainably worthy requires the truth

3) With Love. Caring about the outcome, impacted people, and doing the right thing needs to be the foundation from which to build.

I was pondering this simple- and timeless- framework for interacting successfully, when I was asked about how adult children should best engage with their aging parents to discuss their finances. This would also include discussions around potential care frameworks and other health related decisions. This is such a sensitive topic- often emotionally charged, and requiring acknowledgement by all involved of some of the harsher realities that can befall us as we get older. So, it seemed to me that speaking the truth with love is the very best place from which to initiate that conversation. Here’s how that breaks down:

1) Speak. It is so tempting to never have this potentially very difficult conversation. Things like a role reversal — where the adult child might take the position of being decision maker — can be threatening, saddening, uncomfortable and many other challenging things. Even acknowledging that a parent is getting older and may need help is something that adult children may not want to face, and that aging parents may not want to accept. But knowing what our parent’s wishes are for their later years, what decisions they would want us to make if they are incapacitated and can’t express them at that time, and how they want to manage their finances, are all better discussed up front rather than trying to guess or scramble if an emergency arises. So, schedule a time to open the dialogue, and do it.

2) The truth. What is the truth about your parent’s situation- finances, health, and what they want for care? The reality is that when it comes to finances, most people (parents and their children) are largely in the dark. What are the rules around social security? How much do they currently spend on healthcare and how do Medicare and insurance supplements work? What is the optimal, tax efficient, drawdown schedule for their retirement assets — and how far will these assets take them? Do they have other assets that they could manage to their advantage (like a home that could be downsized) to give them a higher quality of life, and would they want that?

We once had a Pefin user who was an accountant- very knowledgeable about finance- who asked us how the platform could help him co-manage his mother’s finances. She was beginning to suffer from dementia but was still living independently. She was aware that she was beginning to have some challenges and asked him to review her finances alongside her to help make sure she was keeping to her financial retirement plan. We showed him how he could leverage the platform (if his mother made him someone who would co-manage finances with her) to gain visibility into her spending patterns, and to make sure that her investments and asset drawdowns were consistent with the plans she had to live in her home and maintain her lifestyle. With these advancements in technology today, it is possible to understand “the truth” about your finances — and co-manage with loved ones who may need your help.

3) With love. Empathy is probably the most important element in this discussion. One day, if we are fortunate enough to get there, we will be in the position of managing our finances, and care, as an elderly person. How would we feel if approached by our child to have this discussion and what could some ways to make that easier? As an adult child, put yourself in the shoes of your parent, and do what you can to ensure that they know that this conversation is coming from a place of wanting the best for them — in the way that they want it. That is what you are trying to accomplish. Under no circumstances should they be made to feel that this is a discussion designed to undermine or belittle them, or hijack their money. Your only desire should be their well-being, not access to their funds.

If you are the parent of adult children, what can you do to help initiate these discussions and make sure your wishes are heard? Being honest with yourself that challenges with health and finances can arise at any time- for all of us- and making a plan to address as many outcomes as possible can only help. As with most things, if we fail to plan we plan to fail- and hope is not a strategy! And remember, that this conversation may be tough for your kids to have- because they want you around and healthy forever. Starting with speaking the truth with love to your kids is probably the best place to start :)