Adult children of retirees and pre-retirees need to speak with their parents earlier, rather than later, about retirement and the need to address financial and life matters.
That’s the major take-away of my book, “Having The Talk: The Four Keys to Your Parents’ Safe Retirement.” It’s a difficult discussion to have and that’s why most of us put it off until it’s too late.
Ultimately most of us end up having the conversation with our parents at some point but it’s often at a time when their mental capacities are diminished or there are expectations that have been unspoken that can cause life long rifts in families.
It’s a big part of my overall message to my multigenerational audiences: have ‘the talk’ with your parents about retirement earlier than you think you should. By doing so, you set up plans and structures to address the issues that will arise in later years and the reality is that parents are more willing to do this and live in comfort knowing that this will be one less issue they’ll have to deal with as they grow older.
Now the facts are bearing out the need for having these discussions earlier. Michael Finke of Texas Tech University published a study in 2011 that shows ” that older respondents experience a decline in cognitive processes closely related to financial decision making. Financial literacy scores decline by about 2% each year after age 60. Confidence in financial decision making abilities does not decline with age. Increasing confidence and reduced abilities can explain poor credit and investment choices by older respondents.”
Finke’s study shows that although the financial literacy of those over 60 decreases, their level of confidence doesn’t, which can make for some poor investment and credit decisions at a time when these choices can cause havoc in a retiree’s portfolio. These choices and decisions result in closed accounts, damaged credit, money lost to scam artists, foreclosure and ultimately can ruin any financial plan that a retiree has put together to allow them to live out their golden years.
As we age, many of us simply refer to strange behavior or forgetfulness as “senior moments”. As I write in my book, ” Old age can be overwhelming. It’s not just the physical changes — the creaky knees and aches and pains that predict rain better than any meteorologist — but also the mind slows down. We’ve all experienced it even if we’re still in our roaring 40s. We even refer to them as “senior moments.”
To a certain extent this is actually a healthy aspect of aging, because it allows the person to begin the reflection process that helps them figure out the meaning of their life. But when the slowing mind gets in the way of managing the financial, health, or safety aspects of living, this previously benevolent characteristic turns into a danger.”
Invariably, strange or irregular behavior in our later years can lead many to wonder “is it Alzheimer’s?” (I remind you that Alzheimer’s is a disease and not something that occurs because you age) When you add in the challenges and concerns about Alzheimer’s into the equation for our aging parents, it further reinforces the need for earlier discussion about retirement.
In an article by Glen Ruffenbach in SmartMoney, the point is made that this problem is magnified by the harsh facts: ” The numbers are scary: One in eight Americans age 65 and over and 43 percent of individuals 85 and over have Alzheimer’s disease. Every 69 seconds, on average, someone in the U.S. develops the illness. But financial advisers and accountants, when asked about their experiences with clients who have memory loss, invariably raise the same concern: Elderly parents and adult children alike are too slow to seek or provide help in the early stages of decline.”
So how can we identify these “early stages of decline”? In his article, Ruffenbach, editor of The Wall Street Journal’s Next section, a guide to retirement planning and living, points out some of the danger signs to look for:
- Be on the lookout for seniors giving out credit card information on the phone — this can often be the sign that they are being targeted for financial scams on the elderly who often see calls as a way to stay connected to the outside world.
- A large number of phone solicitations and donation requests in the mailbox may also be another danger sign.
- Any discussions about making major changes to their portfolio without the existence of a plan is also another danger sign.
In my book, I point out that family members should be on the lookout for these “red flags” with their parents and loved ones that something is not right and that a situation with that family member needs to be addressed:
- Worsening health issues that are painful and/or effect mobility
- Trouble with previously routine tasks such as balancing a checkbook
- An increase in forgetfulness such as missing bill payments
- Cognitive impairment that goes beyond normal “senior moments”
- A decrease in personal hygiene
- Trouble keeping the home clean and repaired
- A tendency toward depression and isolation
These red flags can indicate a more serious situation than just “senior moments” and should be addressed immediately and appropriately. The damage to ones health is the first thing to be addressed but you also need to recognize the impact that this can cause for that person’s, and their family’s financial situation as well if this is addressed too late.
Once again, I have to bring it back to the need to have “the talk” and discussions about finances and later life decisions earlier rather than later. Having these discussions at a time of crisis is unfortunately when most of us do have these discussions, but any one who has been through that will tell you the same thing — ” I wish that I had discussed these matters early with my parents! ”
Their advice would mirror my own: Ensure that all proper documentation has been secured and set up a helpful and necessary program to review your loved ones’ finances that stresses how you’re protecting them.
Another case for discussing the topic of financial assistance with parents early is clarified by Kiki Brink (a former college professor who worked with dementia patients in hospice settings before starting her own personal-administrator service in Salem, Ore.) , “If you suddenly step in and take control, without any prior give and take, parents feel belittled,” she says. But “if you get in early, you haven’t taken away their dignity.”
Is this an easy thing to do? No. Is it necessary? I hope that you see that it is!
Those familiar with my writings and appearancesknow that there can be many conversation starters and methods to get ‘The Talk’ started. They include sharing stories about friends, neighbors or others that they can relate to about what could happen to them in their advanced age and above all, stressing that having these discussions is all about helping them now as they have always helped you.
But however you do it, the point is to “just do it!” The reality is that the role that you can play for your parents and loved ones as they age is an important and necessary aspect of your life, much as their role helping you to grow up was to them.