Stop Your Retired Parents from Blowing All Their Money

Whether your parents have recently retired and seem to be still living high on the hog or they just seem to be trying to fill a void in their lives by splashing out with cash, convincing your parents to stop blowing all their money can be a daunting task. The roles are reversed, where you feel that you must assume a more parental, responsible role, which can put both parents and children in an awkward and perhaps contentious position.

How do you help your parents see that plowing through their life savings at warp speed has the potential to result in despair during a time when they should be enjoying their new freedom? Here are some suggestions for treading carefully on a fairly touchy topic.

Steps

  1. Examine your own motives before questioning theirs. If thoughts of "my inheritance" keep bobbing up before all else, then it's possible that you're in a very self-centered frame of mind and might not be thinking in their best interests at all. Set aside your expectations in relation to inheritance or ongoing assistance and put their interests first––trusting that your parents can make that decision for themselves is part of approaching them with genuine care for their well-being rather than your own.
    • Be honest with yourself: Are you good with your own finances? Or have you grown used to having your parents bail you out financially? In the latter case, fear that they won't keep doing this might be driving your worries. It is important to acknowledge this––addressing their spending habits means ensuring that your own are in good shape.
  2. Get your facts straight. If you're worried that your parents are spending beyond their means and this will soon result in them owing more money than they can ever repay or leave them destitute, what evidence do you have of this? Do you actually know how much money they have or are you simply viewing the things they're bringing home, the things they're doing or trips they're taking and making assumptions without further facts? Have you seen bills go unpaid due to their inability to pay or poor financial management?
  3. Put yourselves in your parents' shoes. Imagine yourself 20, 40 years from now and how it would make you feel if your adult child came to you and asked about your spending habits. Thinking from their perspective can help you to create a non-confrontational, caring and considerate way to raise the issues and find solutions without seeming to be bossy or intrusive. It's not easy but you owe it to your parents to be sensitive to their feelings as you deal with your own worries about them.
    • What age are your parents? Recently retired parents are likely to be agile, in full possession of their mental faculties and itching to do all the things their careers have prevented them from doing - that hard-earned money is there to be spent on their futures. Parents who have been retired a long time and are often older. If they suddenly change their usual thrifty ways, they may have health problems or other private concerns you may not be aware of. Though sudden changes can be a sign that something is wrong, be careful of their privacy and observe their actions. Offer help with problems that don't involve money. Tread with care and look for facts before making up your mind.
  4. Have a heart-to-heart with your parents. Find a time and location when everyone will be together and comfortable, and discuss the matter in a private setting. It's best to bring this issue up when they're relaxed (not defensive) and ideally, when thoughts of the future are in the air (like when watching the grandkids play).
    • Act as though you're seeking financial help from your parents about budgeting and saving. Instead of making accusations, inquire about how your parents are budgeting post retirement. A red flag for you is if they inform you that they don't have any specific plan or advice in place, along with any indications that they're not comfortable living on a fixed income. Listen carefully for the things they're not telling you, as much as the things they do say. A red flag for them will rise when you repeatedly ask about a situation that they feel you may be intruding into. Truth is best.
    • Ask your parents if there is something they aren’t telling you. Could one of your parents be dealing with a terminal illness or the possibility that they may be pondering divorce? In some cases, huge life changes beyond retirement may produce irrational spending.
    • Don’t bring up the fact that you believe they're squandering their nest egg away around your siblings or spouse (especially other relatives or friends). This is primarily your concern at this stage and it isn't a good idea to make more of it until you have the facts. If other family members have concerns, you can consider a joint meeting but take care to not overwhelm your parents; just immediate family only.
  5. Listen to your parents openly and without judgment. You may feel annoyed, worried or even angry that your parents seem to be spending a lot of money and don't seem to have much of a financial plan to accompany their expenditure. However, you must listen to them and to their reasons. Hearing what is truly motivating their choices and treating them as adults capable of being responsible for managing their own affairs is crucial to facilitating a more financially aware approach for them. If they sense that you're bossing or intimidating them into doing something just so that they're not on your "list of worries", you risk having them shut down on you and refusing to listen to anything else you have to say. Remember that you are all adults here and that whatever you say, ultimately their choices remain their choices and you can only offer sound and caring advice, as well as offering to facilitate helping them to develop a new financial approach if they agree.
  6. If your parents inform you that it is their right to do with their money as they wish, don't argue, because it's true. However, if there is clear evidence that they are buying things they can't afford and their usual financial commitments like rent and fuel are in arrears, then draw in a third party, someone neutral but capable of telling things like they really are. Even suggesting this may cause resentment but it does at least allow for continuing advice to be on a professional, detached level that ensures that your parents continue to be treated as adults.
  7. Urge your parents to work with a financial consultant. A certified financial planner can help your parents assess and determine a budget that will allow them to accomplish many of their “bucket list” wishes without going broke. Of particular importance, as noted above, this creates a professional relationship for your parents to be a part of and distances the emotional fray that can develop if you, as their adult child, try to remain their sole source of financial awareness.
    • Make sure you convey that your concern is only for their financial well-being and that it has nothing to do with an inheritance, trust, etc. Communicate that you want to make sure that your parents spend their golden years independent and happy and not penniless. Explain that you're already working on this for your future and would like them to benefit from taking a similar, professional approach to handling money.
    • Suggest that your parents consult with a money manager in order to obtain a “big picture” assessment of their nest egg. Let them know that a money manager can take the headache out of trying to wade through finances and design a customized financial plan based on their goals and savings.
    • Help your mom and dad to find and secure a reputable money manager. If you use a financial planner who has provided you with solid advice, consider making a referral. Otherwise, ask friends or family members for a suggestion or consult with your banker for a reputable money manager. In particular, look for someone who is reputed to be good with retirement advice.
    • Ask your parents if you can be involved. You don’t want to intrude, but offer your assistance during the initial or ongoing consultation. If you have insight or experience with financial planning provide your expertise and/or help throughout the process.
  8. Remind your parents that the typical nest egg cannot be stretched to the same lengths as it could be years ago. Saving a million dollars a few decades ago was considered to be a fortune; however, today the same amount can no longer take you as far and is soon stretched.
    • Point out that in the USA by way of example, Social Security is not going to provide complete support. Although reports point to benefits being intact until 2037, these benefits are not going to support your parents in the lifestyle to which they’ve become accustomed. While Social Security can provide some income, it will most likely not cover all the bills, which makes having a secure nest egg to draw from vital to a happy retirement.
    • If your parents are in good physical condition, remind them that with medical support, a healthy diet and exercise, their longer lifespan during retirement creates a strong need for them to be conservative with their finances.
    • List any large expenses that could crop up in the near (or even distant) future. Expenses such as needing a new vehicle, new appliances, roof repairs or replacement or even the regular rates bills could put a significant dent in your parent’s nest egg.
  9. Actively assist your parents in finding ways to achieve their dreams and goals in financially astute ways. Go beyond paying lip service to the issue and be a proponent for mom and dad’s financial and lifestyle freedom. If your parents have a clear list of things they’d like to do, help them find ways to achieve these goals on a more financially aware basis.
    • Use your connections to give your parents a financial edge when it comes to meeting their goals. For example, if mom and dad want to travel the world, sift through your list of connections for friends who may be travel agents or work in the travel or hotel industry. Or suggest volunteering options, budget options or perhaps even sharing vacations with them on occasion.
    • Offer to provide financial assistance from time to time. If you're in the position to help, offer to pay or help pay for some of your parent’s ventures. For example, if mom and dad travel to Greece, consider fronting a few nights at the hotel or pay for dinner as a gift.
    • Research any special deals or financial breaks for seniors. In addition to AARP (in the USA), make sure your parents are eligible to receive any kind of deals or financial breaks they entitled to receive. For example, many community banks or credit unions offer special senior accounts that waive fees and pay a better interest rate. Additionally, some financial institutions, community colleges, non profits and organizations have special travel and social clubs for seniors, with ventures at a discounted rate. And for travel around the world, many countries have taken to reciprocal recognition of seniors' cards, entitling them to discounts when they travel, something well worth looking into.
  10. Stay attuned to how your parents are faring. Even if you're successful in helping your parents to sort their finances well at this point in time, things will change at different stages of their retirement. Ill health, accidents, loss of friends, etc., will all have impacts on how they're coping and simply being available to talk to and give them support is a vital part of your role as the adult child. In many cases, early intervention where you spot worrying behavior, such as spending to cover a sense of loss, can help to prevent a bigger problem later. And that means knowing how your parents are coping, on a regular basis. Even if you live far away, set up a Skype account and stay in touch as often as possible; there are definitely no technological excuses for staying distant anymore!

Tips

  • In some jurisdictions, such as the USA, a court can order conservatorship over another's finances. This is a rather drastic measure though and should only be considered as a last resort, such as where a parent with dementia is clearly incapable of dealing with financial issues.
  • Be discreet when discussing your parent’s finances with others, including other family members. If you feel overwhelmed, consult with a professional before going to your mom’s sister, for example.
  • If you have relied on your parents for a helping hand many times in the past, don't be averse to giving them a helping hand in return now. This isn't about constantly bailing them out; assess when you know that your financial input can help fix things for them again so that they can stay focused on better financial approaches from this point forward. Make it very clear that this is the intention though; you don't want to have them think that you'll always jump in and rescue them.
  • If your parent or parents seem to have a problem with the ease of shopping from home, this is one area that you can help them to tackle. Television and internet advertising can create a sense of urgent need in a person who feels lonely, bored or down, influencing them to buy things they don't want or need. Unfortunately, problems can arise when elderly parents don't read the fine print and end up subscribing to deals that don't stop charging their credit card. Help them to understand the pitfalls of such things by discussing the tricks such advertisers can use and exploring why your parents feel the need to buy items they have no use for. Moreover, help your parents to recognize scams, including online ones, so that they don't become victims. Show them where to go to check if something is legitimate or not (such as government consumer warning sites or a consumer's group website, etc.).

Warnings

  • Seek medical assistance if your parents’ behavior has suddenly changed and they are doing things beyond what would be considered to be normal. One early signs of Alzheimer’s and dementia is forgetfulness or frivolity with finances.
  • Remember that money is one of the signs of empowerment as an adult. Bear this in mind when seeking to curtail your parent's current use of credit, savings, etc. On the one hand, their financial future is paramount but on the other hand, so is reassuring them that they are still treated as adults capable of making their own decisions and choices. It's a fine balancing act that needs to be carefully worked through in an ongoing way.
  • When your parents become more vulnerable to charlatans who run scams directed at the elderly, don't be slow to help them. The sooner that such things are nipped in the bud, the better. Let your parents know that you are always available to talk to if they need advice on something that "seems too good to be true."

Related Articles

Sources and Citations

Retrieved from "https://kipkis.com/index.php?title=Stop_Your_Retired_Parents_from_Blowing_All_Their_Money&oldid=293546"