Aging Parents and Debt

Your aging parents might be carrying a heavier debt load than you know!

The tough thing about aging parents and debt is that most adult children don’t realize what’s happening – until the situation gets very serious. That makes perfect sense. Talking about money is difficult. Your parents are adults who are used to making their own decisions and doing things for themselves. The easiest path is to believe that your parents are okay financially.

Which may or may not be true. According to the Social Security Administration, four out of five retiring households carry debt. Housing debt plays a big role, but medical expenses and fraud can contribute to the snowball as well.

What should YOU do about that?

Step one, get a basic understanding of your aging parents’ financial situation. This includes their income sources, typical expenses, emergency savings, etc. Yes, money is a difficult topic. Yes, this conversation represents a role reversal that may feel uncomfortable on both sides. Here are some tips to help “the big talk” go smoothly.

• Choose a non-stressful occasion. If your parents are already stressed, they are more likely to shut you down.
• Do it on their territory or on a neutral ground, like during a walk out in nature.
• Keep it casual, especially at first.
• Prepare to be patient, as this conversation may require several attempts.
• Use “I” statements and make this about you, not them. Instead of saying “You need help managing your money,” try this. “I know how expensive things are getting. I am worried about…”
• Make it clear that you want to collaborate/help them, not swoop in and take over. Your parents may be sensitive about their declining ability. They may feel shame that it’s gotten more difficult to do things that used to be easy. It’s wise to respect that.

You’ve discovered debt. Now what?

If you learn that your parents have debt that you didn’t know about, your first step is to stay calm. Thank them for opening up and trusting you with this information. Offer to help them prioritize payments and arrangements.

For example, if they are paying down a medical bill by using a credit card with high interest rates, it may be better to negotiate a payment arrangement directly with the insurance company. If they are writing a check for just the minimal payment because they worry about their cashflow, offer to take a look at the moving pieces and see if they can afford to be making a larger payment. And, if you discover that your parents have fallen victim to a fraud scheme, reach out for help.

Do your part!

You have the most influence over your own habits and actions. Yes, the debt problem might be on your parents’ side, but you can do your part to help keep the problem from getting worse (and to possibly make it better). Here are some ideas.

• If you are not currently using budgeting methods to manage your own spending, it’s not likely that you can sell your parents on benefits of budgeting. Lead by example.
• Do your best to avoid relying on your parents for financial help. Talk with your siblings about doing the same.
• Judge not, no matter what you uncover. Your parents may be just fine financially, or they may be in a terrible mess of a situation. Don’t blame them for a mistake. It won’t undo anything and may actually damage your relationship.
• Offer to help with small tasks. Perhaps they would appreciate help with balancing their checkbook every month. Or maybe they would be grateful if you could help them make a decision about their next big purchase, like buying a car or investing in a home remodeling project. Help them pull together their documents for their tax return. Make yourself available to meet with their financial advisor or other professional. These small steps will reinforce the trust and move you into the “inner circle” where it’s safe to discuss money matters.

Aging parents and debt: your best strategy

So, set yourself for success by being strategic about the timing and place for the money conversation. Offer your help, don’t judge, and do your part to model good financial sense.

Finally, remember that there’s a limit to what you can do. You can only help those who want to be helped. Sometimes, aging parents need to hear it from someone outside the family. If that is the case, find an elder law attorney or a financial planner who can step into the “outside advisor” role and guide your parents to safer ground.

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