Working Through Tough Financial Issues with Aging Parents

    For many families, it’s the elephant in the room: the necessary but potentially awkward discussions between aging parents and adult children about subjects like where the parents envision living as they grow older and more dependent on others, the role family members are willing (and not willing) to play in caring for an ailing parent, and, of course, how the potentially weighty financial responsibilities associated with elder care will be handled.

    As much as families tend to avoid talking frankly and openly about sensitive issues such as these, the best outcomes tend to be those in which a family addresses the “what-ifs” proactively, putting the issues on the table for discussion before a crisis forces their hand, says Sandra D. Adams, a CERTIFIED FINANCIAL PLANNER™ (CFP®) professional with the Center for Financial Planning, Inc., in Southfield, MI. “I suggest people talk about this stuff earlier rather than later, before there’s a real issue. Otherwise you end up having to make snap decisions in crisis mode, when emotions are running high and people maybe aren’t thinking as clearly as they need to be.”

    How, then, to banish the elephant in the room and start having these crucial conversations around the family dynamics of elder care? And, once the ice is broken, what issues to prioritize during the dialogue? Here are five suggestions to help initiate and frame the discussions:

    1.        Enlist an objective third party to facilitate and offer guidance. Chances are neither parents nor their children have been down this road before. What’s more, cross-generational discussions involving aging and family dynamics can be emotionally charged. “It’s not always easy to approach issues like these, especially if the parents don’t bring them up,” observes Adams, who holds a Master's degree in Gerontology, the study of aging, “which is why it makes a lot of sense to find a financial professional to facilitate these conversations. The financial professional can help mediate if the need arises, they can be the ones asking the tough questions, taking on sort of a ‘bad guy’ role so family members feel like they’re on the same side, and they can help find answers to those tough questions. Really they can take a lot of weight off a family’s shoulders.”

    To find a CFP® professional with experience in elder care and family issues, get a referral from someone you know who’s been in a situation similar to your family’s. Or to find one in your area, check out the Financial Planning Association’s searchable national database of personal finance experts at

    1.        Hone in on the housing issue. Where do the parents want to live as they age? Do they envision staying in their own home? Do they expect to move in with a family member? If either of these options appeals to them, how might the home need to be modified to accommodate an older person with restricted mobility and other limitations? Is assisted living an option? Do the parents have the financial means to pay for home modifications, or for assisted living or nursing home care, should that become necessary? Answering these and other housing-related questions will help parents and their adult children “get their head around the issue,” says Adams.
    1.        Dare to discuss care. Contemplating the possibility that you, your spouse or a parent will encounter a serious health issue that requires some form of long-term care is hard enough. But not only should families discuss the real possibility that parents will need long-term care at some point in their lives — the U.S. government puts the chances at about 70% — they also need to dig deeper into the issue, says Adams, by discussing expectations, roles, and finances. Are parents expecting a family member (or family members) to assume a caregiver role if the need arises? Are family members willing to serve as caregivers? If so, who, in what capacity, and for how long? What impact would taking time off to care for a parent have on the caregiver’s finances and career? If not, where will the parent get care if it’s needed? Does the parent prefer in-home care, if that’s an option? If not, what are the other care options? What might the various care options cost, who will be responsible for covering those costs, and how?  Would it be wise and financially practical to invest in some form of long-term care insurance, and if so, what kind? The issues are myriad and complex. Here’s an area where guidance from a CFP® professional with elder care expertise can be especially valuable.
    1.        Be forthcoming about your financial picture. In working through the family dynamics of elder care, it’s important that the parents and their adult children be upfront with one another about their financial situations, Adams asserts. “They need to be open to sharing that information, so they understand one another.”

    Do the parents have the means to cover their expenses in retirement? If not, what resources (government programs, etc.) might be available to help? And to what extent are the adult children willing and able to provide financial assistance?

    Being organized is also a priority, according to Adams. Are the parents’ assets properly titled? Is information about assets, accounts and beneficiaries (retirement, bank, insurance, etc.) up-to-date, well-organized and readily accessible to the children, should they need it?

    Being organized helps families avoid “a huge financial mess” later, she says.

    1.        Ensure that parents’ estate and affairs are in order. In the same organizational vein, it’s vital that parents have the legal documents related to their estate in order and up-to-date. That includes wills specifying how assets will be distributed, powers of attorney (over financial, medical and other decisions, should one or both of the parents be incapacitated), and a living will specifying their end-of-life wishes.

    January 2018 — This column is provided by the Financial Planning Association® (FPA®) of Iowa, the principle professional organization for Certified Financial PlannerTM (CFP®) professionals. FPA is the community that fosters the value of financial planning and advances the financial planning profession and its members demonstrate and support a professional commitment to education and a client-centered financial planning process.  Please credit FPA of Iowa if you use this column in whole or in part.

    The Financial Planning Association is the owner of trademark, service mark and collective membership mark rights in: FPA, FPA/Logo and FINANCIAL PLANNING ASSOCIATION.  The marks may not be used without written permission from the Financial Planning Association.