Although we don't always agree with the way our aging parents handle their finances, we mind our own business. According to a Fidelity study, 24 percent of adult children believe their parents need help handling their finances. However, 97 percent of the parents think they are doing just fine. A recent Money article suggests adult children set a few ground rules when having conversations about money with their elderly parents. In the past several years, my husband and I have observed our parents make financial decisions that raised our eyebrows. We view their money mistakes as financial lessons that we can learn from as opposed to ammunition to use against them.
Neglecting to pay fees
One of our relatives recently told us that he refuses to pay his homeowner association fees because he doesn't agree with how they are handling the maintenance in his neighborhood. Instead of telling him what to do, I told him about people I knew who neglected to pay. They had liens put against their homes, which meant the money owed to the association came out of any profit when the home was sold. The scary part is that the association could charge interest and legal fees.
Getting into debt
It's always disturbing to see senior citizens use credit cards or take out a new mortgage after retiring. However, I view our elderly parents as adults who can make their own financial decisions. When one of my relatives told me about her high interest rate credit card, I told her about one I found with a lower interest rate. I told my father-in-law about how we reduced our mortgage payment by refinancing to a 2.75 percent interest rate.
Investing too aggressively
I personally think it's foolish for senior citizens to put the majority of their money in individual stocks. It seems as though it would make more sense to have a balanced portfolio that includes more conservative investments. However, some senior citizens complain that they get too low of a return on their money since banks by putting their money in savings accounts, CDs and bonds. I can understand the dilemma. I recommend exchange traded funds that pay solid dividends when my senior citizen relatives ask me about investments. I feel more comfortable recommending an ETF rather than an individual stock that could go bankrupt.
Giving away too much money
My grandfather was a generous man, but when he developed Alzheimer's disease he became too generous. Other family members had to intervene when he would answer the phone or the door. It's easy for a lot of senior citizens to fall prey to scams. In the case of my grandfather, he was contributing to some legitimate charities. When my relatives develop dementia or similar illnesses, it will be time to step up and protect them from themselves.
I think it's tricky to give older Americans advice about handing their money because they are often overwhelmed by the new financial reality. Our parents don't want to outlive their money, but they also want to enjoy the moment. They want to remain independent, but they may need their adult children to help them one day. According to the Money article, elderly parents don't want to give up control. Talking to them about money is similar to dealing with financial issues with our teenagers.
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