Signs Aging Parents May Need Help Managing Finances

I have recently seen a number of articles on the subject of aging and the related decline in financial judgment. Here is a well-written article on how to identify this, and ways to begin a discussion of this difficult subject.

From the article:

Research shows that financial decision-making peaks around age 53, and by age 60 our ability to process new information starts to slow. The shift happens at a different pace for everyone, and it can be accelerated by medical conditions such as Alzheimer's and dementia. While some people are capable of managing their own finances throughout their lifetime, others may find their skills suffering.
The impact could be as benign as paying a utility bill twice, or something worse, like falling prey to a scam.
Experts say there are signs that children or spouses can watch out for that will help them know when it's time to step in and help an older relative with their finances.

The article goes on share findings from a new study from the University of Alabama at Birmingham:

The study looked at up to seven years of financial skill performance among cognitively normal older adults. The warning signs of financial decline it found are:
— Taking longer to complete everyday financial tasks;
— Missing key details in financial documents;
— Having difficulty with everyday math;
— Showing decreased understanding of common financial concepts;
— Having difficulty identifying risks in an investment opportunity.

Finally, the author shares some great tips on how to prepare for this situation, with the key takeaway being the importance of being proactive (something we can all work on!).

The Difficult, Delicate Untangling of Our Parents’ Financial Lives

Excerpt from a moving article in the Wall Street Journal

When my in-laws became too incapacitated to handle their own affairs, my wife and I took over. A year and a half later, we’re still trying to figure it all out.
Updated March 27, 2016
“No, no, no, don’t transfer me to her again,” pleads my wife.
It is a typically frustrating moment in our family crisis, one that many grown children will have to face, ready or not: We are people in our 50s who are unraveling the finances of parents who can no longer do it themselves.
My wife, Julie, is on the phone with the company where her 82-year-old dad had once worked, trying to change the direct deposit of his pension checks to a bank closer to the assisted-living home where he and his wife now live, which is near us in Pennsylvania. Again and again, she is transferred to the person in charge, “Rose.” And every time, the same recording: “This number has been disconnected.”
In the room next to her, I see our once-usable sofa, covered with her parents’ financial papers from the 1960s to now. On the floor sit a metal tub and plastic cups of coins that we had hauled from the parents’ third-floor walk-up in Queens, New York—a small (but heavy) part of their lifetime of earning and saving, nearly all of it offline.
These are the kinds of elder-care issues that people talk about, but until you have lived it, you don’t truly realize all that is involved—not even someone like me who has spent decades as a financial reporter.” 

So begins William Power’s, and his wife Julia’s, long, exhausting, frustrating journey trying to help her aging parents handle their financial, medical and personal lives when her father is hospitalized. There is no central record of their various financial accounts, so it takes months to begin to piece this together, as her parents memories are vague. Virtually everything is on pieces of paper, with records going back to the early days of their marriage in the 60’s. Over many months, they wait for the mail to determine what bills her parents’ owe, and pore over the monthly credit cards, as many charges are on auto bill, for services her parents don’t remember signing up for. You can read the full article here.

With more than 10,000 Baby Boomers turning 70 every day, this is becoming a much more common occurrence. Which is why adult children of aging parents need to begin to have these discussions by the time their parents are in their 60’s, and don’t feel as threatened by this conversation. 

There are resources out there to help families. Don’t put it off. 

Three Unexpected Things That Can Happen Following a Major Illness or Death

Given my interest in this subject, from time to time friends will relay a story of what unexpected things happened following a major illness or death. Here are a few you should look into to see if you can easily remedy.

1. Credit Cards: 

Issue: Cards that are issued to one spouse, with the other listed as an additional cardholder, will often be automatically cancelled on the death of the spouse. Say, for example, you have an American Express Gold card, which was taken out in your husband’s name, and you are the additional cardholder. He dies, and it is noted in a local paper in the obituaries. Services who look for this information pass it on to credit card companies, leading the card company to cancel the card, even though it has two cardholders. If you are not sure who is the named cardholder, look at the bill:  that person is the named cardholder. 

Remedy: Each of you would be well advised to have a card in your own name, or perhaps 2-3, depending on how much you use them. Over time, when they are paid off promptly, and your credit rating stays strong, the spending limit will gradually rise, giving you each room in later years to be covered in the event that a joint card is cancelled. (It is always a good idea to discuss this with the card company, as their disclosure statements governing accounts change over time.)

2. Joint Bank Accounts

Issue: Banks, when they are notified that an individual has died, will put a freeze on the account, until they have the documents that show who has authority to access the funds. This takes time, at a time when you will need access to ready cash for immediate expenses. 

Remedy: Have a separate account in each of your names, with a way to transfer funds from your own investment account to replenish cash in your checking account. This can be done easily if you have a Living Family Trust estate plan. Discuss this with your attorney, and once you have that set up, then change the title to each of your accounts to the title of your share of the Trust. As you do this, you will be working with your banker, and they can help to ensure that it is done correctly.

3. Health Insurance While Traveling outside of The United States

Issue: You are traveling in Europe, and suddenly your spouse suffers a heart attack. He is taken to the local hospital and stabilized.

Remedy: There are really two questions to resolve in this situation, with a suggested remedy for each: 

i. Does your insurance take care of medical expenses when you are outside the country? You need to check with your primary insurer as well as your supplemental insurer, as often those expenses are not covered. You can purchase additional insurance just for this purpose.

ii. What if you feel your spouse would get better care at a hospital and with a doctor back in the United States? This involves medical evacuation, which is very expensive. But there are policies that can be purchased as insurance in case this happens, and you could ask your insurance agent what the options are. Some organizations offer this for a small annual amount for their members, so look into that, as well.

In all cases, check into your options well before you take a trip out of the country, especially if one or both spouses have had health issues. You would be surprised how often this happens, and it is a mess scrambling to find solutions when you are up against a short time frame. It can also be very expensive, if you have not planned ahead.

Photo by NASA