How to talk about money with ageing parents

By Marianne Curphey

Talking to your parents about their finances can seem awkward and difficult, especially if money matters are something of a taboo in your family. Yet, as your parents age, it's a conversation you might not be able to avoid. Their shrinking incomes, growing expenses and even your inheritance are all sensitive subjects that need to be broached. Here are some tips for doing so.

When should you talk to your parents about money?
A rough rule of thumb is the 40/70 rule -- you should initiate the discussion either when you reach 40 or when your parents reach 70.

Or, you might be prompted to open the discussion by a life event -- as a parent draws close to retirement, for example, or when a spouse dies or someone suffers an illness or disability, says a spokeswoman from Age UK.

How can I broach the subject without causing offense?
Make the discussion relaxed and informal -- perhaps round the kitchen table, suggests Philip Pearson, an independent financial adviser (IFA) from Southampton. Since most pensioners are surviving on a fixed or limited income, they tend to be very conscious of price rises and are more affected by increases in food and heating costs.elderly-parents

"Talking about the rising cost of living or how to save money on utility bills is a good opening," Pearson says. "Discussing general bills and how you have managed to save money on your utilities is a way of introducing the subject. You could share with your parents how you have switched suppliers to find a better deal."

This, in turn, can lead to a discussion about paperwork -- with an offer to help your parents out with certain money chores if they are starting to get too much for them.

"You can also ask them what they would like you to do if one of them dies or is seriously ill," Pearson says. "This in turn leads on to a discussion about power of attorney (which gives you the right to handle their affairs if they are incapacitated) and also to talk about issues around long-term care."

To prevent your attempts to help from becoming offensive, keep this in mind, says Age UK's spokeswoman: Age should not be a barrier to people managing their money, and most older people want to remain in control of their finances. In fact, most money problems older people have stem from a lack of access to banking and information, rather than from a lack of ability to keep on top of their finances.

What if my parents have a lot of credit card debt?
Some older people get into debt when they stop working because their income drops sharply, yet they still have the same expenses to pay. Divorce, berevement, illness and disability can also fuel debt problems, says Age UK's spokeswoman.

It's important to remember that not all debt is a problem, although older people may not feel comfortable with debt.

Talk to your parents about how they got into debt, and start a discussion about ways to sort it out. This might mean looking for alternative sources of income.

Tell your parents to ignore any texts, telephone calls or emails advertising debt advice services. Instead, call Age UK Advice (0800 169 6565) to find your nearest, free, reputable agency. Non-profit debt counselling charities, such as National Debtline and StepChange Debt Charity (formerly the Consumer Credit Counselling Service) provide free, reliable advice.

If your parents have already retired and don't have enough income to cover credit card bills, check whether they are claiming all the benefits they are entitled to. 

Far too many of us procrastinate and avoid what is often an uncomfortable subject.

   -- Paul Latham, Octopus Investments

More than £5 billion in means-tested benefits go unclaimed by older people every year, according to Age UK.  Age UK has a benefits calculator that can help you check if you're missing out and produces the guide "More Money in Your Pocket," which gives lots of useful advice about claiming benefits.

What needs to be planned out?
You also need to talk to your parents about their wills, whether they need to take steps to reduce inheritance tax (IHT) and whether they want to give away any of their estate tax-free to grandchildren or charitable causes.

If you need help breaking the ice, consider seeking an independent financial adviser or estate planning professional. Sometimes a dispassionate view can be helpful.

"Far too many of us procrastinate and avoid what is often an uncomfortable subject," says Paul Latham, managing director at Octopus Investments.

In fact, many parents procrastinate until it's too late when it comes to estate planning, says Nick Gartland, senior financial planning director at Investec Wealth & Investment.

"Sadly, many parents never get round to estate planning before they pass away, which means that few if any measures can be taken to mitigate the impact of inheritance tax," Gartland says. "This can reduce assets worth over £325,000, including property, by 40 per cent."

July 2012 research from Investec reveals that three quarters (74%) of adults have never discussed what they stand to inherit financially with their parents. They told researchers they were worried about discussing financial issues with their parents because they didn't want to seem greedy, and they were also upset by the thought of their parents passing away.

It is surprising how common it is still for parents and children to treat inheritance as a taboo subject.

   -- Nick Gartland, Investec Wealth & Investment

"It is surprising how common it is still for parents and children to treat inheritance as a taboo subject," Gartland says.

In fact, so sensitive are the issues around money that Investec found that about only one in 10 people would open up the issue of money even if one of their parents were likely to die soon. More than a third said they would never feel happy about raising the issue, and only a quarter would talk about money if their parents started the discussion.

"It's better for parents and children to get the subject into the open, and I would encourage parents to take the lead in this regard," Gartland says.

More information
Age UK's website has short guides and videos on money issues. If your parents aren't online, you could help them access this information by identifying which guides might be of use and printing them out.  Alternatively, you or your parents can call the Age UK advice line (0800 169 6565) to order guides and factsheets, or to seek further advice. 

See related: How to make adult children financial independent

Published: 6 November 2012