Senior Investing

Like millions of Americans, Columbians Lisa Meyer, 40, and her mother Sandra Millatti, 73, have been drawn into a new era of their mother/daughter relationship. For many, it’s an uncomfortable reversal of roles: grown children being called upon to help their aging parents manage their money.

Fortunately for Lisa and Sandra, they have negotiated the unfamiliar terrain successfully and say they are now even closer, sharing a newfound respect and admiration for each other. Unexpected circumstances did not force Lisa and Sandra to make sudden, traumatic, life-altering changes. They gradually came to the realization that Lisa’s organizational skills and financial expertise could help Sandra enjoy a better quality of life. Still, for many Americans, the journey is not as sweet.

National statistics estimate that more than 25 percent of U.S. families are involved in some way with elder/parent care. For those families that provide in-home care for their parents, it is estimated that 50 percent are also contributing financially with out-of-pocket expenses averaging $5,500 annually. A growing segment of seniors whose nest eggs have been severely diminished by the recent recession are worried about their financial futures.

Financial experts agree that talking early and talking often with your aging parents is the best defense for avoiding unforeseen financial crises. For this generation of baby boomers, dubbed the “sandwich generation” because they are sandwiched between caring for dependent children and aging parents, planning for your own retirement may mean reevaluating your parents’ retirement as well.

Richard Blankenship, a 15-year financial adviser, currently working for Wells Fargo Advisors, says early planning is crucial. “It may be safe to assume that if the parent(s) are in the position of needing assistance, most likely a formalized financial plan was lacking in years prior.” Blankenship adds that sometimes pride can prevent parents from asking for their children’s help.

Such was not the case for Sandra. After losing her husband in 2005, Sandra relocated to Columbia within the year to be near Lisa. The two decided together, and with the blessings of Lisa’s siblings, that Lisa would become the point person for helping Sandra with her day-to-day and long-term financial decisions. “I’m very grateful and thankful that Lisa helps me,” Sandra said. “I was overwhelmed with paper, boxes and boxes of papers.”

Lisa, who with her husband, Jim, sells real estate locally, helped her mom consolidate accounts, move accounts, enroll in online services and review insurance policies and investments. The two women meet every Wednesday to pay bills and review Sandra’s budget. “I’m pretty organized, but it is a challenge to run a business, volunteer, take care of my home, be a full-time caregiver and manage it all,” Lisa said. “At first it was tons of hours, but it’s gotten better.”

For Lisa, the most daunting aspect was the responsibility. “I didn’t want to make any mistakes,” she said. “It’s one thing to make a mistake with your own money. It’s another to make a mistake with someone else’s money.”

Broaching the subject of finances is uncomfortable for both children and parents. Michel Plut, vice president of Central Trust and Investment Company, said that her 15 years of experience in estate planning has provided skills in helping open the lines of communication. “Some members of the aging population don’t like to discuss their financial matters,” she said. “We can help guide their children with tools and appropriate questions. It’s always very helpful to get the family involved and supportive.”

If you believe your parent(s) may have recently suffered a severe economic decline, some experts recommend that you talk to your parents about your own financial situation and allow them a chance to realize that you share similar situations. Experts recommend that you find a quiet time, not traditional family gatherings, for such discussions. Financial professionals agree that you should take a sensitive approach; don’t be judgmental.

Convince your parents you need to know this information in case you have to help them in the future. Your parents may not need your hands-on help in managing their money now; however, it’s inevitable that at some time in the future they will.

If parents are unwilling to share broad details, at the very least try to convince them to share the whereabouts and means of accessing essential documents necessary should they fall ill or become incapacitated. Offer to assist them in compiling a financial folder, particularly if both parents are still living and one typically handles all the money management.

Other questions that need to be asked of aging parents are whether they have a will, a durable power of attorney or medical directives should they become unable to make their own decisions. Sooner rather than later is the time to help your parents find a professional to draw up these types of documents.

Plut and Blankenship also highly recommend that children and their parents sit down and write up a list of assets, their location and their value. “Asset gathering and determining where everything is, finding tax returns, which professionals use; it’s important,” Plut said.

Blankenship recommends matching up income against future liabilities or debts. “Establishing an income analysis versus expenditures can also be very useful in budgeting and working through these tough times,” Blankenship said.

Lisa and Sandra say that working on the budget took a great deal of time and thought. “We don’t really like the word ‘budget;’ we call it a spending plan,” Sandra said. Considering all the potential expenses Sandra might incur and how much to budget for each was time consuming, according to Lisa. “Things like, how much are you going to give the church, spend for the grandkids on their birthdays, how much for entertainment,” Lisa said. “We wanted a reasonable plan that will sustain.”

Like most Americans, Sandra’s investments took a hit recently; however, she has historically invested conservatively and remains financially secure. Of the economic downturn, Sandra said: “I’m very comfortable with conservative investments. But now I have friends that need to find new housing. What has happened to some of my friends who didn’t have guidance ended up in a financial situation I’d never want to be in.”

If you fear your parents’ finances are dire, you may want to call in a financial professional. The key, according to experts, is not to let your parents avoid facing the reality of the situation. The stress of a diminished retirement savings can even affect their physical and mental health. “It is important to convince parents to accept the reality,” Blankenship said. “Most all children want to assure a higher quality of life for someone who has supported them.”

Lisa and her siblings are examples of children who want to help. Lisa refers to her siblings and her husband as the wind beneath her wings. “Even though my siblings aren’t here doesn’t mean they’re not supportive,” Lisa said. “I’m not a martyr about it, and it’s been the most unified experience for us all.”

“Her brother and sisters are grateful for Lisa’s help, and they feel very reassured for me,” Sandra said.