How to talk with elderly parents about their finances

As young children, it may seem like our parents have life figured out. But as adults, you may realize your parents were—like many people—figuring out their finances along the way. By the time they reach retirement, they may not have saved quite enough or may even be holding debt.

It's a surprisingly prevalent issue: About 80% of households with aging adults are financially struggling, and nearly 17 million adults aged 65 and older are economically insecure.

It's tricky to know how to talk to elderly parents about finances without insulting their pride or overstepping. If you're preparing to bring it up, you'll want to consider their challenges, look for certain signs of financial distress and plan for how you and others can support them.

Maintaining financial security takes hard work, and elderly people may have certain factors working against them. Aside from financial issues that may come with aging, such as cognitive impairments or mounting health care bills, debt also could be behind your parents' money issues. Consider some of the potential root causes before you explore solutions.

It's challenging to accurately predict how much money you need for retirement. Older generations may have been counting on Social Security, but the average benefit only covers about 68% of basic living expenses. Even if your parents had an employer-sponsored retirement plan, IRAs and other investments, it's not always possible to prioritize retirement savings when other family needs take center stage. The unfortunate reality is that 48% of people over age 55 lack a form of retirement savings.

Even with a sturdy nest egg, the newly retired may wrestle with budgeting for their new income. It can be hard to adjust your spending when you're used to income from a full-time job. Your parents may spend more freely on dining out, clothes shopping or gifts for grandchildren. Or perhaps they've splurged on a retirement dream without fully realizing their budget limitations.

Financial technology is advancing every day—many institutions are strictly adopting paperless accounts, automatic payments and online ordering. It can be frustrating for people whose lives no longer revolve around tech, especially if they're trying to live an unplugged life in retirement. Elderly people are also more likely to be victims of identity theft and tech-based scams, with financial fraud among seniors averaging about $120,000 per incident.

Many times, people will hide their financial difficulties. This may be the case for your parents, and if they're specifically trying to shelter the family from this knowledge, it can create a delicate situation. You'll want to walk the thin line between respecting their privacy and dignity and stepping in to assist if these red flags pop up frequently.

• Bills piling up. A stack of disorganized bills could be a sign that your loved one is dealing with debt.

• Collection calls. If your parent receives frequent calls from bill collectors, they may not be able to pay everything they owe. Your parent might not admit who's calling, but frequent calls they don't answer or calls they're cryptic about could be a signal.

• Utility outages. If their cable goes off for days at a time, they lose power or their cellphone won't work, it may indicate they're behind on payments.

• Unusual purchases. If they're spending more money than usual—which could be a couple of huge purchases or several smaller ones and be from physical stores or online orders—it's possible they're not keeping close tabs on their budget.

• Credit card rejection. If they insist on buying lunch or gifts while you're out together but their credit card repeatedly doesn't work, it's fair to wonder if it's something more than a machine error.

• Asking for money. If your loved one often asks you or other family members for loans, it can be a sign something is up.

Anytime it comes to finances, it's important to maintain a respectful, shame-free attitude and not jump to conclusions. Spotting a few warning signs doesn't mean you should stage an intervention with your parents and take over their accounts.

Instead, look for ways to open lines of communication with your elderly parents about their finances. Aim to be clear that you're concerned about their comfort and well-being—and not about your inheritance or them becoming a burden.

Ideally, you could have a direct, planned conversation, but if you think your parents may respond better to an indirect approach, here are some ways to bring up the topic:

• Talk generally about the economy and mention how it's impacting older people.
• Ask them for advice. Tell them you're planning for retirement and want to know more about their experience.
• Send a letter or email on the topic. Some families have unspoken rules about not discussing money, but a written note could turn into a conversation.
• Make an open offer that you're always there for them. Let them know you're available to talk about anything and you want them to experience a joyful retirement.

If your parents opened up about their challenges with debt or finances, start by trying to get a handle on their situation before coming up with an appropriate solution. Reassure them that they can get through financial problems with help and support.

You may need to start by working on their mindset about their situation. Emphasize that there's no reason to be embarrassed or ashamed. Remind them that families help each other.

To tackle budgeting problems, you could offer to balance their checkbook and track down their owed payments. Once you help them identify their income limits and establish a realistic budget, you or another family member could offer to do regular financial check-ins with them. If they want you to be more involved, they can complete certain documents like a trusted contact form so you can communicate directly with their financial advisor and banking institutions.

Helping them out financially is also an option, but it may not be something you can handle or what your parents desire. Talk with your parents about the help they need the most. Then you can reflect on their needs and the best way you can accommodate that.

If you don't feel comfortable helping your parents with financial advice, you can connect them with a number of professional resources. Libraries, churches, senior centers, charitable groups and government agencies often offer free assistance with basic accounting and taxes, or you may be able to tap into help from nonprofit credit counselors.

If big decisions are looming—like if they need to sell their home or file for bankruptcy—suggest involving the whole family in discussions along with professionals, who can help them weigh all their options and create a plan.

Helping your aging parents with their finances may call for understanding, empathy and a delicate touch. Always keep their feelings in mind, and try to proceed at a comfortable pace for them. Connect with your own financial advisor for guidance if necessary.

For more guidance, you can check out Thrivent's resources on day-to-day finance management and consult our advice sessions via Money Canvas.