What Does Your Older Parent Know About Investing?

1 What Does Your Older Parent Know About Investing Header ImageIf you have elderly parents, there’s a decent chance that they have investment accounts. In fact, investment in equities has fallen for every age group since the financial crisis – except for the elderly, where it’s ticked up just slightly. Today, 54% of Americans over age 65 own stocks in their investment accounts.

This adds a potential challenge to helping older parents manage their money. After all, balancing risk and reward – not to mention current income and future growth – takes a little more prudence and planning than balancing the monthly budget.

Here’s how you can help.

Build communication channels

Different families operate in different ways, but one common refrain among worried children is defensiveness. Elderly parents can become defensive about their children’s attempts to “encroach” on their independence, a reaction that can make participation and protection more difficult.

To broach these issues, try a more neutral approach. You could:

  • Ask about your parents’ wishes for the future of their finances so that you can be prepared for an emergency or other surprise.
  • Go digital and suggest sharing financial information through an advisor or online platform, so that you can view and participate if needed – without getting full control.
  • Accompany your parents to financial planning meetings so that you can meet and know their advisor.
  • Broach financial conversations in a neutral environment and in a spirit of assistance and partnership – we know, sometimes this is easier said than done!

Be sure to include more than money in your conversations. Helping out your parents could also involve issues like healthcare decisions, medication management, and things like getting around and keeping up with beloved hobbies.

Get informed on key financial facts                                                           

Everyone needs a back-up plan when it comes to finances. In other words, whether you help with their investments or not, it’s important to know where your parents have money and who to contact in case of an emergency.

This is especially important if you are entrusted with financial power of attorney should one or both of your parents be incapacitated. Knowing where everything is and what critical functions need to be carried out can help ensure that you’re empowered to make decisions in your parents’ best interest.

Some of the information you should have on hand includes:

  • All bank and investment accounts – where they’re located and where to find statements or how to log in
  • All insurance policies and pension plans
  • Any bills that need to be managed or which aren’t automatically paid
  • Health insurance information and how to find it
  • Lists of medications and allergies
  • Contact info for doctors, advisors, and other professional help like lawyers or accountants

Armed with this information, you’ll be better prepared to step in if necessary – and actually be effective.

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Discuss risk tolerance and potential concerns

The balance between short-term income and long-term growth is one of the key issues of retirement investing. Whatever your parents’ financial situation, it is crucial that they have a plan.

This is all the more important because there is research which shows that investment abilities tend to decline after about age 70.

While the experience of age can beget wisdom, aging can make risk assessment and the application of knowledge more difficult – sometimes to detrimental effect.

Talk to your parents about investment risk and how their accounts have been doing.

If your parents favor conservative investments, make sure they’ve accounted for the risk of outliving their assets. If you have a highly risk tolerant investor on your hands, ask about a back-up plan if the market goes south.

Again, broaching these topics can be difficult, so it can help to do it at a financial advisor’s office or other neutral environment. You can even bring up your own experiences and concerns for your retirement – after all, you might be considering the same challenges in your own investment accounts!

Encourage professional help

Especially as your parents get a bit older, it could make sense to seek outside help and advice.1 What Does Your Older Parent Know About Investing Info Image

Issues like Required Minimum Distributions, tax strategy, and allocation decisions can get more tiresome just as they also become more important. Working with an advisor can help alleviate the stress of investment management, and keeping you in the loop can help ensure that everything is staying on track.

Working with a professional can also help bypass some of the embarrassment or resistance that your parents might experience from needing help. An advisor is a neutral, objective third party with specialized expertise and no backstory involving changed diapers and scraped knees.

And if your parents feel more comfortable with someone closer to their own age, there are plenty of seasoned and experienced advisors out there ready to help.

Whatever you do, keep at it

It’s not always easy to be helpful. Sometimes it’s downright challenging!

But keep talking to your parents about investing and risk.

These are discussions that might need to evolve over time as your parents get used to the idea of aging and possibly needing extra support. You’re right to stay involved and stay informed and concerned – investing requires prudence and care, as poor decision-making can result in difficult outcomes.

At the very least, raising the subject can help your parents get used to the idea of talking about money and investing with you. And that on its own could provide a very important start to a successful long-term collaboration.

Investing is just one piece of the puzzle

As your parents get older, you might find yourself needing or wanting to help in more ways than one. After all, longevity brings many gifts – but it can also impart challenges. How to Help Your Elderly Parents Navigate the Twilight Years is our free guide to managing this process. From money to mobility, we’ll help you develop the tools to support and nurture your parents with sensitivity and success.

Download your free copy today!

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How to Help Your Elderly Parents Navigate Their Twilight Years 

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Let Us Help!

We can discuss this topic and more at a complimentary appointment. As a bay area retirement planning coaches, we can give you a review and make suggestions based on your retirement objectives.

Important Disclosures

& Associates Insurance Services or United Planners Financial Services (United Planners). The opinions voiced in this article are for general information only. They are not intended to provide specific advice or recommendations for any individual and do not constitute an endorsement by United Planners.

To determine which investments may be appropriate for you, consult with your financial professional. Please remember that investment decisions should be based on an individual’s goals, time horizon, and tolerance for risk. Neither diversification nor asset allocation can ensure a profit or prevention of loss in times of declining values. United Planners does not render tax advice.

Securities and advisory services offered through United Planners Financial Services, member FINRA, SIPC. Pasquale Vitucci, CA Insurance Lic. # 0758212, is an Endorsed Agent of Vitucci & Associates Insurance Services CA Insurance Lic. # 0I06319. Vitucci & Associates Insurance Services and United Planners are separate and unrelated companies.
This page contains links to third-party company websites. By selecting a link, you will be leaving our website and launching a new browser window. These links are provided for informational purposes only and should not be viewed as an endorsement, sponsorship, solicitation or other affiliation with respect to any third parties. We are not making any recommendations or providing any advice on securities in particular or investments in general. Neither Vitucci & Associates nor United Planners Financial Services have reviewed the content of, and are not responsible for, the information or the results of the third-party websites.

Further Reading

Equity ownership by age: http://news.gallup.com/poll/211052/stock-ownership-down-among-older-higher-income.aspx

Investment performance and aging: http://www.mitpressjournals.org/doi/abs/10.1162/REST_a_00053

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