The COVID-19 crisis has been stressful for everyone. We’re all feeling its effects — emotionally, mentally, physically, socially, and financially. But the pandemic has been especially hard on the “sandwich generation” — a term used to describe middle-aged adults who care for both elderly parents and children.
Nearly half (47%) of adults ages 40 to 59 are dual caregivers, attending to the financial, domestic, and emotional needs of their elderly parents and children. And women in the sandwich generation usually are the ones shouldering this dual caretaker responsibility.
Tips for Talking about Money with Your Elderly Parents
If you’re part of the sandwich generation and need to broach uncomfortable money topics with your parents during the pandemic, how can you do it tactfully and successfully? Here are a few tips:
Be sensitive and careful when offering financial guidance. Your parents likely don’t want to be a burden and/or lose their independence. Saying “Do you need help with your finances?” may sound like you don’t think they are capable of doing it on their own. Instead, convey that you want them to be best prepared in case something were to happen, says Credit Karma co-founder and Chief Executive Ken Lin in the Wall Street Journal. This makes it more about you instead of them.
Be gentle in your approach and consider that your parents may well have everything under control. That said, there are a lot of current changes to keep track of with market volatility and government bailout packages, and it can be helpful to make sure that everyone is up-to-date on the most recent legislation. Keep things organized and factual. Share information and include your parents in any decisions.
The CARES Act has included some provision for retirees that you will want to talk to your parents about:
- Required minimum distributions (RMDs) have been suspended for 2020. (Keep in mind that if your parents already took their RMD for 2020, they cannot reverse it.)
- There are no penalties for early withdrawals from IRAs or other retirement accounts.
- If they’re receiving Social Security, they aren’t required to file a tax return to receive their stimulus check. Stimulus checks have started to be paid by direct deposit so remind them to check their bank accounts.
- They can receive extra incentives this year for making charitable contributions, including the application of a special limit for gifts to public charities of 100% of their adjusted gross income (AGI).
Ease into the process of taking over their finances. Start with gradual steps, such as adding your name to your parents’ bank accounts, making copies of important documents, and getting their financial advisor’s contact information.
Make sure they have the necessary documents. Your parents need a power of attorney in the event they ever become incapacitated and can’t make a decision on their own. If notarizing the documents in-person is not an option, look into if your state allows legal documents to be witnessed or notarized virtually.
Review all financial-related documents, such bank and brokerage statements, insurance policies, wills, health-care proxies and car titles. Gather Social Security numbers, passwords, and bank PINs.
Assess cash flow. Understand their sources of income, such as pensions, Social Security, or investments. Also, do they have an emergency fund to fall back on?
Dust off the budget and review spending. It is likely that our spending habits have changed during shelter-at-home orders, but some fixed costs may still need to be covered depending on your parents’ situation. It is always good practice to review spending and cash flow including where to cut back since this is one of those emergency times for which we contingency plan. Make a list of recurring bills; take note of which bills are automatically withdrawn from their accounts or charged to a credit card.
Revisit investment accounts. Are they being proactive with strategies such as rebalancing their portfolio and tax-loss harvesting?
Protect them from scammers. There’s been an uptick of scams during the COVID-19 crisis. According to the FTC, in the first nine months of 2020, victims lost $150 million to phony offers of job training, work-from-home schemes, or investment opportunities.
Protect your parents from scams by being the “trusted contact” on all of their accounts, the Wall Street Journal suggests. Review their accounts monthly and set up automatic payment for as many bills as possible. Also, consider registering their phone number with the National Do Not Call Registry.
Reassure them and remember that it’s a good strategy to keep focused on one’s financial plan and goals while tuning out the noise.
Financial Planning with The Humphreys Group
The Humphreys Group provides financial planning to clients in-person (during the “before times”) and remotely throughout the country. Our expertise is helping women navigate their particular challenges — such transitions as marriage, divorce, widowhood, inheritance, and taking care of aging parents. Our passion is helping clients take control of their financial lives and get smart about money. Interested in becoming a Humphreys Group client? Reach out to our team today.