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Friday, September 30, 2011

Elderly Parents and Overspending: Responsibilities

Ahhhhhh. Since my anonymity has long since been compromised . . . an embarrassing topic. What do you do when you see an elderly parent overspending?

My mother is 81. My father, who handled all the money, died almost three years ago, during the depths of the economic meltdown. Three days after he died, my mother got an accountant (a neighbor). Four days after that, she put half her money into the hands of an advisor, recommended by the accountant. The other half is in TIAA-CREF. The advisor has been urging her to take that money out and let him manage it. The advisor has not told either her or me (I asked him directly) how he is compensated. He did tell me that he and his wife made $700,000 in 2007.

Anyway, my mother has been totally transparent about her assets. I noticed that she is taking more than 10% from the TIAA account. I told her that is not a sustainable withdrawal rate, even for an 81 year old.

I don't want to go into the details of her spending at the moment. I did get her to call someone at TIAA, who told her that her money would run out in 9 years.

I guess it's good that I'm pathologically frugal! My mother gets angry at me as the bearer of bad news. My un-frugal sibling said that the advisor seems like a great guy!

So...what does one do when one sees an elderly parent overspending? Any advice would be appreciated.


Shelley said...

Wow. Tough topic. My Dad left several thousand in credit card debt at hair raising interest rates and a house that was paid off. In order not to sell the house - I lived in it for a while and then had it as rental property for about 15 years - I had to pay those debts. Even though I knew that was the likely scenario, it never really occurred to me to tell him how to /not to spend his money. He didn't ask me for anything and it was his house to leave to me or not. I know he did his best when he realised how ill he was to both unclutter his house (he hired some help) and to pay off his debts. He was housebound and very bored and his money went for foolish toys, but I couldn't begrudge him that.

Mom's last conversation with me on the way to the hospital where she died was that she was worried about leaving me similar debts if her sister didn't follow through with an agreement they had made (she did and there were no debts, just another paid-for house). I can see that where you might be worried about you mom finding herself broke and at the mercy of an unscrupulous advisor, you could be perceived as wanting to ensure you get something when she's gone. Or, maybe even trickier, perceived that you wouldn't wish to help her in the event she needed it.

Your spendthift sibling makes it even more complicated; I've often been grateful to have been an only child.

I don't trust financial advisors any further than I can spit, and I won't likely ever speak to another if I can help it. The only way I can think of for you to find out what he charges is to go talk with him as though you were going to use his services as well.

Can you ask your mom what she expects from you as a daughter - to keep your nose out and mind your own business, as it were, no matter what you think is the danger? To take her to live with you or in someway support her when she finds herself without enough money to support herself - I think it would be fair to say you would resent it if she'd blown all her own money needlessly and foolishly.

If she tells you to butt out, I think she's entitled, but then you would need to be clear with her about your boundaries and what you would or would not be prepared to do with her if she were in a mess. If she's not senile, then she has a right to make her own decisions and to enjoy the consequences. I think of that as part of be pleasure of being a free agent, something I'd not like to give up if I didn't have to. It's hard to watch someone you love make painful mistakes, I know. Good luck and let us know how it goes if you can. I still don't know who you are, so your anonymity is safe with me!

Frugal Scholar said...

@Shelley--Thanks for the thoughtful comment. So much to think about. I did try that trick with the advisor--he was very evasive. My brother isn't a spendthrift--just not a saver. Thinking about more of what you have written...

SewingLibrarian said...

I wish I had an answer for you. All I can offer is my sympathy and my hope that your mother will "come to her senses" as they say, before it's too late. Good luck.

Anonymous said...

I've had exactly one frank conversation with my mother about her spending habits as a widow. It was a painful conversation...and yet, it seemed to hit the mark.

I did tell her that I would say it just once and then no more.

Duchesse said...

First, my heart goes out to you. We all want to see our parents live comfortably, to the end.

Second, (rhetorically), do you and our brother have a plan in place if she outlives her money, nine years from now?

I'm assuming your mother is competent but things can change quickly in the 80s. You might ask that one of you have power of attorney, for financial and medical reasons.

If advisor is doing a good job in this volatile economy, for reasonable fees, his and his wife's income is irrelevant. If you or your brother suspect he's like Madoff, it is.

Advisors often view children concerned about an elder's spending as angling to max their inheritance; try not to take it personally. They have seen everything.

the Frugal Ecologist said...

This is something that we are struggling with regarding my husbands mother so I am curious to see what others say. We have at least helped her get her finances in order so that she is no longer losing bills and thus not paying them, but it's an uphill battle.

I thought that all certified financial planners were required by law to disclose how they are compensated? Maybe threaten a call to the BBB? This guy sounds like bad news and I hope you can get rid of him!