TODAY | April 01, 2013
>>> when should you take over your aging parents' finances? jean chatzky is here with good information on how to know if it's time for to you step in and what to do. jean, good morning.
>> good morning.
>> we can look at the statistics, one-quarter of americans over the age of 65 and half over 85 have some sort of cognitive impairment so when it comes to making financial decisions, as "market watch" reported last week sometimes they make decisions with that impairment.
>> right, what we know is as we get older we lose our ability to make good financial decisions, but we get more confident in our ability to make financial decisions, so we're more confident about making what turns out often to be bad decisions.
>> you say there's research that shows even if your parent doesn't have dementia or some other inability, you say that their financial smarts pale as they do age.
>> that's right, this is one of the things that we know goes first so it's very important that you're looking, not just listening, but you're looking for the signs that things are starting to go awry.
>> let's talk about some of the signs. what are some things that you can observe in how they're handling things.
>> you want to look at how bill payment is being handled so when you go into the house or a neighbor goes into the house and sees piles of unopened bills or unopened mail that's a trouble sign. also, if you're with them in a restaurant and they seem to think they have more cash than they actually do, or getting forgetful, it's a sign that they're not paying attention but also they might not be able to get to the bank or get to the atm.
>> or maybe they want to you pay.
>> that could be it as well, very crafty.
>> exactly. and then are there other signs as well? you said you start noticing creditors calling them?
>> if you get a look at the phone bill and notice that creditors have been calling or check out the caller i.d. on their phone, you can sometimes get a sense that that's been happening, another sign, and finally if they start to be more intense about purchasing expensive things, taking up an expensive hobby, you notice the house is filling up with stuff, memory loss or impaired judgment could be taking place.
>> here is the trick, because this is sort of like taking the keys away from your parents. how do you, you know, handle that conversation with them?
>> it's better off to have a conversation when things are fine. if you're watching and things with your parents are fine and getting older, ask them how they'd like to you proceed if they start to seem to lose their judgment about these things. otherwise, sit down with your parents and perhaps with a third party and have a discussion. fidelity recently released a survey that said both parents and adult kids are more comfortable talking when there's a financial adviser in the room. so think about that. if you're operating from a distance, online banking can be a godsend. you get access, they get access so they don't feel like you're swooping in and taking complete control but everybody can see what's going on. if your parents are running out of resources you can see that as well.
>> that sort of power of attorney or not.
>> that's not but power of attorney is really key because if your parents become fully incapacitated, you can start to take control, which is really, really important, and if you've got siblings, try to keep everybody in the loop so that nobody gets offended.
>> jean chatzky, great information and advice. thanks so much.