5 tips for talking to elderly parents about credit card debt
Patience, reassurance can make emotional conversation easier
For many years, your parents paid your way – remember braces and summer camp? – but if they're among the growing number of senior citizens saddled with credit card debt, you could end up footing the bill for them sometime soon.
Legally, you're not obligated to do so. Your parents' credit card debt won't transfer to you or any other relatives after they die. It can be hard to ignore, however, and if you end up tackling your parents' credit card debt, you may find it just as stressful as dealing with your own.
The AARP Public Policy Institute found that in 2012, adults over the age of 50 had an average combined credit card balance of $8,278. It’s not uncommon for seniors to have card debt burdens, either. According to a survey by the National Council on Aging, 32.2 percent of senior households held credit card balances in 2013, a 4.9 percent increase from 2001.
For some senior citizens, credit card debt is a way of life that gets more difficult to handle as they get older. Julie Murphy Casserly, founder and president of JMC Wealth Management, spent her whole life watching her parents struggle to pay the bills. By the time she was old enough to take a peek at their financial issues, they had $72,000 in consumer debt, including unpaid credit cards and old orthodontia bills. Even after Murphy Casserly, helped her parents tap a home equity line of credit to pay off debt, bad health and poor money management skills soon created another mountain of debt in its place. "It was a chronic problem," she says.
Many older people, even frugal ones, are simply unable to make ends meet on a pension or Social Security check, so they turn to plastic to help pay for daily living expenses, such as groceries and gas. Other seniors plunge into debt when their health takes a turn for the worse. A stroke, a heart attack or a bout with cancer can create thousands of dollars in medical bills, which elderly patients may be pressured to pay with a credit card.
The death of a spouse can wreak financial havoc for widows and widowers, says Bruce McClary, vice president of communications for the National Foundation for Credit Counseling. "When the person who handled the family finances passes away and leaves the other one to sort out the financial picture for themselves, they often turn to credit cards to backfill the loss of income or lack of benefits -- or use it to fill an emotional void. I have had clients who come to me and say, 'I went out and started spending and didn't think about it till it was too late.'"
Why it matters to you
In purely financial terms, a credit card company can liquidate your parent's estate after death to recoup what is owed. In that case, you could kiss the family home goodbye. Plus, a bad credit score can make it difficult to get the loan needed to, say, buy a new car, or even rent an apartment, which can limit your parents' options as they age.
More poignantly, it can be painful to watch aging parents struggle with out-of-control debt or live close to the bone because of it. To make ends meet, they may cut back on necessities, even food, and medications, which can affect their quality of life. The anxiety of the situation can even aggravate existing health conditions or create new ones, leading to a whole host of hurdles for your family.
Having the big talk
If your parents haven't come to you for help or told you about their credit card woes, you'll have to figure out whether it's best to mind your own business until they do. If, however, you're determined to bring up the problem, don't expect things to go smoothly the first time around. "Typical responses you could hear might be that they don't want you to worry, that they have it under control, that they're trying to keep their independence," says Lynne Coon, a counselor in private practice in Portland, Oregon, who specializes in helping older adults and their children. "Or they might feel shame that they've gotten themselves into a money issue."
However much you dread it, you can make the debt conversation go more smoothly. Here's how:
- Be upfront. "I prefer the direct approach: 'I know this is none of my business, but I'm concerned, and I want to ask you about your credit card issues,'" says Sharon Burns, author of "How to Care for Your Parents' Money While Caring for Your Parents." The first time, your parents might agree with you that it's none of your business. On the other hand, they may want to talk later, once they know you're clued into the problem.
- Look for an opening. An onslaught of credit card offers may indicate rising debt levels, so ask about it if you see a letter lying on the table: "Do you get a lot of these offers? Are you looking for a new credit card?" Or volunteer to help with the physical task of paying bills or filing an income tax return. You'll get a close-up look at their finances -- and a better sense of whether they're really in trouble.
- Show your good intentions. When your parents understand that your concern about their debt stems from love and not a greedy scrabbling for inheritance cash, they're less likely to go on the defensive. Try saying, "I care about you, and I want to make sure you're as well taken care of as you deserve for raising us," or, "I want you to have smooth sailing as you go forward."
- Offer collaboration. "Don't say things that imply they're not capable; that's every older person's fear," says Coon. Instead of telling your parents what they're doing wrong and dictating solutions, work together to brainstorm positive approaches to the problem and remind them that they're not the only ones in this situation.
- Defuse hurt feelings. Despite your best efforts, the conversation may not go well. You can keep it from turning into a shouting match by keeping your tone even-keeled and offering a measured response: "I can see that what I said has upset you, and that's not what I intended. I just don't want you to feel like you have to go this alone."
Don't think of this as The Conversation, advises Coon. More likely it will be the first of an ongoing series of talks. Handle it well and you could help your parents live longer, happier, more financially secure lives.
Tips for getting your parents out of debt
When someone you love is struggling financially, your first impulse may be to jump in and pay off the offending bill. However, doesn't address the root cause of the debt. Here are better ways to assist:
- Help out -- a little. If a tight income caused the credit card debt, offer to buy groceries or contribute to an emergency fund.
- Tap outside resources. Local governments, senior centers, churches and other groups offer financial relief to the elderly in the form of prescription drug assistance, subsidized bills, even hot meals. Help your parents navigate the system and fill out paperwork.
- Hire a third-party assistant. Hiring a bookkeeper may not only keep finances in order but eventually trained your loved parents to use the same system.
- Create a financial tag team. Assign siblings or other relatives to help with different aspects of your parents' lives -- one pitches in some extra cash each month, one actually pays the monthly bills, one helps around the house so your parents won't have to hire a plumber.
- Prepare for the inevitable. Determine who will assume financial responsibility for their parents in the future. Those who may step up can purchase long-term care insurance now or funnel money into a "future care" savings account.
- Safeguard your own money. As much as you want to help, don't jeopardize your own financial security. Doing so reduces what you can put away for retirement. And, as Murphy Casserly puts it, "If you bail out the generation before you and don't take care of your own finances, you'll do the same thing to your kids."
Updated: October 18, 2016
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