Offers Resources to Help Families Make the Transition to Managing
Finances for Loved Ones
BOSTON–(BUSINESS WIRE)–Everyone wishes to grow old gracefully and retain independence for as
long as possible. However, when it comes to managing finances, what
happens when the desire to have complete control over decisions
outstrips the actual ability to manage the money? According to Fidelity
Investments’® Independence Myth study, this
quandary is something most seniors would prefer to assume isn’t going to
happen to them, yet is highly likely, given that people are living
longer and are more likely to experience the ailments that come with old
age, including the possibility of dementia. In fact, while only nine
percent of older adults (aged 50-80) surveyed felt they’d ever lose the
ability to manage their day-to-day finances, 60 percent admit having
witnessed it happen to a friend or family member—and 40 percent actually
helped manage their own parents’ finances.
For many Americans, needing help with the management of finances at some
point during retirement is not a matter of if, but when—especially since
studies show that financial
decision making peaks around age 53 and gradually declines, even
among healthy individuals. Despite being a normal part of the aging
process, a significant majority (60 percent) of older adults worry about
burdening their families with the task of managing the finances. Parents
might be reassured to discover that most adult children hardly view this
as a burden. In fact, eight in 10 children very much want to be involved.
“The possibility of losing financial independence is something for which
we all need to plan,” says Suzanne Schmitt, vice president of Family
Engagement, Fidelity Investments. “That’s why it’s important for
families to be in sync about what needs to happen in the event it’s
necessary to help take control of financial decision making for a loved
one. By engaging in conversations now and having a strong support system
in place, families can help loved ones gracefully transition into that
next phase of their lives.”
A Long and Winding Road
Each family situation is unique, which is why the transition from
financial independence to interdependence could never possibly come with
a definitive roadmap. However, for most families, the road to financial
interdependence is gradual, beginning with low knowledge and involvement
for adult children of a parent’s financial situation and eventually
building over time to high knowledge and direct involvement. Throughout
the journey, an important focus should be ensuring that parents or loved
ones stay in the driver’s seat and retain independence for as long as
they possibly can.
Where to begin? Three-quarters of older Americans surveyed say it’s very
important to maintain the ability to manage day-to-day finances. In
contrast, less than half place a similar importance on managing
investments. This suggests family involvement might initially focus on
financial matters with a long-term horizon, such as investments and
one’s estate, and gradually shift to more sensitive issues involving
health care and day-to-day spending.
There are three “tipping points” that adult children should be aware of
that may signal the need to step-in and get involved in a more direct
fashion with the finances:
When a parent or loved one makes a direct request for financial
When age starts to become a significant factor. On average, children
step in when parents are 75 years old.
When there is awareness of a change in circumstances. This can be the
hardest change to detect, particularly when a health decline is
“The process of comfortably and thoughtfully moving from independence to
interdependence is critically important,” says Schmitt. “Well before a
tipping point has been reached, families need to be prepared and make
sure they have a transition plan in place—and the good news is, there
are several benefits to building a strong family financial safety net.
Doing so allows parents the ability to maintain their current lifestyle
for as long as possible, helps them preserve their assets and may
increase the likelihood they won’t fall victim to fraud. Best of all,
most parents appreciate the assistance, so it can help forge stronger
Additionally, almost two-thirds of adults (65 percent) expressed an
interest in having financial advisors help them manage their finances as
they age and their abilities change. Advisors believe that family
engagement is critical and many advisors ask clients they suspect of
having diminished capacity to proactively involve their family in
Have You Reached 50 or Have a Parent 75 or Older? Read this.
Although everyone’s circumstances are unique, as a general rule, by the
time you’re 50 or an older loved one reaches 75 (or whichever happens
first), it’s time to start taking the following actions:
Take stock of the people you consider family (by birth or by
choice) and draft a family financial roadmap. Think about how old
each of you are today and working ahead in increments of five years,
project how everyone’s needs are likely to change. Think about things
such as finances, housing, health, caregiving and end-of-life.
Remember: your plan is only as complete as the plans in place for
those whom you might be responsible.
Assemble a team of trusted advocates. Make sure you have in
place friends, families and professionals that understand your
personal balance sheet and are prepared to step in should you need
help. And, make sure they know what they are expected to do.
Get your paperwork in order. By the time you are 50, make sure
you have all the basics in place: make sure you have designated
beneficiaries on bank accounts, investments and insurance policies; a
current and complete will; a healthcare proxy; and a living will.
Also, make sure you scan and store your legal documents someplace
safe—and share this information with your loved ones. (For those
looking for a safe, electronic storage location, Fidelity recently
a free and secure digital place to store, access and share all of a
families’ most important documents.)
Develop a family “crisis management” plan. Although no one
wants to think about getting sick, the best time to plan is before you
are facing a crisis. Take the time to complete your “in case of
Resources to Get the Family Conversation Started
Even the closest of families can struggle when it comes to tackling
tough subjects such as aging, health issues and end-of-life matters.
Fidelity offers several resources:
For family conversations, fidelity.com/families contains
helpful Viewpoints articles such as “Time
to take away the financial keys?” providing adult children with
ways to take charge of parental financial information if need be; “Five
ways to protect what’s yours” focuses on the subject of creating a
will, naming beneficiaries and completing other estate-planning tasks;
the family’s financial boss dies,”
offering a detailed list of documents families need after a key
financial decision maker passes.
There’s also a podcast
around finances every family should have as parents age.
In addition, Fidelity offers a “Health
and Medical Information worksheet” that helps family members
collect and share important information and make an individual’s
wishes known, which can help make a difficult situation easier to
well: A planning, conversation and resource guide” helps aging
parents think and talk about the decisions that may be around the
corner for them and their family.
Fidelity also has a useful interactive
map to help you determine how much it costs for different types of
long-term care coverage.
For information specific to your family’s unique situation or to speak
with a licensed investment professional, visit one of Fidelity’s 193
Investor Centers or call 1-800- FIDELITY (1-800-343-3548).
About The Independence Myth
The study explores the concepts of financial decision making and
autonomy, the potential for decline in the ability to maintain financial
independence as a function of age, and what help looks like in managing
change from the perspectives of different stakeholder groups. Conducted
by Mathew Greenwald and Associates, which is not affiliated with
Fidelity Investments, the research is the result of online interviews
with 1,043 adult children and 1,024 older adults between October 2015
and June 2016. Adult children had to be at least 30 years of age with a
living parent at least 60 who had a minimum of $500k in assets and
worked with a financial advisor. Older consumers ranged in age from 50
to 80, had at least $500k in assets and worked with a financial advisor.
About Fidelity Investments
Fidelity’s mission is to inspire better futures and deliver better
outcomes for the customers and businesses we serve. With assets under
administration of $5.6 trillion, including managed assets of $2.1
trillion as of November 30, 2016, we focus on meeting the unique needs
of a diverse set of customers: helping more than 25 million people
invest their own life savings, nearly 20,000 businesses manage employee
benefit programs, as well as providing nearly 10,000 advisory firms with
investment and technology solutions to invest their own clients’ money.
Privately held for 70 years, Fidelity employs 45,000 associates who are
focused on the long-term success of our customers. For more information
about Fidelity Investments, visit https://www.fidelity.com/about.
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