Money Dilemmas

Meg Green: There’s trouble ahead for extravagent parents

 

Special to The Miami Herald

The dilemma: My parents have lived the good life, especially since they retired here in Florida 18 years ago. They own a beautiful home, belong to a country club, have traveled extensively and have a summer home in Michigan, where we’re from and where I live.

My father has slowed down considerably this past year, and we think he’s got some memory problems, which appeared during tax time. This is the first that my mother had to get involved and asked me to help, as Dad couldn’t seem to “get it together.” He may have had a stroke, and they’re testing for that and other things.

Now I have a double dilemma. First of all, my mother needs help managing their affairs, as Dad never taught her and it seems, from their accountant, that he was a wild man in their investments. The tax return was over 40 pages!

Second, they have been living way above their means, spending down principal like crazy. There’s no pension, just Social Security and their investments, which they have been depleting for years. My father says he likes to be aggressive and is in denial that their lifestyle is above their heads. My mother is quite scared to find this all out, but doesn’t want to change things.

Neither of them want to sell either house, they’re still planning on a big summer cruise and my mother has scheduled a $35,000 face lift for the fall — all expensive and extravagant. I’m angry at my father for being so selfish. I don’t blame my mother because she trusted him, as I did, to take good care of them. He’s 88 and she’s 82. Shouldn’t she be interested in pulling in their belts? They may need a nurse for Dad if he gets worse.

I have my own financial problems and can’t help them. I’m an only child and a single parent. The way I see it, they have four more years until their portfolio runs out at this rate of spending. I think that’s why my father was being so aggressive. What can I do?

Meg’s solution: This is certainly a dilemma and whether they’ll listen to you or not is a wild card. Now that tax season is over, I would enlist the help of their CPA who knows their story. If there’s a financial planner or wealth manager he can recommend to do an overview of their portfolio and spending, and their estate plan while they’re on it, that would be the first step.

Do they have long-term care policies? That makes a difference in their future finances as well.

A professional needs to paint the picture where there’s no refuting the facts or finger pointing on who spent what. It’s crisis time, and your father’s illness dials up the urgency. Your Mom needs a financial advisor to guide her. Hopefully, Dad will go along.

Once they get to see the picture in black and white, perhaps that will encourage them to put their finger in the dike. But they’ll need reasonable options as well.

It’s going to be one step at a time, starting with the feasibility of owning and maintaining two houses. Now that the markets have been recovering, one home has to go — and most likely it will be the Michigan home. They’ll have to rent for a month or so if they choose to go for the summers, or stay with you for a bit, if possible.

Keep in mind that with your father’s failing health, this may be the last cruise they get to take together, so I don’t know if I’d suggest they cancel, although they may have a medical reason to do so. As to the facelift, ask your Mom if that’s something she can give up, not just for the expense of it, but for the recovery and possible setbacks. With your Dad possibly out of commission, it’s important to ask.

When the light bulb goes on, hopefully you can be supportive and understanding as they mourn the loss of their carefree and extravagant lifestyle. Help them see how blessed they were to have lived this dream, and how safety and security will take them into their older years.

Good luck. You have your work cut out for you … and so do they.

Got a dilemma? Email askmeg@ meg green .com. Meg Green, CFP, is a wealth manager with offices in Aventura. Her Money Dilemmas column runs monthly in The Miami Herald.

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