Are there ways to help parents with their anxiety of running out of money?

[Yegey]

A constant topic with my parents is their constant fear that they will run out of money. This seems irrational to me since they seemed to have a withdraw rate of around 1% (probably because of fear) even if I keep proposing they spend more. Their portfolio has gotten larger, yet they seem to live in fear since the rent keeps going up, the food keeps going up and that I need to find them price breaks on utilities, insurance, etc or they will soon go broke despite me showing them evidence to the contrary.

Do others have this issue with their love ones? How did you help them with this? I don't think it's a mental decline issue. We all have fear that we will run out of money and there is a still a chance they can run out of money (nursing home), but the fear in my opinion isn't rational and I can't seemed to sway their fear. Just live with it I guess?

 

[COcheesehead]

Control usually calms fear. Have them be part of the process.

 

[VanWinkle]

This is a common problem it seems. My StepMother spends next to nothing from her investments, reinvests RMDs, and has more money in cash instruments than she would ever begin to spend. She worries she might need nursing home care, but has enough to live for 20+ years in a nursing home and she is 86. She still lives in my father's original house and won't consider moving to an independent living facility. Change is hard for some people.

 

[Yegey]

Control usually calms fear. Have them be part of the process.

They are in control and is part of the process, but it looks like they really don't want to know and let someone else (FA and myself) handle it. Their participation in the process seems to be that they looking at their networth every day.

Part of the issue is that they hate making decision and changes which is both good and bad. On the positive side, it has prevented them from going to cash on downturn news. It just give them anxiety which is less harmful than taking action.

 

[COcheesehead]

They are in control and is part of the process, but it looks like they really don't want to know and let someone else (FA and myself) handle it. Their participation in the process seems to be that they looking at their networth every day.

Part of the issue is that they hate making decision and changes which is both good and bad. On the positive side, it has prevented them from going to cash on downturn news. It just give them anxiety which is less harmful than taking action.

“…I need to find them price breaks on utilities, insurance, etc or they will soon go broke…”

Sounds like you are more in control.

 

[Yegey]

This is a common problem it seems. My StepMother spends next to nothing from her investments, reinvests RMDs, and has more money in cash instruments than she would ever begin to spend. She worries she might need nursing home care, but has enough to live for 20+ years in a nursing home and she is 86. She still lives in my father's original house and won't consider moving to an independent living facility. Change is hard for some people.

Glad to know that I am not the only one with the issue then. They do have an abnormally large amount of cash because they might need it. I have at least convince them to move the cash to a HYSA account because if their intention is to preserve, having the money lose to inflation due to a crappy interest rate run counter to their goals and because they hate change even more, it was difficult to convince them.

 

[pb4uski]

Yes, a common problem. Us kids totally failed in convincing DM to spend more even though she could afford to but we benefited in a larger inheritance but we were all doing fine even before the inheritance.

I have a 70 yo friend who refuses to spend more on himself despite my encouragement. I manage his portfolio for him so I know he can afford to spend more.

One way to frame it is that they could safely spend their portfolio divided by (100 minus their age). Not much, but it is simple for people to digest. Alternatively, spend any growth over a set amount.

 

[Yegey]

“…I need to find them price breaks on utilities, insurance, etc or they will soon go broke…”

Sounds like you are more in control.

Well that is on them. They could just call their utility to research discount for senior and compare rates on insurances on their own, but they don't want to do that. They want someone else to do it. Let's just say I don't want to be controlled.

 

[Yegey]

Yes, a common problem. Us kids totally failed in convincing DM to spend more even though she could afford to but we benefited in a larger inheritance but we were all doing fine even before the inheritance.

have a 70 yo friend who refuses to spend more on himself despite my encouragement. I manage his portfolio for him so I know he can afford to spend more.

One way to frame it is that they could safely spend their portfolio divided by (100 minus their age). Not much, but it is simple for people to digest. Alternatively, spend any growth over a set amount.

I will give that a tried.

I have also propose moving money to an annuity, which would generate an income stream which would make them perhaps spend more. However, after some thinking I don't think this will work. They will immediately balk at the idea since it decreases their networth, giving them more anxiety. The other evidence this will n ot work is that the FA originally redirected money to their bank account via distribution simulating an income stream, but they still failed to spent it causing a cash balance to build. I feel it's difficult to change their ways.

 

[Kings over Queens]

Glad to know that I am not the only one with the issue then. They do have an abnormally large amount of cash because they might need it. I have at least convince them to move the cash to a HYSA account because if their intention is to preserve, having the money lose to inflation due to a crappy interest rate run counter to their goals and because they hate change even more, it was difficult to convince them.

You aren't.

In fact, you'll see many threads here very similar to yours, but also members who refuse to spend money on themselves despite seemingly being able to afford it.

 

[Kings over Queens]

Well that is on them. They could just call their utility to research discount for senior and compare rates on insurances on their own, but they don't want to do that. They want someone else to do it. Let's just say I don't want to be controlled.

It takes a lot of patience.

 

[Kings over Queens]

Control usually calms fear. Have them be part of the process.

Control, or participation?

The OP doesn't seem to be in "control" meaning he's making the decisions. Seems to me he's being viewed as an employee of sorts.

 

[COcheesehead]

Well that is on them. They could just call their utility to research discount for senior and compare rates on insurances on their own, but they don't want to do that. They want someone else to do it. Let's just say I don't want to be controlled.

You see what’s happening here though, right? They live in fear, but want someone else to fix it. That’s not taking control of their own destiny. You are enabling it.

 

[Kings over Queens]

You see what’s happening here though, right? They live in fear, but want someone else to fix it. That’s not taking control of their own destiny. You are enabling it.

I don't know Yegey's parents, but looking from the outside and my own anecdotal experience, they don't want him to fix it. If anything they want to complain about it. This worry is part of their existence.

You can't change (or fix) people who don't want to change or be fixed.

 

[ERD50]

One thing I did with/for my Mom, was to have her change her dividend re-investments and instead, have the divs directed to her checking account. That way, she ''saw' the cash flow, and saw that she could spend that, while letting her investments grow.

You mentioned her FA did something similar, but what was the source of the income? Also, if they are paying the FA, that's an expense they could do w/o, and spend on themselves instead.

Outside of that, it sounds like a behavioral issue, and as mentioned above, don't enable them by doing their shopping for bargains they don't need.

 

[pb4uski]

I will give that a tried.

I have also propose moving money to an annuity, which would generate an income stream which would make them perhaps spend more. However, after some thinking I don't think this will work. They will immediately balk at the idea since it decreases their networth, giving them more anxiety. The other evidence this will n ot work is that the FA originally redirected money to their bank account via distribution simulating an income stream, but they still failed to spent it causing a cash balance to build. I feel it's difficult to change their ways.

Another idea that we set up for my DBIL's mom. She had a Vanguard mutual fund account and was unable to live on SS alone so we set up an automatic monthly redemption of $x that went to the same checking account that her SS went to and on the same day as that. It made her finances more comfortable. In you're folks case, while the cash flow is similiar to an annuity, it will not reduce their net worth... it just shifts money from one pocket to another.

Now there is a risk that even if the money is in the checking account that they won't spend it, but if they understand that the withdrawals have been carefully calibrated so that they can safely spend whatever is in their checking account them perhaps they will indulge in an occasion splurge.

It is hard. We could spend much more than we do, but over the last few years I have convinced myself that it is ok to splurge on things that we enjoy or make our quality of life better. For example, we are going on a cruise next month and splurged for a outside balcony cabin rather than an inside cabin that I am sure we will enjoy more. More recently, I have changed the various streaming services that we use to be ad-free and it is totaly different and the cost isn't much in the whole scheme of things. Just little things here and there that improve convenience and quality of life. By framing things as occasional splurges I find it easier to open the spending spigot.

 

[jazz4cash]

Another idea that we set up for my DBIL's mom. She had a Vanguard mutual fund account and was unable to live on SS alone so we set up an automatic monthly redemption of $x that went to the same checking account that her SS went to and on the same day as that. It made her finances more comfortable. In you're folks case, while the cash flow is similiar to an annuity, it will not reduce their net worth... it just shifts money from one pocket to another.

Now there is a risk that even if the money is in the checking account that they won't spend it, but if they understand that the withdrawals have been carefully calibrated so that they can safely spend whatever is in their checking account them perhaps they will indulge in an occasion splurge.

It is hard. We could spend much more than we do, but over the last few years I have convinced myself that it is ok to splurge on things that we enjoy or make our quality of life better. For example, we are going on a cruise next month and solurged for a outside balcony cabin rather than an inside cabin that I am sure we will enjoy more. More recently, I have changed the various streaming services that we use to be ad-free and it is totaly different and the cost isn't much in the whole scheme of things. Just little things hear and there that improve convenience and quality of life.

This is close to my thinking. I would mirror their concern and insist on adopting a budget via Fidelity Retirement Planner, Firecalc, etc. Let them participate with the inputs. Use ultra conservative estimates for expenses and inflation. Use market average ROR’s or heavy fixed income allocation. The results give year by year income estimates that are likely well beyond what they will actually spend. It’s a bit of a mind game but if they stay within “the budget” they likely never run out.

Other suggestions to seek out senior discounts, tax breaks, etc will help also because most of us feel like we are being overcharged anyway and it feeds into a sense of control.

 

[Yegey]

One thing I did with/for my Mom, was to have her change her dividend re-investments and instead, have the divs directed to her checking account. That way, she ''saw' the cash flow, and saw that she could spend that, while letting her investments grow.

You mentioned her FA did something similar, but what was the source of the income? Also, if they are paying the FA, that's an expense they could do w/o, and spend on themselves instead.

Outside of that, it sounds like a behavioral issue, and as mentioned above, don't enable them by doing their shopping for bargains they don't need.

The source of that income is their retirement portfolio. The FA basically said to just try it and see if this will serve their income needs. They failed to communicate that that they were spending more than a bare minimum of it, so a lot of money got waste sitting around at 0.01% interest rate.

I have since redirected the dividend back into the portfolio. I help them move some of the money to HYSA and some bonds. The increase in interest alone actually cover their expenses. Their retirement portfolio is now essentially fodder for nursing home and medical expense which I feel is a waste. They could have use it for stuff like a cruise or vacation.

Yes, I realized I have enable their bad discount coupon behavior and have been pushing back. I have automated their credit card award redemption which they seemed more happy about receiving than anything else.

 

[Yegey]

I don't know Yegey's parents, but looking from the outside and my own anecdotal experience, they don't want him to fix it. If anything they want to complain about it. This worry is part of their existence.

You can't change (or fix) people who don't want to change or be fixed.

Yes, I think you hit it right on the nail. They want to complain about it and complaining is just part of their personality. I think the recent inflation spikes have gotten them spooked and they feel it threaten their existence. Their desire for discounts is their way of maintaining control over cost because they don't understand investment.

 

[Crewer]

You don't say how old they are or how they grew up. Long held habits are probably impossible to break. My parents were born in the 20s and yeah, they were extremely frugal. Though they would never, ever complain about anything in front of the kids.

 

[JohnnyPHX]

Do they have a working budget plan? It might be helpful for them to see detailed expenses including a section for discretionary things like vacations and hobbies perhaps?

 

[pb4uski]

Another idea. Run FIRECalc with their parameters, but use the Investigate tab to solve for safe spending with 100% success and see how the results compares to their natural spending. It might be eye opening for them.

 

[Mulligan]

Glad to know that I am not the only one with the issue then. They do have an abnormally large amount of cash because they might need it. I have at least convince them to move the cash to a HYSA account because if their intention is to preserve, having the money lose to inflation due to a crappy interest rate run counter to their goals and because they hate change even more, it was difficult to convince them.

I suspect a lot have the same problem. My stepmother wont spend anything but the social security check. Complains about govt forcing her to spend money, when all that “spending” consists of IRA withdrawals moved to taxable CD accounts. Nursing care is a worry too…. She isnt going to spend it, so I dont stress her about trying to get her too. The security of the cash, provides more comfort than spending provides enjoyment. So I dont try. My buddys dad is the same. A lifetime of frugality and asset building, doesnt equate for many into “enjoying the fruits of ones labor” and flipping the switch in later years.
My dad was the same as my step mom. I thought he was the problem, when he was alive and tried to get him to spend it saying, its just going to be split up and blown by us heirs. That didnt work as he just said, “I hope you all enjoy spending it as much as I enjoyed saving it”. I gave up after that, and step mom is just the same.

 

[Kings over Queens]

Yes, I think you hit it right on the nail. They want to complain about it and complaining is just part of their personality. I think the recent inflation spikes have gotten them spooked and they feel it threaten their existence. Their desire for discounts is their way of maintaining control over cost because they don't und

I get it.

I don't know your relationship, but with my mother in law, I take it only so long and then push back. "Stop crying, I've seen your finances, you're fine. Stop being silly and spend some money."

It's frustrating.

 

[Aerides]

yet they seem to live in fear since the rent keeps going up...

Most of the rest has been addressed, but renting vs. owning in old(er) age would give me anxiety. Perhaps they live in an area like Manhattan where most people rent and don't have any rent stabilization? But other than that I don't know why they'd not be homeowners of some sort if they have a large portfolio. Maybe time to find a nice condo in a senior friendly neighborhood?