THE BLOG
07/14/2014 03:46 EDT | Updated 09/13/2014 05:59 EDT

We Need to Talk About Seniors and Money

We've found that there's just not enough conversation around health and aging and its impact on money. It's extremely important that all ages, but especially seniors, prepare for major life changes -- from divorce to illness and everything in between.

Every day, I hear stories of Canadian seniors facing financial crises. My job focuses on working with a team to provide seniors with much-needed financial options -- whether requiring funds for healthcare or other unexpected expenses.

What I've found is that, right across the country, seniors want to remain in their homes as they age -- but need help understanding their options when it comes to managing finances and unexpected expenses.

While financial advisors are part of many seniors' "go to" experts -- they don't always have the whole story on options to improve finances in old age.

For instance, reverse mortgages offer many advantages that not enough Canadian seniors understand. A reverse mortgage can lead to a more comfortable life in later years at a time when living in a familiar environment is highly desirable and cash flow is tight. And, the good news is that most Canadian retirees have watched the value of their homes increase.

According to Lee Anne Davies, co-author of 'When Life Bites You in the Wallet', women, especially, have a fear of running out of money in old age - what is called 'bag lady syndrome'. Many have a very real fear of ending up on the street, homeless. It's a known phenomenon, Lee Anne notes, and here's why:

• It's a generational issue, with many women seniors not having financial expertise even though some had jobs and added to the family income

• Their limited exposure to financial planning has left them vulnerable when widowed

• Across the generations of women, financial planning still isn't resonating

We've found that there's just not enough conversation around health and aging and its impact on money. It's extremely important that all ages, but especially seniors, prepare for major life changes -- from divorce to illness and everything in between.

As the founder of Agenomics, Lee Anne's work in aging, health and well-being shows that this lack of conversation has lead to an increase in personal bankruptcy for those 55 and older. This group is facing medical expenses and dealing with credit mismanagement and yet is also least likely to be able to find additional ways to earn income. Therefore, they are unable to help younger family members when life problems such as child care challenges or job loss occur. Most financial experts also agree that one of the biggest changes we've seen is seniors retiring with debt. Previous generations paid off all debt before retirement.

When it comes to Canadians and their financial management and aging, many experts believe that too many people are standing on the cliff of insolvency but either don't know how to change this or are unaware of the extent of the crisis. However, one shift in your life can push you over this cliff. And if you're a senior, especially one with increasing health problems, and this happens -- it's important to know your options, including remaining open to making your home work for you.

It's also imperative that families discuss finances, on a regular basis, even though some seniors may resent any questions on this topic.

I know this first hand, as I recently discussed finances with my parents in a tag-team effort with my sister. It's tough -- but it's important and it will help address potential issues proactively.

So, I suggest starting the conversation with a question such as: 'I've noticed the roof needs fixing -- are you thinking of bringing someone in to do the repairs?' Listen closely to the response and watch body language as well and you'll learn a lot about your parents' financial situation.

This conversation should take place before financial issues become dire. For families having a tough time getting senior parents to talk on this topic, an alternate way to address the issue is to purchase two hours with a money coach and give this as a gift. Ask friends and family for a referral, but it's important to note that time spent with a reputable, unbiased money coach can make the difference between peace of mind and financial turmoil.

As always with money, approaching issues proactively helps stop crises from developing. And this becomes increasingly important as we age.