Lending money as an older adult

Why older people are often asked for money and ways they can, and perhaps should, say no.



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If you’re an older adult, there’s a good chance someone younger, probably employed has asked you for money. There’s a good chance it was for substantial amount of money. And if you obliged, there’s an equally good chance no documents were signed.

What’s the cause of this borrowing?

Some reasons for borrowing from older adults include:

The borrower has the belief that the older person does not “need” their money (e.g. they aren’t raising a family, saving for a house, etc.);

  • Borrowers may be looking for quick cash and the older adult is more likely to have it readily accessible in bank accounts;
  • The borrower does not have good credit, cannot qualify for a traditional loan, and is looking for alternative lending sources with low or no interest;
  • Unprecedented household debt levels means that even though their credit may be fine (because they are paying at least the minimum necessary to service their existing debts) they do not qualify for additional credit;
  • The borrower is hiding issues from another family member (e.g. addiction) and does not want any paper trail about the loan.

Here is where this gets tricky. Adults have the right to handle their money in a way that fits with their values and lifestyle as long as it is legal and they are considered mentally capable. Some observers may wish to get involved by giving their opinion about the lending activities or even suggesting that it be stopped. This is likely not the best approach because it risks your relationship with the lender and can place the older person’s dignity at risk. Another approach, for family and friends as well as professionals is to ask the following:

1. Has anyone ever asked you for money or for a loan?

  • How would you/do you handle this type of situation?
  • If it happens again would you be willing to talk with me first before taking action, regardless of how small the request is?

2. Does anyone currently owe you money?

  • If so, have they borrowed money before and have they paid it back?
  • Do you have anything in writing?

Give the lender ammunition to refuse lending money

Older persons who have loaned money, even if they have been repaid, may be embarrassed by the situation. Make sure you openly address this, commenting on their kindness, and the difficulty that most of us have when dealing with unexpected requests for money. One suggestion is to remind the lender that money is available at record low interest rates from financial institutions. A formalized loan helps the borrower improve their credit rating by paying it back on time. If the individual is unable to obtain a traditional loan then they are likely a poor credit risk.  They need to concentrate on improving their credit instead of borrowing more from friends and family.

Give the older adult your support as well as solid reasons for refusing to loan money. They may feel vulnerable about fracturing family relationships. Remind them that often the borrower has an insatiable need for money that they would never be able to satisfy.

Lee Anne Davies has worked as a consultant for insurance, wealth management, banking and financial education companies. She has a PhD in Aging, Health and Well-being and a Masters of Arts (MA) in Gerontology and Health Studies from the University of Waterloo and an MBA from Athabasca University’s Information Technology Management program. She’s also successfully completed the Canadian Securities Course and the Professional Financial Planning Course. To read more from Davies, visit her blog Agenomics.

3 comments on “Lending money as an older adult

  1. Great article, Lee Anne! This is important! I had no idea that family asking each other for money (especially older parents) was such a prevalent thing in our society until recently. I've read horror stories about 25 year-old "children" demanding $50K from their parents to buy a house or get married. It's really sad. This needs lots more discussion so that people know what is and what is not acceptable. Some of the examples I've read are abuse of a loving relationship.
    Here's my favourite article about lending: http://lenpenzo.com/blog/id15845-dear-friend-here


  2. This is a really important topic; and I love the approach you are recommending because it empowers the parent, and avoids entrenching family schisms. A lot of parents experience guilt or remorse and think that money can bridge emotional chasms, but those efforts can backfire and cause greater discord.
    Another way to support the parent is to help them understand the costs of long term care and remind them that if they want to stay independent for the long haul they have to protect their capital.


    • Good point Janet that the motivation with ‘strings attached’ can come from either the borrower or the lender. I’d also add, that another perspective is to remind the adult kids that if their parents’ money is depleted the kids will need to help them out financially. In some jurisdictions this is legislated.


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