How to talk to aging parents about finances
We all have a lot on our minds based on the events of the past year.
However, in the midst of all that is going on we must not forget about those closest to us: our parents. Ensuring the financial security of those who are aging is an important topic and one that should remain top of mind.
Helping ensure your parents’ financial security as they age is a conversation to have now, before a change in their situation necessitates your involvement. These are rarely easy conversations, but talking ahead of time can build trust, protect your parents, and leave you better prepared to understand their needs and wishes.
With that in mind, here are five tips to help you address your parents’ finances.
1. Ask about their financial security. A lot of people don’t like to talk about money, but if you come from a position of concern, they may feel more comfortable. You might start by asking how they are handling everyday expenses, and whether they are covering essential costs. If they have a financial advisor, ask to be introduced. Don’t be nosy, but demonstrate your concern and your ability to help.
2. Ask about estate planning. Raising the subject of their estate planning may open the door for a broader conversation. Your parents might already have a will, but what about healthcare directives and powers of attorney? You should ask whether important documents are accessible and how you or another trusted person may access these important documents if need be. Ask if they have an attorney; such guidance may be essential as you address complex issues related to your loved ones.
3. Discuss future living arrangements. Some people want to live in their homes as long as they can, while others are open to a retirement community that provides some support should their health decline. Ask your parents if they’ve thought about what they might do in the event they need ongoing help. Ask them to imagine their ideal living arrangement if money was not a major concern. Position it as an exploration of future possibilities, a fun exercise in thought, and not a recommendation.
4. Plan ahead for long-term care. Not everyone will need assisted living or nursing care, but for those who do, it can be a large, unanticipated expense. If your parents already have long-term care insurance, understand what it will cover and how to help implement the coverage. While future care can be an emotional flashpoint, it’s also an important financial consideration, because all involved need to understand how much they can afford and if you may be called on to provide additional financial assistance.
5. Be on the alert for abuse. Seniors lose billions of dollars to financial abuse and fraud each year. While senior investor protection laws are in place in many states, everyone needs to be mindful of potential scams. Offer to help monitor or assist with their finances as appropriate – a second set of eyes is very important.
To learn more about how to educate yourself and your older family members on the latest financial schemes, see Schwab’s resources for senior investors at schwab.com.
Ultimately, when it comes to addressing financial security for aging parents, it is all about openness and honesty. While the burden often falls on the kids to get the conversation going, I encourage any older adults who are reading this article to initiate these discussions with their loved ones. The more mutual understanding there is about both emotional and financial matters, the more you will help reduce stress points in life and be able to enjoy the years to come.