The topic of finances can be an uncomfortable conversation to have with your parents, but it’s necessary. If anything were to happen to them suddenly – even if they live long, happy lives – having your loved ones’ wishes clearly defined and their finances organized will help take some of the uncertainly out of their elder years.
Knowing this can be a difficult conversation, we have mapped out why, how and when to talk to your parents.
Why is this an important conversation?
Aging is inevitable, and with preparation you can help your parents through their later years with financial confidence. At the minimum, you’ll want to know the basics:
- Do they have important documents prepared, and where are they?
- Do they have a financial professional?
- Do they have adequate life insurance to ensure the surviving spouse can live comfortably if one of them dies?
- Do they have enough retirement income in place to pay their bills and cover the “what ifs”, or will they need help?
Knowing these basics will help you determine the next steps and how you can help your loved ones. This information will also help you be ready to represent your parents’ wishes in case of the unexpected.
When is the right time?
It may seem like it’s never a good time, but don’t put it off until something unexpected happens. You can initiate a conversation even if your parents are healthy and independent – in fact, it’s the best time to do so.
Starting now will give your parents time to create a plan for their future if they haven't already. It takes time to prepare the essential legal documents, includin a will, power of attorney and advance healthcare directive. All these documents require that a person is mentally competent to sign, so they are best handled while your parents are in good health.
How should you start the conversation?
According to a Wells Fargo survey, only 38% of Americans with aging parents have discussed their parents’ current and future financial situation with them.¹ That’s understandable because it can be hard to know where to begin.
Most likely, your parents have been taking care of themselves for a long time and may feel hesitant or worry they will burden you. Take it slow, respect their feelings and emphasize your wish to help them navigate this process.
Here are some ways to start the conversation:
- Talk about the situation of a friend or neighbor and ask what they would want to do in a similar situation.
- If they have any health concerns, ask what type of care they would want should it get worse.
- Ask what keeps them up at night about their future.
- Begin the process to get your own financial affairs in order and ask your parents if they have had the chance to organize theirs.
- Offer to help organize your parents’ retirement finances, so they can enjoy themselves without worrying about money.
Some find it useful to form a team with other close family members (like a spouse, siblings or cousins) to address decisions and concerns as they come up. This can help alleviate the feeling that it is all on your shoulders.
You may also suggest your family speak with a financial professional, who can provide a helpful outside opinion. The financial professional can help you and your parents analyze their goals and budget and offer solutions to meet your family’s needs.
