Talking to Your Aging Parents About Their Finances

When meeting with many of my clients one of the most common worries of those planning for retirement is the uncertainty that comes with the possibility of having to take care of their parents at some point in the future. When digging deeper into the conversation it comes out that they actually do not fully know their parents’ financial situation or whether this is something their parents have planned for. Most of times where this is a concern, I find that my clients simply have not had a financial conversation with their parents. Most have never asked their parents how they want to be cared for in the future and what that looks like financially.

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Talking about money with anyone can be difficult, but it can be even more difficult having that conversation with your parents, especially if money was not a transparent subject growing up. For some families, personal finance is not an acceptable topic to discuss with others including family members. Should this be the first discussion you will have with your parents about their finances, the conversation may be a bit awkward and very uncomfortable, especially in the beginning. Talking to parents about money may be an intimidating conversation, but it is one of the most important conversations that you must have if you want to ensure their comfort without causing you financial hardship and frustration later.

Sometimes we make assumptions about other’s personal financial situations, but it is not until after an emergency happens that we realize our assumptions were not correct.  Here are a few considerations to plan a conversation and to make it easier on everyone.

Approach with understanding and empathy

Before starting any financial conversation, understand where you parents might be coming from. I have seen parents tell their children that they have taken care of everything and walked them through their plans, most often ecstatic that they took the time to ask and understand. At the same time, I have seen other conversations, where the parents had nothing left and were embarrassed to tell anyone, putting on the illusion that everything was okay, when they truly had no financial plan and have been living in fear for years, crossing their fingers that nothing would happen. No matter where your parents may be with their financial preparation, begin any meeting with love and empathy and with a wanting to understand.

Schedule a time

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Thinking about picking the right time to talk is important for a conversation like this. No one wants to sit down to a family dinner and be blindsided by questions about their finances. Avoid starting a conversation like this, “Hey Mom and Dad. Since the whole family is here at the dinner table, what do you have planned in case one of you needs assisted living in the coming years?” Unfortunately, there are far too many stories that seem to match this. No one wants to feel ambushed.

Instead, approach it like you would a meeting. Ask them if you they can set some time aside to have the conversation and explain to them why you want to have the conversation. Let them know you are concerned and that you want to ensure that you follow their wishes and that you all have a plan in place should something happen. You want to make sure that you are able to take the time needed to have a meaningful conversation free of distractions and time restrictions. It’s an important conversation that should not be rushed. If you have siblings, ask each of them if they want to be present during the conversation while ensuring that your parents are okay with that, as well. This will help you make sure that you have all the interested parties as part of the discussion.

Paint the big picture

The conversation does not have to be about money. It should be about understanding where they are now, what their plans are, and how they are going to get there. Explain to them that having this conversation is hard for you, as well, but you want to make sure that when the time does come you are respecting their choices.

When painting the big picture, use “Tell me about your …” statements and ask “What if …” questions, so that you gain a better understanding. Use statements like “Tell me about your retirement plans.” Ask questions such as, “What do you have in place in case one or both of you eventually need full time care.” The answers may surprise you.

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Should your parents be reluctant to talk about their finances, let them know your concern again. Let them know that should something happen, should one of them pass and the other has dementia that you do not want to have to make decisions for them, but would like to have all of the worst case scenarios ready to follow their wishes. If they still do not want to talk about their financial information, ask them to at least come up with a plan in writing with all of their financial information, where all of their checking, savings, and investment accounts are, along with copies of any needed legal documents, and insurance policies so that you will be ready to execute their wishes in an emergency.

No matter how the discussion goes remember to keep you emotions in check throughout the conversation, respect their thoughts and perspective, and always let them know that you want to understand what they want.

We simply cannot afford to make assumptions about our family’s finances. The burden and costs associated with lack of planning can negatively impact every member of the family.

How do you approach financial discussions with your parents? Tell me your stories and your thoughts by leaving a comment below. Let’s have a better money conversation.