Some might say that 80 is the new 60, but the reality of aging is that no matter how young your parents feel now, they’re likely to need some type of help in the future. I applaud you for being proactive—it’s better to have these difficult conversations before a change in your parents’ situation necessitates your involvement.
Here are five tips to help broach the subject.
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 might feel more comfortable. Here are some questions to start with:
- How are they handling everyday expenses? Do they have enough income to cover the essentials? If they’re struggling to stay on top of bills or debts, you might help them create a more realistic budget or suggest they work with a planner who can help get a handle on their expenses. It can also help to look into benefits programs nationwide, which can help with everything from finding affordable housing to tax relief. Learn more at benefitscheckup.org.
- Do they have a financial advisor? If so, ask if they’d be willing to introduce you and perhaps even include you in a meeting. If they don’t have an advisor, you can start by encouraging them to create a simple financial plan. At the very least, you might help them draft a basic net worth statement, establish a monthly budget, and review their insurance coverage. You can use the resources available at Schwab MoneyWise to get started.
- Do they have a complete estate plan? Chances are, your parents have a will and perhaps even some asset titling in place, but what about health care directives and powers of attorney? Ask whether they’ve created any legal documents that specify how to manage their financial and health care decisions should they become unable to do so themselves. If they do have a solid plan in place, ask when they last reviewed the documents and whether any updates are necessary.
- Are important documents accessible? In case of emergency, it’s important that you or another trusted person be able to locate important documents, such as financial statements, insurance policies, trust paperwork, and wills. If they don’t have it all in one place, ask if you can help them collect and store the documents for safekeeping.
2. Discuss future living arrangements
Some people want to live in their homes as long as they can, while others are open to independent-living communities should their health decline. Ask your parents if they’ve thought about what they might do in the event they need ongoing help. Position it as just an exploration of future possibilities—not a recommendation.
3. Plan ahead for long-term care
The median annual cost for assisted living is $48,612, according to the Genworth 2019 Cost of Care Survey. However, median annual costs vary widely by location—as much as $84,255 in New Hampshire and as little as $34,566 in Missouri, for example—and expenses are generally per person.
Not everyone will need long-term care, of course, but it’s still worth discussing. If your parents already have long-term care insurance, understand what it will cover. While future care can be an emotional flashpoint, it’s also an important financial consideration because they—and you—need to understand how much they can afford and whether you might need to supplement any costs.
4. Be on the alert for abuse
Seniors lose more than $36 billion to financial abuse each year.1 While senior investor protection laws are in place in many states and more are in the works, everyone needs to be mindful of potential scams. For more information, check out the “Senior Investor Protection” page on SIFMA’s website, which includes helpful tips and resources for combating elder fraud.
Be sure to discuss this with your parents, too. As a precaution, you might suggest they add you or another trusted family member to some or all of their accounts to help monitor balances and transactions. (If your parents are Schwab clients, they can also designate you as a Trusted Contact so Schwab may discuss with you possible indications they’re being financially exploited. Learn more.)
5. Have a family discussion
If you have siblings, make sure everyone is aware of your parents’ situation and desires, and come to a consensus on who will do what should your parents need assistance in the future. In this way, you can ensure there are no misunderstandings or disagreements and that whoever takes the lead gets the support they need.
Finally, when it comes to family financial conversations, it is all about talking openly and honestly. While the burden often falls on the kids to get the conversation going, I encourage any older adults reading this column to initiate these discussions themselves. The more mutual understanding there is about the future—of both emotional and financial matters—the more you will all be able to enjoy the present.