There comes a time in life when roles reverse, and adult children need to start looking out for their aging parents’ best interests – including their financial ones.
It can be an awkward subject to broach. Money is such a personal, emotionally charged issue, it’s almost taboo to bring it up. But the harsh reality is that many seniors face issues that could force their adult kids to become engaged in their financial lives whether they want to or not.
According to a 2018 study by the Insured Retirement Institute, over 40 percent of baby boomers have saved nothing for retirement. Less than a third think they’ll be able to take care of their healthcare expenses, and 81 percent said they will not be able to afford long-term care.
Most parents never want to become a burden on their children, but they may have no choice in the matter. Even elderly adults who have budgeted and planned for their twilight years may need some assistance if they outlive their plans, have unexpected health complications or their financial decision-making faculties decline.
Whether or not a child is prepared to step in and help out with their aging parents is a whole other subject. At the very least, a conversation about essential money matters needs to be had at some point, preferably before a crisis strikes. This is an issue that can’t just be swept under the rug because it’s unpleasant.
However, there seems to be a lot of sweeping going on. A GOBankingRates survey found that 73 percent of Americans haven’t had important financial talks with their aging folks. Over half of the survey respondents said they don’t plan to bring the subject up until their parents retire, start to decline in health, show signs they need assistance or overtly ask for help. And 22 percent said they never plan to discuss their parents’ finances as it’s none of their business. This delay and denial strategy will backfire one day. You simply must find a way to talk about money matters with your aging parents, for their sake and yours.
When is a good time to bring it up?
It’s best to broach this sensitive subject while your parents are in good health and of sound mind. Then you can start to create a family plan to deal with potential future issues, such as elder care, aging in place, insufficient retirement savings, legal documents and so forth.
How to start the conversation?
As the relationship dynamic shifts between aging parent and adult child, you don’t want to be perceived as nosy, greedy or self-serving by bringing it up. Here are some tips to approach this delicate topic with sensitivity, respect and practicality it deserves.
- Ask them for advice
A natural way to start a conversation is to ask for advice about your financial situation. Parents love to give advice. Once they open up, try to steer the talk to their own financial and estate planning.
- Bring up “what if” scenarios
A main reason to talk to parents about their finances is so that everyone is prepared for potential emergencies. For example, ask how their bills would be paid if they had an extended stay in a hospital. It’s a practical point they shouldn’t object to. Everyone needs to set up a system to handle these kinds of situations.
- Tell a story
Talk about someone you know whose parent died without a will, or a friend who has had to get actively involved with their parents’ finances due to chronic illness or dementia. This could then flow into a conversation about the importance of having a will, power of attorney and other legal documents.
- Don’t make it about money
If money is a sensitive topic in your family, don’t start the talk by asking about their nitty-gritty financial details. Rather, try to chat about big-picture topics, like how they envision their retirement will be, and what their goals are for their golden years.
- Don’t bring this up during a holiday meal
It sounds like a convenient time, while siblings and loved ones are gathered around the table, to raise such an important topic like this. However, don’t. Just don’t. Keep holiday gatherings lighthearted and festive. Find a more neutral time to talk, when tensions and expectations won’t be so high.
- Or just be direct
If money isn’t taboo and you have a good, open relationship with your parents, there’s no need to beat around the bush about money. Just speak your mind and get the conversation rolling.
If you are the aging parent reading this, please be open and receptive if/when your adult child brings up the subject of finances, banking, wills, power of attorney, advance healthcare directives and the like. To be valid, these legal documents must be signed while a person is of sound mind, so it’s crucial to have the conversation early, before physical or mental health declines. Better yet, bring it up yourself well before you think you need to, as you never know when an unforeseen crisis will arise. Don’t think of it as morbid or crass or intrusive. Having a financial plan and estate documents in place is a responsible, loving thing to do for everyone concerned.