This week, I’m beginning a series of posts about talking – talking about money. There are certain important financial conversations you should be having (some of them every few years, others on an ongoing basis). These include the conversation with your parents, spouse, and your adult kids, all of which are mandatory as well as the money talk you might have with your friends, which isn’t but has other benefits that make it worthwhile. These conversations don’t happen often enough because of the not-so-simple-to-overcome fact that talking about money makes many of us distinctly uncomfortable. We were brought up to think it was rude. Some of us still feel that way but even if we weren’t may feel there’s something icky – for lack of a better word – about it. So we choose not to partake. That’s even true of talking about money with a financial advisor (the fourth conversation in my series) despite the fact that (in some way or another) you’re paying for this talk to happen.
So today I want you to take a deep breath, steel your confidence, and dive in knowing that even for me talking about money didn’t come easily. There are still times when I don’t want to discuss a financial matter that happens to be bothering me with my husband. But I nudge myself to the table (and he, knowing this about me, helps me along) with the certainty that once it is out in the open, I will feel significantly better, calmer and safer about both my finances and my life.
Talking with your older parents about their money is uncomfortable, as role reversals typically are. That’s why, according to the Phoenix Fiscal Fitness survey, nearly half of adult children with a living parents hasn’t done it. You’re trying to assess whether they have enough money to last the rest of their lives, whether the proper documents are in place to assure decisions can be made on their behalf if need be and even more than that, how they want financial and medical matters handled as they age. And yet, both of you are likely use to them being the ones in control. That means you need two things: a way to start talking and a guide to the most important points to cover.
I think like a reporter, so I’ve found the best way to begin this conversation is to use an old reporter’s trick – give a little to get a little. Share what’s going on in your own life as far as your retirement finances and your estate planning decisions (you recently bought more life insurance, updated your will, looked into an annuity, etc.) and you were wondering how your parents are handling those matters. Lead with compassion: You know these are personal matters, but you want to be sure that your parents have the information, help and financial support that they need, and if you’re going to be the one providing that support, it’s better that you understand it sooner rather than later.
Once you break the ice, here’s what you need to cover.
- What do they want? Have they thought about how they want to age? Do they plan to stay in the house they’re in today, move somewhere that might have fewer stairs and more services, or to a real-age-in-place facility?
- How are they set up to pay for those things? Are they feeling comfortable with their retirement, pension and Social Security combined? What would happen if one of them got sick? Is there a long-term care policy that would kick in and how comprehensive is it?
- If they’re not comfortable already or are worried about their ability to stay comfortable in the future, would they like you to find them a financial planner who might be able to suggest some changes to make them more comfortable? Would they like you to be the one who takes a look at their finances yourself? (Don’t offer the latter unless you’re comfortable!)
- Do they have the important documents and where are they? By this I mean:
A living will, which tells a doctor or hospital whether or not your parents want life support.
A health care proxy, which gives you or another individual the power to make health care decisions on your parents’ behalf.
A durable power of attorney for finances, which gives you or someone else the power to make financial decisions on your parents’ behalf.
You may start this conversation – or try – and realize that for whatever reason, it’s not happening. Maybe you’re not the one with the right relationship to have it, but another sibling is. Maybe your parents would be reticent to discuss money with any of their kids. In that case, find a financial advisor, lawyer or accountant with whom they’re comfortable, call a family meeting with that person in attendance and try again. The important thing is that, eventually, it gets done.
Have you had a conversation with your parents? How did it turn out?