November is National Long-Term Care Awareness Month. While a majority of people over 65 will require help with daily activities at some point in their lives, many skip this aspect of retirement planning and aren’t prepared if that time comes. Moreover, families aren’t discussing their finances or how to pay for long-term care needs. According to a survey from U.S. Bank, almost half of Americans are unaware of their parents’ financial situation but still expect they’ll need to support their parents or in-laws.
Unfortunately, many people still feel that discussing finances is uncomfortable. Your parents may not need assistance in the near future, but planning ahead can save a ton of time and stress should an emergency arise. Keep reading for five tips to help you discuss finances with your parents.
1. Start your discussion early
As with most things, starting early is best. Even if your parents are still active and in great health, it’s important to have a casual conversation about finances as soon as possible. Starting the dialogue early can help you better prepare for the future, plus help you course correct should you make a financial mistake.
One way to ease into the conversation is to start sharing your own goals and financial plans. Aside from an additional layer of accountability, sharing these goals can make it easier for your parents to share their plans in return. For example, if you recently spoke with a financial planner about your own retirement options, it can be useful to talk about your experience with your parents. In return, they may share information about their financial advisor and even offer insight into their financial plans.
2. Be an ally
One of the biggest hurdles when talking to parents can be the defensive feelings that come up. Instead of feeling like they’re being offered help, talks about money can feel transactional. It’s important to remind your parents that you’re on their side and not gunning for their money. Instead, frame the conversation as one about keeping them in control of their financial future. Your goal is to help them create a plan that ensures they’re taken care of according to their wishes—and that keeps you from scrambling for financial documents in the future.
Note that all of these details probably won’t be revealed in just one conversation, and you should never pressure your parents to give up information before they’re ready. Respecting their boundaries can make these chats easier and help build more trust. Ease into it, and as you become more comfortable, you’ll likely be able to discuss more in depth.
3. Get the details
Once you’re ready to have these conversations with your parents, it can feel overwhelming to know where to start. Some of the key topics you’ll want to discuss include their goals for retirement, potential long-term care needs, and end-of-life plans. In terms of retirement, you’ll want to know what their income plan is as well as plans for healthcare. As we mentioned, most adults will eventually need long-term care, so how do they plan to pay for it should the need arise? Everyone should also have a will, especially if you have dependents. If your parents want you to have access to their assets while they’re still alive, they can designate you as an authorized signer, which typically requires an in-person meeting and possibly a signature card.
It’s also important to know about their financial accounts, like what institution they use and what types of accounts they have. You should also ensure they’ve listed a beneficiary on accounts that allow for payable on death designations. You’ll also want to know where their important documents are stored, like deeds, insurance records, and tax returns. If they have a safe deposit box, you’ll need to know where it is and where they keep the key.
In this digital age, there’s also tons of passwords to account for. Make sure you have a way to access their computer and email accounts as necessary, especially if they want you to contact people on their behalf. For more information about what documents you may need, you can check out the National Institute on Aging’s checklist of documents to prepare for the future.
4. Make an emergency plan
Emergencies happen, so it’s a good idea to talk with your parents about what to do when one arises. The National Institute on Aging recommends that advance written consent designating a specific person as their power of attorney—someone who’s legally allowed to discuss their personal affairs with professionals like doctors and financial representatives. This person should be someone trusted to act in the best interests of your parents and according to their wishes. If you’re designated power of attorney, keep records and be aware of the location of important documents. It’s also imperative that you create a transition plan—know when and how your parents will need your support. Discuss different scenarios they could encounter, like an accidental fall, and how they’d like you to support them during these incidents.
5. Know when to step in
While it’s important to have these discussions with your parents, it’s also crucial to know the signs that they’re in need of support. It can be difficult to admit we need help, so watching for warning signs can help you step in before it’s too late. Some signs may be more obvious, like physical setbacks and memory issues, which can snowball into other issues like mismanaged finances. Keeping an eye out for these issues can help protect your parents physically and also help protect them from scams, as older adults tend to be more vulnerable.
Key takeaways:
- Start early—save time and stress down the road by having the conversation as early as possible.
- Plan for when and how you might start helping financially.
- Keep an eye out for signs your parents may need help.
Talking about money and the future can seem stressful, but having these early conversations can help you better prepare for the future. And with the costs of long-term care on the rise, planning ahead may be more crucial than ever. Have you had the talk with your parents? Share your tips below!
