For general informational purposes only: not a substitute for financial or legal advice from a licensed professional based on your particular circumstances.
Watching your parent enter their golden years is a natural part of the life cycle. But seeing them experience physical and cognitive decline can raise concerns about their well-being, which, in turn, may cause worry about their financial health. Talking with your parents about money and their future can be awkward, but it’s also important to ensure they have safe, comfortable later years.
Here are expert-approved tips for having five of the toughest — but necessary — financial conversations with your aging parent.
How to set the stage for talking about money with aging parents
For any delicate topic you need to address with older loved ones, and especially finances, Greg Klingler, director of wealth management at the Government Employees’ Benefit Association, offers the following suggestions for setting the stage for a productive and non-confrontational conversation:
Prepare a list of questions to help guide the conversation in a constructive manner.
Opt for a one-on-one conversation versus an intervention-style meeting.
Avoid the dinner table. Aim for a private moment away from young or prying ears.
5 must-have financial conversations to have with senior parents
1. Long-term care options and costs
More than half of Americans age 65 and older will develop a condition that’s serious enough to require assistance with tasks of everyday life, according to the U.S. Department of Health and Human Services. With that in mind, talking to your parents about long-term care is one of the most important conversations you can have, notes Cameron Huddleston, personal finance expert and author of “Mom and Dad, We Need to Talk.” That said, it’s also a difficult one as many older people don’t want to think about the possibility of relying on someone else to help them as they age.
“If you don’t have conversations and make a plan, you could find yourself entirely unprepared financially and emotionally to help them if they need support from you,” says Huddleston. “If you’re lucky, you and your parents will never have to put your plan into action. But if they do need care, all of you will be prepared.”
Of course, if your parents do end up needing some level of care, the cost can be high, says Huddleston. Professional care can range from about $4,000 a month for a home health aide or an assisted living facility to more than $8,000 a month for a skilled nursing facility, according to a 2019 Genworth Cost of Care study.
How to discuss: Because a preemptive conversation means talking in hypothetical terms, rather than responding to an emergency, it can be as simple as saying, “If something were to happen and you needed care, do you have a plan to pay for it?” says Huddleston.
If they don’t, you can help them explore their options, which may include:
Looking into buying long-term care insurance or a life insurance policy with a long-term care benefit.
Encouraging them to meet with a financial planner who can help them create a plan to pay for care if they need it.
Exploring affordable care options in their community to let you know which ones they would prefer.
2. Ongoing money management
People with aging parents cite managing their aging parents’ finances and paying their bills as one of the biggest issues, according to Ryan McEniff, owner of Minute Women Home Care, a private home care company that provides aides to seniors.
Many older adults view the loss of financial autonomy as “their independence is being ripped from them,” says McEniff. “They likely have stopped driving, and now they can’t even pay their own bills. The difficulty is they cannot admit that they are declining and need assistance with something that they have done for over 70 years.”
How to discuss: The following steps can help you begin navigating this sensitive subject with your parents.
Talk about timing. Neel Shah, estate planning attorney at Shah & Associates and financial adviser/owner at Beacon Wealth Solutions, says that all too often problems arise due to a gradual decline rather than a sudden inability. That said, it’s important to discuss when you might step in to assist with a parent’s finances.
Get a sense of their finances. “Many money conversations start with an inventory of what’s out there,” says Ryan McPherson, director of coaching at SmartPath. Walk through your parents’:
“Write down the account’s location, the name on the account and the rough amount,” says McPherson.
Gather information. “It’s important to have a series of documents in place in case of a catastrophe,” says Shah. “Financial powers of attorney and a living trust, if appropriate, should be considered.”
3. Selling the family home
Most older adults have a strong emotional attachment to their home. In fact, a 2018 survey by AARP found that 76% of Americans 50 and older want to stay in their current home as they age.
“There’s no need to push your parents to move if they can afford to remain in their home and are in good health,” says Huddleston.
However, you may want to begin discussions about moving if you notice any of these signs:
Health or cognitive issues that make it difficult to maintain their home or live safely on their own.
High mortgage payments and housing costs that hurt your parents’ ability to live comfortably.
How to discuss: To increase the chances of having a successful conversation, highlight the positives of moving, such as the lower housing costs, which means more room in the budget to do things they enjoy, less maintenance and living in community with other retirees or same-aged adults.
“Avoid focusing on the negative aspects of remaining in their home or telling them they can’t stay where they are,” says Huddleston. “That will make them feel like you’re trying to take away their independence and likely lead them to resist your efforts even more.”
If they’re open to it, you can help your parents explore their options. Offer to research smaller homes, apartments for rent, senior living communities or facilities that can meet their needs.
4. Legal documents
Finding out whether your parents have estate planning documents such as a will, power of attorney and advance health care directive is important, but it can bring up insecurities. You might be worried it comes off like you’re trying to find out if you’ll get an inheritance or feel unpleasant because it requires discussing aging and death.
Still, these documents are essential because they allow your parents to put their wishes in writing and designate someone to make financial and healthcare decisions for them, says Huddleston. And they must be mentally competent at the time they sign them for the documents to be valid, she notes.
If a serious health issue, such as a stroke or dementia, arises with a parent, and they haven’t named a power of attorney to make financial decisions for them, you will have to go through expensive legal proceedings to be appointed to make financial decisions and transactions for them, Huddleston says. If they haven’t specified what sort of end-of-life medical treatment they want in an advance directive, family members could end up in court fighting over whether to keep them on life support. If your parents die without a will, their state’s laws will determine who gets their property.
How to discuss: “To broach the topic of estate planning, let your parents know that you want to know what their wishes are so you can follow them,” says Huddleston. “You can tell them those wishes will need to be in writing — otherwise, there will be no legal standing to enforce them.”
You can also emphasize their privacy and say you don’t need to know the details of their will, just whether they have one and where it is located.
And if they don’t have a will, power of attorney or advance directive, encourage your parents to meet with an estate planning attorney who can help tailor the documents to your parents’ situation and state laws.
5. Choosing and paying for a final resting place
Few people want to imagine a world without their parents in it, notes Stacie Irving of Willamette Life, a final expense life insurance provider. But there’s merit to discussing what your parents’ final wishes are and how you’ll pay for it.
How to discuss: There are three steps Irving recommends to help smooth this conversation:
Research. Gather information before approaching your parents. Some funeral homes have their price list online, you can use this as a starting point to understand the ballpark cost of different services.
Understand financial options. There are many ways that someone can handle these costs from direct payment to the funeral home or crematory upon performing services to taking out a life insurance policy specifically for the costs. You can either contact an agent directly or do an internet search to see what coverage options are available. Coming to the conversation equipped with facts can help take some of the emotions out of it.
The last word
The experts we spoke with emphasize being patient with yourself and your parents. “No one is excited to have these conversations,” concludes Irving. “But everyone feels relief once the door has been opened and a financial plan has been made.”