Finances and death can be sensitive conversations to have with aging parents. However, many of us don't realize that talking about them now will make things easier later.
We assume our parents have their financial house in order. But that's not always the case. According to a study by Fidelity, 72% of American parents expect their kids to take on long-term care responsibilities when the need arises. But only 40% of their kids have no idea. And that's not all.
AARP reports that 40% of American adults aged 50 and above don't have a will. Another 55% don't have a power of attorney. This means they have no one legally appointed to make financial decisions on their behalf if they can't.
Understandably, it can be uncomfortable to bring up these sensitive matters with your aging parents when they're still healthy. But it's better to plan for their future now instead of grabbing the reins in a crisis.
If you want the conversation to be smooth, productive, and encouraging, here are a few mistakes to avoid.
Choosing The Wrong Time
Many adult kids pull their parents aside during highly-involving activities and ask sensitive questions. Others do so at a family reunion. Although you may have good intentions, these moments are not suitable for having "the talk."
Choose an appropriate time when everyone feels present. It's wise to plan for this time. For example, invite them over for dinner. This way, both you and your parents will feel more confident and heard.
Not Knowing How To Break The Ice
Whether your parents are open about their finances or not, you must take your time to discover and decide on the best way to break the ice. If you don't, you could end up getting stuck on the opening, and annoying your parents.
Some of the best ways to bring up the discussion include:
- Ask for advice on saving for retirement. Your parents will probably tell you about the steps they took and give you information about their financial wellbeing.
- Use current events like new tax laws, how pandemic has affected Social Security funding, retirement portfolios, and more.
- Share a friend's experience to give your parents a context about why the discussion is important to you.
Not Involving Your Siblings
Siblings can make having financial conversations with aging parents easier or difficult depending on your relationship with them. Experts recommend talking to your siblings before initiating the conversation with your parents.
If you don't get your sibling on board, you risk building resentment. And worse, your parents might think you're just thinking about yourself.
It's Not Just About Money
Finances are important. However, your parents' future isn't just about money, paperwork, and hard numbers. Adult children who focus so much on what their parents own and their financial situation can easily do more harm than good.
You also want to remain aligned with what your aging parents want. For example, what do they want their retirement to look like? Do they want to downgrade their home? How about traveling in retirement?
Frame your conversation in a way that clearly shows you're not interested in controlling your parents' finances.
Expecting Instant Results
Don't expect your aging parents to provide the information you want in one sitting. If you don't get what you want, don't force it.
Start the conversation and keep going until everyone is comfortable talking about their finances. Even if they walk away, be content with any information they share.
These topics will eventually come up over time. So ask broad, open-ended questions in your first discussion instead of focusing on granular details to increase your chances of success.
Talking with aging parents about end-of-life finances is not easy but necessary. By thoughtfully approaching the discussion, you can convince them you want to be supportive, respectful, and compassionate throughout their golden years.