Just the thought of entering into a discussion with our parents about their finances can cause anxiety. But as they reach retirement age, planning for their future becomes even more imperative. Your parents may need assisted care at some point in the future or decide to move to another city or into a retirement community, and taking steps now to make sure that they have the financial security to make these changes will help ensure that they’re enjoying life well into their golden years.
1. Remind your parents you learned about financial responsibility from them.
Recognize that your parents will likely be reluctant to bring up this conversation themselves, so it will be up to you to broach the subject. You can overcome the initial awkwardness by breaking the ice with a simple reminder that they taught you about planning for the future and now it's your turn to be sure things will be accounted for— from their social lives to independent living to eldercare.
Should health status change at any time, for example, it's important to have finances secure to cover medical costs as well as future living costs. If your parents living situation unexpectedly transitions to assisted care, you may need to make decisions on their behalf quickly.
Medical costs can add up fast and understanding where your parents’ buffer zone will be over time will help you help them choose the right place to live to maintain the lifestyle they enjoy without compromising their savings.
Essentially, assure your parents that you have their best interests in mind and help them take the steps needed to secure their financial future no matter what costs that may entail.
2. Find out where your parents are planning to live after retirement.
An increasing number of seniors plan to stay in their homes no matter what, though there are some who plan to move into a retirement community once their 65th birthday comes around.
Whatever your parents ideal living situation is, be sure their vision encompasses the possibility for assisted care later down the road if necessary. Knowing what options are out there can help later in matching a living scenario to their financial situation.
3. Discuss the legal ramifications of financial decisions
None of us wants to plan for a time when our parents aren’t able to manage their finances or make their own decisions, but it’s critical that your parents have a plan in place for such a situation. Encourage them to name a friend or family member who they trust to make decisions on their behalf as Power of Attorney, so that critical choices about treatments and care can be made even when your parents cannot make them. Even in extreme cases.
Crises can be avoided by talking with your parents now. Having the pertinent documents, passwords, accounts and assets in place now will save all of you hassle in the future. Reassure your parents that you're here to help make their money work for them— that is, to empower them rather than have them fear you're trying to control their finances.
While discussing financial planning with parents may be challenging, facing unexpected financial concerns without a plan can leave you finding it difficult to support them properly.
Avoid procrastinating. Put discussing finances at the top of your list. If you have to, plan to get other siblings involved by bring up the topic after a family event when your family is already together. Once the conversation gets rolling and your parents realize your concerns are simply a result of wanting to make sure that their future is secure, you will be one step closer to offering your parents the retirement lifestyle they imagined.