March 7, 2017
Although it may be one of the most difficult conversations to have with your parents, planning for what’s bound to happen is better than being caught off guard down the road when it does. Studies have shown that financial decision-making peaks around 53 and declines gradually there on after. This means having a conversation about the future of your parent’s finances should happen sooner rather than later (and be documented for future reference).
Losing financial independence is not something anyone wants, but is bound to happen. Make this conversation a priority even if your parents think of themselves and the task of managing their finances a burden to you.
Make It a Family Affair
Retirement affects more than just the retiree – make a point to have a retirement plan that the whole family is a part of. As adult children, it is important to sit down and discuss your parent’s long-term plans as well as financial goals. Things to discuss in such a conversation with aging parents include:
Income and expenses
Contact information for their financial advisor
Permission to contact their financial advisor
Whereabouts of their financial records including tax returns
The majority of people will need help with their finances after entering retirement years. Fidelity Investments found that 60% of aging adults worry about burdening their families with the responsibility of their finances.
Losing your financial independence is unavoidable to an extent, so it is better to plan for the inevitable, especially when it comes to something as important as your financial future.
Healthcare is generally speaking the biggest retirement expense, not to mention the most difficult to plan for. When planning for retirement, which could be decades away when you begin, it is impossible to know what type of health conditions may arise that require additional funding. With such an uncertain future, it is important to have a proactive plan in which healthcare savings are included which hopefully, your parents have done.
As a child of an aging parent, make sure your discussion with your parents about health care includes:
What type of medical insurance do they have?
Do they have long-term care insurance?
Who are their doctors?
Do you have permission to speak with their doctors?
Do they have a plan for paying for at home care if the need arises?
In addition to healthcare, another important piece of the conversation should pertain to the legal documents that piece this all together.
Wills and Estate Documents
Possibly the touchiest of all family discussions is that of wills and estate documents. It is important to be aware of the type of estate planning that your parents have done and who their attorney is in case the need arises to contact them.
Conversations in regards to estate planning are some of the most important to have with an aging parent to prevent loved ones being left unaware of what the documents contain or even of their whereabouts when a parent passes away.
Financial conversations can be uncomfortable for everyone involved but when it comes to family and the future of your loved ones, planning for the inevitable is a necessary evil. Permission granted by Investopedia and Advisor-Stream