7 Financial Topics to Discuss with Your Aging Parents [A Series: Part 2]
‘Where Do I Begin?’
You may be wanting to discuss finances with your aging parents but do not know where to begin or what financial topics to discuss. While 7 Steps to Beginning a Financial Conversation with Your Aging Parents [A Series: Part 1] explains how to prepare for, initiate, and hold a financial conversation with your aging parents, this post will provide you with specific financial topics that you can address with your parents as well as important considerations for each topic. Keep the following financial topic tips in mind when having a conversation with your parents…
Take It Easy
After reading through the 7 Financial Topics to Discuss with Your Aging Parents listed below, choose the topic that you feel most comfortable with and that you think your parents will be most receptive to for your first conversation. While this topic may not be the most pressing, it will make future, more challenging conversations easier. If you are still uncertain which topic to begin with, I recommend working through the financial topics in the order that they are written.
Less is More
You are establishing a routine of ongoing financial conversations with your parents. Therefore, you only need to address one financial topic at a time. Attempting to discuss several financial topics in a single conversation can feel overwhelming for you and your parents. You will have future opportunities to continue the conversation.
No Expert Necessary
You and your parents do not have to be experts on these financial topics in order to start talking about them. Together, you can ask questions, learn more, and possibly seek out a financial professional when deemed necessary.
Decision Free Discussions
Not all conversations need to have concrete decisions or answers at the end. Sometimes, the conversation in and of itself is enough. Remember that you do not need to come to any conclusions today. You are simply getting the ball rolling!
7 Financial Topics to Discuss with Your Aging Parents
1. Retirement Preparedness
It can be difficult to gauge your parents’ level of retirement preparedness. Your aging parents may still be working by choice or out of necessity, or they may be fully retired. Do not assume that your parents are financially prepared for retirement, simply because they have not mentioned financial stress or anxiety. Also, do not assume that your parents are not financially prepared for retirement. They may have a pension you never knew about that will cover a significant portion of their retirement!
Awareness of their actual preparedness will help you to know what options are available, next steps you can take, and what may be expected of you financially. Ask…
‘Do you feel financially prepared for retirement?’
‘What sources of income do you or will you have in retirement?’
‘What financial concerns do you have for retirement?’
‘How do you imagine your retirement?’
2. Physical Location of Information
In the event of an emergency, it is important that someone (you, a sibling, a friend, etc.) knows where to physically access important financial information. Important financial information includes usernames and passwords to financial accounts, physical documents (deed to the home, car title, social security card, etc.), contact information (financial advisor, financial power of attorney, etc.), and keys and codes (safety deposit box, safe, etc.).
Your parents may or may not have this information already organized. If they do not have this information organized, encourage them to begin this process. To learn more about what specific financial information and documents to include, read the National Institute on Aging’s Getting Your Affairs in Order Checklist: Documents to Prepare for the Future.
3. Identity Theft and Scams
While identity theft and financial scams have been around forever, scammers are constantly finding new, creative, and complex ways to target people. In 2023, approximately 50% of people lost money from a financial scam. While seniors are targeted for a number of reasons, including a belief that they have a significant amount of money in their retirement savings, increased trustworthiness and generosity, social isolation, cognitive decline, etc., many people, young and old, are scammed every single day. Normalizing financial scams can help reduce feelings of shame for those who have been scammed.
Scammers often use a sense of urgency or emergency situations to propel people to act quickly, without thinking. Encourage your parents to pause whenever anyone asks for money or access to an account. Reassure your parents that you, your siblings, and your children will never ask for money via email or text. Help them to create a plan in the event that they are scammed. Review the Federal Trade Commission’s Consumer Advice on How To Avoid A Scam and What To Do If You Were Scammed.
4. Long Term Housing
There are many housing options for aging adults. Oftentimes, people have a specific vision of or strong preferences for their long term housing, whether or not they have communicated them. Preparing for long term housing - physically, emotionally, and financially - can help to ease the eventual transition for everyone. Explore the following options with your parents…
Aging in Place
Aging in place (or aging at home) is a common desire. If your parents would like to age in place, start to assess the accessibility of their home. For example, is there a main floor bathroom with a walk in shower (no bathtub)? Is there a ramp up to the front door or several steps? Aging in place requires forethought and planning. These issues can be addressed and a home can be modified. It is better to take these steps now rather than when they become urgent or a necessity.
Intergenerational Living
Intergenerational living is prevalent in many cultures and similar considerations must be taken to those as aging in place. If you are not open to your parents living with you as they age, gently communicate this as soon as possible, so your parents are aware and can explore alternatives. If you are open to your parents living with you as they age, be sure to express this to them, as many parents do not want to feel like they are a burden to their children. Transparency is key.
Independent \ Assisted Living
Today, there are many high quality independent and assisted living homes that provide ongoing assistance throughout the many changes that aging brings. The cost of these homes can vary greatly depending on location (city, state), level of care, etc. If your parent would like to live in independent or assisted living, it is worth exploring options now to assess overall affordability and feasibility. Visiting these living facilities well in advance has many benefits: exploring what your parents do and do not like to find the right fit, knowing what to expect in the future, getting expected, etc.
5. Financial Power of Attorney
A financial power of attorney is a person who will make financial decisions on your parents’ behalf, if they are incapacitated or have given up their decision making rights. A financial power of attorney may never need to go into effect for your parents; however, in the event that a financial power of attorney does go into effect, it is helpful for you to know who will be responsible for financial decisions as well as the specific responsibilities included in the financial power of attorney.
If you are the financial power of attorney, ask your parents…
‘What specific financial responsibilities are included in the power of attorney?”
'Can I have a digital copy of the power of attorney?’
If someone else is the financial power of attorney, ask your parents…
‘Do you trust this person?’
‘Is this person responsible and organized?’
For a detailed explanation of financial power of attorneys, read FreeWill’s What Is A Financial Power of Attorney?.
6. Last Will and Testament
A will indicates who will receive your assets after you die. If your parents do not have a will, their state’s intestate succession laws will dictate who their money will go to upon their death. Additionally, in order for the state’s intestate succession laws to be enacted, you will have to go to probate court to settle the assets, and there is a cost associated with probate court. Therefore, by writing a will, your parents can be proactive, saving you and your siblings significant time and money.
Ask your parents if they have indicated beneficiaries on all of their savings, retirement, and investment accounts.
If your parents have not yet created a will or established financial power of attorneys, encourage them to do so for free at FreeWill or with an attorney.
Learn more about the differences between wills and trusts to determine if a trust is right for you or your parents with NerdWallet’s Will vs Trust: What Do You Need? Cost, Process, and Uses
Review TRW Law’s 25 Steps to Estate Planning
If your parents do not believe that they have any assets to leave behind, inform them that cars, pets, sentimental items, etc. can be included in a will and help to prevent familial conflict.
7. Long Term Care Insurance
Long term care insurance helps to pay for, well, long term care, such as assisted living, memory care, hospice care, occupational therapy, physical therapy, home healthcare, etc. Not everyone has or needs long term care insurance. Some people can afford to fully finance long term care in the future if needed. However, many people cannot.
Like any insurance, your parents may or may not ever need to use their long term care insurance, and long term care insurance can be expensive, but so can health care bills. Having long term care insurance may be worthwhile, as life has many unexpecteds, especially while aging.
Learn more about the pros and cons of long term care insurance at Ramsey Solutions to determine if long term care insurance is the right choice for your parents.
