10 Ways to Talk to Your Aging Parents about Finances
“The spirit never ages. It stays forever young.” – Lailah Gifty Akita
There's a good chance that many adult children will have to get involved with their parents' financial lives as they age. Yet, an overwhelming majority of adult children – 73% – have not had detailed conversations with their parents about their finances, according to a survey by GOBankingRates. One of the primary reasons why survey respondents said they haven't had "the talk" yet with their parents is because they don't know how to have the discussion.
If you're on the fence about whether you want to go through with this, here's something very important to consider about why you need to have this conversation sooner rather than later. "You're either going to do it by plan or by crisis,"financial psychologist Mary Gresham said. "It is going to happen." Ideally, you want the conversation to happen when your parents are in good health, are mentally alert, and aren't an emotional mess (nor are you) because a crisis has struck.
The good news is that your parents probably won't resist your efforts to get them to share at least some of their financial information with you if you use one of these conversation starters.
#1: Use a Direct Approach
If you have a good relationship with your parents and they were relatively open about money matters while you were growing up, there's no need to beat around the bush. Simply let them know you would like to find out some information about their finances to give you peace of mind.
You don't necessarily have to ask them to tell you everything at once. Instead, you could start by asking about particular aspects of their finances. For example, when my mom started showing signs of memory loss, I suggested that we meet with an attorney to update her estate planning documents – her will, living will, and power of attorney. That then led to other conversations and a trip to her bank to put me on her account as her representative payee because I was going to have to handle financial transactions for her as her memory declined.
#2: Use Current Events
Chances are, you and your parents discuss current events from time to time. When financial topics are in the news – changes to the tax law, big swings in the stock market, health care reform, the list goes on – use that as a launching point for a conversation about your parents' finances.
For example, Jason – a 40-something who lives in California – used the poor state of the economy during the Great Recession to start a conversation with his dad about how inflation was affecting his finances. "I mainly asked him if he had been speaking with anyone about his retirement funds and if he had moved any of his holdings into a safe harbor type of situation to prevent any negative fallout from inflation." He then asked how his dad felt about his savings and whether he was prepared for retirement. Jason learned that he had been talking to a financial advisor about these topics and was taking steps to protect his savings. Since that initial conversation, he has had more financial conversations with his father and continues to check in to see how he's doing financially.
#3: Send an Invitation
It might seem old-fashioned to send your parents an invitation to talk, but it can be a polite gesture that an older generation will appreciate. And it's more likely to result in a productive conversation. "It's really helpful to let your parents know you want to have this conversation in writing rather than catch them in the moment when they have to give you an immediate response," said financial psychologist Mary Gresham. "The immediate response is going to be more emotional. If you write to them and say, 'I want to invite you to have this talk with me,' that gives them time to work through their emotions."
Explain in your letter what you want to discuss. And let your parents know that you're inviting them to have this conversation out of love – your love and desire to be able to help them as they age and their love and willingness to share information with you so you can help them if they need it.
#4: Ask for Advice
Some parents might be reluctant to have money talks with their children because they feel like it's a reversal of roles. If you suspect that will be the case with your parent, start the conversation by asking for help with your own financial matters. For example, you could tell your parent that you want advice on how to save for retirement, whether you need a will, or how much life insurance you should get now that you have a family of your own.
The goal in asking your parents to give you advice is to get them to open up about the financial and estate planning they have done. If you ask whether you should have a will and they tell you they never bothered to get one, you could suggest that all of you meet with an attorney together to draft wills.
#5: Use a Story
Stories are a great way to get a conversation going with your parents about their finances. You could tell them about a friend whose father died without a will and the family ended up in court fighting over who got what because the father had been married more than once and had stepchildren who wanted a piece of the pie. Then you could ask whether they've done any estate planning to prevent this sort of situation.
You could tell them about a colleague whose mother had a stroke that left her hospitalized, and the friend couldn't access any of the mom's financial accounts to pay bills because they had never planned for this sort of situation. Then you could discuss the importance of naming a power of attorney to make financial decisions for them if they can't and creating a list of financial accounts and passwords.
Or you could tell them about a neighbor whose parent was a victim of identity theft and that you want to help protect them from becoming victims. You could then show them how to log onto AnnualCreditReport.com to get a free copy of their credit report, which you could review with them for signs of fraud (and get good insight into the types of accounts they have).
#6: Talk About Your Own Financial Planning
Plenty of financial advisers say that talking about your own financial planning experience can be a good way to get your parents to open up about theirs. Nelson said he often recommends to clients that they get their own estate planning done, then use that as a conversation starter with their parents. For example, you could tell your parents that you recently had a will drafted and want them to know where they can find it if something happens to you.
Hopefully, your parents will then let you know if they have a will or other estate planning documents and where they are. If not, Nelson recommended that you take the opportunity to ask. Or you could tell them that you recently met with a financial planner or took some other step to make a financial plan. You could share how helpful the experience was for you and ask whether they've done anything similar.
#7: Use a Life Event
A life event – either one in your family or in family you know well – can help start a conversation with your parents about what they've done to prepare for events that will happen in their life.
You don't have to wait for a death in the family, though. A marriage, divorce, graduation, or birth of a baby could be used to start the conversation. The point is to use a life event to talk about being proactive so your parents can have more control over what happens to their finances and any assets they might leave behind when they die. You can tell your parents that you know that it might be a difficult conversation to have, Cheng said. But she said you should then say, "If something happens, we don't want to have to make these decisions for you."
You could suggest that they check their financial accounts and life insurance policies to make sure their beneficiaries are updated. You could ask them to consider meeting with an attorney to draft or update their estate planning documents. Or you could gently nudge them to discuss what sort of long-term care they would want if they ever needed it.
#8: Don't Make the Conversation About Money
If your parents think money is a taboo topic, you'll be more likely to get them to open up about their finances if you start the conversation by talking about big-picture topics.
For example, you could casually ask, "Mom and Dad, have you given much thought to what your retirement will be like?" This will get them thinking – and, hopefully, talking – about what they want life to be like as they age. And their answers will likely give you clues to whether they're financially prepared for that lifestyle.
Another way to approach the conversation without initially making it about money is to ask your parents about their wishes. The point is to show them you're concerned about being able to uphold those wishes, whether it's the type of care they would want later in life, end-of-life care, or their final wishes.
#9. Ask About 'What If' Scenarios
One of the key reasons to talk to your parents about their finances is to be prepared for emergencies. So asking them about "what if" scenarios might lead to more in-depth planning and preparation. For example, you could ask what would happen if both of them ended up in the hospital after a car accident. Let them know that someone would have to be designated as a health care power of attorney to speak with their doctors and make medical decisions for them if they couldn't on their own. And someone would have to be designated as power of attorney to handle financial transactions for them, such as paying bills.
You also could ask your parents to share details about their final wishes. "It can be as simple as, 'Do you want a burial or a cremation?'" Valecka said. If they are reluctant to answer, let them know that you need to know so you don't have to make this sort of decision for them. If they don't want to hand over detailed information to you about their finances to prepare for worst-case scenarios, ask them to make a list of the accounts, insurance policies and legal documents they have and to tell you where you could find that list if something happens.
#10: Offer to Lighten Their Load
You can gain insight into your parents' finances by offering to take over a financial task for them so they have more time to do what they enjoy. This is a good strategy to use if you haven't had any money talks with your parents and they already are showing signs that they're having trouble managing their finances on their own.
You could start small by suggesting that you help them set up automatic bill payments. They might not even use their bank's website, so this would give you a chance to create an online account for them, and to keep tabs on their account going forward. Or you could offer to tackle one of the most universally dreaded financial tasks for them – tax preparation. You don't necessarily have to prepare their tax return for them. Instead, you could help them gather their documents and take them to an accountant to prepare their return. In the process, though, you'll get details of their finances that you'll need if you ever have to manage all money matters for them.
Final Thought: Remain Calm and Respectful
Regardless of the conversation starter you choose to use, remember to be respectful when talking to your parents. You won't get very far if you're condescending. So come at this conversation from a place of compassion and reverence for your parents, even if that's not truly how you feel. You're more likely to have success if you're talking with them rather than at them. After all, the goal is to have a conversation, not a monologue.
Also keep your emotions in check as you have this conversation with your parents. The reason you're trying to have this talk with Mom or Dad before a crisis strikes is to do it when everyone is calm and level-headed. So if they balk at your efforts to get them to open up, don't let your frustration get the best of you.