Friday, May 24, 2024

How to Talk About Money with Your Aging Parents


Gather Financial Information

You’ll need to get a complete picture of your parents’ finances, because the bills you see around the house are likely just a snapshot of the reality. Know where their money is kept, how much is in there, who has access to it, and how they use it.

Together, make a list of all of their income sources, expenses, and assets. You can review their tax returns as well to confirm any additional income sources. If they have a financial advisor, you can request a meeting with everyone present to ensure no critical information is left behind.

You will also need to gather high-priority financial documents, including: 

  • A will
  • A durable power of attorney
  • List of bank accounts
  • Tax Returns
  • Pension documents (if applicable)
  • Life insurance policy
  • Loans and debts

Organize and categorize all records to the best of your ability so you and your parents can get a 360-degree view of their finances.

Discuss Estate Planning

No one enjoys planning for what will happen once they die, but estate planning is a critical part of your parents’ financial well-being and the legacy they will leave behind.

Make sure they have the most critical estate planning documents completed, such as a will, trust, beneficiaries, and powers of attorney. You may be surprised to discover that your parents never considered creating a will or establishing a power of attorney for their finances or healthcare needs. Explain to them why these documents are helpful, and ask for permission to access their assets.

Explore Long-Term Care and Healthcare Expenses

Healthcare and potential long-term care are some of the highest expenses your parents will likely face, and the reality is that those expenses will continue to increase. 

Over the past five years, the cost of assisted living has increased by 4.4% annually, bringing the median annual cost in the US today at over $57,000 a year. The cost of long-term care will differ depending on what state you live in, but it’s often a significant financial commitment wherever you are.

Get to the core of what your parents’ wishes are for their healthcare needs. Ask important questions such as:

  • What is your current health insurance coverage?
  • Are you concerned about any particular health issues?
  • If you were no longer able to live on your own, where would you prefer to live?
  • What are your end-of-life wishes?
  • Who do you want to take care of your healthcare needs if you are no longer able to do so?

Remember, this conversation revolves around helping your parents identify and hopefully achieve their wishes and goals.

Address Scams and Financial Security

Older adults are more likely to fall victim to scammers. According to an AARP study conducted in 2023, an estimated $28.3 billion is lost to elder fraud scams yearly, whether from strangers or other family members.

Take this opportunity to educate your parents about common financial scams targeting seniors. To help deter scams, encourage your parents to monitor credit activity and set up identity theft protection on a credit card. 

Most importantly, establish an open line of communication with your parents. They may be embarrassed or scared to admit if they’ve fallen victim to a scam. Share stories about any of your own near-encounters with scams, and explain how intricate these criminal strategies are becoming. An open dialogue about fraud and theft will likely make your parents more comfortable speaking up in the future.

Seek Professional Guidance for Legal and Financial Advice

You may begin these discussions thinking you can handle your parents’ finances independently, but hiring a professional with expertise in senior financial planning might become necessary. They can assess your parents’ financial situation, handle conflicts, organize paperwork, and help you collectively make these important decisions.

Dealing with money changes and financial considerations can be scary and potentially threatening for your parents, so ensure that your conversations with them come from a place of empathy. If you can be a source of guidance and assistance without immediately taking over, you may be able to work together to support your parents and help them build a stronger financial future that you all feel good about.

If you have questions on how to start conversations about money, or if your parents are searching for professional advice, get in touch with our team at Abacus today.


Sources:

Shuman, Taylor. “How Much Does Assisted Living Cost?” Senior Living. 21 Mar. 2024

Gunther, Jilenne. “The Scope of Elder Financial Exploitation: What it Costs Victims” AARP. June 2023



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