NEW YORK (MainStreet)—Are you thinking that it's time to talk with your aging parents about their financial situation? If you aren't, you should be.
More and more Baby Boomers and older Gen Xers are hearing about friends who have suddenly discovered their parents no longer have the resources or wherewithal to meet their fiscal obligations. Or about someone's parent dying or becoming incapacitated before sitting down to discuss money matters — forcing the adult children to shoulder a slew of emotional and financial burdens as they attempt to track down key financial documents and other personal data.
But experts say it doesn't have to be this way, even though family discussions about money are never easy.
Increasingly, older Americans face financial strains as they confront growing health care expenses with diminishing resources. As a result their grown children are often required to step in, even as they're providing financial assistance to their own offspring and preparing for their own retirement. "This is genuinely unprecedented in the U.S. and around the world," says Paula Span, a contributor to the New York Times' "The New Old Age" blog.
Even worse, many seniors have never discussed such matters with their kids — who have no real idea what resources exist, or where relevant paperwork can be found.
So, if you haven't had "the talk" yet, do it. This will help you care for your parents in the way they desire, ease your own worries, and allow you to continue working toward your own financial goals. But it must be done with sensitivity, cautions Nicole Francis, a financial adviser at Hudson Advisory Group in New York. Controlling one's money is a major aspect of adult independence and no one wants to willingly give it up.
Here are ten tips for doing it right:
1-Don't wait for a crisis to begin
Don't delay, especially if you already have questions about your parents' finances or their ability to handle them. Span cites research indicating one early sign of dementia is financial — "falling prey to scams, making bad investments, not paying bills or paying them twice." But even in the absence of such missteps, it's important to open the conversation while you still can. "Have these discussions when they are still able to tell you what they have and what they want," Span says.
2-Determine what you know, and need to know
Francis advises clients to prepare a list of resources and documents they're aware of, and those they need to track down. This might include bank accounts, deeds and wills, along with medical, disability and long-term care policies. It should also specify where the relevant paperwork is stored, along with the location of any safe deposit box keys. For a list of materials your parents should ideally share with you, she recommends the aptly named Get Your Shit Together.
3-Don't think you have to do it alone
Even if you're initiating this on your own, it's a good idea to talk with siblings and other close family members as you prepare. They may know things you don't, and can certainly be supportive in other ways before the conversation takes place and while formulating and implementing long-term plans. Span says bringing in a trusted neutral third party, like a family law attorney, financial planner or geriatric care manager can help smooth the way.
4-Recognize the conversation will likely be awkward
Whether you've previously spoken with your parents about money or not, this particular talk will be sensitive. Accept this and prepare accordingly. Francis says you can take much of the pressure off by making sure your parents see themselves maintaining a sense of control. This means establishing yourself as a helper, not the authority. Drop the I-know-best attitude, don't introduce ideas with "you should," and never be condescending.
5-Plan ahead to give everyone time to prepare
Easing into the conversation with advance notice is often helpful. Francis suggests starting with a non-threatening question that can get the ball rolling: "You might say, 'I started making a will; have you guys done that?' Or, 'My financial planner is recommending I get long-term care insurance; do you have that?'" Offer to research the issue and set a date to discuss the options. "For families that have never talked about money, it starts by just trying to get the door open a little bit," Francis says.
6-Set the right tone from the start
When you do talk, Span suggests framing everything "as a way of giving decision-making power to the older person, not taking it away." Ask how they want a bill paid, or how they want some investment handled. Explain that to feel truly comfortable, you need to know what they want done and what they've assembled to do so. In this manner you can sensitively address the resources and responsibilities that you need to know about.
7- Suggest a concrete place to start
During the first meeting, propose a specific action with potential benefits that everyone will see. For example, tell them you might be able to save them some money on their cable bill and offer to take a look at it. Immediately cutting out some overhead like this could be a good start, because it establishes the process while addressing a common concern. (A recent Allianz survey found 61% of older Americans worry about outliving their money.) Then set regular times to continue the dialogue.
8-Fill out your list of contacts and resources
Once you've established a rapport and begun developing long-term plans, plug the gaps in your information while making sure what you do have is current. Besides financial advisors and lawyers they work with, gather names and numbers of doctors, other professionals and even neighbors. In addition to bank account numbers and insurance policy details, get all computer logins and passwords. Draw up a list of all bills that need to be paid, and any money that regularly (or irregularly) comes in.
9-Become familiar with assistance programs
Span notes that even people who believe they have resources to meet their needs can be laid financially low by the "dauntingly expensive" cost of long-term health care. Medicare doesn't cover nursing care, she says, and Medicaid doesn't kick in for everyone. There are, however, other programs that might help. For more information she suggests the federal government's official benefits website, as well as anything your state, city or county has to offer.
10-Keep your own financial condition in mind
Last but not least, don't destroy your own financial situation as you try to solve that of your parents. "If you want to help out, do so within your means and without sacrificing your own future," Francis says. Proper planning, setting the right tone, and truly working with your parents can go a long way toward alleviating many potentially devastating problems before they crop up — but it all starts with having "the talk." Don't wait until there's a crisis before you begin.
--Written by Howard Rothman for MainStreet