Have "The Talk" with Your Parents About Money

Have you had "the talk" with your parents yet? I'm talking about the conversation or series of conversations that will help you help them secure their financial future. Do they have enough money to see them through a long retirement? Life expectancies have gone up, way up. Unless a person has a strong genetic or other reason to believe their life will be short, they should plan to live to be 95, even 100, years old. Do your parents have the medical or disability insurance they need if one of them gets sick? Do you know enough about their wishes to make sure they get the sort of care they would want if they're no longer able to communicate in the traditional sense? And what happens in an emergency?

Believe me, talking to your older parents about their finances is as hard for you as talking to you about sex was for them, but it's every bit as important. Almost half of adult children with a living parent hadn't discussed financial issues with that parent, according to the Phoenix Fiscal Fitness survey, and a full third said they had little to no knowledge of their parent's financial situation. Yet 35 percent believe they'll support that parent financially at some time in the future. If that happens to you, you don't want to be hit with any surprises.

Legally, parents have no obligation to tell their kids anything about their money—and emotionally they may not be inclined to either—but consider this conversation nothing more than fair trade. The more you know now about your parents' financial situation, the better you'll be able to help them age gracefully into the future.

Here are some tactics and strategies that may help you get your parents to open up about their finances.

More than likely, your parents grew up in a house where money wasn't discussed openly (believe it or not, most families talk about these things more than they did in previous decades), so they may not be comfortable sharing details of their financial lives with you. Their pride and privacy may also be a barrier.

That's why you need to head into a conversation like this with just the right tone. Too much force and your parents may think you're trying to move them toward the nursing home or that you're just after their money. Be too timid, however, and your parents will be able to brush off the subject with a simple, "Don't worry honey, we're fine."

Talk these strategies over during your next money group and do a bit of role playing to see what approach might work best for you and your parents. Remember, a slightly uncomfortable moment now will give you all peace of mind in the years to come.

• Use yourself as the ice breaker. Explain to your parents the steps you and your spouse are going through for your own estate planning, long term insurance, etc. If you're open about your own finances, it may make your parents feel more comfortable about being open with theirs.
• Bring up a friend's situation. You may get your mom and dad to open up with something like, "My friend Suzy's father is really sick and now she's worried about her mother's future. It made me wonder, have you and Dad done any planning?"
• Rely on recent headlines. Not a day goes by without some new story about aging boomers or the elderly. Next time something like estate taxes or Medicare prescription drug plans are in the news, talk to them about what you've read and ask what they're doing about the specific topic. Hopefully, that will open the door for a wide-ranging discussion.
• If they can't talk, ask them to get out pencil and paper. Sometimes it's easier to say things in writing than it is to say out loud. If your parents simply can't get the words to come out, ask them to jot down their thoughts about the sort of planning they've done, where the most important documents are kept, and any wishes they'd like you to know about. Then you can go back and ask them specific questions that they should be more comfortable with once the ice has been broken.

How much do you know about your parents' financial situation? Their goals and hopes for the future? This month's money group questions will help you and your fellow members get a handle on what you know, what you need to find out and the feelings you may be dealing with as your parents age.

1. What's your biggest fear about your parents' future? (Jean's take: Fears about your parents becoming frail, ailing and dependent can paralyze you and stop you from discussing important issues with your parents. Once you voice these fears, you'll find it's easier to go forward.)
   
   
2. When you ask your parents about something money related, how do they react? What clues can you glean from their responses?
   
   
3. How do your own attitudes toward money affect your attitude toward your parents' finances?
   
   
4. Have your parents made any plans for when they can't take care of themselves? (Jean's take: Many older parents assume they'll take care of each other or that you'll take care of them, without ever broaching the subject.)
   
   
5. Do your parents have enough money to last for the rest of their lives? If not, it may fall to you to fill in the gaps.
   
   
6. Where is your parents' money invested? Are they making the most of the assets they have?
   
   
7. How much insurance do your parents have for health care, prescription drugs and long term care? Is it enough to cover their needs? If not, how will the shortfall be covered?
   
   
8. Where do your parents want to live in the future? Do they want to age in their own home with help from you or home health care? Or, are they willing to move to assisted living or another type of retirement facility?
   
   
9. Have your parents made up a will and health care proxy? Have they selected who will receive power of attorney when the time comes? (See three tasks you can do this month for more details.)
   
   
10. Who can help you get your parents to open up and take care of the things they need to? Do you have siblings or other close relatives? How about a trusted financial advisor or an estate planning attorney?

Whether you're just getting the ball rolling or you're in the throes of helping your aging parents plan their future, here are three things you can do this month that will give all of you more piece of mind.

1. Determine what assets your parents have.
Happily, your parents will probably live a lot longer than their parents did. It would be nice if whatever they've stockpiled for retirement could last as long as they do. In order to make that happen, you or a trusted financial adviser need to sit down with your parents and get a handle on how they are living today. Do they have a substantial pension? Are they relying mostly on Social Security? Do they have enough to cover their daily needs and any health care costs going forward? Are they depending on their home equity to see them through? Once you or another trusted individual understands how much money your parents have, you can begin to plan successfully for the future.

2. Take care of the big three.
The most important information you need to gather from your conversation with your parents is whether or not they have the following documents that will allow you or someone else they trust to manage their health and financial needs if they become ill or incapacitated.

• A living will tells a doctor or hospital whether or not your parents want life support.
• A health care proxy is a document that gives you or another individual the power to make health care decisions on your parents' behalf.
• A durable power of attorney for finances gives you or someone else the power to make financial decisions on your parents' behalf. 
  

If your parents have already taken care of these documents, make sure you know where they are and what they say so you can refer to them easily in an emergency.

3. Write a letter.
If you can't bring yourself to talk to your parents directly about their financial situation and the future, or if they simply refuse to answer your questions or respond to your concerns, try putting your questions and feelings in writing. Send a note with a recent relevant article. Or just write to them about how you feel and list the specific questions you have. Emphasize that you care about them and you're asking because you love and respect them and want them to have a happy future. Then put your letter in the mail before you have time to censor yourself.

Use this retirement calculator from PracticalMoneySkills.com to make sure your parents (or you for yourself) are saving and investing enough to support themselves when they retire.

• Five things to do now to care for an aging parent
• Three must-haves for a secure financial future
• Are your parents ready for retirement?
• Women and retirement
• Make retirement savings last
• How to get your siblings involved
• Life insurance basics
• How to buy life insurance
• The What-If Policy
• Navigating the insurance maze

Are you ready to talk to your parents? Take the quiz!