Aging parents and adult children - It's time to talk

We deal with families, so we understand some of the dynamics between adult children and aging parents. In many households, we know it isn’t easy to talk about money from an intergenerational perspective. In some instances, elderly parents are not likely to want their adult children to know they may not have enough money to last their entire lives. In other instances, adult children may be making (poor) spending decisions because they assume they will be left a bigger inheritance than they’re likely to receive. Suffice it to say that money is a sensitive subject.

If you’re an adult child whose parent(s) may outlive their savings, will you be able to pay for college for your children, save for your retirement, and contribute to funding your parents’ lifestyle? And if you’re a senior, think of the pressure your child(ren) may be under if they don’t know your financial situation. 

Charles Schwab¹ offers a few tips on how adult children can speak to their parents about money. 

• Start slowly and try to meet your parents where they are: If you don’t have the right words to use, or the topic is especially awkward, try telling a story about a friend. Tell a story about a friend whose dad lost his passwords, and your friend couldn’t help him. Or a friend whose mother needed help paying bills. These discussions about ‘others’ may allow your parent to open up about issues he/she has been reluctant to discuss. You may find your parent wants to discuss these topics but don’t have the right words to initiate the conversation. 

• Consider getting these four documents in place: You’ve read this here before, but it’s always worth repeating. These four documents will aid you in managing the affairs of your parent(s):

  • Revocable living trust: “This allows your parents to appoint a trustee who can manage the trust and the assets in the event of incapacity."

  • Power of attorney (POA): “This legal document gives a trusted individual control over any financial matters your parents specify, such as paying bills, making gifts, or managing property. Without a POA, a court may need to appoint a conservator to manage their financial affairs."

  • Advance directive: “Also called a living will, this legally binding document allows a person to spell out their preferences regarding medical intervention and end-of-life care.” In addition, a health care proxy “gives a loved one the legal authority to make medical decisions regarding any situations not covered by the directive.”

  • HIPAA authorization: “A signed HIPAA authorization form would allow you to speak with your parents’ doctors about their medical situation.”

• Explore if you will need to provide support for your parents as they age: Sometimes, support is more than money. Support is often about caregiving. “If you can get your parents to open up and share their financial picture with you, it could help you determine whether they are in good shape or if you’re going to need to supplement. If it’s the latter, knowing in advance gives you time to start saving and planning for that inevitability.”
• Find out if your parents have long-term care insurance: The longer we live, the more likely the probability of needing some form of long-term care. If your parents have a long-term care policy, it can be a huge help in paying for those types of expenses.
• Alert your parents to scams: While many of us can fall victim to a scam, a person with early-onset dementia or other memory issues is far more likely to be victimized. In addition to outright fraud, seniors may unknowingly sign up for costly subscription services. Share stories with your parents about friends who were victimized so they better understand that anyone can be a victim. And “Suggest that your parents add a trusted contact to their financial accounts,” which will allow you to address problems you may uncover more quickly.

“Money conversations with parents can feel heavy and uncomfortable, but once you have them, both you and your parents will likely feel relieved. Your parents can feel good knowing they have your support and their wishes and legacy will be honored. And you can feel relieved knowing what you may be up against, potentially needing to save extra to support your parents, or helping to honor your parents’ wishes as they age.”

¹ Bidner, Jeannie. “Aging Parents? 5 Money Topics to Discuss.” Schwab Brokerage, 8 Nov. 2023, www.schwab.com/learn/story/aging-parents-5-money-topics-to-discuss.