0
Cameron Huddleston
Business Lifestyle

Why You Need to Talk to Your Parents About Their Finances

Published September 13, 2019 by

You don’t want to wait to have the money talk. Author Cameron Huddleston will share tips on how to talk to your parents about their finances on Sept. 16 at GreenPath Financial Wellness in Farmington Hills.

By Cameron Huddleston

One of the biggest mistakes you can make when it comes to talking to your parents about their finances is assuming that the conversation can wait. You might be telling yourself, “I’ll cross that bridge when I come to it … when they’re having health problems or their finances are an issue.” At that point, it might be too late.

I made that mistake with my mom and still regret it. My mom was 65 when she was diagnosed with Alzheimer’s disease, and I was 35. Even as she was starting to show signs of memory loss, I hung onto to the idea that my mom would be there for me and my kids. So I wasn’t in any rush to discuss the “what ifs” with her: What if you start having trouble keeping track of your finances? What if I have to manage your money for you? What if you have to move into an assisted living facility or nursing home?

I didn’t want to talk about money matters because it meant confronting the fact that she was losing her memory. I delayed the conversation until it became apparent that I couldn’t put it off any longer. Then I had to scramble.

A survey by Fidelity Investments found that nearly 40 percent of adult children think conversations about their parents’ finances don’t need to happen until after their parents have retired and their health or finances have become an issue. This wait-and-see approach is understandable.

Many of us are so busy with our daily lives that we don’t stop to think about taking the time to talk to our parents about their financial lives. We assume there will be time for that later.

We might also think our parents have a handle on their finances, so there’s no need to talk. Or we might assume that Mom or Dad will come to us if they need help.

Wrong, wrong and wrong.

The reality is your parents might not have a good handle on money matters. They probably won’t initiate a conversation about their finances or ask for help if they need it. And, most importantly, time really is not on your side.

Cameron Huddlestonvia iStock

Your Parents Might Not Have Their Financial Act Together

Many adults aren’t making all of the right financial moves and haven’t taken the steps to prepare for retirement, for long-term care needs or even for their death. Consider these statistics:

  • A Gallup poll found that nearly half of adults ages 50 to 64 don’t have a will, and more than one-third of adults 65 and older don’t have a will.
  • An AARP study found that 55 percent of adults over 50 don’t have a durable power of attorney – someone who is legally appointed to make financial decisions for them if they can’t.
  • Nearly half of adults ages 50 to 64 don’t have a health care power of attorney who is designated to make medical decisions for them if they can’t, a Caring.com survey found.
  • A survey by the Insured Retirement Institute found that 45 percent of baby boomers ages 53 to 69 don’t have money saved for retirement.
  • Just 5 percent of adults ages 55 to 60 have long-term care insurance, and only 11 percent of adults 65 and older have a policy, according to the Urban Institute.
    You might be thinking, “Maybe my parents don’t have a will or estate-planning documents, ample retirement savings or an insurance policy that will help pay for long-term care. So what?”

Here’s what:

Your own finances could take a big hit if your parents need support from you in retirement, or if you have to stop working to care for a parent who needs long-term care. You or your siblings might not have the legal authority to step in and make financial or health care decisions for your parents if they haven’t given you power of attorney or health care power of attorney. Family fights could erupt and long, expensive court battles could ensue if your parents die without a will specifying who gets what. It might not go that far, but it certainly can create tension and resentment.

Your Parents Probably Won’t Initiate a Conversation

Money might not seem like a taboo topic to you, but it likely is for your parents’ generation. As a result, they’re not going to stop by for a visit or give you a call to say, “Hey kids, let’s have a heart-to-heart about our financial situation today.”

Even though your parents might not initiate a conversation with you about their finances, there’s a good chance they are counting on your help as they age. A Fidelity Investments’ Family & Finance Study found that 69 percent of parents expect one of their children to help manage their finances in retirement, but more than one-third of children who are expected to fill this role didn’t know this. And 72 percent of parents expect one of their children to be their caregiver if necessary, but 40 percent of children identified as filling this role didn’t know this.

Don’t you want to know if your parents are expecting you to play an active role in their financial lives or help care for them? Wouldn’t you rather know now than right at the moment you actually have to step in and help?

Cameron Huddleston

It’s Never Too Early to Talk

Your parents might have taught you to stash spare change in a piggy bank when you were a kid. But you might have to make sure their bank accounts aren’t drained by scammers who take advantage of them as they age. Your parents made sure you had food, clothing and a roof over your head. You may have to ensure that they have the same in retirement if their Social Security benefits and savings aren’t enough to live comfortably. They took care of you, and you might have to do the same for them someday.

Having a money talk with your parents can bring all of those uncomfortable scenarios to the forefront. But the sooner you start having conversations with your parents, the better. Here’s why:

  • You and your parents will have more time to come up with a plan if it looks like they won’t have enough money to live comfortably in retirement.
  • You and your parents will have more time to discuss what sort of care they want if an illness or accident leaves them unable to take care of themselves and how to pay for that care.
  • You and your parents will have time to discuss what roles they want you to play — such as power of attorney or executor of their estate — then get legal documents drafted and signed.
  • Most importantly, talking to your parents sooner rather than later will give you peace of mind. Then you can spend the time you do have with your parents without that nagging feeling that you’re not prepared to give them the help they might someday need.
Cameron Huddleston

Cameron Huddleston, author of “Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances.”

This article was adapted from “Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances.” Copyright © 2019 by Cameron Huddleston. All Rights Reserved. Reprinted with permission of John Wiley & Sons, Inc.

Cameron Huddleston will be sharing tips on how to talk to your parents about their finances on Sept. 16 at 6:30 p.m. at GreenPath Financial Wellness at 36500 Corporate Drive, Farmington Hills. Free tickets are available at stackingbenjamins.com/CHuddleston.

No Comments

    Leave a Reply