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Cashing In Q&A columns

6 questions to ask aging parents about their finances

Summary

It may be a hard conversation to have, but as your parents get older, you’ll need to chat with them about their financial well-being. Here are six questions to get you started

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If you’ve filed money matters with religion and politics under “Awkward Conversations I Don’t Want to Have with My Parents,” who can blame you? After all, an April 2012 Ameriprise Financial survey found that when they were growing up, two-thirds of adult children never or rarely heard their parents talk about money.

“Parents think it’s their own private business, and children feel like they don’t want to pry,” says Bob Mauterstock, a financial planner and author of “Can We Talk? A Financial Guide for Baby Boomers Assisting Their Elderly Parents.”

Avoiding the topic for too long can leave you in the lurch if your parents outlast their retirement savings or, unthinkably, become ill or die before making their financial wishes known.

 

So heed the parental caregiver’s 40/70 rule: Bring up your parents’ money situation by the time you’re 40 or they’re 70. These six questions will get you started.

1. What’s your plan?
The No. 1 reason seniors balk when their kids bring up money? They’re worried about maintaining their independence. “For older people, one of the most important things is to maintain control of their lives,” says Mauterstock. “They don’t want to end up with their children telling them where they’re going to live and what they’re going to do.”

By focusing on your parents’ plans for themselves — from retiring to traveling to moving to an assisted living community — you’ll reassure them that they’re still in charge. Meanwhile, you’ll get a toehold for talking about how their money can get them from Point A to Point B.

2. Where can I find out about your finances?
When a parent falls ill or dies, the last thing you want to do is spend hours hunting for insurance documents and account numbers. That’s why Mauterstock recommends that your parents — and you, for that matter — should keep a financial master list in a safe place, including:

  • Basic information about all savings, checking, investment and retirement accounts, including names of banks and brokerages, account numbers and instructions for online access.
  • Insurance policy numbers, along with the names and contact information of their insurance agents.
  • Instructions on where to find important documents such as wills, stock or bond certificates, tax returns and the deed to their home.
  • Names and contact info for their lawyer, accountant and financial planner.
  • The location and combination number of any lockboxes or safes.

Assure your parents you don’t need the list now — you just want to know where they keep it in case of emergency. While you’re at it, encourage them to meet with an estate planner to designate power of attorney for one of their adult children.

— Christine Sheffield
co-founder, The Parent Care Solution

If your mom has a stroke, her accounts will be frozen and untouchable, but a power of attorney document “allows the person who’s appointed full access to make decisions on behalf of another person who’s incapable,” explains Jennefer Walsh, a financial planner and CEO of Walsh Financial Solutions in Golden, Colo. “They can open accounts, make changes, get financial statements, things like that.” When tragedy strikes, that authorization can save a lot of heartache.

3. Where do you want to live as you get older?
On average, a whopping 40 percent to 45 percent of older Americans’ budgets go toward housing and related expenses, according to the Employee Benefit Research Institute, making it the top spending category for seniors.

So if your parents want to get a handle on their retirement finances, they need to figure out where they want to — and can afford to — live. In their own home? In a retirement community? In a care facility? Knowing your parents’ wishes may open the door to solving potential problems together.

In one family Mauterstock worked with, elderly parents desperately wanted to stay in their home, but diabetes and other health issues made maintaining the property difficult. Working with their adult children, the parents hired a property manager to care for the home so they could continue living there — a far better solution than letting the family home deteriorate over time.

4. What are the biggest challenges you see ahead?
As much as you’re dying to ask your parents about their net worth, don’t. Many retirees are too private to share the big number, says Walsh. One fiercely independent 80-year-old client recently started letting her adult daughters take on some of her financial tasks, but she clarified up front what she wanted them to know. “She’s comfortable sharing her income and her plan,” says Walsh, “but not comfortable sharing her net worth. Her daughters are getting more involved, but that big number is not going to be disclosed.”

Retirees may also secretly feel that an adult kid who asks how much money their parents have is angling to learn the size of his inheritance, points out Mauterstock.

Instead, ask what worries them. Their response will give you a sense of how secure they feel in retirement. “It isn’t about knowing how much they have,” says Christine Sheffield, co-founder of The Parent Care Solution, a Charlotte, N.C.-based organization that helps families plan for the care of their aging parents. “You just have to know if there’s enough money there to sustain a lifestyle that they would like to have for their future.”

5. Do you need any help?
One reason you care about your parents’ finances is that you know that, down the road, their money matters may have a big impact on your own money matters. According to an April 2012 report by Ameriprise Financial, nearly 60 percent of baby boomers are helping their parents financially. But it’s rarely an easy offer to extend, which may call for some creativity beyond simply sending a check.

— Bob Mauterstock
author, “Can We Talk? A Financial Guide for Baby Boomers Assisting Their Elderly Parents”

Walsh recalls one client who set up an investment account that paid dividends straight to the parent. In other cases, children had the parents’ bills sent directly to them. Siblings can even pool money and have a financial adviser mail a check, so it feels more like a pension than a handout.

Aging parents may also need help with basic financial tasks. “My 86-year-old dad almost had his electricity shut off because he forgot to pay the bill,” says Sheffield. The earlier you start talking about finances, the sooner you’ll notice changes that indicate a need for you to step in.

6. How do you want to be remembered?
“Most adult children have never really talked to their parents about what they want as their legacy, how they want to be remembered, what’s important to them,” says Mauterstock. “It’s not all about finances.” In the end, figuring out how to spend the time they have left is just as important as how to spend the money.

See related:Kids aren’t responsible for parents’ old debts, Protect elderly parents’ credit cards from illegal use, 5 tips for talking to elderly parents about credit card debt

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