Financial Topics to Discuss
Topics: Will/trust, power of attorney, advance directives, final wishes (burial/cremation), and account beneficiaries (401k, life insurance).
This category is top priority, says author Cameron Huddleston. The reason? You have to be mentally competent to sign legal documents. “If you have a parent who has a stroke or who develops dementia, you may have to step in and start managing finances, and to do so you need to be named power of attorney,” she says. “If your parent can’t sign that document, you’ll have to petition the court. And that can take many months and cost thousands of dollars.”
When discussing these topics, highlight your desire to know what your parents want. You don’t want to guess, and you don’t want to make decisions for them. You want to honor their wishes.
Smart Tip: If your parents don't know where to start in this process or feel overwhelmed at the idea, encourage them to follow these 10 straightforward steps to create an estate plan.
Topics: Long-term care insurance, health and life insurance policies, and medical expenses.
Almost 70 percent of adults who are 65 years old today will need long-term care at some point in the future, says Huddleston. Ask your parents if they have a plan for long-term care, should they need it. Keep in mind, long-term care is incredibly expensive and not covered by Medicare. Social security can help offset retirement funds but not enough to cover long-term care. Other options include long-term care insurance (which has to be secured when they’re in their 50s or early 60s and in good health), permanent life insurance policies with a long-term care benefit, reverse mortgage on a paid-off home, and for lower-income households, Medicaid (which will pay for long-term care in your home or in a nursing home, but typically doesn’t pay for care in an assisted-living facility).
All that to say, if your parents don’t have a plan and end up needing long-term care, there’s a good chance they are going to rely on you. “I worry it’s going to be a huge issue as baby boomers continue to age,” says Huddleston. “Many millennials may have to step out of the workforce to care for aging parents.”
Topics: Bills, investment accounts, and debt.
If you don’t already know, determine what sources of retirement income your parents have and whether they believe they’ll be able to live comfortably—or whether it will be a challenge to make ends meet. If they need a small push, Huddleston says, it’s low-pressure and helpful to offer money-saving suggestions. You can share things that have worked for you personally, from shopping around for lower insurance premiums to regularly evaluating and trimming subscription services. If your parents can save a little now, they may be in a better position later.
With more significant financial concerns, your parents may need family support—or to consider downsizing to a smaller house or apartment. If you need to discuss the latter, Huddleston suggests highlighting the financial benefits including how much more money they’ll have in their budget to pay off debt and do the things they enjoy. And you can always suggest they meet with a financial advisor.
Access to Information
Topics: Keys to safe or lockbox, passwords to accounts, contact information for key people (doctors, lawyers, money managers, landlord, etc.), mortgage documents, medication information, and where to find all of this.
Let’s say your parents have all their estate-planning documents completed. Great! But do you know where they are? What about healthcare information and other relevant documents?
On her website, Huddleston offers a free, downloadable “In Case of Emergency Organizer,” a 36-page fill-in-the-blank financial and personal inventory that will help your parents provide you with all the information you’d ever need in an emergency, from military service history to the nitty gritty of monthly utility bills, plus where to find important legal documents. You can also make your own version for them to fill out. Either way, make sure they keep it in a safe place you know how and when to access. Should the worst happen, your collective efforts will save time and worry.