How to Talk to Your Aging Parents About Finances

Conversations about money aren’t easy, but the right approach goes a long way.

a senior mother touches her adult daughter's arm with warmth
Wait until your parents are in the right frame of mind before broaching this touchy topic. 
Dean Mitchell / iStock

Important conversations with our loved ones can be hard. And they can be harder still during a challenging year. But it’s important to talk to our parents about their finances—before we are unable to do so. 

According to a 2018 survey by the Federal Reserve, many adults nearing retirement age are struggling to save and not on track with where they want to be. Of those 60 or older, 13 percent have no retirement savings or pension at all. And, according to the New York Times, the Covid-19 crisis will upend the timing of retirement plans for older workers, whether due to sudden job loss or the health risks of returning.

In other words, now may be the perfect opportunity to have “the talk.” Here are some tips for navigating a conversation about money and healthcare, so you can support your parents in achieving their vision of the future.

How to Approach the Conversation

Remember, now is better than later.

Cameron Huddleston, a longtime financial journalist and author of Mom and Dad, We Need to Talk, was just 35 years old when she was unexpectedly confronted with her mother’s Alzheimer’s diagnosis. Huddleston didn’t have friends in a similar situation and navigated much of the process on her own, eventually making her mom’s financial decisions. One major lesson she learned? Discuss money and end-of-life care earlier than you think you need to.

“Don’t wait to have conversations with your parents until there is a health emergency, or until they’re in retirement and facing financial issues,” Huddleston says. “If you wait until something forces you to have the conversation, it will be more emotionally charged. And, if there is no plan for dealing with an emergency, your parents may not even have the legal documents in place to allow you to step in and help them.”

Reframe conflict as opportunity.

If fear of a potential conflict leads you to procrastinate, re-evaluate your mindset. According to Kwame Christian—an attorney, author, and director of the American Negotiation Institute—humans, like other animals, are constantly assessing the environment and asking: approach or avoid? If we see a threat, we avoid it. If we see an opportunity, we approach it. “So we need to see conflict as an opportunity,” Christian says. “Maybe it’s an opportunity to learn about your parents. Maybe it’s an opportunity to strengthen your relationship. Or, maybe it’s an opportunity to help you avoid paying exorbitant nursing home fees down the road.”

It's okay to be afraid, but, Christian adds, be sure it’s about the right thing. Weigh today’s discomfort against the regret you could feel in the future if you don’t have the conversation now.

Be mindful of timing and preparation.

When it comes to choosing the right time to talk, the psychological state of our parents is key. “When someone is stressed out or under a lot of emotional or cognitive strain, they’re not going to process with much depth,” says Christian. Instead of thinking things through, they’re more likely to choose what provides the most perceived safety, which is to maintain status quo by avoiding the topic.

But once your parents are in the right frame of mind, take time to prepare. Read up on financial topics and consider answers to questions such as, How do your parents see the world? Where are they now, and where do they want to go? If you don’t already know, ask. After all, this is about them.

hand typing on calculator at desk

Implementing money-saving strategies now can help your parents later.

wichayada suwanachun / iStock

Strategize your communication.

Once you begin the conversation (or series of conversations), use these three ways suggested by Christian to effectively communicate:

  1. Acknowledge and validate emotions.
  2. Get curious with compassion.
  3.  Prioritize joint problem solving.

Know who to include—or exclude.

If you have siblings, speak with them before you speak with your parents. Determine who wants to be involved in your parents’ care and how much time or money each person will contribute. “Don’t just assume you’re on the same page,” says Christian. “It is an incredible sign of respect for you to take the time to include them in the process.” Likewise, if you have a sibling who should not be involved, for whatever reason, negotiate those expectations prior to sitting down with your parents.

Sometimes relational or historical barriers may require the presence of a third party. While it doesn’t have to be an actual mediator, it should be a person well-versed in personal finance and regarded as objective by all participants. “Sometimes you’re not the right person to do the negotiating,” says Christian.

The American Negotiation Institute offers free downloadable Negotiation Guides on its website, which can help you prepare a communication strategy for this conversation—and others.

paperwork, pen, and glasses sitting on a desk

Once the correct paperwork is in order, make sure you know where to find it in case of emergency.

DNY59 / iStock

Financial Topics to Discuss

Estate Planning

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.

Long-Term Care

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.”

Money Management

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.