Talking to aging parents about money
While adult children say they recognize the need to discuss inheritance, eldercare and retirement planning issues, roughly half of them don’t feel they’ve done a very good job talking with their parents about these issues, according to a study by Fidelity Investments.
What’s worse, there’s substantial disagreement between the generations on just what to talk about, and even when these sorts of conversations should take place.
While nearly nine in 10 (89 per cent) of adult children and parents agree that health and later life care is an important topic of conversation, 63 per cent disagree on the level of detail that has been covered to date. Only 10 per cent of children, for instance, believe the conversations were sufficiently detailed.
Many families have a hard time talking about the subject of inheritances and later-in-life care. It's a delicate matter and families aren't as tight-knit as they were in previous generations, partly because so many are spread out across the country.
But if your folks are getting older, you and your siblings should start getting them comfortable with the idea that there are things you simply have to talk about. Don’t expect to be on the same page, however.
For example, nearly all of the parents in the study maintain they won’t need financial help from their kids, yet a quarter of those adult children say they believe they will have to help their parents in retirement.
The top barrier to conversation noted by 30 per cent of parents is they don’t want their adult children spending too much time thinking about a potential inheritance.
As for adult children, 40 per cent say the biggest impediment is that they feel it’s not any of their business to broach these topics with their parents. Interestingly, only 15 per cent of older respondents say that such money issues are private.
Kathleen Murphy, president of personal investing at Fidelity Labelling, finds these answers “troubling,” especially for those in the sandwich generation who are already grappling with competing financial priorities. She urges families to break through these barriers.
“Whether it’s a parent facing a shortfall in retirement income or an adult child weighing the tax implications of an inheritance, too often discussing these issues is considered taboo within families,” Murphy says.
“But real emotional and financial consequences emerge when such conversations don’t happen or lack sufficient depth,” she warns.
Even the timing of these discussions is an issue. In fact, only one in three (34 per cent) parents and their children agree on the best time to compare notes.
Parents are more likely to say the time to talk is when they’re near or even entering retirement, while most adult children say they’d like to talk before their parents retire or become ill.
“With parents living longer and the increasing financial complexity that the sandwich generation faces, it’s critical that families break down barriers, have these important conversations to make informed decisions and take control of their finances, rather than reacting to a crisis after it’s too late,” Murphy maintains.
Simply getting everything down on paper can be another problem. And that's too bad since most middle-aged adults really want to fulfill their parents’ wishes, regardless of how much money they may or may not see in the end.
Here’s a basic list to start with: wills, insurance policies, property records, retirement accounts, pensions, and powers of attorney naming a trusted adult child to potentially make financial and healthcare decisions later in life.
Parents who fail to address these issues, or who assume that their children will suddenly step up when called upon are really looking for trouble, says David Solie, author of How to Say It to Seniors: Closing the Communication Gap with Our Elders.
For instance, he suggests that families use life events to lay some groundwork, raising a series of unassuming what-ifs along the way — and well before needs may arise.
The priority is to help the older members of the family recast the situation they’re in. Adult children aren’t parenting their parents, they’re partnering with them, he maintains.
Older adults are watching control evaporate right before their eyes. Begin this reframing process by clearly acknowledging that you understand that control is critical to their well-being and that you fully support their need to have it, he adds.
All of this will likely make your parents a bit nervous, or perhaps even resentful. They’ll need time to establish trust in your abilities and adjust to seeing you in a different way.
Just don’t wait too long to start.
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