As a child of aging parents, you may find these statistics alarming: Only 42 percent of Americans have a will, while almost 30 percent over the age of 55 have no retirement savings or pension, and many have barely thought about or planned for their financial situations as they age. How will these folks pay their expenses in retirement? What will they do if they need long-term care? How will their families honor their wishes or make decisions on their behalf without knowing what their wishes are or what their decisions would be? If this sounds like your parents (or you), and if you may have to care for them someday, there are questions you should ask elderly parents.
For example, if your parents have done some financial planning, do you know where they keep their important paperwork? Have they designated you or one of your siblings as their power of attorney? What if something happened and they were suddenly unable to help you find what you need or make important decisions on their behalf?
If they haven’t done any financial planning, the time is now, before something happens, to talk with your parents about these important financial issues. For many adult children in this situation, this can be a difficult conversation, but it’s one you should have before a situation arises in which you have to scramble to find information, make guesses about their wishes or pay for things like medical expenses or long-term care out of your own pocket.
Here are a few of the essential questions to ask elderly parents. Hashing out answers to these questions now, as opposed to during a time of extreme stress or grief, can help you and your parents put together a comprehensive plan for their financial well-being, and your peace of mind, as they age.
1. Do You Have a Will or Trust?
A will or trust is one of the most important documents to have completed, no matter a person’s financial situation or how old they are. If your parents don’t have a will, now is a great time to start discussing their wishes and plans for their assets and designating an executor and power of attorney. If your parents do have a will, how recently was it written? If it hasn’t been revisited in the last five years or so, they should consider reviewing and updating their will to be sure it represents their current wishes.
Need help talking with your elderly parents about their finances? Contact PAX Financial Group to see how we can help.
2. Do You Have a Designated Power of Attorney? If So, Who Is It?
Most people don’t like to discuss – or even think about – their mortality, but it can be hugely beneficial to know what kind of lifesaving measures or end-of-life care your parents would want in the event they should become incapacitated or unable to make their own decisions. Giving someone power of attorney will allow your parents to have someone they trust make important medical decisions and manage their financial affairs, and talking about these things now can make it easier to know the kind of decisions they would want made on their behalf.
Your parents should let you know who they have chosen to serve as their executor and power of attorney, but don’t be offended if it’s not you. They may not want to place this burden on you.
3. Do You Have Long-Term Care Insurance?
If your parents have long-term care insurance, that’s wonderful. Carefully read and understand the terms of the policy they have, the coverage offered and what the policy limits are.
If your parents don’t have long-term care insurance, encourage them to consider it. The national average for monthly costs at an assisted living facility in 2018 was $4,000 per month, which equates to $48,000 a year, an amount that can quickly and easily chip away at even the most substantial retirement savings. Long-term care insurance can help offset the costs of assisted living or other types of long-term care.
4. Do You Have All Your Accounts/Retirement Plans/Pensions Listed Somewhere? Is So, Where is This List?
Your parents should have a list with all of their financial accounts, account numbers, usernames, passwords and other important information, and you should know where to find this list if you need it.
You should also know where to find other important items and documents, like life insurance policies, wills or trusts, health insurance information, titles for their home and vehicles, tax returns, safe-deposit box and key, and funeral pre-planning information. You may want to recommend that they organize all of this paperwork, if they haven’t done so already, and store it in a safe location that they – and you – can easily access if necessary.
5. Are You Working With a Financial Advisor?
If your parents do have a financial advisor, it’s important to know who that person is and how to reach him or her.
If your parents are underprepared, or if they are overwhelmed with some of the aforementioned questions, a financial advisor can help them make decisions and offer wise and informed advice.
Ready to Have the Talk?
Don’t be discouraged if you’re not looking forward to initiating this difficult and potentially uncomfortable conversation with your parents, and certainly don’t wait for the right time, because that may never come. Instead, be prepared with this list of questions to go over and what information you need from them, then broach the subject gently and respectfully. Think about how you would want this conversation to go with your children someday.
Here are some suggestions to make it go a little more smoothly:
Try asking your parents for advice about your own future planning. By asking them how they handled their own estate planning, you can get them talking about their decisions, their plan and important documents, and you may be able to avoid making them feel powerless and inept. If there are a lot of holes or gaps in their planning, this approach can give them the impression that you’re going to work on completing your plans together.
Another suggestion is to write a letter, letting your parents know what information you need and why, and how important it is to work out all of these details. You could include a checklist, or a list of these important questions for them to think about and answer.
You might also set up a time for you and your parents to meet with a financial advisor who can help steer the conversation, offer guidance and keep planning on track.
While the conversation may be awkward, it’s important to know the right questions to ask elderly about their life.
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