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How to talk to Parents about their finances

Posted by jkom51 (My Page) on
Mon, Feb 4, 08 at 11:55

An article with useful tips. This is often a difficult topic to discuss within families: I've only seen it happen after one parent has a medical emergency and the family has to confront these issues ASAP.

Questions for Parents about Financial Planning/Estate Planning
February 3, 2008 WSJournal

As twentysomethings turn to their financial affairs, they often come up with questions for, or about, their parents.

To wit: Do my parents have enough money for retirement, or will I have to help? Am I prepared for a parent's untimely death or medical emergency? And how do I approach such uncomfortable topics with my folks?

Begin a Dialogue

Experts say one way to start a dialogue is to ask your parents for advice, as you've done throughout your life, or tell them about what is going on in your financial life.

Shortly after Alex Rodriguez-Valdivia, 26, started contributing to his employer's retirement plan, he asked his father, "Do you have a pension plan or a 401(k)?" From there, the conversation turned to the dad's advice on "what would happen to my three younger siblings if something was to happen to my parents," Mr. Rodriguez-Valdivia says.

Kit Yarrow, a professor of business psychology at Golden Gate University, says that "by seeking guidance, you put your parents in a position of control, while demonstrating that you are taking these issues seriously."

You can also approach your parents by explaining to them that "holding a discussion about the 'what ifs' now will allow you to avoid the harder issues in the future," says Joseph Monterro, a financial planner for USAA's Financial Planning Services.

Involve other siblings and assure your parents that your questions come out of love and concern. Tell them you want to be involved with their decisions -- but remember that they are in charge, says financial planner Nigel Taylor in Santa Monica, Calif.

"Keep in mind this is a discussion, not an interrogation," Mr. Taylor says.

Get Organized

If your parents are comfortable sharing their financial plans with you, ask about the adequacy of their retirement funds based on their current and projected lifestyle. Take note of any life insurance or long-term-care insurance policies and suggest visiting a financial planner or lawyer together.

Some parents will choose not to share details of their finances. "At the very least, you need to know how to access any important documents and information" for the future, Mr. Monterro says.

Make a list of people to contact in the event of an emergency or untimely death; include your parents' financial adviser, attorney and banker.

Also, make sure you have access to an inventory -- including account information and any passwords -- of bank accounts, real estate, loans, investments, insurance coverage, retirement plans, safe deposit boxes, estate plans and any predetermined funeral arrangements.

Free guides can simplify the list making. Try Huntington Bancshares' "Checklist for Life" (at huntington.com/checklistforlife1) or USAA Educational Foundation's "A Guide For Your Survivors" (at www.usaaedfoundation.org/pdf/ 579.pdf2.) Keep all information in a secure place.

Besides regular wills, you should discuss living wills with your parents. Each state has its own regulations for living wills, but typically they outline medical procedures you want taken -- or not taken -- if you become too ill to state your wishes.


Follow-Up Postings:

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RE: How to talk to Parents about their finances

Some parents don't want to talk to their children about their finances. In certain instances I can understand why. But retiree's still need to make arrangements for their later years so they don't end up having strangers decide who will care for them and where they will live when they can no longer choose for themselves.

I picked up the following book at the library. Scary stuff. Provides all the right reasons why its better to make ANY plans rather than none at all.

The Retirement Nightmare: How to Save Yourself from Your Heirs and Protectors : Involuntary Conservatorships and Guardianships (Golden Age Series) (Paperback)ISBN-10: 1573927961
by Diane G. Armstrong Ph.D.


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RE: How to talk to Parents about their finances

Ssshh-h-h!!

Don't tell my kids about this one, O.K.?!!

ole joyful


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RE: How to talk to Parents about their finances

joyful,
Have you made out a will yet? (nag,nag,nag)


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