Talk to aging parents about finances

The Savage Truth

Summer may seem like the wrong time of year to have a serious talk about money with your family. Or maybe it's the most relaxed opportunity you will have to tackle a tough intergenerational discussion. Whatever the case, you cannot put off having the talk.

Fidelity has just released its third biennial study on the topic of family and finance, a unique survey of parents and at least one adult child on a number of retirement planning issues, including retirement income, elder care and estate planning. The results are eye-opening.

These topics appear to make for a mutually disagreeable conversation, but avoiding it can have severe repercussions. Adult siblings may disagree on how parents will be cared for when they can no longer live alone, with one child accepting most of the burden of care. Even before that time arrives, there could be disagreements over money management and bill payment. If you've ever tried to convince a parent he or she needs a hearing aid, you know how difficult such a mundane discussion can be. Now think about discussing moving out of the family home. 

The Fidelity survey shows a complete disconnect between what parents and adult children are thinking on key financial planning issues. For example, 93 percent of parents feel it would be "unacceptable to become financially dependent on their children, but only 30 percent of children feel the same way."

Nearly four in 10 families disagree on the role children should play as parents age regarding money and care management. Here's a shocker: 69 percent of parents said they expect one of their children to help manage investments and retirement finances, yet 36 percent of adult children who were identified to assume this role had no idea their parents were planning to give them this responsibility!

Worst of all, 38 percent of parents and 44 percent of adult children have yet to have a conversation about retirement plans, not to mention issues around long-term care. And yet, says the survey, those who have had those conversations in detail have far greater peace of mind.

Maybe the trick to getting started is to bill this discussion as "getting organized." At my website, TerrySavage.com, you can sign up for my free newsletter and by return email get a link to my Personal Financial Organizer form. Print out as many copies as you and your family need. You can even fill it out online and then print it out to save it.

When you start raising questions such as "Where is a copy of your estate plan?" you might get an answer that reveals that Mom and Dad haven't updated their will or revocable living trust in decades. Or maybe they don't have one at all. Ask about the name of their physician -- and whether the doctor has a copy of their living will (instructions about prolonging life in case of terminal illness) and their healthcare power of attorney. You might find out that you have been assigned those powers.

Obviously, it's important that you or one of the other adult children has access to all documents if your parents are incapacitated -- everything from life insurance policies to deeds to a burial plot.

Those simple "where are" questions could easily lead to a "what if" discussion. As in, what if you developed Alzheimer's? What if you could no longer live in your house? What if one of you dies before the other? Will the survivor have enough income? Now, you're moving into a planning discussion.

These conversations will certainly require more than one sunny summer afternoon. But waiting until it is too late is not the answer. There will never be a better time. And that's The Savage Truth.

Terry Savage is a registered investment adviser and the author of four best-selling books, including "The Savage Truth on Money." Terry responds to questions on her blog at TerrySavage.com.

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