Financial discussions to have with your parents as they approach retirementSubmitted by Castlebar Asset Management on November 19th, 2014
Discussing financial matters with your parents is at best awkward if not completely uncomfortable. It is not an easy conservation, but not having a financial talk with your parents as they move towards retirement can lead to potential issues for you and other family members down the road. It is important to be prepared for this discussion. Here are some suggested topics.
Are your parent’s financial prepared for retirement?
With your parents progressing towards retirement knowing where they stand can help you plan for your own family’s future. If you parents are comfortable or in excellent financial shape for their retirement you can relax. If they have not saved enough for retirement you might have to help and contribute to assist them as they age. Knowing this early can help you financial prepare now for this additional budget item that maybe coming down the road.
It is important to respect your parents' independence. A way to ask your parents if they are prepared could go like this.
“Mom and Dad, we recently met with our financial advisor and our on track with our own retirement plan. How are things going with your retirement planning?”
Another approach could be;
“Mom and Dad we have an upcoming meeting with our financial planner. One of the topics she mentioned we should discuss with our parents is how things are going with their retirement plan. We want to make sure that you are able to be comfortable in retirement since you sacrificed so much for us growing up. If you need us to help out we are more than willing we just want to plan for it ahead of time.”
Having this talk early can help you plan ahead and possibly get your parents on the right path.
Do they have an updated estate plan?
Estate planning is something that many parents do when they first have children and then usually let sit idle for many years if not decades. As your parents approach retirement it is an ideal time to have an estate planning attorney take a fresh look at their will, trust and power of attorney documents. Your parents may chose not to share the details of their plan today and this is normal. If they do want to share their estate plan it a big plus.
Whether your parents want to share the details of the plan you should ask them if they have updated their estate plan recently. If it has been longer than 5 years it is worth suggesting they have it reviewed. You should also ask them where you can find a copy of their estate plan in the event you need it because they become incapacitated or pass away. Another question to ask is which estate planning firm prepared their documents because they will have copies on file if you are unable to locate their copy.
How they plan to handle Long Term Care if the situation arises?
No one wants to think about going into long term care, especially your parents. The cost of long term care can surprise people with the average cost running close to $7000 a month. Now long term care insurance is not a great fit for everyone and some people are comfortable enough with their nest egg to afford long term care out of pocket. Knowing where your parents stand on this topic can help them plan in advance.
Disclaimer: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.