21 Feb 5 Financial Talks to Have With Aging Parents
Having a conversation with your parents about their financial situation can be an awkward and even a taboo topic. After all, like religion and politics, our culture teaches us from a young age not to discuss someone else’s money. However, when it comes to finances, don’t compare an aging parent to a co-worker or a neighbor across the street. As your parents get older, being aware of their financial health is as important as keeping up on their physical health.
According to a 2012 report from the Centers for Disease Control and Prevention (CDC) the number of people using some type of long-term care facility is projected to increase from 15 million in 2000 to 27 million in 2050. Most of this increase will be due to growth in the older adult population who need such services. Recent projections estimate that over two-thirds of individuals who reach age 65 will need long-term care services during their lifetime.
Therefore, it is essential to have a thorough understanding of mom and/or dad’s finances before a medical crisis happens. As a certified senior advisor, I help many adult children place a parent in an assisted living. This often comes at a time of an unexpected medical emergency. Unfortunately, sometimes an already stressful situation becomes worse when adult children have no idea what type of living situation a parent can afford. This is why it is important to talk about a parent’s financial health now–before it becomes too late.
Start the Discussion
It is best to begin a financial conversation with your parents when you are all in a relaxed, unemotional state. Start by telling your parents you are in the process of getting your own financial house in order. Transition the discussion and ask a parent the following questions:
1. Are legal documents in place? It is important that all older adults have certain legal documents prepared. These include: Advanced Health Care Directives (which names a healthcare power of attorney); Financial Power of Attorney (POA); living trust, and last will and testament. Know the location of these documents as well as a parent’s military records/discharge papers, birth/marriage certificate, name of attorney, financial advisor, and insurance contact.
2. How will you pay for long-term care? Do your parents have a long-term care insurance policy? Where is it located? What does it cover? Do they plan to sell their home to pay for long-term care? Even if your parents are in good health now, they need to have a long-term care plan in the event of a medical crisis. The yearly price of a long-term care facility can range from $40,000 to $100,000.
3. What is your monthly income? Ask about all income sources including social security, pension, and interest from investment accounts. Does your parent quality for veteran’s benefits? Monthly income will determine what type of long-term care facility is most affordable for a parent.
4. Health insurance information? Make copies of parents’ Medicare, Medicaid, and insurance/supplemental insurance cards along with a copy of a loved one’s driver’s license. Make a list of parents’ doctors and prescription medications.
5. Are you able to keep up with the bills? One of the first signs of memory loss is the inability to manage the daily tasks of living such as sticking to a budget and paying the monthly bills. Ask a parent if he or she is having any trouble with these financial tasks. Gently suggest taking over these duties. Do this under mom or dad’s direction and guidance since many older adults are reluctant to let go of managing their finances.
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