Money talk: 4 topics you should be discussing with aging parents

Aging gracefully can be difficult for someone whose finances aren’t squared away, yet nearly half of 55 to 66-year-olds haven’t saved money for retirement, according to the U.S. Census Bureau.

If you want to help your aging parents enjoy their final years as much as you enjoyed your childhood, starting an open discussion about their financial situation is an essential first step.

This way, you can position yourself as a resource – and potentially get ahead of any unexpected challenges. Many seniors dread the thought of losing their independence, so broaching the subject of their finances in a respectful way is important.

How to be respectful:

Assure them that your objective is to get a clear understanding of their wishes and to safeguard their independence for as long as possible.
Let them pick the time and place (as well as who is invited, if you have siblings).
Once you’ve gathered together, set ground rules so that everyone feels comfortable. For instance, agree on what topics will be off-limits, or if you need a talking stick.
Listen and ask how you can help, but avoid offering solutions unless it’s requested.

Bay Federal Credit Union, a local not-for-profit with the mission of making a difference in the financial lives of its members and the community, offers this quick list of talking points:

1. Budgeting

Budgeting for retirement can be a big undertaking, even without inflation or a possible recession on the horizon. If you can ensure that your parents have a solid budget and emergency fund now, they may later be able to avoid unfavorable tax situations, taking on debt, or — in extreme cases — homelessness.

If you discover that your parents are struggling with debt already, there are resources that can help. Or if they need to downsize to make the numbers work, discuss what kind of forever home would be the safest and most affordable for them.

Finally, discuss whether they will be able to afford future long-term care, such as a caregiver or nursing home. The average cost of a shared room in a nursing home in California is nearly $8,000 a month, according to the American Council on Aging, while the average salary of a caregiver in California is about $2,700 a month, according to Indeed.com.

Ask: Does your parent have enough money to cover basic expenses? If a big, unexpected expense arises, how will they pay for it?

Continue the conversation: Home repairs, rent increases, medical bills, and other changes can throw a budget off track. Down the line, if your parent mentions an expense with a big price tag, check to see if you can help.

2. Healthcare

As we age, we experience more health-related problems, which means that healthcare is an important topic to address with your loved one. Medicare insurance can be expensive and difficult to navigate. This can lead to unexpected bills and financial stress.

Encourage your loved one to ask questions and take notes. See if they need support finding in-network doctors, or if they would like you to advocate for them. Or perhaps you can add your parents as dependents on your taxes, making them eligible for your employer-provided healthcare benefits.

Finally, setting up a medical power of attorney long before its needed can give both you and your aging parent some peace of mind. Talk about the pros and cons, and decide together if a medical power of attorney is right for your family.

Ask: Can I take anything off your plate? What do you desire for your long-term healthcare?

Continue the conversation: Since health issues can occur rapidly, let your loved one know that you’ll check in as time goes on to see if their needs have changed.

3. Fraud

Scams can be difficult for anyone to recover from, but especially for those on fixed incomes. With digital transfer options and seniors increasing their online activities in recent years, elder financial abuse is on the rise. If you can, talk about real-world examples of people who were victims of fraud — and what steps they took.

This will help show your loved one that fraud can happen to anyone and what to do if it happens to them.

Ask: Have they heard about the uptick in online scams? Do they know the warning signs to look out for?

Continue the conversation: Since scammers are constantly refining their fraud attempts, sharing news articles or videos about scams with your parent can help them be cautious when making money decisions.

4. Will or Trust

The topic of end-of-life planning can be uncomfortable to bring up, but you might be glad you did. More than half of Americans age 55 and older do not have estate planning documents, according to a Caring.com survey. Many say they don’t have anything to leave behind (33 percent), but most say they just haven’t gotten around to it (40 percent).

If your parents have set up a will or trust, rest easy knowing that things are taken care of. If they haven’t, try to determine what roadblocks they may need help overcoming to get the ball rolling.

Ask: Do you have a will or trust? But avoid asking questions that may be interpreted as money-grubbing, such as, “How much will I inherit?”

Continue the conversation: Once you’ve determined what roadblocks your parents are struggling with, follow-up in a few weeks. Perhaps you can offer the name of a reputable lawyer, or an offer to drive them where they need to go.

* * * *

Bay Federal Credit Union is a full-service, not-for-profit financial institution that serves over 80,000 members and 2,400 local businesses throughout Santa Cruz, San Benito, and Monterey counties. With more than $1.6 billion in assets, Bay Federal is the largest member-owned financial institution in Santa Cruz County, serving its members and the community since 1957.