The difficulty your parents had with talking with you about the birds and the bees when you were young, is about the same you face when talking with them about finances. The topic is awkward, but the conversation is very important.
Waiting until your family experiences a health, legal or a financial crisis, is the last time you want to discover that Mom and Dad have no money—or that they have millions stockpiled and no plan for their estate. A GOBankingRates survey found that 22% of survey respondents said their parent’s finances are none of their business and had no intention to speak with their parents about this topic.
That’s a big mistake, for a number of reasons.
Forbes’ recent article, “What You Don’t Know About Your Parents’ Finances Could Ruin Yours” says that if you don’t take the time to chat to your parents about their finances, your own finances could be affected. This is because there’s a good chance you’ll have to get involved with your parents’ financial lives, as they age. This can impact your own financial well-being, if you aren’t ready for that task.
As Americans are living longer, there’s an increased risk of health issues. About 80% of older adults have at least one chronic condition like heart disease, diabetes, dementia or Alzheimer’s disease. Alzheimer’s disease is becoming increasingly prevalent as people live longer. The number of Americans living with Alzheimer’s disease is expected to more than double to 14 million by 2050, according to the Alzheimer’s Association.
However, just 5% of adults ages 55 to 60 have long-term care insurance, and only 11% of adults 65 and older have it. Long-term care insurance helps cover the cost of care in an assisted-living facility, nursing home or even at home. Medicare doesn’t pay for this sort of care–which easily runs well over $8,000 a month.
If you and your parents don’t talk about how to pay for any care they might need, you could become your parents’ long-term care plan. That could mean you pay these expenses or stop working to help care for a parent.
Those who haven’t had detailed discussions with their parents about their finances, can anticipate facing a larger burden than those who’ve been able to help their parents start managing their money better, by having discussions with them.
If you have siblings, it is important for all the children to be on the same page regarding the parents’ finances. This will help everyone involved be better prepared.
Talk with your parents about their finances. Find out if they have an estate plan that includes a will, power of attorney and a living will or advance health care directive. If they don’t, explain how you have planned for your family’s protection, and offer to help them find an estate planning attorney who they would be comfortable with. Life throws curve balls often, and waiting is always a bad idea. Don’t wait until it’s too late.
Reference: Forbes (July 17, 2019) “What You Don’t Know About Your Parents’ Finances Could Ruin Yours”