5 Questions to Ask - Retirement Planning with Your Aging Parents

Talking about retirement and long-term finances with parents can be difficult or uncomfortable, but it's an important discussion to have as a family. Here are five questions to use when preparing for this conversation.

Family of four sitting around the table talking

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Are your parents financially prepared for their retirement? Do you know if they’ve created a retirement portfolio that will meet their long-term income needs? These are questions that should be discussed together as a family. But sometimes, that can be easier said than done.

A GoBankingRates survey found a majority of Americans (73 percent of respondents surveyed) haven’t had extensive financial talks with their aging parents. Of those surveyed, 37 percent said it doesn’t seem an important topic to discuss, 23 percent had tried, but their parents refused to talk finances, 19 percent were afraid to bring up the topic and 17 percent stated talking about money is taboo in their family. 1^ GoBankingRates 73 percent of Americans haven't had this crucial talk with their parents," June 2019 https:/?www.gobanking.com/saving-money/family/americans-discuss-finances-aging-parents-survey/

It’s common for parents and adult children to think this is an awkward or overwhelming topic, but it doesn’t have to be that way, especially if you come prepared with the right questions to ask your parents when beginning this type of conversation. The more open you are now with communication, the less conflict and disappointment you might have to face in the future.

Questions to ask when starting the conversation about retirement planning

"What do you envision for your retirement?"

This is an opportunity to hear about your parents’ retirement goals and see if everyone is on the same page. This would be a good starter question for parents who have never talked about finances or haven’t saved any finances for retirement.

There are the well-known income options, like 401(k)s and Social Security, but what other investments and savings do your parents have? An Insured Retirement Institute (IRI) report stated only 16 percent of retirees surveyed count on Social Security for 50 percent or more of their income. The report also found Social Security is less than 25 percent of income for more than one-half of retirees surveyed. 2^ Insured Retirement Institute, "Retirement, Income, and Risk: 2nd Biennial Study on the American Retirement Experience," October 2018

This discussion is a time to learn what the soon-to-be retired or newly-retired parent wants. It can also be a time for an adult child to share what they think their parents should be considering. Do the two outlooks align and do the parents’ current finances meet their future retirement needs?

"Are you happy with your financial outlook for retirement right now? I want to make sure all of your daily needs are going to be covered."
This question could lead to a good topic that’s focused on whether your parents have the retirement income to cover housing, transportation, health care, monthly expenses and more. Do your parents plan to work in some capacity during retirement? The IRI report found, of the retirees surveyed, 72 percent aren’t currently looking for employment and 63 percent stayed in their home after retiring. 2^ Insured Retirement Institute, "Retirement, Income, and Risk: 2nd Biennial Study on the American Retirement Experience," October 2018 This could be a good time to determine what an average day, week or month looks like for your parents in retirement and figuring out what type of budget will be necessary to maintain that lifestyle.

"I care about your health and quality of life. In case there’s some kind of unforeseen health care issue or medical emergency, have you looked into a long-term care insurance policy?"
If elderly parents are facing health issues that could go beyond Medicare coverage, this would be an important subject to approach. According to the IRI report, only 25 percent of retirees surveyed believe will likely need long-term care, versus a probability that 68 percent of those age 65 and older will likely need care.2^ Insured Retirement Institute, "Retirement, Income, and Risk: 2nd Biennial Study on the American Retirement Experience," October 2018 Access to affordable medical care and the ability to maintain a healthy lifestyle play a significant role in preparing for life in retirement.

"What do you want your legacy to be and has it been taken care of through legal documents, such as a will?"
Retirement can bring about a lot of legal matters and decisions that have to be made. You can provide reassurance to your parents that their wishes will be met and legal issues will be taken care of when they’re gone.

What is the plan for their property, assets and other beneficiary decisions like power of attorney or executor of the will? Or, what if a parent is incapacitated and important decisions have to be made on their behalf? This might be a good question if you are an only child or you have several siblings and need to find out who gets designated with what responsibility.

"What financial advice would you give me that you wish you knew at my age?"
This might be another good question for parents who have never talked about finances. This talking point could lead to the discussion of working with a financial professional. Let your parents know it is never too late to start preparing financially, and working with an industry professional is something you could do together as a family.

The IRI report found more than six in 10 retirees surveyed work with a financial advisor, and retirees with advisors are 45 percent more likely to have long-term care insurance.2^ Insured Retirement Institute, "Retirement, Income, and Risk: 2nd Biennial Study on the American Retirement Experience," October 2018 Financial professionals understand the industry and can help figure out the correct steps to help meet aging parents’ long-term retirement income goals.

An important overall reminder

While this type of retirement savings conversation might be hard to have, it could be harder on everyone in the long run if these questions go unanswered. Be open and honest with your parents, and know that it’s OK to bring important research, documents or even news articles to back up your finance and retirement questions. It’s also possible your parents might have been wanting to have this conversation with you, and didn’t know how to approach the subject either.

It’s fine to not have all of the answers right away and to reach out to someone who will help with the process. A financial professional can act as an outside source and provide objective knowledge, insight and expertise to help guide the financial process along for everyone involved. They can also offer information about the investments needed to create a strong and diverse portfolio to help meet your parents’ long-term retirement income goals.

Your parents have worked hard throughout the years. With a customized financial roadmap in place, they should be able to enjoy all the benefits their golden years have to offer.






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