By Solid Serenity Legal Solutions
Talking about personal finances is often difficult and can feel uncomfortable, no matter who your talking to. But, talking to your parents about their personal finances can be even more difficult.
But for both their financial sake and yours, having those conversations earlier rather than later can make all the difference in protecting your financial futures. Nearly 3/4 of Americans have yet to have a conversation with their parents regarding their financial situation, and 1/5 say they never plan to have that conversation because they feel it is none of their business.
The reality is, your parents’ finances are your business as they get older because there’s a good chance that, as they age, you will have to get involved with your parents’ financial lives. Taking on the responsibilities of your parents’ finances can affect your own financial well-being if you aren’t prepared for that role. Avoiding these conversations early on can prove disastrous down the road.
Each year, our life expectancy increases, with this increase, the number of people unprepared financially to take care of themselves into their old age increases as well.
In addition, roughly 80% of older adults have at least one chronic disease. With numbers like that, chances are good that you will have to take care of your parents in the future. Having a good handle on what their financial situation is now could prove crucial in those later years.
Only 5% of adults ages 55 to 60 have long-term care insurance, and only 11% of adults 65 and older have a policy. Long-term care insurance helps cover the costs of care associated with aging, including assisted-living facilities, nursing homes or even care at home.
Medicare does not pay for some types of care and costs for care can run from $4,000 up to more than $8,000 a month. It’s important to find out whether your parents have long-term care insurance or savings to cover this sort of care. Statistics show 7 out of 10 adults 65 and older will need long-term care at some point in their twilight years.
It’s also important to find out what your parents’ retirement savings look like, or if they have retirement savings at all. They could be drowning in debt and have no savings.
If that is the case, knowing up front can help you prepare with them for a future when you may be making their medical and care payments alone. People who do not talk to their parents face a much larger burden than those who openly communicate with their parents early and often about their financial health and retirement goals.
While having conversations about finances is extremely important, it is also important to discuss other estate planning matters. Whether your parent has a will, trust, durable power of attorney, or advance health care directive can play a large role in your required preparations. These documents must be signed while your parents are able to understand the documents and make decisions about their assets and care. Having estate and incapacity planning documents in place can make caring for your parents much easier when you need to make decisions on their behalf.
While there are costs for putting these documents in place, it is much lower than the costs to you to go through the court process when your parents cannot care for themselves or after they pass away.
Likewise, though there can be discomfort and awkwardness when having these discussions with your loved ones, that temporary pain pales in comparison to the financial, emotional, and physical difficulties that will arise from not having the conversations. Opening communication early and maintaining that going forward can have a drastic impact on your ability to care for your parents into their old age.
Call us today if you have any questions or need to start your family’s estate plan!