Financial Questions To Ask Your Aging Parents

Knowing what financial questions to ask your parents as they age is crucial. Three years ago, Bill and Ann Broward (names and personal details are changed to protect the couple’s privacy) learned a hard lesson about the state of retirement planning in America. Ann’s mother, a widow in her early 70s, was diagnosed with Alzheimer’s, and after much discussion, Bill and Ann took over caring for her. It was a decision Ann says she doesn’t regret despite the havoc it caused to the couple’s personal finances.

“I was pretty shocked to discover Mom had next to nothing set aside for retirement. We walked in at ground zero and had to make financial decisions on the fly. I mean, there was literally nothing in place to cover the type of arrangements we needed to make for her,” Ann said”.

The North Carolina couple saw firsthand what the GAO recently reported   PDF Opens in new window about the state of retirement security in the U.S.: Nearly 30% of 55-and-older households have no retirement savings or pension plan and half of 65-and-older households rely entirely on Social Security for retirement income. Many in Ann’s mother’s generation are simply not financially prepared for old age.Today, the Browards are part of the roughly half of Americans Opens in new window in the “sandwich generation” who simultaneously care for their own young families and provide care and financial support to an aging parent. Over the past two years, they’ve made radical changes to their own savings and investment strategies to continue to care for Ann’s mother and to ensure their own children won’t have to make the same difficult decisions in the future.

Ann puts it bluntly: “I wish we had known Mom’s situation long before it became a financial crisis for us. I tell all my friends no matter how awkward it is, have those difficult conversations with your parents. Make a contingency plan. Hopefully, you’ll never need it, but if you do—you’ll be so thankful it’s there.”

It’s never easy getting your parents to open up about their finances, but it’s a necessary step in the planning process. If you’re unsure about how to begin the conversation, elder care experts recommend talking about your own situation to set the stage. For example: “Mom and Dad, I set up a health care power of attorney last week so that my husband can make decisions for me if something happens and I can’t make them on my own. Do you have any arrangements like that?”

Alternatively, you can try a storytelling approach. Mention you saw a report on the news about scammers targeting seniors for financial fraud and you want to help them protect themselves. From there, you can guide the conversation to specific questions about their finances.

’Your conversation should help you understand their needs and wishes as well. Gathering this information up front lets you get the right plan in place so you aren’t scrambling to gather documents and make important decisions when a parent unexpectedly becomes ill or injured.

Here’s a list of financial questions to ask your parents to guide your conversation and prepare you for making an financial elder care plan:

What are your current sources of income?

This is perhaps the most difficult question to ask, but it’s better to know what you’re facing now than be unpleasantly surprised later, as the Browards were. If your parents have investment income or a pension plan, get account details and find out where they keep important documents.This is also a good time to ask if they are working with a financial planner or other professional—and to get contact information if they are.

Do you have any health or long-term care insurance?

Medical costs are a significant drain on retirement income. Find out if your parents have supplemental health insurance and get the specific details. Ask to read their policy and make sure you understand what is covered.

The average monthly costs for assisted living today hover around $4,300according to a 2020 Cost of Care Survey Opens in new window—a figure that can rapidly deplete retirement savings. If your parents have insurance to offset these costs, be sure you know how much it pays and what the policy limits are.

Have you made any legal arrangements that affect your care?

In addition to asking if your parents have made a will or living trust, find out if they have a health care power of attorney or other legal instrument that spells out who will handle their financial affairs and make health care decisions if they become incapacitated. Ask where the documents are kept and if they are up to date.

If they have not made these arrangements, ask them who they’d like to take the lead on decision-making if the unexpected happens. It’s important to let them know you will respect their wishes and support their choices so you can have an honest discussion.

Remind them to complete the appropriate documents with their lawyers, doctors, insurance providers and financial institutions to give the designated person access to account information and to make decisions on their behalf.

What are your wishes for the future?

This question opens the door to a range of issues you should discuss with your parents. For example:

How would you like to live if you aren’t able to care for yourself at home? Assisted living? With a caregiver in your own home? With a family member?

If your parents are married, find out how their plans might change should one of them die and how it might impact their current financial situation.

Do you have preferences for end-of-life care? Your parents may have very strong views on life support measures they do or don’t want; remind them to confirm their choices with a living will or other health care proxy.

Where do you keep your important documents?

If your parents don’t already have a safe place to store all their paperwork, now is a good time to suggest they find one. Ideally, your parents should keep the following information together in one place so that you or your siblings can easily access them if necessary:

Social Security, Medicare and health, life, long-term care and property insurance ID cards and/or policies

Financial accounts (retirement, pension, savings, checking, investments, loans and credit cards) plus contact information for any advisors handling their accounts

Deeds and titles to any properties

Car titles and registrations

Tax returns

Utility bills and other service provider information

Wills, trusts and other legal instruments

Contact information for family members and friends

Do you see your doctor regularly?

This may not seem like a “financial” question, but it can have a tremendous impact on future plans. Do your parents have any chronic health conditions they’re being treated for? What is the long-term outlook? Do they take daily prescription medications? Are there other health care expenses such as physical therapy they pay on a regular basis?

Be prepared to have a thorough discussion about your parents’ health and well-being—and if you discover they are not getting routine preventive care, encourage them to establish a relationship with a primary care doctor and take steps to protect their health.

Remember, your parents probably dread “the conversation” as much as you do, so you may have to broach the subject a few times before you’re able to have a meaningful talk about financial matters. But the effort is definitely worth it.

Footnotes

Sheila Olson is a Charlotte-based freelance writer specializing in investing, personal finance, entrepreneurship and retirement planning. She is a regular contributor at Investopedia and the Motley Fool and writes frequently for the banking and consumer credit industry.

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