Talking About Money With Your Baby-Boomer Parents
Parents, in the eyes of history, the media, and most other sources of information, are supposed to give guidance. They’re caregivers. Imparters of wisdom. Advice-giving gurus. While a good many of today’s youth can look to their folks for leadership, some can’t. For some, the helping hand offered to your parents extends beyond just showing them how to navigate their smart phone.
Whether you’re used to parenting your folks across the board, or they do alright in most areas of life except making reasonable goals with their money, we’re here for you. Sometimes, parents just need a little help assessing which financial habits in their life need to go. But sometimes, the choices they’re making regarding their money begin to show a pattern that lacks long-term wisdom, and they fail to create and stick to goals that will allow them to thrive until their very last days.
Paying Off Debt
The odds are, both you and your parents have debt. In fact, a recent Pew study found that 80 percent of Americans have debt. Debt isn’t always a singularly bad thing; it is often a means that makes it possible for individuals to access new opportunities.
In fact, the negative connotations surrounding debt are fairly millennial in nature. Baby Boomers are less likely to lament debt’s impact in their lives than your average millennial. Despite that though, even smart money habits exhibited by your parents may evolve into bad habits as they approach the end of their lives, particularly with respect to debt and credit utilization. Their spending should look different than yours, after all, but on a fixed income they may have to be more conservative with spending and debt. If your parents have waded into the murkier end of debt’s pond, it may be beneficial to bring it up.
How: Even if your parents are in need of some sound money guidance, they may not feel like they are and it’s doubly likely they aren’t thinking they need it from their offspring. To broach the topic, stress the good.
If your family has benefitted from their debt, recognize it. Did they use it to go to school? To send you to school? To make an expensive, but important renovation to your childhood home? Bring it up, and acknowledge that they have been responsible with debt in the past.
Just as important, talk about the value of setting goals for debt reduction. The end of their lives should be a season when they are finally able to take the trip they’ve been dreaming about or complete the project they’ve been planning. However, debt can potentially prevent that from becoming a reality.
It would be a shame for their last season of life to be marked by the stress associated with not being able to keep up with payments. Similarly, if they pass away with debt, their estate is going to be the source from which the payments come, thus restricting the reach of what will be left for those they love.
If you’ve gotten this far and things are still going well, perhaps they’d like some help making a game plan. Even simple things like paying off debt with the highest interest rates first, committing to making the minimum payments, and selling superfluous assets can make a substantial impact.
Making a Last Will and Estate Plan
You know what’s awkward? Talking about death. Even more-so? Talking about it with your parents. Inject the topic of a last will and estate plan from one of their beneficiaries and the situation can quickly morph from awkward to confrontational.
In this financial area, your parents are likely not in the minority by putting off making a plan. They may interpret this subject to be about what they’re going to lose, but in reality it’s the opposite. It’s a way for them to have agency and power, even after they’re gone.
How: This topic requires an extra dose of tact. The focus has to be on successfully getting the plan together, and not on what you or anyone else will receive. There’s no faster way to shut your parents down than by talking about their stuff or money, and who will get it. This conversation is supposed to primarily benefit them, so the focus needs to stay there.
When it comes to wills, your parents get to plan to leave whatever they want to whoever they want. That’s the point: your parents get to choose how their money and possessions will make an impact even after they’re gone. Having a plan to manage their estate is about choice.
They’re going to want what they leave to have as wide-ranging an impact as possible, and thoughtful estate planning with the goal of protecting their loved ones from an excessive estate tax burden is one of the best ways to achieve that.
It’s also prudent to communicate that getting their plan organized is a crucial step in ensuring that the surviving spouse has everything they need when they become the sole member of the household. Will they lose access to certain benefits, or encounter new expenses? Does staying in the house make sense with two, but less so with just one resident? Who would be better equipped to plan for the care of the surviving spouse, but your parents themselves?
Moving Into Assisted Living
This subject gives death a run for its money in the arena of awkward conversation subjects. If your parents were born at the beginning of the Baby-Boomer era they may be at this point; it’s going to be a tough transition for you both. However, there is one thing that’s harder than watching your parents move into assisted living, and that’s them becoming injured because they should have moved, but didn’t.
This topic is hard not just because it can be difficult to talk about, but also because the change is a costly one. The job of talking to your parents about the benefits must coincide with a conversation about the type of financial plan that will make it a viable option for them.
The end goal is that they will able to transition when the time comes, and that they will be able to do so with a plan in place so that their financial resources are optimized in such a way that their goals are not totally thrown off track.
How: Even if you feel like your parents need to move, telling them that probably won’t produce the results you’re looking for. One of the greatest losses felt when moving into assisted living is the loss of agency, and telling your folks they have no choice will only reaffirm that fear.
Assess where you see need in your parent’s life, find them a living arrangement that solves the problems and by extension relieves burdens, and then gently and diplomatically make the suggestion.
The key to making sure their burdens are relieved and not increased is to make a plan so that their money is utilized in a smart way; a way that keeps their goals oriented around their long-term future.
The sooner everyone is able to recognize what changes must happen to make the move an option, the better. For veterans, consider the options afforded by the VA. Look into long-term care insurance and reverse mortgages, etc., as a means of cultivating the financial atmosphere that will prevent the transition from monopolizing every resource your parents have.
If they bring up their reluctance to spend the money in that way, remember that it is probably flowing from a place of concern for what they’ll have to leave you (They did, afterall, set it aside for you in the will you helped them create.) and not a lack of sense.
Quality Over Quantity
The ideal rings true in many facets of life, even here, concerning conversations with your parents about their money goals. If you’ve read this far, its because you value them and want the best future for them. To have successful conversations about money with your parents, keep that your primary focus, and it will take you far.
Making wise decisions about their debt, assets, and liabilities is the key to ensuring that their estate is a legacy and not a burden, and that is likely exactly what they’re hoping for, even if they’ve struggled historically to do so.
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This post was updated June 27, 2017. It was originally published June 24, 2017.