Aging parents isn’t a topic most people like to think about. It’s uncomfortable to think that our parents are coming to a point where they may not be able to care for themselves or worse not be here at all. While your parents are still fairly young and active, it’s a good time to have those difficult conversations with them, such as the conversation about finances.
A study done by Employee Benefits Institute found that parents think their adult children know more about their finances, then they really do. In the study, 63% of parents said their children did know about their approximate income. Only 42% of children knew the approximate income of their parents. 54% of parents said their adult children knew their expenses. Less children said they knew their parents expenses. There is clearly a financial communication failure between adult children and their parent’s.
There may be two reasons why parents and adult children aren’t communicating finances properly. One possible reason is no one likes to admit or think of their parents as aging. None of us like to think our parents are failing in any way or doing something wrong with their finances. Another possible reason is maybe the parents think they are telling their adult children their income and expenses but they aren’t saying what they think they are saying.
If adult children don’t pay attention as their parent’s age and a parent begins to fail their could be multiple issues. Some issues parents could have as they begin to age is they could fail to take care of their own basic needs, medical issues and fall into big debt, even bankruptcy.
In America, 73% of adults 55 & older have revolving credit card balances. While 60% of adults under 55 have revolving credit card balances. Bankruptcies in adults 65 and older are up 150% in the last two decades.
Adult children should know about their parents finances. Adult children don’t have to have control of their parent’s finances but they do need to have the ability to step in when their is a health issue or death.
If you have aging parents, you need to have a conversation about their money. Something’s you should know about your parents income is how much income is coming in. You should know how much your parents are spending. You need to figure out if that balances and make adjustments, if it don’t.
While having the financial conversation, you should know where their important legal documents are, list of accounts, list of lawyers and accountants, list of insurance and policies, where medical records are, as well as their will.
If your parents don’t want to talk about their finances, you need to go a little further and bring in people who know about their finances such as the accountant, financial planner or whom ever you think could help.
Talking about money is difficult for the average person. It’s very hard to have the conversation with your parents, as pride is involved. The feeling of being old is involved and no one likes that feeling. Make it as comfortable as you can and have the talk, all of you will benefit in the end.