The (Other) Talk: Preparing Your Parents for Retirement

For much of our lives, our parents are the ones who have to bring up uncomfortable topics. (Just think back — and squirm — to their birds and bees talk. Awkward, right?) But once we become adults, sometimes it’s our turn to start sensitive conversations. One example is talking with parents about their retirement. Even financial professionals have experienced the challenges.

For 56 percent of millennials, making sure their parents are taken care of as they age is a major focus of their lives.1 Yet parents and children alike can ease this worry through talking about the future. These may not be easy conversations, but they can be invaluable for everyone.

“I don’t know if there’s ever a ‘right’ time” to broach the subject,” says Brennan Drew of WestPac Wealth Partners in Las Vegas, Nevada. “I think the biggest thing is helping them understand you are coming from a place of caring and wanting the best for them.” With this in mind, consider these guidelines to get past any awkwardness and let the conversation flow.

What’s the Big Picture?

For Brennan, the process began when his parents decided they wanted to build a farm to retire on. “My dad started bouncing a number of questions off me. I told him I had no problem answering one-off questions for him, but what he really needed was an overall strategy looking at his finances from a macro perspective and how all these small decisions were related,” he explains. As Brennan’s conversation with his father shows, it’s important to start with an understanding of your parents’ big picture in retirement.

Retirement Income

Sometimes when parents look at their retirement reality, they discover a gap between their finances and their needs. How much do your parents plan to live on in retirement? At what age will they start collecting Social Security, and how much of their living expenses will it cover? What other forms of income of income will they rely on? Is there a pension, 401(k) or IRA available? What are the potential tax implications on their retirement income? Who are your working with to make sure you’re are on a good track?

Medical Costs

Laura Houston, a financial professional with WestPac Wealth Partners in Portland, Oregon, used her specialties to help her parents select a medical plan to supplement Medicare. Her effort proved to be crucial. When her mother was diagnosed with a terminal illness, her father was able to focus on being with his wife, rather than worrying about finances. He was also able to pay the medical bills and keep his retirement savings intact. Despite her family’s painful loss, Laura gratefully acknowledges, “Thank God they had the best medical plan.”

Laura’s experience demonstrates the importance of knowing your parent’s medical coverage. Ask them if they will carry insurance beyond Medicare. Note that Medicare doesn’t cover long-term care, such as nursing home stays. It also doesn’t cover dental care. What funds will be available for unexpected costs like these?

Housing

Brennan’s talks with his parents began in earnest when they started building a farm for their golden years. For Laura’s family, there was a beach house to consider — should they keep it or sell it? These situations point to a need to talk about where your parents will live in retirement. Do they plan to age in place? If so, is there an outstanding mortgage on their home? Or, if they want or need to go to a long-term care facility, where would they like to live? What monthly budget do they have in mind for housing?

Who Will Be Their Voice?

After Laura’s mother passed away, her conversations with her dad about retirement and legacy planning accelerated. “We discussed wills, trusts and advanced directives,” she explains. “Dad updated everything right away — we wanted to be on top of everything, and he became diligent about having a plan.”

No one likes to think about this, but in the event your parents can’t manage their health and financial affairs, who will serve as their power of attorney? Also, do they have an updated will? Who is the designated executor of their will?

Avert a Future Crisis

Not only does knowledge bring power — it brings relief, too. For both parents and their adult children, initiating these talks while everyone is in good health can avert a future crisis. When adult children know how their parents want to live in their retirement years, they can better support their parents in living as they wish.

At every step of the way, a financial professional can bring objective insights to the conversation. “Seeing the impact we could make in [my dad’s] life really opened my eyes to how much people need what we do,” Brennan says. “We are such a vital resource in our clients’ lives. I think it is important to let your passion for helping them be the crux of the conversation.” Know you don’t have to do it alone. There are professionals here to help and assist you and your parent with their retirement plans.

 

Brought to you by The Guardian Network © 2018.  The Guardian Life Insurance Company of America®, New York, NY

2018-66410 Exp. 09/2020