personal finance | april 6, 2022
Important Conversations for Older Parents to Have With Their Adult Children
Talking with your adult children about your future can benefit the whole family.
Create an agenda to help you stay on track during your discussions.
Topics such as long-term care and powers of attorney should be a part of your conversations.
Discuss family members’ financial priorities and tax situations to help make the best decisions about your income and estate plan.
As you prepare for the later years of your life, you will likely want to involve your grown children in the conversation, since your plans can have an impact on their future as well as yours. There are so many financial decisions that need to be made in retirement and so much information to handle. It’s a good idea for parents to discuss these matters openly with their adult children before any needs arise.
Consider the following suggestions for beginning this discussion with your children:
Speak in person, at times of low stress, preferably while you’re healthy.
Lead the discussion. Provide them with only as much information as you feel comfortable sharing, and find out how involved they’d like to be. Explain that they may be able to help you make your retirement planning decisions while respecting your right to accept or decline their ideas.
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Setting an Agenda
Covering these subjects can help you stay on track as you talk with your family:
The location of important documents, including lists of financial providers and doctors. Compile documents, names, phone numbers, and addresses in a binder or on your computer. Keep them in a safe place, and let your children know how to access the information. Our family records worksheet can help you start to get organized.
Your living arrangements. Tell them how long you plan to live in your current home and what you are considering doing about housing if your situation changes.
Your will and/or trusts. Make sure you have an up-to-date will and that you’ve reviewed it within the last several years to accommodate any changes in your family or your wishes. If you have any trusts, determine whether they still meet your needs by talking with an attorney.
Durable power of attorney. This document enables you to give a specified person the authority to make financial decisions on your behalf if you’re incapacitated. It’s often a good idea to add powers of attorney to your investment accounts as well. You may also want to select a “trusted contact” for your investment accounts as an added level of account protection. A trusted contact is an individual you designate who can be contacted by the financial firm if something seems amiss.
Health care directive. Also known as an advance directive, this document covers two important aspects of your medical care: a living will and a medical power of attorney. A living will provides specific end-of-life instructions for the type of medical care you desire. A medical power of attorney, also known as a durable power of attorney for health care or a health care proxy, enables you to name a person to make medical decisions for you when you are unable to do so.
Long-term care arrangements. Long-term adult day or nursing care can be expensive: upwards of $200 per day and considerably more in many parts of the country. Your children should know your health care preferences and how you plan to pay for care if necessary (e.g., insurance or investments). They especially need to know if you’re counting on them for financial or physical support.
Financial information and decisions. Review your financial situation with your children to identify strategies for making the most of your money. For example, understanding each other’s financial priorities and tax situations can help you make decisions about retirement income and estate plans that benefit both generations.
It’s important to remember that you don’t have to solve everything or share the information all at once. The conversations may be very new and different for all of you—both financially and emotionally. Taking the time for an honest and open dialogue ultimately will provide everyone with greater peace of mind.
Tips for Adult Children
Taking these steps can make a difference as your parents get older.
Increase your emergency fund—Having more money available can help in the near term if you need to travel or take time from work to help your parents.
Consider the roles your siblings could play—Brothers and sisters who live near your parents could drive them to doctors’ offices or assist with chores, while a sibling who lives farther away might handle monthly bill paying.
Talk with your parents—While you don’t need to know account details, be sure your parents have a solid estate plan, including wills, trusts, a power of attorney, health care directives, and beneficiary designations.
- T. Rowe Price Research Participant*
*Source: In 2017, T. Rowe Price conducted a study with focus groups that included 50 individuals.
This material has been prepared by T. Rowe Price for general and educational purposes only. This material does not provide recommendations concerning investments, investment strategies, or account types. It is not individualized to the needs of any specific investor and is not intended to suggest that any particular investment action is appropriate for you, nor is it intended to serve as the primary basis for investment decision-making. T. Rowe Price, its affiliates, and its associates do not provide legal or tax advice. Any tax-related discussion contained in this material, including any attachments/links, is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding any tax penalties or (ii) promoting, marketing, or recommending to any other party any transaction or matter addressed herein. Please consult your independent legal counsel and/or professional tax advisor regarding any legal or tax issues raised in this material.
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