As your parents age, it’s a good idea to have conversations with them about their financial health and future. Many adult children take on the role of caregiver or overseer of finances in their parents’ old age. Trying to figure out what your parents might have wanted can be confusing and scary if you fail to have a conversation with them ahead of time. These are six important financial decisions that we recommend discussing with your elderly parents before possible mental deterioration.
1: Long-Term Care Insurance
As your parents age, long-term care may become a necessity. Getting and paying for long-term care insurance can help provide an ongoing income source for potential medical and caregiving expenses. Look at long-term care insurance packages, government assistance programs, Medicaid, and Health Savings Account (HSA) options. We also recommend discussing preferences for in-home care versus assisted living or nursing home care.
2: Healthcare Expenses
Ask your parents about their current healthcare expenses and their future expected healthcare expenses. Review the health insurance coverage that they currently have and make sure those plans can be managed in the future. Now is also the time to consider setting up a Health Care Proxy to make medical decisions if one or both parents cannot make those decisions.
3: Income Sources
This might be a more delicate conversation, but it is a good idea to have a picture of how much money your parents have and to make sure that income will be able to sustain your parents throughout old age. Identify all sources of income, including pensions, Social Security, investments, and savings. Evaluate the sustainability of their income sources for current and future needs.
4: Funeral and Burial Planning
Another difficult conversation topic is funeral and burial planning. The funeral and burial preferences are individualized and it’s important to know rather than guess. Ask your parents what they want when they pass and consider prepaid funeral plans to cover expenses. Research the costs associated with funeral services, burial plots, or cremation services.
5: Digital Assets and Passwords
You may want to compile a list of digital assets, online accounts, and passwords for easy access in case of an emergency. Your parents will have digital assets that should be accessed and protected at the time of their death. Discuss how they would like their digital legacy to be maintained and when/how digital assets can be accessed. You should also ensure you have the proper names and contact information for all professional services they used like lawyers or financial planners.
6: Downsizing and Housing
Downsizing or choosing additional housing accommodations is a typical part of old age. Discuss the financial implications of housing decisions, including property maintenance and potential rental income. Consider whether or not it makes sense to downsize or move to a more manageable living arrangement. Depending on the amount of funds your parents have, they may or may not need to look at moving. Some elderly parents can stay in their original homes and prefer this to the cost-savings of downsizing.
By having these conversations now, you can consider your parents’ wishes as they age. These six financial decisions are critical decisions that may need to be made during your parents’ elderly years. Approach these difficult financial conversations with sensitivity and empathy and continue having them regularly if your parents’ wishes change.