As your parents get older, more responsibilities will fall on you to help care for them. It starts with mowing their grass, lifting some heavy boxes, and helping fix their TV when it stops working, but eventually, it becomes so much more. They’ll need help taking care of themselves, you’ll have to do their shopping for them, or even start making decisions for your parents.
It’s not easy to do, but your parents will need your help, and in order to do that, you need to have open and honest conversations about their situation, lifestyle, and finances. If you are going to take care of them, you need to understand what their situation is. But having conversations about finances with your parents can be hard, awkward, and difficult.
Start Talking Early
Before your parents are in a place in their lives where you need to care for them, have conversations about the future. It might be hard to view your parents as dependent or feel like it’s too early to discuss these things, but the earlier you can open the conversation, the easier it will be.
Start with understanding their retirement plan and how much money they have saved up. If they aren’t retired yet, discuss their current retirement savings and contributions. Ask to see their retirement plan so you are in the loop. If they are already retired, find out their monthly income and how much they have left saved up for the rest of their lives.
Having this talk early opens it up for future conversations and what the future entails. You can better understand what being cared for in the future looks like and what they want to avoid. For example, if they don’t want to be put into a nursing home, you might have to sacrifice your time or even your job to take care of them.
Be Honest and Caring while Talking
For many parents, talking about their finances or even asking for help is incredibly difficult. They might feel ashamed or failing by having you involved in it. This is completely understandable and needs to be approached with love and care.
But just because it might be hard to talk about doesn’t mean it should be avoided. Be honest on why you want to talk about it and set expectations and goals. Don’t spring the conversation on them, but instead set a time and date in the future to have it. That way, they can prepare mentally and physically for it.
Have Hard Data to Work With
In an effort to avoid some of the hard work, your parents might try and be vague about their finances. They might say “we have enough to get by” or “we have enough savings to be comfortable.” This doesn’t work. In order to fully understand their situation, you need to see hard numbers and written down plans.
Ask to see records of their savings, their regular bills, and their budget. This way, you can get more of the complete picture, rather than simple assurances. Double-check their work and look for potential pitfalls in their future.
Explore Multiple Options
Just because they have a plan right now doesn’t mean it’s exactly how it will happen. Accidents, health issues, and old age can all cause the plan to change. If you wait too long to discuss options, a choice will be made for you and your parents.
Talk openly about what the future can hold. This can include how to care for them as they grow older, where they want to live, what to do if something goes wrong, and what they expect from you. They’ll want to stay independent, but you should talk about what to do when they no longer can care for themselves.
Even if you don’t come up with a hard plan for the future, exploring the options and knowing what’s available can make a huge difference when it’s time to make a decision.
Setting up a Will and Power of Attorney
Alongside discussing your parents’ finances, you also need to plan out what to do in case something goes seriously wrong. Who is going to take charge if your parents are unable to make decisions? How will their finances be handled if they are unable to manage them?
A good first step is to create a will, in case of a parent’s death or inability to make decisions. A Will sets aside exactly what a person wants to happen after their death and typically includes financial guidance. If your parents already have a will, please ask where it is being kept. If they don’t feel comfortable sharing the details of it, that’s fine, but know where it’s kept and encourage them to have a spare copy in a separate location you can access when necessary.
Discuss with your parents who will have the power of attorney in case something happens. Power of attorney gives another person the authority to manage another’s finances and is necessary if your parents can’t care for themselves. If this is not determined before, a judge will make the decision, which might not be who needs to be in charge.
Consolidate Accounts to Make Things Easier
Your parents might have financial accounts at multiple different financial institutions or several credit cards that need to be cared for. If you will need to manage these for them, you should encourage them to consolidate their different accounts to make everything easier.
Especially if there isn’t a reason to have their finances spread around, talk with your parents about putting all of their accounts in one place. If they have multiple credit cards, talk with them about canceling some and only have one or two they’ll need to track.
If they are looking to consolidate their accounts, Pioneer has savings and checking accounts perfect for your parents. Plus, switching over to Pioneer is easy using our ClickSwitch tool. You open an account with us, put your current bank account’s info into ClickSwitch, and your money gets transferred to your new account.
Protecting Them from Future Fraud and Identity Theft
Senior citizens are often targeted by criminals for scams. Whether it’s pretending to be a loved one stuck in a different country with no cash, imitating the IRS looking for their personal info, or trying to romance them out of their money, seniors need to stay on their toes.
Talk with your parents about how to recognize and avoid these scams. Encourage them to not answer unknown callers and be strict with who they give their info out too. Help them make their social media accounts private and to not share any personal information online.
If you are worried your parents could have their identities stolen, encourage them to use tools that can help protect and correct fraud. Pioneer’s ID Theft Protection is a great example of this. If you or your parents suspect identity theft, we’ll connect you with a Personal Recovery Advocate to help you secure their accounts and identities. Plus, if your parents already have checking accounts with us, they already have ID Theft Protection.
Learn More about ID Theft Protection!