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January 26, 2024
“The Talk”: Money and Your Aging Parents
By Sun Life Staff
Have you talked with your aging parents about their finances and medical needs? Here are 6 questions you’ll want to ask.
Parents are always looking to make sure their kids are OK. Even when they’re all grown up. What will you do for a living? Did you go for your annual check-up? Did you open that retirement account?
And then, one day, the shoe is on the other foot. It’s the grown-up kids’ turn to talk to their aging parents about their financial and medical needs.
Where do I start?
Sure, it’s awkward, but you still need to know what your parents are up to. So bite the bullet. It’s time for “the talk.” You may unearth problems that you’ll have to deal with right away. Or you may find they’ve got it all nicely worked out.
Either way, find out while they’re still in good shape, physically and mentally.
What topics do we need to cover?
Here are some questions to ask to learn more about your parents’ situation. By the way, doing this will set the stage for important talks in the future.
- What happens if you can no longer manage your affairs?
- What’s your retirement plan? How will you manage your finances?
- Is it time you stopped driving?
- Where do you plan on living?
- Would you be ready to move into a long-term care facility?
- Do you have the right health insurance?
Why it’s important to talk about money with your elderly parents
There are all kinds of reasons to talk about money with your parents, but mainly it’s about peace of mind. And that’s yours as well as theirs. Getting the ball rolling means you can nail down several burning issues:
Legal stuff
Ask your parents if they’ve made a will. Doing so will set forth what they want done with their estate and possessions when they die. Without it, the law will determine who takes care of their estate and who gets what.
- Having a will protects your family and your assets. Here are the questions to ask when writing yours.
They need to have legal documents giving someone the authority to make financial and medical decisions for them if they’re incapacitated. This is generally called a power of attorney (POA). A POA gives someone the authority to act on someone else’s behalf in legal, financial, or medical matters.
There are different types of POAs, some of which can be quite specific. For example, you might have a POA for your property and another for healthcare. POAs are called different things and may have different signing requirements depending on which province you’re in. So be sure to do your homework and find out what your parents need. You can also consult a lawyer for help obtaining and writing up legal documents.
Retirement
Parents about to retire? It wouldn’t hurt to talk about their plan with them. The first step is to help them make a budget. That will help give you an idea of their financial obligations and retirement income. Are they aspiring to a jet-setting champagne lifestyle? Their budget will show whether that’s realistic.
- What’s your retirement savings goal? Try this retirement savings calculator to see if you’re on the right track.
“Phased retirement” is something to bring up, to make sure they don’t make the jump too early. Phased retirement is when one partner downshifts to a part-time position or the couple staggers their retirement dates. Now is also the time to double-check whether your parents are comfortable managing their finances on their own. If they aren’t, perhaps an advisor might be a good idea.
What does an advisor do? Generally, an advisor will help your parents work up a financial roadmap suited to their needs and lifestyle. And people who work with an advisor often feel more secure about their retirement. On the 2019 Sun Life Barometer, 62% of respondents with advisors said they were satisfied with how much they’d saved for their retirement. Among those without one, only 37% could say the same.
Their driver’s licence
It doesn’t seem so long ago, you were begging for the car keys, and they were up late worrying. But according to Transport Canada, seniors are at the top of the motor-vehicle fatalities list. Turning in your driver’s licence may feel like losing your independence, but it doesn’t have to be that way. Talk to your parents about alternatives. There are a lot of them.
Public transit is one option, and there are other resources for seniors depending on the community they live in. If you live nearby, consider doing your weekly grocery shopping together. Not only is it family time, you can tick one more chore off your list.
Where to live
Sometimes the family home isn’t really set up for your golden years. The driveway might be too steep. A hallway may be too narrow. Or all the bedrooms might be on the second floor. Now is the time to talk about whether renovations can help their future needs. If not, it might be time to look for somewhere more suitable.
If they’re thinking about moving to a place with a warmer climate, look at the pros and cons with them. Things to consider:
- social life,
- healthcare options, and
- public transit.
Suggest they run a test with a long-term rental rather than selling everything and moving all at once.
Nursing homes
Besides talking about where they live now, you can also talk about where they might end up in the future. A place with long-term care, like a retirement home, is something to talk over. They may have reservations. But they’ll be happy to find out that residents often live active lives with lots of opportunities. They may also appreciate not having to do house or yard work. And they’ll be able to access higher levels of care if their health demands it.
- Accepting that your parents need long-term care is just the beginning. Here’s what to think about next.
Health Insurance
Health-care expenses can make short work of a budget. That’s why you can help your parents by talking about how they’ll pay for care that may be necessary. For that, a long-term care insurance plan can be an investment in peace of mind. Here are some things long-term care insurance can help your parents with:
- getting home care so they won’t have to downsize move right away,
- lessening the burden on caregivers and family members who provide financial support, and
- covering care and expenses if they have a serious accident.
Note: The earlier you start, the more affordable it’s likely to be. Bring it up as something to consider if they’re looking for security in the future.
Having “the talk” with your aging parents can be tough. But in the long run it will pay off in peace of mind—for you and for them.
This section is for general information purposes only. Sun Life Canada does not provide legal, accounting, tax or other professional advice. Please seek advice from a qualified professional, who will conduct a thorough review of your specific legal, accounting and tax situation.
