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Millennial money: Ask your folks about their financial plans

Are your parents saving enough for retirement? Are they prepared if they need long-term care? Those are just two of the issues you may want to explore with them.

Are your parents saving enough for retirement? Talk

Are your parents saving enough for retirement? Talk to them and explore long-term care and other issues. Credit: Getty Images/eyetoeyePIX

Parents are often more than happy to offer financial advice to their kids. But it's important to turn the tables and ask about their financial plans, too.

Are they saving for retirement? Have they updated their will? What's their plan for long-term care, should they need it?

It doesn't matter if you're living on ramen or running your own business and taking care of your own kids — asking parents about their financial future can feel odd. But your parents' financial plans can and will affect your own, eventually.

"It's never too soon to have this conversation," says Greg Young, owner of Ahead Full Wealth Management LLC in Rhode Island. "If something happens to your parents, not only there goes your safety net and a key part of your support network, but their affairs will likely pile onto you."

Show them you want to learn and you want to help. Use your own life events, like a new job, a new house or an expanding family, as an opening to talk about their plans.

Retirement

It's important to know if your parents are saving, but this conversation isn't just about money. It's also about their dreams for retirement.

Your first real job (or any new job) is a good chance to ease into the conversation. Ask your parents for advice as you navigate 401(k) contributions. A simple "What did you do?" gives you insight into their situation without being invasive.

Are you house hunting? That's another opportunity to check in with your folks about their retirement plans. You know, in case you need to add "in-law suite" to your home-search wish list.

Estate planning

Sorting through an estate without clear directives can tear families apart. That's the last thing your parents want. Talking openly about things like wills and trusts, life insurance and advance medical directives can help you understand what they have in place and give you insight into their intentions, Young says.

"Knowing what to expect from them, or that they've done some planning, will certainly make an emotional eventuality a little easier," he says.

Starting your own family, and setting up your own estate plan, is a great opportunity to ask your parents what they have in place. You can also use someone else's experience to start the conversation.

"Ask questions like: 'A friend from work had a parent pass and they could not find any paperwork. ... Do you and Mom have all your paperwork together in one place? If you were to pass, who has access to it?' " says Mark Struthers, owner of Sona Financial, a wealth management firm.

Your folks might not be comfortable talking about their finances. That's OK. Don't push them. Instead, make it clear that you're ready and willing to talk another time, Willis says.

"You might need to take the approach of planting a seed, and that's all you do in the first discussion," she says. "Which is another reason for beginning early."

LONG-TERM CARE INSURANCE

The cost of extended care is staggering — assisted living carries a median price tag of $48,000 per year, while the annual median cost for a nursing home is nearly $90,000 for a semiprivate room, according to an annual survey by Genworth, an insurance company. In-home care can be just as costly, depending on the services needed.

Long-term care insurance gets more expensive with age, so most people who buy it do so in their 50s or 60s. It's good to have the topic on your family's radar.

"'Do you have long-term health care insurance?' That's a specific question that is pretty palatable," says Thayer Willis, a wealth counselor. "If they say yes, the follow-up question is: 'How does it work exactly?'"

If the direct approach doesn't jibe, try backing into the conversation. Use someone else's experience as an example and ask whether your parents have considered assisted living in the future and how they would pay for it.

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