Complete Your Own Retirement Financial Planning After You Talk to Your Aging Parents About Their Monetary Needs:
Financial Planning for Retirement is a Gamble Without It

Retirement financial planning is on the minds of many of us. Retirement planning calculators will help you anticipate your current savings, and investments versus anticipated future spending needs. You may have been very careful in balancing your budget so that your retirement future is secure. You’ve used every tool available and are fairly confident that your financial planning for retirement is the best. But if you have not talked to your aging parents about their money situation, now and in the future, you could be in for a rude awakening.

Money for retirement

The headline in Dow Jones News (1-21-08) reads this way:

“Caring for aging parents can wreck a financial plan”

“… a growing number of financial advisors see lurking risks that can destroy their clients’ financial plans.

If you planned to withdraw 5 percent from you portfolio every year to support your lifestyle, and then you increase that by 50 percent to care for ailing parents, your financial plan’s a mess.”

Here are the money matters you need to talk about with aging parents:

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Impact of Current Economy

Despite their best efforts in retirement financial planning, it should be obvious that many of our parents could be on shaky grounds financially. For one thing, people are living much longer than they have in previous generations. Our current economic situation is wrecking havoc with even the best laid plans.

The basic costs of living continue to rise. Heating costs, repairs and maintenance costs and property taxes continue to escalate. Many aging parents have counted on the value of their homes to carry them through, sometimes through a reverse mortgage. As housing prices plummet, their security in retirement financial planning may also be disappearing.

Anticipating Health Care Costs

Medical technology has produced amazing support for people in all stages of life. But health care and medication expenses also rise dramatically with age, and a careful review of health insurance coverage, or Medicare or Medicaid eligibility is a must. Early research on Long Term Care Insurance should be considered, too, given the reality of people living longer and longer, but in more frail health.

Your Parents Financial How-To List

Your parents may be like many couples and have one person responsible for managing their funds. Make sure that they have prepared a “Financial Instruction Manual” for the other. A sudden illness or accident could leave them unable to finish these tasks for some period of time. Also, they need to know the location of all the essential financial documents . You would hate to see your mom or dad financially paralyzed if they don’t know the intricacies of how their household bills are taken care of from month to month.

Consult Financial Professionals

Encourage your parents to have a professional review of their long term retirement financial plans. They should have a review of

  • social security

  • life insurance

  • pensions, or

  • annuities

    so they will understand the impact of one spouse predeceasing the other. This is especially important for your mother since women are most often left alone.

    It’s not hard to imagine that your parents may not be perfect financial managers. Credit card debt has gotten out of hand for many people, and your parents may not be exempt. They should have a clear understanding of existing debt on the other spouse if they are widowed.

    Finally, do your homework so that you are clear about how your parents debts impact you after they are gone.

    Emergency Financial Plan

    If your parents needed an extended hospital stay, would the mortgage and utilities be able to be paid while they were away? Have they named someone as Durable Power of Attorney for Finances? Also, make sure all their estate planning documents, such as a will, have been prepared and stored properly so there is not an unnecessary gift to the Government at tax time.

    The Family Talks About Finances

    Nothing could be more frightening for many people than the prospect of talking to aging parents about money. We’ve been taught for years that our money is private, that it’s impolite to talk about what we make or what we spend. But given the economic realities of our time, NOT to talk to your parents about money could leave you having your own conversations about financial survival that you didn’t predict. Take the time to plan your money talks so that you, your parents, your family, and your extended family are not devastated. should be considered, too, given the reality of people living longer and longer, but in more frail health.

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