Gathering for the holidays: How to discuss family finances

As we approach the holidays and family gatherings, here is a question that I often receive from children of parents who are in or near retirement – how do I approach the topic of financial planning and retirement with my parents? 

Clearly, approaching your parents about the state of their financial health can be a delicate situation.  If your parents are reluctant to talk to you, make it clear that you respect their need for privacy and concerns.  However, don’t be afraid to express your own needs and concerns as well.  Their financial situation may impact you also, particularly if they become unable to support or care for themselves.

In our offices at Secured Retirement Advisors, we have helped hundreds of families in or near retirement with their financial planning. What we find is that parents hope that their financial matters never burden their children or cause them hardship.  At the same time, the children of these parents want assurance that their parents have "things taken care of" or “all their ducks in a row”.

While many families we work with wish to keep many of the details of their finances more guarded from the children, some are fine with an open book policy.  Whichever your family’s desire, the holiday season is often a good time to begin these discussions as likely the whole family is together for an extended period of time. Be cautious, however, not to isolate one or two siblings, or step siblings, from these discussions to avoid the potential of leaving a generation of resentment and hard feeling towards other family members.

Get Organized

Now that your parents have accepted your help, it’s time to get organized.  Find out where they keep all of their financial and legal documents.  These documents include wills, durable power of attorney, medical power attorney, insurance policies, bank accounts, and so on.  Consider a three-ring binder to organize some of this most important information.  Don't forget about where the list of passwords is kept and important keys are stored. If you would like, contact Secured Retirement Advisors and our office would be happy to send you an example of what we share with many of our clients.

Get Help

Now, here is some advice for those parents in or near retirement. A legal professional can help ensure that you have all of the necessary legal documents in place.  Review these documents periodically to make sure that they are up to date and do not become 'stale'.  Review your beneficiary forms on retirement accounts, annuities and life insurance policies with your financial professional on an annual basis.  Finally, remember to shred any unnecessary documents and to clearly indicate any financial accounts which have been closed.

Get Specific

I also suggest that you have a discussion with your family about your wishes, in all legacy areas important to you, not just financial issues. Discuss family traditions, family history, your values and your faith. Often, the most precious legacy you leave is not monetary in nature.

If you are a child with concerns about your parents’ finances, be careful not to overstep your boundaries. While it may be okay to press about what the plan would be if you need to assist in the financial affairs, your right as a child does not include getting down to the numbers or reviewing any division of assets between siblings unless everyone is comfortable with your involvement. Sometimes our clients will prefer to have their children involved with professional financial and legal meetings, but unwelcomed attendance will cause discomfort.

Finally, in my experience, disability or death NEVER come at a convenient time so make sure you have your plan in place. The best course of action is to have this difficult discussion sooner than later.

Wishing you a happy holiday and a wonderful time as your family gathers together this week!