There's a good chance that many adult children will have to get involved with their parents' financial lives as they age. Yet, an overwhelming majority of adult children – 73% – have not had detailed conversations with their parents about their finances, according to a survey by GOBankingRates. One of the primary reasons why survey respondents said they haven't had "the talk" yet with their parents is because they don't know how to have the discussion.
Fortunately, talking to your parents about their finances isn't as difficult as it might seem. That's because there are several ways to start the conversation. Here are 10 tried and true approaches from my book, "Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances." Decide which conversation starter will work best to get your parents to open up and start talking.
If you're on the fence about whether you want to go through with this, here's something very important to consider about why you need to have this conversation sooner rather than later. "You're either going to do it by plan or by crisis," financial psychologist Mary Gresham said. "It is going to happen." Ideally, you want the conversation to happen when your parents are in good health, are mentally alert, and aren't an emotional mess (nor are you) because a crisis has struck.
The good news is that your parents probably won't resist your efforts to get them to share at least some of their financial information with you if you use one of these conversation starters. John Cooper, a financial planner with Greenwood Capital, said he's learned by talking to many retirees that they recognize the importance of sharing financial information with their children. "There are really a lot of people out there who are interested in having these conversations with their children," he said. "They just need to be asked." So what are you waiting for?
First Things First: When to Have the Conversation
Before you decide what you want to say to your parents, you need to figure out when to have a conversation with them. "Timing is really important," said eldercare expert Linda Fodrini-Johnson. Your efforts could backfire if you pick the wrong moment.
"Often kids will say, 'We're all together. Let's talk to Mom now,'" Fodrini-Johnson said. "That's not okay. There's usually alcohol, little kids, and people who shouldn't hear the conversation are there." If the holidays are the only times when you and your parents gather, at least wait until the day after a family meal to try to talk to them about their finances. After all, how would you feel if someone asked you, "Could you please pass the turkey, then tell us who's going to get what when you die?"
You'll have much more success if you try to start a conversation with your parents at a time when everyone is relaxed and emotions aren't running high. If you have siblings and all of you want to be present, you need to decide jointly when you can gather to have a calm discussion that is free of distractions and time constraints. I know that's tough when we all have busy lives, but it's an important conversation that shouldn't be rushed.
It's also important to pick the right time of day to have this conversation if your parents have health issues or are showing signs of dementia, Fodrini-Johnson said. They're likely to be in a better mood and have more energy for this sort of discussion earlier in the day. But that could vary, so try to time your talk to coincide with the point in the day when they are functioning best.
Once you pinpoint a time to talk, you can use one of these strategies to get your parents to have a discussion with you. If the conversation you choose doesn't work, try another one. It might take time and several attempts to get your parents to open up to you. More importantly, don't push them to reveal more than they're comfortable discussing, said Josh Nelson, founder and CEO of Keystone Financial Services. "It's probably a progression of conversations," he said. "This is probably not a one-time sit down, 'I'm going to spill my guts and tell you everything – now we're done.'"
As your parents do start to share information with you, take notes. You don't want to forget any details – which, trust me, you will if you don't keep a record of what your parents have told you.
Conversation Starter #1: Use a Direct Approach
f you have a good relationship with your parents and they were relatively open about money matters while you were growing up, there's no need to beat around the bush. Simply let them know you would like to find out some information about their finances to give you peace of mind.
You don't necessarily have to ask them to tell you everything at once. Instead, you could start by asking about particular aspects of their finances. For example, when my mom started showing signs of memory loss, I suggested that we meet with an attorney to update her estate planning documents – her will, living will, and power of attorney. That then led to other conversations and a trip to her bank to put me on her account as her representative payee because I was going to have to handle financial transactions for her as her memory declined.
I really had no choice but to be direct with my mom because I had to act quickly before her Alzheimer's progressed too far. For the most part, she didn't push back because we had a good relationship, and she knew I had her best interests at heart. You'll likely have the same success I did if you and your parents get along, and you make it clear why you're trying to gather information from them about their finances.
Conversation Starter #2: Don't Make the Conversation About Money
If your parents think money is a taboo topic, you'll be more likely to get them to open up about their finances if you start the conversation by talking about big-picture topics.
For example, you could casually ask, "Mom and Dad, have you given much thought to what your retirement will be like?" This will get them thinking – and, hopefully, talking – about what they want life to be like as they age. And their answers will likely give you clues to whether they're financially prepared for that lifestyle. If, say, they tell you that they'd love to be able to travel but that's not really in the cards, then it might be a clue that they don't have much money set aside for retirement. You could respond by saying something like, "That's too bad. Why don't you think you'll be able to travel?" or "Are you sure? There are plenty of cheap ways to travel." Then you could offer to help them brainstorm ways to find room in their budget to afford to travel or do the things they want in retirement, which might give you more insight into their finances.
Another way to approach the conversation without initially making it about money is to ask your parents about their wishes. The point is to show them you're concerned about being able to uphold those wishes, whether it's the type of care they would want later in life, end-of-life care, or their final wishes. For example, you could say, "Mom and Dad, you took such good care of me when I was younger. I want to be able to provide that same sort of care if you ever need it." This could open the door to conversations about whether they have a will, a living will, financial and health care power of attorney documents, or a plan for long-term care.
Conversation Starter #3: Send an Invitation
It might seem old-fashioned to send your parents an invitation to talk, but it can be a polite gesture that an older generation will appreciate. And it's more likely to result in a productive conversation. "It's really helpful to let your parents know you want to have this conversation in writing rather than catch them in the moment when they have to give you an immediate response," said financial psychologist Mary Gresham. "The immediate response is going to be more emotional. If you write to them and say, 'I want to invite you to have this talk with me,' that gives them time to work through their emotions."
Explain in your letter what you want to discuss. And let your parents know that you're inviting them to have this conversation out of love – your love and desire to be able to help them as they age and their love and willingness to share information with you so you can help them if they need it.
The benefit of an invitation is that it lets your parents maintain a sense of control. "An invitation is different from a demand or a request," Gresham said. "People process the word 'invitation' differently." You are asking kindly to have a conversation but giving them the option to decide whether to accept your invitation. And you can let them decide when and where to meet to have the conversation by asking parents to share a vision of what will make it work for them, Gresham said. "If they say, 'Never,' you can always say, 'That doesn't work for me,'" she said.
Conversation Starter #4: Ask for Advice
Some parents might be reluctant to have money talks with their children because they feel like it's a reversal of roles. If you suspect that will be the case with your parent, start the conversation by asking for help with your own financial matters. For example, you could tell your parent that you want advice on how to save for retirement, whether you need a will, or how much life insurance you should get now that you have a family of your own.
"Tell them what you're thinking about doing so you give them the power to tell you what they think you should do," said Daniel Lash, a certified financial planner with VLP Financial Advisors. "It's like they're giving you advice because that's what parents are good at – giving advice."
The goal in asking your parents to give you advice is to get them to open up about the financial and estate planning they have done. For example, they might tell you that they didn't have to worry about saving for retirement because they will get a pension. You could keep the conversation going by saying, "Wow, you're lucky. Have you had to do anything else to make sure you'll have a comfortable retirement, like getting long-term care insurance or planning to downsize to a smaller home?"
If you ask whether you should have a will and they tell you they never bothered to get one, you could suggest that all of you meet with an attorney together to draft wills.
Conversation Starter #5: Use a Story
Stories are a great way to get a conversation going with your parents about their finances. You could tell them about a friend whose father died without a will and the family ended up in court fighting over who got what because the father had been married more than once and had stepchildren who wanted a piece of the pie. Then you could ask whether they've done any estate planning to prevent this sort of situation.
You could tell them about a colleague whose mother had a stroke that left her hospitalized, and the friend couldn't access any of the mom's financial accounts to pay bills because they had never planned for this sort of situation. Then you could discuss the importance of naming a power of attorney to make financial decisions for them if they can't and creating a list of financial accounts and passwords.
Or you could tell them about a neighbor whose parent was a victim of identity theft and that you want to help protect them from becoming victims. You could then show them how to log onto AnnualCreditReport.com to get a free copy of their credit report, which you could review with them for signs of fraud, such as accounts they didn't open (and get good insight into the types of accounts they have).
If you don't have a story of your own to share, you can use one you read about in an article or heard on the news. Remember, though, that you don't want to drone on about all of the bad things that have happened to families who didn't discuss financial matters. Share one story, then focus on how having conversations sooner rather than later can help ensure that it will be easier for everyone – you, your siblings, Mom or Dad – down the road.
Conversation Starter #6: Talk About Your Own Financial Planning Experience
Plenty of financial advisers say that talking about your own financial planning experience can be a good way to get your parents to open up about theirs. Nelson said he often recommends to clients that they get their own estate planning done, then use that as a conversation starter with their parents. For example, you could tell your parents that you recently had a will drafted and want them to know where they can find it if something happens to you.
Hopefully, your parents will then let you know if they have a will or other estate planning documents and where they are. If not, Nelson recommended that you take the opportunity to ask. Or you could tell them that you recently met with a financial planner or took some other step to make a financial plan. You could share how helpful the experience was for you and ask whether they've done anything similar.
Conversation Starter #7: Use a Life Event
A life event – either one in your family or in another family you know well – can help start a conversation with your parents about what they've done to prepare for events that will happen in their lives, said Marguerita Cheng, a financial planner and CEO of Blue Ocean Global Wealth. For example, you could say something like, "I've seen how hard Grandma's death has been for you, and it got me thinking. What sort of planning have you done?"
You don't have to wait for a death in the family, though. A marriage, divorce, graduation, or birth of a baby could be used to start the conversation. The point is to use a life event to talk about being proactive so your parents can have more control over what happens to their finances and any assets they might leave behind when they die. You can tell your parents that you know that it might be a difficult conversation to have, Cheng said. But she said you should then say, "If something happens, we don't want to have to make these decisions for you."
You could suggest that they check their financial accounts and life insurance policies to make sure their beneficiaries are updated. You could ask them to consider meeting with an attorney to draft or update their estate planning documents. Or you could gently nudge them to discuss what sort of long-term care they would want if they ever needed it. Even if you get them to take baby steps, that's a good start, Cheng said.
Conversation Starter #8: Use Current Events
Chances are, you and your parents discuss current events from time to time. When financial topics are in the news – changes to the tax law, big swings in the stock market, health care reform, the list goes on – use that as a launching point for a conversation about your parents' finances.
For example, Jason – a 40-something who lives in California – used the poor state of the economy during the Great Recession to start a conversation with his mom about how it was affecting her finances. He was in his 30s at the time, and she was in her 60s, going into semi-retirement. "I mainly asked her if she had been speaking with anyone about her retirement funds and if she had moved any of her holdings into a safe harbor type of situation to prevent any negative fallout from the market crash in 2008–2009." He then asked her how she felt about her savings and whether she was prepared for retirement. Jason learned that she had been talking to her financial advisor about these topics and was taking steps to protect her savings. Since that initial conversation, he has had more with her and continues to check in to see how she's doing financially.
Conversation Starter #9. Ask About 'What If' Scenarios
One of the key reasons to talk to your parents about their finances is to be prepared for emergencies. So asking them about "what if" scenarios might lead to more in-depth planning and preparation. For example, you could ask what would happen if both of them ended up in the hospital after a car accident. Let them know that someone would have to be designated as a health care power of attorney to speak with their doctors and make medical decisions for them if they couldn't on their own. And someone would have to be designated as power of attorney to handle financial transactions for them, such as paying bills. Most likely, it will be a relief to them that you're asking and want to plan for worst-case scenarios, said Jan Valecka, a financial planner and owner of Valecka Wealth Management.
You also could ask your parents to share details about their final wishes. "It can be as simple as, 'Do you want a burial or a cremation?'" Valecka said. If they are reluctant to answer, let them know that you need to know so you don't have to make this sort of decision for them. If they don't want to hand over detailed information to you about their finances to prepare for worst-case scenarios, ask them to make a list of the accounts, insurance policies and legal documents they have and to tell you where you could find that list if something happens.
Conversation Starter #10: Offer to Lighten Their Load
You can gain insight into your parents' finances by offering to take over a financial task for them so they have more time to do what they enjoy. This is a good strategy to use if you haven't had any money talks with your parents and they already are showing signs that they're having trouble managing their finances on their own.
You could start small by suggesting that you help them set up automatic bill payments. They might not even use their bank's website, so this would give you a chance to create an online account for them, and to keep tabs on their account going forward. Or you could offer to tackle one of the most universally dreaded financial tasks for them – tax preparation. You don't necessarily have to prepare their tax return for them. Instead, you could help them gather their documents and take them to an accountant to prepare their return. In the process, though, you'll get details of their finances that you'll need if you ever have to manage all money matters for them.
Final Thought: Remain Calm and Respectful
Regardless of the conversation starter you choose to use, remember to be respectful when talking to your parents. You won't get very far if you're condescending. So come at this conversation from a place of compassion and reverence for your parents, even if that's not truly how you feel. You're more likely to have success if you're talking with them rather than at them. After all, the goal is to have a conversation, not a monologue.
Also keep your emotions in check as you have this conversation with your parents. The reason you're trying to have this talk with Mom or Dad before a crisis strikes is to do it when everyone is calm and level-headed. So if they balk at your efforts to get them to open up, don't let your frustration get the best of you.