Asking your parents about their finances may seem strange, especially if it was a taboo topic when you were growing up. While it may seem like just yesterday that they were teaching you to ride a bike, times change. Today, you may have to be the one to take charge.
“It can be an awkward and unnatural experience,” says Rhian Horgan, CEO and founder of Silvur, a retirement planning app. “Growing up, it may have been impolite to talk about money at the dinner table.”
While it may seem like you’re being nosy or overstepping, you’re actually making a wise and proactive decision; by understanding their goals, debts, documents and other details about their financial lives, you can get on the same page today and into the future. Ask these seven questions to start the conversations:
Question 1: What Will Your Retirement Cost?
Talking about your parents’ possible retirement budget is a great way to start learning about their overall finances. You can start by asking them about how different their spending might be in retirement—whether they expect to cut costs across the board or spend more on things like travel.
Social Security is often a good place to start, according to Horgan. “Deciding when to take Social Security is a really important decision,” she says. “The difference between taking it at 62 and 70 is a 32% difference in the payout. If you wait longer, it can be as high as a 64% difference.”
Another way to frame it is that you want them to get all the money that’s coming to them—after all, they’ve paid into the system for years. “A good way to approach it is that you’re looking out for them and making sure that they’re getting their fair share,” she says.
Question 2: Where Do You Think You Might Retire?
Deciding where to retire is more than just a question of being near grandchildren or having a fishing boat. There can be significant financial implications depending on where they intend to settle down.
“Moving to another state seems like a lifestyle choice, but really, it’s an important financial decision,” says Horgan. “For our average customer, we found that their savings lasts seven years longer in Florida.”
It’s also important to think about which states have a lower cost of living, lower taxes and the best options in terms of hospitals in case of emergencies.
Question 3: Have You Thought About Healthcare Costs?
If your parents are used to having their employer shoulder the cost of healthcare, this can be a staggering change. “The transition into paying for healthcare yourself is one of the biggest shocks for soon-to-be retirees,” says Horgan. “The average couple is expected to pay north of $250,000 on healthcare costs in retirement.”
It’s essential that your parents understand their Medicare benefits and how they net out differently for each person, depending on the age they retire and their assets, says Ramona Ortega, CEO and founder of My Money, My Future, a financial education and wealth building app aimed at a Latinx audience. In very few cases will Medicare pay for all necessary medical bills. “Ask your parents if they have any healthcare savings accounts,” she says. “Do they have additional income? All those things can reduce their benefits.”
Question 4: Have You Made a Will?
Ortega recommends framing the conversation around creating generational wealth. Who do they want to be sure has financial security when they’re gone? Who will need a place to live or need long-term care?
By creating a will, parents can specify exactly how they want their estate to be distributed and keep their family out of probate court after they’re gone.
Question 5: What Insurance Policies Do You Have (and Have You Named Beneficiaries)?
Ask your parents if their insurance policies are up to date and if they’ve named the beneficiaries. “Something that’s often confusing for people is that retirement accounts, life insurance and even brokerage accounts are contracts and are not determined by a will,” says Ortega.
All of the above are meant to provide a financial umbrella for your family so that the older generation isn’t leaving a financial burden for their next generations.
Question 6: When Do You Expect to Pay Off Your Mortgage?
Don’t assume that your parents have paid theirs off, or your family may be hit with some stressful surprises. “Parents may have taken a second mortgage on their home and never discussed it,” says Ortega. “It’s important to know how much they owe on their house.”
If you’re going to sell the house, you’ll need to know how much you’ll owe on it and if their insurance policies can offset those costs.
Question 7: What Are You Worried About and How Can I Help?
Your parents may have shielded you from unpleasant realities or have shame over their decisions. Approaching all these topics from the point of view of a mutual journey (you’re both learning as you go) can soften rocky feelings.
You can help them by getting their paperwork organized in a single file so that no one in the family has to scramble to find contact information, account numbers and estate planning information. “Let them know that this will keep you from staying up nights worrying,” says Ortega. “Most parents want to make their kids’ lives easier after they’re gone.”
Lindsay Goldwert is a money writer, author and former head of editorial for personal finance companies Stash and Zeta. Her work has been featured in publications and financial sites including NYMag.com, Fast Company, Refinery29 and Qz.
Are we teaching our daughters enough about money? Fight the bias.