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8 Conversation Starters to Have With Your Parents in Their Golden Years

8 Conversation Starters to Have With Your Parents in Their Golden Years

June 04, 2024

One aspect of life that can catch many by surprise is how finances and dynamics shift as both you and your parents age. As you grow into adulthood, pursue careers, raise a family, and travel, your parents approach retirement and settle into their golden years. These stages bring new dimensions to the parent-child relationship, but they can also introduce anxieties, challenges, and questions about the future that may have previously gone unaddressed.

As a financial advisor, I encourage open dialogue between aging parents and their adult children about changes and questions. This communication helps both parties prepare and plan for the future. We also urge adult children, who are likely to become caregivers, heirs, and beneficiaries, to equip themselves with the right questions to foster meaningful discussions and ensure clear communication. 

Here are some key tips and considerations to discuss to ensure you and your family navigate life’s transitions as smoothly as possible.

  1. Have your parents assessed their financial situation?

One of the biggest hurdles for everyone later in life is making sure there will be enough money to maintain a certain standard of living. And once you leave your normal job, income sources will change.

Sit down with your parents and identify all their potential income sources, including pensions, Social Security, retirement accounts (401(k), IRA), and other investments. You can encourage your parents to estimate their monthly and annual expenses, considering both essential costs (housing, healthcare, utilities) and discretionary spending (travel, hobbies).

  1. Review Retirement Accounts and Investments

Hopefully, your parents have retirement savings accounts set up. Ideally, they will also have a diversified portfolio that can mitigate risk and spread out their pre and post-tax liabilities. Saving is the first step, followed by establishing a withdrawal strategy. It’s wise to work with an advisor and have family discussions about the best strategies for withdrawing funds from retirement accounts to minimize taxes and ensure the longevity of their savings.

Also, don’t forget to talk about Required Minimum Distributions (RMDs). Make you’re your parents understand the rules around RMDs, which begin at age 72, to avoid penalties1.

  1. Healthcare and Long-Term Care Planning

Inevitably as we age, it’s more likely to encounter health issues. This means needing different types of insurance coverage than before, and your parents will also become eligible for Medicare at age 652. Review the basics of Medicare, including coverage options (Part A, B, C, and D) and supplemental insurance with them. Medicare.gov has many helpful resources, and your insurance company can also help you understand what’s best for your situation.

We also always recommend Long-Term Care Insurance to clients. With people living longer than previous generations and the rising costs of living facilities, consider the benefits of long-term care insurance to cover potential future needs that Medicare doesn’t.

And lastly, it’s important to plan for healthcare costs. Do your best to plan for out-of-pocket healthcare costs, which can be significant in retirement or later in life.

  1. Estate Planning

We view estate planning as a way for your parents to pass on their legacy as they intend, and our previous blog outlines the essentials of an effective estate plan. Wills and trusts ensure your parents have a valid will or trust in place to manage the distribution of their assets. Designating a Power of Attorney (POA) ensures you have someone to help with financial and healthcare decisions should you not be able to. And finally, beneficiary designations verify that beneficiaries on accounts and insurance policies are up to date.

  1. Social Security Strategy

A financial advisor can help your parents determine the optimal age to start claiming Social Security benefits, considering factors like life expectancy, health status, and financial need. There are also options for spousal benefits, including survivor benefits depending on your parents’ situation.

  1. Income Stability and Employment

Your parents will want to understand their income during retirement and post-working years, as it may vary greatly from the preceding decades. Some income solutions, and ways to combat loneliness or boredom, involve part-time work or consulting to supplement retirement income and stay active. They can also look at annuities and evaluate whether an annuity could provide a stable income stream during retirement.

  1. Tax Considerations

We examine the tax implications and opportunities that surround any life event, and the golden years are no different. Make use of tax-advantaged accounts and understand the tax implications of different income sources. It’s also wise to engage in tax planning to optimize their retirement income and minimize tax liabilities. Certain requirements begin with age, such as RMDs, and other considerations. Working with a financial advisor who understands and can anticipate these changes will help you navigate them.

  1. Emotional and Psychological Preparedness

Lastly, finances aside: the later years of life are a huge adjustment. Help your parents identify their purpose and encourage discussions about how they envision their retirement, including hobbies, travel, volunteering, or spending time with family. You can also encourage them to find community and social connections. Maintaining these social connections can help them combat loneliness and stay engaged.

Approach these conversations with sensitivity and respect and consider seeking advice from a financial advisor to help navigate the complexities of planning for the golden years. As always, reach out to us and we can help you navigate one of life’s most significant transitions.

1IRS.gov

2Medicare.gov