How To Have A Good Financial Conversation With A Senior

Finances are never the most comfortable topic. Many people don’t like talking about their finances, especially if it seems like the other person is going to be critical. Caregivers often run into this issue and talking to seniors about finances can seem extremely difficult. 

Your family member mightn’t want you involved in their finances. But, there are many reasons why you may need to be. At the very least, it helps to have general information about their financial situation and any retirement savings. 

Why Talking to Seniors About Finances Matters

It’s easy to assume that a person’s finances are their own personal concern. That’s true, to a great extent. It’s also very simplistic. 

The reality is that seniors face multiple financial challenges, including changes to their living situation, limitations to their income and potential health issues. Additionally, many seniors simply aren’t prepared for retirement. 

Poor financial planning can mean that seniors don’t have enough money to live on – or that their quality of life is very limited. On the other hand, getting finances organized can help to keep healthy and seniors in control of their lives.

How to Have the Conversations

So, talking about finances is important. Of course, that’s only half the story. The other aspect is having those conversations.

As most caregivers will already know, this process is often more difficult than it seems. This is particularly true for seniors who are stubborn or unwilling to accept help. Thankfully, some approaches can make the processes easier. 

1. Start Talking Early

The best time to talk about finances is before there are any issues. This may even mean talking to your parents about retirement when they are still working full-time and managing their own money. 

Doing so gives you the most time to figure out solutions. It also means that there is much less stress and pressure on the conversation. 

2. Be Respectful 

This is true regardless of the situation. Aging is a challenging process where people often feel like they’re losing control. If you can make sure they feel respected and valued throughout the process, everything will go much more smoothly. 

3. Find Out What They Want

You should also be talking about their desires later in life. What do they think about being a burden on family members? Do they hope to age at home or are they comfortable with an assisted living facility? What about retirement homes or similar locations?

4. Get Advice

Don’t just focus on your own financial understanding. Look for financial and legal advice too, even if you need to pay for the service. In fact, it’s often best to work for “fee for a service” financial planners, as these are required to provide you with unbiased advice. 

Getting financial and legal advice is critical. There are often complexities that you won’t be aware of otherwise. This includes areas like power of attorney and healthcare proxies, along with ways to get the most out of Medicare. 

5. Talk About Implications

The implications of decisions are important too. Your family member may know exactly what they want, but their goals might not be feasible in the real world. 

They may also be unaware of how their decisions affect you. For example, if them aging at home requires you to be a caregiver, then the financial implications may be significant. Many caregivers lose income and have additional costs. 

Those patterns may even affect your ability to save toward your own retirement. Talking about the implications can be an important way to help determine the best possible approaches for you and your family member. 

6. Learn Strategies

The final step is to focus on conversational strategies. This is an important area, as the way that you talk about something can strongly influence the outcome. For example, some approaches are likely to get your family member’s hackles up and make them defensive. It’s often difficult, if not impossible, to have a reasonable conversation with someone highly defensive.

The book Negotiating the Nonnegotiable is a good place to start here. This book specifically focuses on emotionally charged conflicts and ways to work through them. Another book is How to Have That Difficult Conversation.

Neither book focuses on aging parents and finances specifically, but honestly, that doesn’t matter. The techniques they focus on apply to many different emotionally charged topics.

Working on Financial Planning

The ideal solution is for you and your family member to work on financial planning. This process can help to determine what is going to be needed in the future and how to resolve any issues. 

Finding a financial advisor is a good first step. Good advisors will often cost, but they can save you money in the long run. They may also highlight challenges or needs that you simply weren’t aware of beforehand. 

It’s also important to avoid common issues, like the following ones. 

• Ignoring inflation. Inflation occurs over time, meaning that money becomes worth less. For retirement savings to be useful, they should be above the rate of inflation (which is often around 2.5%). Some of the safest investment opportunities are lower than this figure, which may mean you need to look into other options. 
• Making assumptions about Medicare. There are many limitations and complexities to Medicare. Long-term care is one of these. Medicare typically does not help with long-term care, regardless of whether that is at a nursing home, in assisted living or even when aging at home.  
• Not considering long-term care. Long-term care won’t always be necessary, but no one knows that ahead of time. It’s safer to plan for the care, so that the money is there in case it is needed. 
• Relying on Social Security. Social Security is an important safety net, but it’s not as powerful as many people assume. The average amount received often results in a low quality of life, especially as affordable housing can be difficult to find. 
• Poor spending habits. Spending habits can have dramatic impacts on long-term finances. This can be difficult to see in the short-term and many people spend more is ideal. Whenever possible, it’s best to cut back spending and put more into savings.