Eight Important Financial Questions to Ask Your Aging Parents
Many people would prefer to discuss anything—including politics—if it means they don’t have to talk about money. But financial conversations are essential to avoid misunderstandings and money missteps, including across generations. That’s why you should talk to your parents about money as they near (and enter) retirement and older age.
When you start asking financial questions of your parents, remember that you don’t need specifics, such as dollar amounts or who is inheriting what. The purpose of these discussions is to ensure your parents’ wishes are backed by a plan and to understand whether (and how) they want or need your support as they age. Their plan may also affect you directly if you have power of attorney, help with paying bills, or are expected to be a caregiver in the future.
What are their wishes for their money?
The first question you might ask your parents is what they want to happen with their money as they age. Do they want to travel? Gift it to a charity or organization they care about? Fund education for their grandkids? Comfortably cover long-term care costs? This can help guide ongoing conversations about how they can plan for their future and how you can support them in the process.
Do they have an estate plan?
An estate plan is something all adults should work on long before retirement, as it determines what happens to your assets if you are incapacitated or pass away at any age as well as how your medical care is handled. A good estate plan provides clarity about your parents’ wishes and can minimize both the tax impacts and legal complexity down the line.
Estate plans generally include a will, a living will (which spells out medical treatments you do and do not want), power of attorney (POA), and beneficiary designations (more on this below). Some estate plans also include trusts, which direct how assets are handled after death, and power of attorney for kids at age 18, which allows parents to participate in decision-making (such as healthcare) for their young adult children.
What are their assets (and how are they titled)?
A key step in estate planning is taking a full inventory of assets: real estate, vehicles, bank accounts, investments and retirement accounts, insurance policies, credit cards, valuable personal property, collectibles, ownership stakes in businesses, etc. An inventory will also include liabilities, like mortgages and other debts. This can help your parents anticipate estate tax issues and minimize future legal costs (avoiding the probate process) such as by designating real property as transferable or payable on death or putting it in a trust.
How are they funding retirement?
Without asking for specific numbers, talk to your parents about how they are paying for expenses in retirement and which account(s) they are funding these expenses from. This can help clarify how costs will be covered as they age and what assets will be part of their estate.
Sean Williams, a certified financial planner (CFP) at Cadence Wealth Partners in North Carolina, recommends also discussing the current and future tax implications of funding retirement from different types of accounts and what happens to those accounts when they are left behind. For example, beneficiaries of IRAs inherit the required minimum distributions and tax burdens, which can be significant if you are still in your highest earning years, while non-qualified investment accounts can be inherited but not saddle you with capital gains tax, thanks to a step-up in basis.
Have they designated power of attorney?
Power of attorney is an essential part of estate planning because it authorizes someone to make legal, financial, and/or medical decisions when you cannot act on your own behalf. There are a number of different POA designations and scenarios, but if there is trust between parents and children, Williams recommends discussing durable power of attorney, as this can help their agent to act quickly in an emergency for everything from paying bills to arranging end-of-life care. This conversation should also cover your parents’ wishes in more detail.
Do they have updated beneficiaries?
Every financial account should have a beneficiary, which ensures that your assets go where you want them to when you die. Not naming beneficiaries (and updating them if wishes or circumstances change) can lead to confusion and hurt feelings and cost a lot of money and time to sort out. In many cases, parents can designate one or more primary beneficiaries to receive percentages of accounts as well as contingent beneficiaries if the primary beneficiaries have passed away or cannot assume the asset.
How will care be provided and paid for?
Even if your parents are in good health, you should discuss plans for how they will receive care as they age and how that care will be paid for. Healthcare and eldercare costs add up quickly and can be astronomical for older adults who need higher levels of long-term support. Fidelity estimates that the average 65-year-old in 2024 may need $165,000 in after-tax savings to cover healthcare expenses in retirement (a 5% increase over the previous year). Meanwhile, long-term care can easily cost tens of thousands to more than six figures per year.
The National Institute on Aging has a guide to financing long-term care, such as through public and private financing as well as assistance for caregivers of older family members, to support this conversation.
How can important information be accessed if needed?
If your parents already have all of their plans in order, that’s great—but you need to know how to access information (or have a trusted person who does) if your parents are incapacitated or pass away. This may include the names and contact information of any professionals that are involved in financial planning and management as well as legal representation. You should also discuss how to hand down logins to everything from bank to social media accounts. Consider a password manager that has a legacy feature, which gives a designated contact emergency access under specific circumstances, and/or the option to securely share selected items with other account holders (if you are helping with day-to-day money management, for example).
You may also encourage your parents to put together a digital estate plan, which is basically a will for digital assets like photos, apps, and online accounts.
How to have financial conversations with your parents
You’ll want to approach financial conversations with care, as these topics can be difficult and fraught with emotion—especially if your family does not talk about money. One way to open the discussion is to ask your parents what they want or hope for as they age, suggests Eric Roberge, a Boston-based CFP and founder of financial planning firm Beyond Your Hammock. You might ask questions about how they envision their later years and how they would want things handled if they were unable to make their own decisions.
“Framing it as ‘I want to know what YOU want, so I can support you’ can be a more productive way to start a conversation that most people are understandably reluctant to have for all kinds of reasons,” Roberge says. “Once you get an idea of what your parents may have in mind for what their ideal scenario is, then you can start honing in on specific plans or tactics that may need to be put into place to support what they say is most important to them.”
Another option to broach the topic: Let your parents know that you are working on your own estate and retirement planning. Sharing your own experience can create common ground and highlight the importance of the process for both generations.
Know that you won’t cover everything in one conversation—in fact, financial planning conversations should be ongoing—and that it will likely feel uncomfortable. Start with the easiest or most approachable topic first and go from there. Remember that you don’t need specifics, such as which beneficiaries are receiving which assets, right away. Rather, the goal is to help your parents protect their financial wellbeing and their wishes.
