GOBankingRates recently released a survey that found that 73% of Americans haven’t had conversations with aging parents about their finances. Moreover, 22% of the survey’s respondents said they never plan to have this talk with their parents, because they believe their finances are none of their business.
That’s a really big mistake.
Forbes’ recent article, “What You Don’t Know About Your Parents’ Finances Could Ruin Yours” says that if you don’t take the time to chat to your parents about their finances, your own finances could be affected. This is because there’s a good chance you’ll have to get involved with your parents’ financial lives, as they age. This can impact your own financial well-being, if you aren’t ready for that task.
As Americans are living longer, there’s an increased risk of health issues, which can lead to significant financial consequences. About 80% of older adults have at least one chronic condition like heart disease, diabetes, dementia or Alzheimer’s disease. Alzheimer’s disease is becoming increasingly prevalent as people live longer. The number of Americans living with Alzheimer’s disease is expected to more than double to 14 million by 2050, according to the Alzheimer’s Association.
However, just 5% of adults ages 55 to 60 have long-term care insurance, and only 11% of adults 65 and older have it. Long-term care insurance helps cover the cost of care in an assisted-living facility, nursing home or even at home. Medicare doesn’t pay for this sort of care–which easily runs well over $8,000 a month.
If you and your parents don’t talk about how to pay for any care they might need, you could become your parents’ long-term care plan. That could mean you pay these expenses or stop working to help care for a parent.
Those who haven’t had detailed discussions with their parents about their finances can anticipate facing a larger burden than those who have been able to help their parents start managing their money better, by having discussions with them.
If you have siblings, it is important for all the children to be on the same page regarding the parents’ finances and long term care plans. This will help everyone involved be better prepared.
Another important reason to talk to your parents about their finances sooner rather than later, is to see if they have a will, power of attorney and living will or advance health care directive. If they don’t, consult with an experienced estate planning attorney. The sooner you address these issues, the better.
Reference: Forbes (July 17, 2019) “What You Don’t Know About Your Parents’ Finances Could Ruin Yours”