Discussing your parent’s finances, future, and senior care needs can be sensitive topics. If you’ve noticed that your parent might need long-term care and need to figure out how to pay for it, you’re not alone: By 2030, one in five Americans will be at retirement age. Addressing the financial aspects of senior care sooner than later allows you to plan for the future and avoid making quick decisions in a crisis. Here, we outline topics to cover when talking with your parent about their financial situation and tips on how to start a productive financial conversation with them.
Financial details to discuss
Seniors’ financial situations can greatly influence how they receive their future care. You need this information to know your options for long-term care, living arrangements, and how they will pay for it.
Income and available financial resources
People may develop several financial sources as they age. You can bring a checklist of these possible financial tools for discussion. You can go through the list, and if they have any of these types of income sources, determine the dollar amount in each:
- Checking accounts.
- Social Security.
- Pension.
- Retirement savings — 401(k), 403(b), and 457; individual retirement account (IRA).
- Investment or brokerage accounts.
- Savings accounts.
- Certificate of deposit (CD).
Assets, debts, and other sources of income
Now that you’ve talked about income, you want to list the non-liquid assets your parent has and their estimated resale value. If necessary and your parent is willing to part with these assets, selling them could free up money they can use to pay for a senior living community or other long-term care expenses. Their home, car (if they plan to stop driving soon), rental properties or other real estate assets, and others can be funding sources for care.
Considering your parent’s debt is also important. You want to keep this in mind because it affects how much funding they have to pay for senior care. You need to know if they have a mortgage on their home, credit card debt, or owe money in other ways so it’s not a surprise later on.
Another source of income they can use to pay for senior care is Veterans’ benefits if they apply to your parent. Benefits available to qualifying older adult Veterans and their spouses can help pay for senior care. Benefits like Aid and Attendance can provide up to $2,642 of monthly income to qualifying Veterans and their spouses. If you don’t know whether your parent is a Veteran, ask them. Veterans’ benefits can be tricky to understand and apply for, so if your parent is a Veteran, talk with a professional who can help you understand the process.
Medicaid can be another way to pay for senior care. This needs-based health care program is federally funded and jointly run by each state. Asset and income limits exist to qualify, but those who do can get help paying for senior care. It’s important to get a clear picture of your parent’s finances so you can explore this option if you need to.
Your parent’s budget
When you gather this financial information, it is also wise to discuss their monthly budget. Knowing how much money they spend on a monthly and annual basis is equally important as the sources and amounts of income. Like debt, this affects the bottom line of how much they can spend on senior care.
Working with your parent to determine their budget (if they don’t already have one) is also helpful in other ways. For instance, money management is a skill that sometimes declines when older adults need more help and long-term care. Defining their budget can be an exercise that sheds light on their abilities — or waning abilities — to manage their finances independently.
Determining your parent’s budget will also inform your family of a monthly dollar amount they may be able to spend on home care services if that is a senior care option they need and want to have. Many older adults prefer to age in place, so if your parent is one of them, you’ll need this budget to learn if they can afford long-term care services while continuing to live at home.
How to approach the conversations
Though these important topics can be uncomfortable to discuss at first, the bottom line is that you care about your parent’s well-being. Remember that these conversations will help set up your family to meet the challenges that come with finding the right senior care and also funding it.
Patience and compassion
You’ve been thinking about having these conversations for a while, but that doesn’t necessarily mean they have been on your parent’s mind. Even if you approach the first conversation perfectly, your parent may feel caught off guard. They may feel defensive or nervous to admit they are aging and their level of independence is changing. Feelings like these are natural, so having patience and empathy are key.
Remind them that you care
If the conversation isn’t going as planned, ensure your parent that you love them and have their best interests at heart. Be mindful of their emotions and mental state — especially if they struggle with focusing or memory issues.
Come prepared with a list, pen, and paper
You can also bring a written checklist list of topics for discussion, like the financial list mentioned earlier. Have a notepad and pen or computer handy to write down all the information they tell you.
Taking notes will also help you avoid rehashing discussions as often, and you can refer back to the notes at later dates. You’ll also see what information they don’t have handy and can more easily turn the conversation into a list of action items that will lead to progress.
The bottom line
You want your parents to have the life and care they want. Having a financial discussion is essential to facilitate these two aspects of life. Planning for getting senior care can set up your family to enjoy one another and for your parent to live out their retirement years with fulfillment and safety.
