Helping your elderly parents face their financial needs

Remaining focused on established investment principles is essential

Has the time come for ‘the talk’ with your parents about their money? Having the money talk with your parents could be critically important. When you were growing up, adults may have been in charge of your finances. But that was then, and this is now.

Their lives are changing, and although they successfully navigated their way into retirement, it does not necessarily mean they have planned further ahead. As they age, their needs and goals will evolve, so now is the time to discuss these matters with them to help ensure they have a plan in place.

Charging in for the discussion is not the best strategy to adopt; it might be wiser to take a softly, softly approach when starting ‘the talk’ with your parents. You could initiate the conversation by discussing the financial plans you are making for your retirement. This could then naturally lead to asking them what plans they have in place for the future.

Understanding their needs and goals
It’s not a comfortable conversation to have, but taking the time to ask your parents about their needs and goals will help you understand where they stand. You might begin by posing key questions such as who will care for them when they’re older, where they’d like to live if they can no longer look after themselves, and who they’d wish to make decisions on their behalf when they no longer can.

Although you may have grown up believing your parents are invincible, they are only human, and ageing can present challenges such as poor health or increasing care costs. Understanding their financial situation is a vital first step. Assist them in identifying their savings, insurance policies, investments, and whether they have paid off their home. This will indicate if their finances align with their potential future needs.

Practical steps to address potential financial challenges
If it becomes clear that there may be financial concerns in the future, there are practical steps to explore that do not necessarily require any financial contribution from you.

Should they contemplate downsizing? Moving to a smaller home can lower living and maintenance expenses. It’s also a practical way to declutter and simplify daily life.
Would it make sense to relocate? If your parents live in an area with a high cost of living, moving to a more affordable location could free up income. Furthermore, relocating closer to family may offer peace of mind and convenience.
Have they created a budget? Helping your parents to structure a realistic budget could reveal areas where they can save without compromising their quality of life.
Have they considered multi-generational living? While not suitable for everyone, having your parents move in with you could reduce costs while fostering closer family ties, provided that this aligns with everyone’s preferences.

Organising financial documents
To genuinely support your parents, it is crucial to organise their financial paperwork. Encourage them to gather and store essential documents in a safe, accessible location. These may include details of savings accounts, insurance policies, Wills, pensions, and investments.

To make things easier, compile a list of contacts for their accounts and insurers. Having these documents readily available simplifies planning and provides clarity during unforeseen circumstances.

These steps will collectively help to create an accurate picture of your parents’ financial position and determine whether they are sufficiently prepared for the future.

Building a plan for peace of mind
Approaching these conversations with empathy is crucial. This isn’t about scrutinising how much your parents possess or what you may inherit. Rather, the focus should be on ensuring that their later years are characterised by security and dignity.
By planning proactively, you can provide the entire family with peace of mind. The earlier you initiate this discussion, the easier it will be to decide on a course of action.

This article does not constitute tax, legal or financial advice and should not be relied upon as such. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. For guidance, seek professional advice. The value of your investments can go down as well as up, and you may get back less than you invested. past performance is not a guide to future performance.