Daughters give Mom a rose

No parent-to-child talk trumps the birds and the bees in terms of awkwardness. Crying in your mom’s arms after your first breakup or learning from your dad how best to handle a bully have nothing on when your parents sit you down and describe … that.

As you get older, those big talks with your parents typically become more conversational and the grown-up in you might realize you count your parents among some of your most trusted advisors and best friends.

But when it comes to finances, that sense of awkwardness might return (especially since discussing finances in our society is pretty taboo). Conversations might be stressful or even provoke anger, but you need to know how to talk to your parents about money.

Neither side will know where the other stands unless you are able to talk things out. But how do you sit down and have an honest, come-from-the-heart conversation about the important financial matters?

It can be difficult and emotional to talk to your parents about money. Draw on the lessons your parents taught you throughout the years about communicating, showing empathy, and being honest and speak with them adult-to-adult, so you can ease their financial worries in their golden years.

From bank recommendations to inquiries about medical bills to even (another) awkward talk about assisted living, here are five money talks everyone should have with their parents.

Talk #1: Modernizing financial services

Your parents are great at many things, but technology might not be one of them. iPhones and tablets, social media and video calling — it can be difficult for some members of the older generation to keep up.

We get it. After all, it wasn’t so long ago that the concept of online banking was met with a confused look. For some, that’s still the case.

Millennials and Gen Z are well versed in online banking’s benefits compared to traditional brick-and-mortar banks: Higher interest rates on savings, better customer service, and the ability to check balances 24/7, as well as the ability to move money during non-business hours and make payments directly from your phone. Still, some parents are hesitant to leave their traditional bank after being a loyal customer for years.

A smart way to bring up the benefits of online banking to your parents can be to mention the perk of earning more money. Online banks, like Ally Bank, offer competitive interest rates that are typically significantly higher than those offered by brick-and-mortar banks.

If your parents are still skeptical, consider these words from one of our customers in Oregon:

“When my daughter recommended I obtain an account at Ally I was resistant. I finally decided that when traveling it would serve me better than my credit union. Even my brick-and-mortar banker couldn’t resist asking more about it when I told her [Ally’s] rates for CDs.”

Related: 6 Questions to Help You Actually Have ‘The Money Talk’ Without Freaking Out

Talk #2: Paying off debt

Your own debt is a sensitive subject, but talking about someone else’s is even more delicate. It isn’t exactly small talk to ask your parents if they’re in debt, but try to bring it up when something similar happens in your life. If you’ve recently paid off a debt you’re proud of — student loans or your car loan, for example — share your excitement and follow up by asking your parents if they still have any debt.

If they do have a get-out-of-debt plan, that’s great news. But if they’re behind in payments or admit they have no idea if they’ll ever be debt free, empathize with them and offer guidance.

Instead of giving a top-five list about why they should pay off their debt — composed of talking points they’ve likely heard before — share your own experiences about how being debt free has empowered you and made you feel more confident about your finances. Perhaps your stories of feeling less stressed and having the freedom to plan a vacation will inspire them.

If your success story isn’t enough to motivate your parents, encourage them to set up an appointment with a debt consolidator or financial planner who can provide professional guidance in balancing their debt with saving, investing, and other living expenses.

Are your parents free and clear? Then consider this an opportunity to learn yet another lesson from Mom and Dad. Ask how they planned for big purchases and/or paid off their debt in a timely fashion. You know parents: They’re always more than happy to share their stories and opinions.

Talk #3: The right time to retire

Let’s be honest: Retirement is a goal for all of us, whether you’re a college graduate who just started her first job or a 54-year-old fireman. While there are specific age requirements for collecting Social Security, contributing to an IRA, and being eligible for Medicare, when to retire is a very personal decision.

Retirement today isn’t what it used to be. Older, “retired” workers can still work and continue to make money in the gig economy or by working part-time. But if your parents want to truly retire and never work again, they need to give their retirement plan a lot more thought than simply calling it quits.

Encourage Mom and Dad to speak with a financial advisor when assessing their retirement plan. A professional consultation is the surest way to know if they’re prepared in terms of retirement savings and debt repayment, future income like Social Security and pensions, and even lifestyle. (Do they want to travel the world or sit on their front porch sipping sweet tea?)

Plus, there’s an added benefit to your parents hiring a financial advisor: It will be them, not you, who breaks the bad news that, as much as they’d like to, it’s not quite time to clock out for good.

Related: 3 Steps to a Retirement Savings Upgrade. Here’s How You Can Open an IRA

Talk #4: Estate planning

Death is a super difficult topic to bring up — especially with your parents. The conversation can also come across as self-serving and possibly make them wonder if all you care about is an inheritance.

The best tactic is not to talk in absolutes — how much money they have or who gets what — and instead ask if they have a plan in place. With potentially thousands, tens of thousands, or even more at stake, the talk of inheritances could result in a lot of family tension if there isn’t a plan in place.

While last wills and testaments are a popular option for many, another option is opening a Trust — and, no, Trusts aren’t only for the rich and famous. Wills and Trusts lay out how your parents’ assets (including IRAs, certificates of deposit, savings accounts) will be managed and divided after they’ve passed away and are meant to avoid family headaches — and fallouts.

Another way to frame it: If your dad is in poor health, it’s important to know what happens to your mom when he’s gone. A will, Trust, or estate plan helps ensure that your mom is well taken care of and able to live comfortably after your dad has passed.

If you’re an only child, this conversation will fall solely on your shoulders and might be even more difficult without a support system. But if you have siblings, talk amongst yourselves and decide whether the talk should be led by one person or as a group.

Talk #5: Care for aging parents

Perhaps the only conversation tougher than the birds and the bees is this one.

Many elderly parents take the mere mention of in-home care or moving into assisted living or a nursing home as a negative. They think you’re trying to take away their independence, get rid of them, or are simply ready to put them out to pasture.

Unfortunately, having this talk is often a necessity. Someone turning 65 today has almost a 70% chance of needing some type of long-term care services and support in their remaining years — and 20% will need it for longer than five years.

Long-term care isn’t cheap. Costs of assisted living facilities averaged $4,000 per month in 2018, and that doesn’t factor in rising medical expenses that might not be covered by Medicare or Medicaid. That’s why — on top of the human factor — assisted living discussions should also touch on whether your parents (and you) can afford it.

Since this topic is so sensitive, empathize with your parents and position assisted living as a way to ensure their safety — and your peace of mind. Also ask them to do their own homework: Can they afford in-home care? Are any of their friends currently in housing that offers assistance? What do they think about it?

A nudge from a friend or the advice of a peer might be what they need to give a different living situation some serious thought.

Related: 5 Good Reasons to Update Your Will

Discussion questions:

  • Do you talk with your parents about finances?
  • How do you bring up difficult financial topics with your parents?
  • Have you talked to your parents about moving into assisted living?
  • What’s the most difficult financial conversation you’ve had with your parents?