It’s hard to imagine your parents needing help with anything, right? They’ve always been the ones to help you, give you advice, and guide you in life. But at some point, things will start to shift in your relationship. Your roles will transition to you being the one responsible for making sure they have what they need. One of the first opportunities we often see of this role reversal is when parents near or reach retirement. Things can become complicated, particularly when it comes to their finances.
Your folks may reach out to you about getting organized around retirement time, or start chatting with you about issues they’re having. That’s a good thing! When it happens, keep an eye out for these three signs that may show your parents could use a little extra help managing their finances:
Sign #1: They ask you for financial advice.
Wait. Did that just happen? My parents asked ME for financial advice? While it always feels good when your parents ask for your input (you must really have your stuff together!), this is an obvious red flag that your folks aren’t getting the support they really need elsewhere. Pre-retirement can be a very tricky time, with many variables coming into play, like estimating investment income, cashflow issues, and social security filings.
Do they have a financial advisor? If so, that’s who should be guiding them with their money decisions as they look to retire. If their current advisor isn’t giving them the direction they need, it’s time to make the switch to someone who will. If they don’t already have an advisor, they should start building a relationship with one.
What you can do: Recommend that your parents interview financial advisors if they don’t already have one. If they do have one, and aren’t happy with their services, suggest that they interview new ones. It doesn’t cost anything to interview potential advisors and it’s a great place to start. It’s uber important that your folks are comfortable with the person handling their financial affairs. Finding an advisor that meets their needs, and sitting down to discuss their situation and goals can do wonders to ease most financial worries.
Sign #2: They have no plan to get TO and THROUGH retirement.
Your parents are almost to retirement, but have no idea when they’ll actually be able to leave the workforce. This retirement uncertainty often comes from not having a detailed financial plan to rely upon as they transition away from working. Whatever their financial situation may be, your parents need to have a plan in place to retire. Even if they love working, at some point it just will not be feasible to stay employed full time.
What you can do: Talk to your parents about coming up with an actionable plan for retirement. They can either rely upon a financial advisor for guidance, or create a goals-based plan on their own. Either way, having a retirement plan will make your folks more informed about where they stand. Once they have a financial plan in place that accounts for the many variables involved, the transition into retirement should be much less frightening and stressful.
Sign #3: They haven’t created their legal paperwork.
Estate planning and other legal documents are extremely important, but are often put on the backburner. It’s totally understandable. Many people just don’t like planning for when they’ll no longer be around. But getting legal paperwork in order is a must-do. We’re talking Wills, Power of Attorneys, possibly Trusts, and the like. While it sounds like a lot to get taken care of, an attorney can guide them through the process and ensure their needs and concerns are addressed.
What you can do: Ask your parents if they’ve completed their legal paperwork. If they say “yes”, ask if it’s up to date. If they say “no”, ask how you can help with the process. It doesn’t have to be complicated or expensive. Having a clearly written estate plan is well worth the time and cost. The biggest benefit? The inevitable family conflicts that arise from situations where no legal paperwork exists can be avoided entirely.
Helping your parents figure out where they stand with their finances and retirement planning is extremely important. A little guidance can go a long way. They’ve spent decades working hard. Now it’s time to get a plan in place so they can enjoy those golden years!
If you have any questions about talking to your folks about their financial situation, or need advice on getting them on the right track, just drop us a line!