The kids are gone, it’s time to make a new financial plan
If you become an empty nester, you’ll want to reevaluate your money.
america today
In parenting circles, “the talk” is generally defined as having uncomfortable conversations with your kids about sex.
But there’s another story. It happens later, but it’s just as difficult.
Aging parents are anxious and put off sitting down with their adult children to discuss finances, powers of attorney, medical directives, and all the other issues that arise toward the end of life.
AARP offers a book titled The Other Talk: A Guide to Talking with Your Adult Children About Your Rest of Your Life. The topic is revisited in the December-January issue of AARP The Magazine, with a Gen X couple explaining “Why We Always Talk to Our Kids About Money.”
We’ve compiled original discussions about The Talk with commentary from experts at AARP, Trust & Will, and Northwestern Mutual.
Why “talk”?
Experts say there are good reasons to talk to your adult children about your finances, estate plans and retirement wishes.
If you don’t talk, your children could waste precious time chasing your accounts and assets if you become incapacitated or die. They may have no idea what bills you owe, what cash you have stashed away, or what your plans are for your investment property or jewelry stash.
“A little conversation can save you months and thousands of dollars,” says Craig Parker, assistant general counsel at Trust & Will.
Many elderly parents lose the ability to sign checks, pay online, and dispute bills long before they die. If you don’t teach your children how to manage your finances now, you run the risk of them not being able to help you later.
“As parents, one of the greatest things we can do for our children is reduce the number of mysteries and surprises they have to deal with during their stay in the hospital and after they leave the hospital,” says George Manns, editor-in-chief of AARP The Magazine.
David Hamilton, a financial advisor at Hamilton Wealth Northwestern Mutual, says talking about yourself with your adult children “reduces your fears and worries about the next generation.”
Failure to discuss can lead to conflict. Your children may argue about where you wanted to live or how long you wanted to extend your life when you were incapacitated.
In the world of probate and estate planning, “most of the litigation comes from families who don’t speak,” Parker said.
when to talk
Research shows that while many Americans want to talk to their children about estate planning, fewer follow through.
A 2024 RBC Wealth Management survey of high-net-worth baby boomers found that 89% think it’s important to discuss inheritance with their heirs, but only 39% actually do so.
Experts say the best time to hold talks is once preparations are in place. And adult children are probably ready.
“When children become adults, it’s better to do it sooner than later,” Maness says.
If all your children aren’t adults, you can give younger children a “high-level outline” of your plans, Maness says.
Also, don’t think that one conversation will cover everything. Hamilton recommends having these conversations on an ongoing basis rather than just one time.
How to talk
Experts say the best way to open up to your kids about money, incapacity and death is to tell them straight but carefully.
Your adult child will need this information. But as much as you want to talk about it, they probably don’t want to hear about your decline and death.
“This can be an uncomfortable conversation, so be sure to approach it with empathy,” Hamilton says.
A little reassurance might help. “Guys, we don’t plan on going anywhere for very long, but we want you to be ready when that day comes,” Hamilton said.
End-of-life planning does not need to go into all the clinical details. Adult children may not be ready to hear whether you want to survive on a breathing machine or feeding tube. However, you can tell them where to find those instructions when you need them.
“My gut feeling is to tell your kids as much as you think they can handle,” Maness said.
Contents covered in the talk
The story isn’t just about what you have. Why you have it is also important.
“This isn’t really a discussion about death, it’s really a discussion about your values and being clear about what your values are,” Parker said.
When organizing your assets and accounts, explain why you have them. Tell your kids why you’re holding on to that investment property and whether you’re saving more or less for retirement than you expected.
You should also plan details such as:
estate planning
Your estate plan determines what happens to your assets when you pass away and who will manage your affairs in the event of an emergency while you are alive.
As part of that plan, it may be helpful to create a paper or computer file that will help your loved one find and access your account, including your account number, password, and PIN.
Will or trust?
These documents describe how your assets will be distributed when you pass away. Trusts bypass the probate court that administers wills.
power of attorney
A power of attorney allows someone else to make decisions on your behalf and access your records, especially regarding your health care and finances.
advance directive
These instructions tell you what medical care you may or may not want if you become incapacitated. A living will or health care power of attorney typically includes an advance directive.
Experts say it’s equally important to tell your adult children who you’ve named as your legal representative, trustee and executor. Please also tell me the reason.
