What Financial Topics Should I Discuss with My Elderly Parents?
As your parents get older, there may be some financial topics they don’t understand as well or need help brushing up on. So, it’s helpful to discuss this information with them to ensure their financial literacy and wellness. Here are some topics you may want to talk about with your elderly parents during your next conversation:
Getting a life insurance policy
Talking about topics related to death isn’t always comfortable. But getting life insurance for elderly parents can protect the family from financial difficulties in the future. A good life insurance policy option to discuss is final expense insurance. It covers final medical expenses and funeral costs. If your parents are looking for a temporary and affordable option, they can also consider term life insurance. This type of policy lets you choose how long you want coverage for, usually between 10 and 30 years.
Encourage your parents to calculate how much life coverage they’ll need, get quotes from different life insurance companies, and carefully review what’s offered in the policies. Remind them that if they’re confused about anything, they can ask you for help or contact a licensed insurance agent to better understand their life insurance options.
Your parents likely have some familiarity with Social Security. But there may be a few things they could learn to help make the most of it. First, remind them it may be best to wait until they reach full retirement age before claiming their benefits. For each month they delay starting their benefits after they reach full retirement age, the benefit increases until the age of 70. One of your parents might also consider claiming their spouse’s Social Security benefit and continue delaying their benefit until age 70.
Encourage your parents to earn as much as they can before retirement, as it will help increase the Social Security benefit amount they receive. Your parents can find all the information they need on the Social Security Administration website.
According to LIMRA, the average savings in retirement accounts among retirees and pre-retirees is $400,000. If your parents have been behind in saving for retirement, educate them about catch-up contributions. After the age of 50, adults are eligible to go beyond the normal contribution limits to IRAs and 401(k) plans.
Since many payments can be automated nowadays, you can help your parents learn how to make their retirement contributions automatic for each month. While money can be a sensitive subject, consider gently encouraging them to find ways to reduce their spending so they can save and invest more. It’s also a good practice to increase one’s contribution percentage every time a raise or any extra money is received.
The bottom line
Talking to your elderly parents about their finances is essential to making sure your family is financially secure for years to come. Encourage your parents to get a life insurance policy and wait to claim their Social Security benefits. Additionally, educate them about their retirement savings to help them increase contribution amounts and be better prepared for retirement. Having these discussions with your elderly parents will help them to be in the best financial position for their retirement years.