Tough Financial Conversations

Tough Financial Conversations You Need to Have This Holiday

Updated on Nov 21 2018


The holidays present a wonderful time to not only spend quality time with your family, but also catch up on important business and conversations. This year, take time to discuss aging, retirement and end-of-life affairs so that everyone is prepared for the future.

The holidays and family visits are a time of togetherness to share stories and reminisce with loved ones, celebrate traditions and strengthen relationships. These gatherings come with the recognition that it is important think and plan for the future; especially if you or a family member is aging.

Andy Smith, Senior VP of Financial Planning at Financial Engines and host of call-in radio program, “Financial Engines’ Investing Sense,” comments:

“It’s important to have the ‘tough conversation’ about finances and senior care sooner rather than later. On the show, we talk about wanting people to do this while everyone’s healthy and sharp. The longer you wait, the more difficult and expensive these talks may be.”

Tough Financial Conversations Help You Prepare for the Future

Take time this holiday to catch up on not only life events, but also future goals and plans. Being prepared and having a proactive retirement plan for healthcare expenses, the family estate, and end-of-life decisions will help eliminate not only financial, but also emotional turmoil.

Think about it: it’s important to hear directly from your family about their specific wealth-management and health-directive wishes. Family should be able to act on each others’ behalf if an emergency happens. While family conversations about money can be tough, they are important so that you can implement a plan that protects the family assets.

Here are a few key things to think about and prepare for as you meet with your family this holiday season:

The Reality of Retirement Costs

Retirement is much more expensive than most Americans realize, which is why many seniors are having financial troubles later in life. In fact, there is a retirement crisis in America where 19 million people don’t feel they have enough money to retire. This problem is not only placing a financial burden and stress on families, but is also draining government resources. Smith discusses:

“Your average 65-year-old couple thinks they’ll spend around $50K on healthcare costs throughout retirement. In reality, their number’s closer to $275K. Depending on what they’ve done all along to prepare for retirement, they may need to drastically rethink some key pieces — Social Security strategies, healthcare cost management, debt service, estate planning… the list goes on. You have to look at all of these things, together, and you have to have the right full-scale plan in place.”

Taking Smith’s advice into consideration, think about the lifestyle you want in retirement and start thinking about a retirement plan, or updates to a retirement plan, that’s right for you. This can help you prepare for your financial conversation with your loved ones.

Preparing for the Conversation

Thinking about the conversation with your loved ones ahead of time will help you gather your thoughts so that you’re ready to address the big topic.

Here are some pointers Smith provides:

1. Practice What You Want to Say.

Just like with reading or acting, the more familiar you are with a subject, the more comfortable you will be. You don’t want to be over-emotional, so practice will help you prepare.

2. Talk in a Comfortable Setting and Be Natural.

Think of this important conversation as if it’s a normal conversation. Sit in a comfortable place and act like yourself. From here you can discuss goals and transition into deeper conversations. Consider these questions:

  • When do you want to retire?
  • What does end-of-life care look like?
  • Are you feeling financially prepared?
  • Do you have a trusted advisor or attorney?

Smith has an excellent question to discuss with aging loved ones: “If you changed nothing about what you’re doing right now, what is the probability that your long-term plans will be successful?”

If, together, you determine that their long-term plan — or lack thereof — is not successful, he has a follow-up: “What can we change now to improve your probability of success so that you can reach your goals?”

Gather Necessary Financial Information

Either before or after the conversation – preferably before – do a financial planning overview. A financial inventory will help you make sure you have all the information you’ll need to pass-along to loved ones.

Here is some of information you‘ll need:

  • User names and passwords
  • Bank accounts
  • Retirement accounts
  • Proof of ownership (for example, a car or boat title and registration)
  • Marriage license
  • Insurance policies
  • Personal financial statements (including any outstanding debts owed)
  • Military Veteran paperwork and information

Keep information in a secure location that’s easily accessible to trusted family members, such as in a safety deposit box or safe. Smith points out that “letting people know now where things are prevents a scramble later when emotions could be heightened and decisions will have to be made quickly.”

Prepare Essential Life Documents

If you haven’t already done so, prepare essential life documents to make sure you are prepared for future unknowns.

It is vital to prepare these important documents while you are physically and mentally able to do so as this legal paperwork will not only determine your end-of-life care and medical wishes, but will also protect your estate.

Think about it: Without these documents, families could accumulate significant costs while navigating the courts. Not having legal affairs in order also affects family relationships as disagreements arise regarding care and family assets if everyone is not on the same page.

Enlist the Help of a Professional

While conversations about finances can be tough, being proactive and getting prepared for the future will alleviate problems down the road. Getting started with these conversations is easier than you may think, and taking the time to connect on critical matters will help lead to better future outcomes. An expert financial advisor or fiduciary can answer questions and help you and your family get prepared for the future so that everyone has peace of mind that you’re prepared when the need arises.

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