As a certified financial planner and financial advisor, Jackie Porter is used to getting people comfortable with the idea of talking about their money.
However, when it comes to her advice for those looking to talk to their aging parents about retirement, estate planning and preparing for potential health or cognitive declines, she emphasized that expertise isn鈥檛 necessary for success 鈥� but rather a patient, even-tempered approach.聽
鈥淭he reality is that talking about money with your parents shouldn鈥檛 be treated like it鈥檚 a taboo,鈥� said Porter. 聽
鈥淵es, it鈥檒l be awkward 鈥� but just like riding a bike, the first time isn鈥檛 going to be smooth. It takes practice.鈥澛�
Laurent Ruffo-Caracchini, a Montreal resident and 23-year-old graduate student, said this open and honest strategy is his go-to when discussing money with his parents.聽
Though his family has always been fairly comfortable with the subject, continuing to bring it up as if it were 鈥渁 discussion about the weather鈥� has increased the transparency between himself and his parents regarding their personal finances.聽
鈥淚 would say that my parents are people who have thought well in advance about things like retirement, though didn鈥檛 necessarily have the (practical skills) or just fine-grained knowledge required to go to the bank and buy the investments they wanted based on their risk appetite and financial goals,鈥� said Ruffo-Caracchini.聽
鈥淥nce I started to gain an interest in investing myself, I started using the knowledge I had to introduce quite casual conversations with them about what I was doing with my money, and what I thought they should be doing with their money, too.鈥澛�
Porter echoed this strategy, highlighting that talking about your own financial activities first can be a great segue into a conversation about your parents鈥� finances.
鈥淚f you're having these conversations with your parents and you haven't done some of the things that you're encouraging your parents to do, it's going to be harder to convince them to listen,鈥� she said. 聽
鈥淪o saying something like, 鈥楬ey, I鈥檝e been thinking about my retirement and looking at my pension 鈥� have you thought about that at all?鈥� can be a good, non-confrontational approach.鈥澛�
Understanding family dynamics is another crucial element of making money talk with family a smoother process, particularly in a situation where one parent may be more dominant than the other, said Iftikhar Mahmood, certified financial planner at CreateWealth Planning. 聽
鈥淚 would suggest that you start by speaking with the less dominant parent to get an understanding of their financial situation, before moving on to speak with the other parent,鈥� he said. That way, both parents鈥� plans and priorities have space to be heard.聽
Porter also noted getting over that initial awkwardness and talking about your parents鈥� financial situation is something that should be done sooner rather than later, regardless of what stage of life your parents are in.聽
鈥淭he thing about aging is that sometimes, things can happen extremely quickly,鈥� she said. 聽
鈥淪omeone could pass away; someone could get sick. And you just never know what could be around any corner."
Mahmood echoed this sentiment 鈥� particularly in the context of dementia, which will affect nearly one million people in sa国际传媒 by 2030, according to a 2022 Alzheimer Society of sa国际传媒 study. If an older family member is showing signs of forgetfulness, getting them tested sooner rather than later may be crucial to maintain both their health and their finances.聽
鈥淚t can be challenging to convince a parent to be tested,鈥� he added, 鈥渂ut you can explain what concerns you have 鈥� like emphasizing how important it is to understand who their power of attorney is just in case something happens and ensuring you鈥檙e not after their money,鈥� but merely interested in making sure everything is in order.聽
Having these conversations is also important if one鈥檚 parents are spenders rather than savers, added Porter, as well as if their employment or health have been particularly precarious in recent years.聽
鈥淔or example, if they鈥檝e been at the government for a long time, this might mean they have a solid pension to rely on,鈥� she said. 鈥淏ut if they鈥檝e changed jobs a lot and tend to shop more and save less, there might be a lot more cause for worry."聽
In the end, when it comes to what young people should prioritize in terms of money talk with their parents, Mahmood recommends the biggest area of focus be on them 鈥渙utliving their money.鈥澛�
This may involve either reworking their retirement plan 鈥� particularly from a tax-efficiency standpoint 鈥� or looking at cash flow solutions.聽
鈥淚f there is a large probability of them outliving their money then options such as paring back spending 鈥� and perhaps downsizing may be realistic options to consider.鈥澛�
Though discussing money with his parents was a relatively easy task for Ruffo-Caracchini, developing the skills to break down his advice in a way that made sense to them was something he needed to develop over time.聽
鈥淪pecifically, getting my mother to overcome the fear of losses 鈥� and that just because there are no certainties in investing, that doesn鈥檛 mean it鈥檚 inherently bad 鈥� was the most challenging thing for me to explain,鈥� he said.聽
鈥淭he key was patience and repetition, specifically re-explaining things in a respectful way until she felt comfortable with the risks of the decisions we were making.鈥澛�
Porter also cautioned that without proper care, parents may interpret their children鈥檚 advice as patronizing rather than well-meaning, making tone just as important to the conversation as the counsel being given.聽
鈥淵ou need to show your parents the respect they deserve as your parents and adults, because if you infantilize them 鈥� well, good luck,鈥� she said. 聽
鈥淏ring it back to what you鈥檙e doing, but also what they鈥檇 like and what their wishes are 鈥� and in a respectful and sensitive way, talk about how planning for their retirement and their death can benefit the people they love, like providing for their children or grandchildren.鈥澛�
This report by The Canadian Press was first published Jan. 16, 2024.
Pascale Malenfant, The Canadian Press
