Q: I’m a gay man in my 40s.
My mother and father are in their early 70s. I think they’re doing OK financially, but I don’t know for sure. We’ve never really talked about money. How can I raise the topic so I can help make sure they’re really going to be OK?
A: Regardless of whether you and your parents have always talked freely about money or you have never discussed the subject, there may be important financial issues that you need to raise with them as they — and you — grow older. The following topics can help you start thinking about, and planning for, that conversation.
Getting started
When you decide the time is right to discuss financial needs and priorities with your parents, be clear about your intentions, but also let them know that you are not trying to pry and that you respect their privacy.
An initial conversation should be done one-on-one. Involving too many people can be overwhelming and appear threatening. If you would prefer not to take the lead and have siblings, select one — perhaps the oldest, most financially knowledgeable or one with whom your parents may feel most comfortable.
Remember throughout the process to be sensitive to your parents’ feelings. To some extent, our financial lives influence how we view ourselves as independent human beings. For many, old age is a time of coping with a series of physical and emotional losses: hearing, eyesight, mobility, memory as well as friendships. With any discussion of money, be sensitive to the fears and concerns your parents may harbor about their possible loss of control or independence.
Household finances
Maybe you have already spoken with your parents about their handling of regular household finances, but haven’t brought the subject up in a while. If you think they might appreciate your concern, then it may be a good idea to check in again. Determine whether they are staying on top of their household finances. Are bills getting paid on time? Are investments being monitored?
Also, ask about their use of banking technologies, such as automatic teller machines, direct deposit and automatic bill paying. For instance, the vast majority of Social Security recipients now use direct deposit for their benefits checks. Conveniences such as this can simplify money management for older individuals and provide a sense of security and control over day-to-day financial affairs.
Estate planning
Estate planning is the key to making sure that everything you have worked for in life is passed on according to your wishes. An estate plan can be as simple as maintaining an up-to-date will, or it can be expanded to include other planning mechanisms such as trusts for passing assets to children and managing taxes. Estate plans may also include other legal arrangements, such as a power of attorney and health-care proxy.
A power of attorney is a legal document that designates an individual to make financial or legal decisions on behalf of another individual. A health-care proxy is a legal document in which an individual designates another person to make health-care decisions if he or she is rendered incapable of making their wishes known. The health-care proxy has, in essence, the same rights to request or refuse treatment that the individual would have if capable of making and communicating decisions. Together, these documents can be very important should a parent become ill or incapacitated.
Health-care resources
One of the biggest worries of elder Americans and their adult children is paying for the cost of long-term care, should it be needed. If your parents are healthy seniors who can look after themselves, they generally are eligible to enter a continuing-care retirement community that allows them to buy or rent an apartment and ensures them lifetime nursing care when it is necessary. Another option for healthy seniors is private long-term-care insurance, which can help cover nursing-home costs or the cost of an in-home aide.
Should you or your parents consider buying a long-term-care insurance policy? According to current data, the average annual cost of nursing-home care in the Philadelphia region is now nearly $95,000 — well in excess of the average household income.* Also, keep in mind that the government provides limited financial assistance for families paying for nursing-home care. Medicare will only pay for care on a short-term basis, and Medicaid is reserved for low-income individuals with limited assets. For that reason, long-term-care insurance may be a prudent addition to your parents’ — or your own — financial plan.
A gradual process
Working out a financial plan for your parents’ elder years should be a gradual process that unfolds over time. Don’t wait until a crisis develops to start the dialogue or try to resolve all details in one meeting. Raise questions that your parents can consider for a follow-up conversation. After several informal conversations, you may want to consider the help of a financial professional.
For your information
There are many organizations that provide valuable information and referrals. In addition to the resources listed below, check your local library or senior-services agency for other online support services, publications and resources.
LGBT Elder Initiative (www.lgbtei.org)
The LGBT Elder Initiative is committed to assuring that LGBT older adults have rights and opportunities to live vibrant, creative and mutually supportive lives. To achieve this vision, the mission of the LGBTEI is to foster and advocate for services and resources that are competent, culturally sensitive, inclusive and responsive to the needs of LGBT elders in the Delaware Valley and beyond.
The National Council on Aging (www.ncoa.org)
A nonprofit organization that helps older people remain healthy and independent, find jobs, increase access to benefits programs and discover meaningful ways to continue contributing to society.
AARP (www.aarp.org)
A nonprofit organization focused on enhancing the quality of life for Americans over the age of 50. The AARP offers a multitude of products and services to address health care, travel and leisure and financial issues.
Administration on Aging (www.aoa.gov)
An advocate agency of the federal government, the AOA offers a variety of print and online materials for elders, their families and professionals regarding housing, medical, care-giving and services for seniors.
ElderWeb (www.elderweb.com)
A rich collection of online resources for the elderly and their caregivers on financial matters, health care, living arrangements and social, mental and legal issues.
*2013 Genworth Financial Cost of Care Survey
This article is not intended to provide specific investment or tax advice for any individual. Consult your financial advisor, your tax advisor or Jeremy if you have any questions.
ALERT: With all of the exciting recent news coming from Washington, D.C., about same-sex marriage recognition for certain federal-benefits programs, I’m sure many of you have questions. Please feel free to contact me if I can offer any guidance on how these latest developments may impact you and your partner. And please look for upcoming OutMoney columns, which will address some of these issues as they continue to develop.
Jeremy Gussick is a financial advisor with LPL Financial, the nation’s largest independent broker-dealer.* Jeremy specializes in the financial planning needs of the LGBT community and was recently named a 2013 FIVE STAR Wealth Manager by Philadelphia Magazine.** He is active with several LGBT organizations in the Philadelphia region, including the Delaware Valley Legacy Fund, the Greater Philadelphia Professional Network and the Independence Business Alliance. OutMoney appears monthly. If you have a question for Jeremy, contact him via email at [email protected]. LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.
*As reported by Financial Planning magazine, 1996-2013, based on total revenues. **2012-2013 Five Star Wealth Manager Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Prior to 2012, award was based on client satisfaction. Respondents evaluated criteria such as customer service, expertise, value for fee charge and overall satisfaction. The overall score is based on an average of all respondents and may not be representative of any one client’s experience.