Don’t Avoid Talk About Money

There is no easy way to talk to your parents about money.

As a child, money talk generally consists of trying to get an advance on allowance or a few bucks to go to the movies.

As a young adult, money talk often centers on help in getting by during tight times or assistance in amassing enough money for a new car or home.

So when adult children want aging parents to talk about money, it is no surprise that many elders balk, figuring this is just a way for the next generation to gauge its inheritance.

A recent survey conducted by the Roper/Starch Worldwide polling group for Massachusetts Financial Services reports that more than one-third of “the sandwich generation”--people ages 40 to 64--worries about aging parents’ financial issues. More than half that group is also concerned that their children will need financial assistance “in their 20s and beyond.”

The survey was designed to point out why middle-aged folks must get serious about financial planning, but it also raises a basic issue: Families need to talk about money.

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No matter your generation, the need for what advisors now call “intergenerational planning”--in which family members look at long-term needs together--is becoming increasingly evident.

According to the MFS survey, less than half of the members of the sandwich generation have prepared a written list of assets, created a durable power of attorney or living will, purchased long-term care insurance or established a trust.

Those are basic estate-planning tools. And empirical evidence suggests their elders haven’t been much better at handling this stuff.

“Parents don’t react well when you ask them about their money,” says Lynn Hopewell of the Monitor Group in Fairfax, Va., “yet it is impossible for you to plan to help them if you don’t know what is going on. They may act like they are going to run out of money--which would make you nervous-- when they have enough to live on, or they may look like everything is set when in fact it’s not. The important thing, whether it is with your parents or your grown children, is that you don’t want to have a bombshell dropped on you.”

Adds Jerry Potts, an MFS senior vice president: “The hardest time to deal with these problems is when you are right in the middle of them, like when one of your parents has suffered a stroke and there are decisions to make.”

Part of the problem in money chats truly is generational. Financial planners note that current retirees--who lived through the Great Depression--often fear running out of money even when they have more than enough for a lifetime. Conversely, their children have typically been spenders rather than savers.

“There are two reluctant sides to this issue,” says Harold Evensky of the Coral Gables, Fla., financial planning firm Evensky, Brown, Katz & Levitt. “It is hard to get the children to ask and hard to get the parents to listen. But it’s not like these are avoidable issues; sooner or later, this is all going to come to light, because it’s your family and they will share in what you have done--right or wrong.”

Further complicating matters, family members can take some things for granted--for example, children might assume all their parents’ funds are earmarked for them when the parents have charities and other people in mind too. Sometimes parents don’t want to tell their children about that ahead of time, but that shouldn’t prevent conversations about what the parents will need as they age.

Since intergenerational money talk is both essential and elusive, here are a few tips:

* Start by talking long-term care, not dollars and cents.

When it comes to older Americans, the two things are closely aligned, but care issues offer a less-threatening beginning to the conversation.

Most parents acknowledge that they do not want to be a burden to their children. That being the case, they will talk about what to do if and when they get sick.

“You aren’t asking because of the likelihood that something will happen to your parents,” says Judith A. Shine of Shine Investment Advisory Services in Englewood, Colo. “You are asking because you want to know what to do just in case. Start with a question about what your parents want you to do for them in a certain situation--maybe if they had a stroke and needed help.

“That can lead you into a whole realm of estate-planning topics.” Part of the reason to discuss long-term care is to see what estate planning has been done, whether assets will be adequately protected in the event that a parent needs to be hospitalized or moved to a care facility.

Gradually, these issues move the conversation to direct financial concerns.

* Consider making financial plans together.

This is especially important when a parent--or adult child--needs financial support.

“Older parents see their kids struggling to make it and say, ‘They can’t save another $100 a month to help me,’ so they don’t ask,” says Bill Morrissey of Sound Financial Planning in Mt. Vernon, Wash. “But if the reality of the situation for someone in the sandwich generation is that they will have to support a parent or a child, the more they know now, the better. If this is the family’s problem, the results are likely to be better when everyone works together.”

* Money is AN issue; don’t make it THE issue. The object is not to pry for information but to make sure that critical planning steps are taken.

Your children may not want to talk about their spending habits and your parents might not want to say how well off they are. But the only way for the sandwich generation to get on with its own planning is to know that everyone else in the family is taking care of business.

Disclosure need not be down to the penny, but, rather, enough information to go forward with some sense of purpose in your own planning. That information may simply be proof that everyone has adequately handled his or her finances, including the kinds of documents that will someday ease handling estate issues.

Says Potts: “This is a demographic freight train, a connect-the-dots, it’s-a-going-to-happen thing. If so many people are nervous about helping out their family, they need to be making plans together now. If they wait, they are more likely to see their worries become their realities.”

Charles A. Jaffe is personal finance columnist at the Boston Globe. He can be reached by e-mail at jaffe@globe.com or at the Boston Globe, Box 2378, Boston, MA 02107-2378.