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’t necessary for success — but rather a patient, even-tempered approach.
“The reality is that talking about money with your parents shouldn’t be treated like it’s a taboo,” said Porter.
“Yes, it’ll be awkward — but just like riding a bike, the first time isn’t going to be smooth. It takes practice.”
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.
Though his family has always been fairly comfortable with the subject, continuing to bring it up as if it were “a discussion about the weather” has increased the transparency between himself and his parents regarding their personal finances.
“I would say that my parents are people who have thought well in advance about things like retirement, though didn’t 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,” said Ruffo-Caracchini.
“Once 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.”
Porter echoed this strategy, highlighting that talking about your own financial activities first can be a great segue into a conversation about your parents’ finances.
“If 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,” she said.
“So saying something like, ‘Hey, I’ve been thinking about my retirement and looking at my pension — have you thought about that at all?’ can be a good, non-confrontational approach.”
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.
“I 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,” he said. That way, both parents’ plans and priorities have space to be heard.
Porter also noted getting over that initial awkwardness and talking about your parents’ financial situation is something that should be done sooner rather than later, regardless of what stage of life your parents are in.
“The thing about aging is that sometimes, things can happen extremely quickly,” she said.
“Someone could pass away; someone could get sick. And you just never know what could be around any corner."
Mahmood echoed this sentiment — particularly in the context of dementia, which will affect nearly one million people in Canada by 2030, according to a 2022 Alzheimer Society of Canada 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.
“It can be challenging to convince a parent to be tested,” he added, “but you can explain what concerns you have — like emphasizing how important it is to understand who their power of attorney is just in case something happens and ensuring you’re not after their money,” but merely interested in making sure everything is in order.
Having these conversations is also important if one’s parents are spenders rather than savers, added Porter, as well as if their employment or health have been particularly precarious in recent years.
“For example, if they’ve been at the government for a long time, this might mean they have a solid pension to rely on,” she said. “But if they’ve changed jobs a lot and tend to shop more and save less, there might be a lot more cause for worry."
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 “outliving their money.”
This may involve either reworking their retirement plan — particularly from a tax-efficiency standpoint — or looking at cash flow solutions.
“If there is a large probability of them outliving their money then options such as paring back spending … and perhaps downsizing may be realistic options to consider.”
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.
“Specifically, getting my mother to overcome the fear of losses — and that just because there are no certainties in investing, that doesn’t mean it’s inherently bad — was the most challenging thing for me to explain,” he said.
“The 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.”
Porter also cautioned that without proper care, parents may interpret their children’s advice as patronizing rather than well-meaning, making tone just as important to the conversation as the counsel being given.
“You need to show your parents the respect they deserve as your parents and adults, because if you infantilize them … well, good luck,” she said.
“Bring it back to what you’re doing, but also what they’d like and what their wishes are — 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.”
This report by The Canadian Press was first published Jan. 16, 2024.
Pascale Malenfant, The Canadian Press
