Your parents are confident they have enough money to live comfortably during their retirement years. You'd like to get a clear picture of their financial situation before a crisis occurs, but they feel money matters are private and don't want to talk to you about them.
An indirect approach is usually the best way to get them to drop their guard and start a conversation. You could say, "Mom, my best friend's parents are really struggling with money and she's helping them sort things out. How are you guys doing?" You could also pass along relevant newspaper and magazine stories, or suggest attending a financial seminar together. "It may take several attempts, but chances are good that money's on their mind, and they'll be relieved to talk about it," says Jonathan Pond, author of Safe Money in Tough Times (McGraw-Hill).
Once they do open up, gather their financial paperwork (bank statements, investment records, loan documents, etc.) and determine their total assets and liabilities, income and expenses. Reassure them that you want to be certain they have enough money for the years to come and that you are not trying to take control. "Some seniors are hesitant to share financial information because they're worried their children will take all the money," says Jeanie Wyatt, CEO of South Texas Money Management in San Antonio. Then figure out how long their funds will last at their current rate of spending. (Use the American Association of Retired Persons Retirement Nest Egg Calculator at aarp.org/money.) If there's not enough money, your parents may need to adjust their investments. Pond recommends a mix of one-third stocks and two-thirds income-earning securities, such as CDs, bonds, and money market funds.
Now is also a good time to ask your parents about other key money matters. Do they want to stay in their home or sell it and move to a smaller place? Do they have a long-term-care policy? "When seniors run out of money and don't have coverage, the cost of care usually falls to their kids," says Lyn Dippel, vice president at Financial Advantage, in Columbia, Maryland. If your parents don't have insurance, Dippel suggests buying them a policy and splitting the cost with your siblings.
And what if your parents won't discuss their finances? Hire a financial advisor. Ask friends, family, and colleagues for references, or visit the National Association of Personal Financial Advisors website (napfa.com). Pond suggests using a fee-based professional rather than one who earns commissions on sales. "You want someone who is independent and will recommend what's in the client's best interests," he says. Set up an initial meeting and inform your parents you're coming along but that they'll have final say on hiring the advisor and managing their money.