Discussing Retirement with the Folks

Posted by admin on November 14, 2007 in Investment Advice

Of all the scary things that personal finance can throw at you, I am finding talking to my parents about their impending retirement to be a 16 on a scary scale of 1 to 10. For your entire life, your parents teach you about money- either through conversations or observation- and then suddenly one day, your parents turn to you at dinner and ask you about how to plan for their retirement. Should they buy an annuity or Manulife Income Plus? How much do they need to retire? Should they apply for CPP a year early?

The shoe goes on the other shoe quite quickly- suddenly, you are expected to have an intelligent conversation with your parents about money but considering (a) they have 30 years more of dealing with money on me and (b) I have never retired before, its really uncharted territory for all and such a change of roles. You also end up trying to have non-morbid conversations with your parents that may contain the phrase “…and when you die…” and trying to sound normal about it.

I readily admit my chest tightens up when we start talking retirement- there’s more baggage than an airport on this topic- and I really need a guide but here are the three things we are trying to do:

Ignore the media. This one is hard to do since my entire family are news junkies and read everything. There’s so much mis-information about retirement; the most infamous one being you need 80% of your pre-retirement income to retire comfortably (I don’t believe this one at all- my parents grew up in a time when society wasn’t obsessed with consumption. They won’t blow their life savings). Its hard not to get sucked into the fear-driven advertising of the financial industry. We try not to have conversations that begin with “I read a study…”
Get the accountant involved. This one is hard since you are asking an outsider to talk about a very personal matter. But retirement is a numbers driven exercise and the accountant needs to help.
Focus on the numbers and not the emotion. We are trying on this one too. Its weird for everyone to talk about this issue so we are trying to remove the awkwardness factor by breaking out the spread-sheets and working on budgets.

Anyone else have any tips?

3 Comments on Discussing Retirement with the Folks

By Canadian Dream on November 14, 2007 at 4:03 pm

Actually I found discussing it with my parents a bit weird as well. Yet, I know my parents don’t know everything about money. After all if they had been a bit smarter about it they could have pulled the plug about five years earlier. Still they are going to be both retired by their mid 50′s, so not too bad for some huge mistakes in my mind (ie: buying and selling houses every few years or less).

Generally if you going to discuss it keep it simple and don’t try to TELL them what to do. Just suggest things and question what they are telling you to make sure they understand things. After all no one knows everything about money.

Tim

By admin on November 14, 2007 at 4:07 pm

Thanks for the good tips. I am still getting over the fact that they are asking me for advice so I am nowhere near the “this is what you should do…” phase. Usually, I give them a blank look when they ask, stunned that I am the one who is supposedly to give advice about money and not the other way around.

By Riscario Insider on November 19, 2007 at 3:02 am

Your three goals are certainly good ones. Do your parents already have an accountant? If so, that accountant wouldn’t be an outsider. If not, you may be better off with a financial advisor. Perhaps you or your parents know one or can get referrals. Do they have have their investments (registered or nonregistered) at one institution? That’s a good starting point. There’s likely no charge. There’s certainly no obligation. You could even try more than one to find someone you can all trust.

It’s key to understand what your parents want to achieve, assess where they are now and then develop a roadmap. There are many soft issues. For example, if they retire, what will they do with their time? Then there are the quantitative facts, such as how much money they have, estimating life expectancy, their risk profiles. There are folks who know how to do this.

Do your parents *really* want your advice? Are they disciplined? Are they eligible for pensions? There’s lots to consider.

While you haven’t experienced retirement, you can certainly help your folks think things through. And ask the right questions.