The most uncomfortable, important talk you may ever have

Uncertainty about a parent's finances in retirement makes the stress and the burden worse for everyone. Photo / Thinkstock

Paul Merritt hopes his client's kids won't face the problems he did when his father died 14 years ago.

Finances never came up in discussions with his father, says Merritt, a financial adviser at NTrust Wealth Management in America's Virginia Beach. That left him, a career officer in the Army when his father died, "woefully unprepared" and scrambling to pay bills, settle the estate and negotiate with siblings.

"You're on an emotional roller coaster when a parent gets sick or dies, or suddenly needs financial help," he says. "Everything's exacerbated if you haven't talked about what to do."

More than 40 per cent of parents close to retirement haven't had a detailed conversation with children about how financially prepared they are to cover living expenses, health care and other elder care costs as they age, according to a Fidelity Investments study.

Those discussions are happening - or not - as the longer life expectancies of Americans add to already-strained finances.

The more delayed the conversation, the fewer the options for parents and kids. And uncertainty about a parent's finances will only make the stress and the burden worse for everyone.

"We see a lot of 40- and 50-year-olds trying to save for retirement and for their children's college suddenly thrown into caring for a parent," says Chris McDermott, chief operating officer of Private Wealth Management at Fidelity. While children want to help, it may mean working fewer hours or cutting back on expenses and savings, he says.

Only 6 per cent of parents in the survey think the kids will need to eventually handle caregiving duties, compared to 43 per cent of adult children. The kids are probably right.

About a quarter of high-net-worth adults surveyed by US Trust have provided financial support to parents or in-laws. Nearly one in 10 paid long-term care costs for them. Millennials are twice as likely as any other generation to say they expect to support their parents, according to the survey.

At the least, a parent sharing details on how how they want to be cared for if they become ill or incapacitated can avoid a lot of anxiety later. Assembling a document file that includes written medical directives and identifies who will have power of attorney is a good step.

While tricky and awkward, estate planning discussions - wills, tax implications, trustees and executors - ultimately pays off.

More than 90 per cent of parents in the Fidelity survey said informing children about their estate planning gave them "greater peace of mind."

If the children gain peace of mind as well, that's a pretty good inheritance in itself.

- Bloomberg