How to Talk To Your Parents About Money Before It’s Too Late
11 tips to have the conversation without making your mother cry.
Welcome to the Pirate Street Journal. The Wall Street Journal covers companies. We cover categories.
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Piratey disclaimer: This is NOT financial advice. None of us have Series 63, Series 6 7, CPAs, CFAs, IUDs, IEDs, and hopefully not IBS. Think of this like professional wrestling. It’s entertainment.Don’t be so smart you’re stupid and suplex your safety net savings.
Dear Friend, Subscriber, and Category Pirate,
Pirate Eddie made his mom cry.
He was trying to help his parents with their finances, as he had for decades. But he was being so smart, he was stupid. He put being right ahead of their relationship.
Three years ago, Pirate Eddie gave some financial advice to his mom about what to invest in and what not to invest in. She ignored it and put huge chunks of her money into annuities (more about this later).
Pirate Eddie didn’t follow up, and he recently checked in.
He found his mother was bamboozled into annuities that locked up her money for seven years, earning five percent per year. The S&P 500 returned 26% in 2023, 25% in 2024, and 18% in 2025, and 13% year-to-date in 2026. Had she invested their money into the Vanguard S&P 500 index 3 years ago, she would have doubled their money.
Pirate Eddie got overly animated by the math, and he took it too far for his mom.
He hurt her feelings. He dismissed his mom’s need for safety and security. He was fixated on the opportunity cost versus being curious about what his mom and dad dreamed about. And he didn’t see the opportunist, a First Hawaiian Bank ‘financial advisor’, coming.
Annuities are the Keyser Söze of senior citizen financial products.
They are excellent examples of Category Design and languaging. And annuities are some of the biggest legal scams that take advantage of scared senior citizens.
Americans bought $123.9 billion of annuities last quarter, the largest quarter LIMRA has ever recorded, in the fourth straight record year.
With your help and AI we will stop that streak. AI defangs the dense complexity of annuities. Some of you will use this playbook to help your parents. Here’s how to do it differently than Pirate Eddie did.
In this PSJ Deep Dive, we’re going to give a bunch of practical and tactical moves and give you a bunch of scooby snacks.
Examples of why annuities are dangerous.
Moves to invest in your parents’ relationship first.
Diagnostic checks to size the stickiness of the situation.
Money moves to practically and tactically deal with the dollars.
1-page plan that makes this easier to execute today.
If your parents are between 65 and 85 and have savings they are proud of, somebody is likely already advising them, and you may not know that person’s name. The cost of finding out late is measured in years of compounding they cannot get back. The cost of finding out early is one awkward lunch.
The rule of 72 is how to figure out how quickly you will double your money.
Simply take the expected return on your investment and divide it into 72 and voila, you will get the number of years to double your money. At the S&P 500 average return of 10% for decades, they will double their money in ~7 years.
Do this, and you will help double your parents’ net worth within their lifetime and while they are still healthy enough to enjoy it.
Nothing is better for your parents than having more gold in their golden years.
But just beware, these are rocky relational waters ahead.
Danger Will Robinson!
Hey, Ho, Let’s Go!
This Deep Dive doesn’t cover all parent and adult child situations.
Start by working out which of these you are.
There are at least three situations where this DDR won’t apply.
Situation One: If you have very financially savvy and successful parents, this won’t apply to you.
If you know less and have way less financial capital than your parents, stand down. We know of a person who was in their 20s and said to their parents, “Our financial advisor told me to ask you how much money you’re going to leave us.”
Do not do that.
Fire your advisor if your advisor ever tells you to do anything like that. Anyone who builds you a financial plan predicated on your parents’ death is a loser who doesn’t know what they are doing. Have enough EQ to know that this is a question that could permanently taint your relationship with your parents.
Situation Two: If your relationship with your parents is fractured, then talking about money won’t help.
And will likely make it worse.
Relationship Capital must precede Financial Capital. If you are emotionally healthy and strong enough, try to understand why the relationship is fractured and how it makes you feel. Frame, name and claim those feelings. Simply naming your feelings can decrease the power of those feelings and put them into perspective.
It took Pirate Eddie decades to do some of this work with a counselor.
Situation Three: If you have parents who deeply value privacy when it comes to money, tread cautiously.
Money can be deeply personal.
It can be a point of pride or deep shame. It can be a source of identity or idolatry. For some, talking about their money is the equivalent of dancing topless next to Patrick Swayze on Saturday Night Live.
We wish you a deluge of discernment for these types of parents.
If you think time is on your side, then maybe waiting is the wise thing to do. But if there is a trigger event that is not serious, but scary enough to put your parents in a different mental space, then don’t let a good crisis go to waste.
So before you read another word, write down which one you are.
Not applicable, because they have this handled.
Wait, because the relationship or the privacy issue comes first.
Or keep going, because the money is real and the time is right to talk.
If you are in the third group, this is written for you.
Is your parents’ Financial Capital any of your business?
We want the best possible financial outcome for your folks.
But timing is everything.
Your parents’ money becomes much more of your business as you hit 40ish and your folks hit 65ish.
Now, if you are a child of immigrants like Pirate Eddie, you might have been helping your parents with financial capital from a very young age.
Pirate Christopher grew up working class and is the product of a working mother. He started helping his family financially in his 30s. There’s no magic age at which your parents will invite you to talk about their money with open arms and smiles. Most likely, you’re going to get it wrong.
But if you’re going to be wrong, be wrong early versus late.
Too early, and you might get snapped at with a snide comment. Being too late is way worse. The S&P 500 compounds at roughly 10% per year. Which means your money doubles every seven years.
Compounding is your best friend.
We know of someone who is 89 and has a partner who is in his 90s. They both had recent acute health issues. They are now dealing with the fact that where they live now is not going to work. And they need to downsize. They are facing the reality that one or both of them will need healthcare help. No one knows if the math will work when it comes to their money.
This is not good.
Pirate Eddie knows someone with two siblings. They loved each other and their parents. When their parents passed away, they left a vacation home to the three children. All of them have fond memories of that vacation house. All three children had very different points of view on what to do with the house.
Sell it? Keep it? Rent it?
None of the siblings talk to each other anymore.
Giant bummer.
11 Tips to Have This Talk Without Making Your Mom Cry
This is a mix of teaching about the annuities industry, relational wisdom from our battle scars, some ways to gauge how serious this is for you and your parents, and practical moves and templates to make this easier.
Tip 1: Recognize How Annuities Lie with the Truth
Annuities are the big bad guy we want you to look out for.
One of the folks on our Pirate ship used to do marketing for annuities, and this is what he said.
“You would think annuities are sold by gray haired, seasoned professionals with ties at a respectable insurance company. But it’s much closer to Stratton Oakmont like in the Wolf of Wall Street. There were young kids who couldn’t spell the word investment hammering phones. Did we know the outcome and impact on senior citizens? Not a clue. Did we know how it worked, nope. We just sold the annuities that made us the most money.”
An Annuity is one of the greatest examples of Category Design in financial services.
They know their superconsumer: Scared senior citizens who are less money-savvy.
They know their problem: The scariness of outliving your savings.
They know their POV: Guaranteed returns for life.
They designed the company: Nice sales reps.
But the Category Design was done by mercenaries, not missionaries.
They sell safety and security to seniors who are scared of outliving their savings. They deliver a consistent and guaranteed rate of return. The safety and security come with secret costs, commissions, and other catches that are designed to steal senior citizens’ life savings.
How did they do that?
Trustworthy sales reps that look like your neighbor, church member, or extended family. They give those sales reps some of the most masterful, compelling and deceptive languaging. Here are some of their greatest hits of languaging and lies.
Lie #1: Liquidity feature
Why it sounds great: I can access my money, woohoo!
Why this is lying with the truth: You have to pay penalties to withdraw your money. These penalties are buried and complicated.
Why this is BS: It’s your money. Why shouldn’t you be able to access your money, just like you can in a checking, savings, mutual fund or even a stock?
Lie #2: Downside protection or 0% floor
Why it sounds great: I can’t lose money ever, whew!
Why this is lying with the truth: Inflation destroys your money at 2-3% per year. The cost of a nursing home increased 4.4% per year from 2004 to 2024. Annuities give you a rate that barely covers inflation.
Why this is BS: Healthcare costs are the biggest risk for senior citizens. You must earn a return on your investment.
Lie #3: No upfront fees
Why it sounds great: Wow, it sounds like I’m not being charged anything?
Why this is lying with the truth: This is like Bill Clinton saying, “It depends on what your definition of is is.” Many annuities have an 8 percent commission that is paid at the very beginning. They are saying a commission isn’t a fee. And there are plenty of fees, just not upfront.
Why this is BS: A Vanguard S&P 500 Index fund costs you $0.30 per year for every $1,000 you invest. You can buy a stock with no commission. When you factor in all the hidden charges, the average annuity costs $20 to $40 per year for every $1,000 you invest. That is one hundred times higher than the Vanguard fund. If you pull your money out early, you will pay $100 for every $1,000 you invest.
Use any of these three examples to help you and your parents see what’s really going on.
Tip 2: Don’t dismiss their fear and feelings
Your parents won’t care how much you know until they know how much you care.
Once people get into their 50s, 60s, and 70s, they meet a chorus of people in various financial categories that specialize in separating older folks from their money.
Pirate Eddie’s parents grew up in the aftermath of the Korean War.
They worked hard for decades, not earning much but saving prodigiously by delaying gratification. Of course, his mom felt deeply worried about losing what they had worked so hard to save. Security and not losing money were her number one goals.
This is true for many older people.
Don’t dismiss the emotions that come with a clock that is ticking down faster for them than it is for you. Pirate Eddie wishes he had listened to and held his mom’s feelings without judgment. On the back nine, it is only natural for people to want as much certainty and security as possible.
Tip 3: Start aspirational, not financial
After Pirate Eddie course-corrected and listened to his parents’ feelings, he started to ask what their goals and dreams were.
His mom said she didn’t want to have to depend on Pirate Eddie and his wife financially. She wanted to live comfortably for the rest of her life. She wanted to leave something behind to their grandchildren.
Once he had their goals, Pirate Eddie was in a much better place to Category Design a plan they would be excited about. Talking about money is much easier after talking about motivations.
Money is a tool to fund outcomes.
So a money conversation, without the context of what the money is for, is a backward conversation.
Tip 4: Affirm five times for every one correction
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