Older adults face many financial challenges that interfere with the ability to relax and enjoy their retirement. While some people begin saving for retirement early, others retire without a lot of wiggle room. This means that any emergency situation that may arise, health care issues that become more complex or family situations that require financial help can make it difficult to continue to manage daily expenses.
In order to ensure the golden years are financially secure for senior loved ones, it is helpful to understand what financial challenges seniors frequently face, how to be prepared and stay on track financially and how to participate successfully in managing money for elderly parents.
Senior Money Management
Money management is important at every stage of life. However, senior money management has many unique elements that can create both cause for concern and opportunities for financial growth. Here are some of the top financial concerns for seniors:
Running out of money.
When income is coming in during the working years, there is a sense of security that comes with it. For a senior who is no longer working, living on a fixed income can take away that sense of security.
Losing money to fraud.
Seniors are one of the most common demographics to be targeted by cybercriminals and fraud schemes.
Rising health care costs.
Managing chronic health conditions continues to grow more expensive, and unexpected injuries or illnesses can require seniors to dip into their savings.
Paying back debt.
Even in retirement, many people still owe money on student loans or credit cards. Paying high interest rates in these situations can cut even deeper into a loved one’s retirement funds.
Senior money management refers to how seniors handle all of their finances, from budgeting and investing to saving and setting goals. Addressing the above concerns is a major aspect of financial planning for seniors; however, it is important to remember that the approach to creating a personalized financial plan will differ between individuals. Additionally, some seniors will be able to create a plan on their own, while others will depend on loved ones for help.
Financial Planning for Elderly Parents
A time may come when elderly parents can no longer manage their own financial responsibilities, and it can be difficult for them to request help; for many people, money is a sensitive topic. But understanding elderly parents’ financial situation is very important when considering their long-term care plan. Don’t know where to begin? Here are six steps on how to manage elderly parents’ finances:
- Start the conversation early
It may be some time before your parents need your help, but start the conversation now and ease into it. For example, consider talking to your parents about who will handle their affairs if problems arise. The National Institute on Aging recommends that parents give advance written consent to a designated family member so that person can discuss a parent’s personal affairs with key professionals, such as doctors, financial representatives and Medicare officials. Without this type of proactive planning, privacy laws may prevent important conversations that are part of managing finances for elderly parents.
Starting an ongoing discussion early will make it easier to navigate their financial landscape and provide a better understanding of what your level of responsibility may be in the future.
- Go over your parents’ financial situation
Before you can begin managing money for elderly parents, it helps to understand their complete financial picture. Knowing what resources are available is key to learning how best to care for aging parents in the future. The best thing to do is start with a quick balance sheet of their assets and liabilities. First, look at their total income, including pension, savings and Social Security benefits. Then, determine what their living expenses each month are, including insurance and health care costs.
- Take inventory of financial and legal documents
Sit down together and create a list of their contacts and account numbers, and identify the location of legal documents, such as birth certificates, insurance policies, deeds and wills. Ensure everything is valid and up to date and that all accounts are in good standing. It’s also important to make sure any sensitive information is in a secure location. Taking over elderly parents’ finances legally at any point will require documentation.
- Simplify bills and slowly begin managing financial tasks
Once you have a grasp on their financial situation, go over any income your parents might have, such as retirement or savings, and consider switching those income streams over to direct deposit, if possible. This will ensure your parents’ funds make it into their accounts, even if a problem emerges where they are not able (or forget) to make a deposit. If paying bills is stressful for them, consider setting up autopay. Part of managing elderly parents’ finances also frequently consists of consolidating bills. Some families choose this time to move an elderly loved one to a senior living community to reduce monthly costs and bills and create one simple payment that covers most aspects of daily living.
- Consider hiring a financial advisor
It’s hard enough handling personal finances, and adding the responsibility of managing elderly parents’ finances can become overwhelming. It may be a good idea to hire a financial advisor. The benefits of an advisor include:
- A financial advisor can become a trusted resource to aging parents, engaging them in a non-confrontational manner and having those tough conversations about aging.
- Financial advisors can look at an individual’s entire financial situation, educate them on the financial implications of their choices or inaction, as well as help them communicate their decisions to the whole family.
- Working with a financial advisor can provide the entire family peace of mind, knowing that aging parents will have an advocate who can serve as a resource and an unbiased mediator.
- Talk about the future
It is tough to ask fiercely independent parents what their future looks like. However, it is true that, as parents get older, they’re more than likely to need additional assistance and care. It’s important to understand what aging parents want and need. Use a retirement calculator to find out how much money aging parent(s) might need in retirement and whether their current savings plan could get them to their goal.
About Tutera Senior Living & Health Care
At Tutera Senior Living & Health Care, each community is specifically designed to meet the needs of the residents. We offer independent living, assisted living, rehabilitation and memory care. Every community offers support, security and opportunities for each resident and for their families. All our residents are treated as individuals, and their needs, goals and health are given the highest priority.
Interested in finding a Tutera Senior Living community near you? We have a community location finder to help you do just that! Or you can call us any time at 877-988-8372 to ask questions, learn more about our care programs or schedule a tour.
