A time may come when your parents can no longer manage their own financial responsibilities, and it can be difficult for them to request help. For many, money is a sensitive topic. But understanding your parents’ financial situation is very important as you consider their long-term care plan. Don’t know where to begin? Here are six steps to taking on financial responsibility for your elderly parents:
1. 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.
Starting an ongoing discussion now will make it easier to navigate their financial landscape and provide better understanding of what your level of responsibility may be in the future.
2. Go over your parents’ financial situation
When reviewing your parents’ finances, you do so in order to understand how best to care for them and support them as they age. It’s important to have a clear understanding of where they stand financially. The best thing to do first is start with a quick balance sheet of their assets and liabilities.
First, total their income, including pension, savings and Social Security benefits. Then, determine what their living expenses each month are, including insurance and healthcare costs.
3. Take inventory of financial and legal documents
Sit down with your parents and create a list of their contacts, account numbers and 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.
4. 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.
5. Consider hiring a financial advisor
It’s hard enough handling your own finances and adding the responsibility of your aging parents’ finances could become overwhelming. It may be a good idea to hire a financial advisor. The advisor can become a trusted resource to your parents, engaging them in a non-confrontational manner and having those tough conversations about aging. They can look at your parent’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. While having your parents work with an advisor will not eliminate all stress, it can provide peace of mind knowing your parents have an advocate who serves as an unbiased mediator, allowing your focus to remain on nurturing the ongoing relationship with your parents.
6. Talk about the future
A tough conversation to have with fiercely independent parents is asking what their future looks like. As parents get older, they’re more than likely to need additional assistance and care. What’s the plan? It’s important to understand what your parents want and need. If they’re adamant on staying home, research home care options and costs. If they’re interested in moving into a retirement community, determine a budget, start exploring options, and tour communities. When considering a retirement community, determining the costs can be challenging. Use a retirement calculator to find out how much money your parent(s) might need in retirement and whether their current savings plan could get them to their goal.
Finding yourself in the role of managing your elderly parents’ finances can feel overwhelming. Ease into it, make use of the many resources available to you, and know that managing their finances is another way to take care of those you love. If you need recommendations for a financial planner or help with determining the costs of retirement living for your parent(s), contact Tutera Senior Living and speak with a retirement expert who would be happy to answer your questions and help you through the decision-making process. Feel free to call us at 877-988-8372.
