Family finances have the potential to cause a lot of problems. In this article, Stannah hopes to help tackle the issue of family finances, before any issues arise, by being proactive and getting everything sorted out as early as possible. Some articles say you should have this conversation with your parents as soon as they retire, but even if you’ve left it until later, we want to help you to help your aging parents with their financial management as soon as possible.
A lot of factors need to be considered when it comes to parents aging, and the best way to cover all of them is in a conversation with your parents. Sit down with them and talk about their plans for the future. They may already have an idea of what they want to do, and how you can help, but even if they don’t, you can help them to consider their options and talk them through together. Be realistic. Help them to consider which options are viable for them and their needs and listen to them. Their plans may or may not be what you’re expecting.
Table of contents
Aging in place: is it a possibility?
Firstly, what is aging in place and what does it have to do with finances? Aging in place, put simply, describes a person living wherever they want for as long as they can. It sounds kind of obvious when you’re younger, but as you get older you might not be able to do all the things you used to do on your own. At that point, people often think that they have to move somewhere else. This might be somewhere, for example, with no stairs, if they’re struggling to get upstairs. It could also be somewhere like an assisted care facility, where their meals are cooked for them or where they can have some help getting around. What many don’t know is that there are ways of staying in the home they love for much longer than they thought!
What are the benefits to aging in place? This question can be approached from two angles. Firstly, your parents don’t have to move out and can maintain complete control of their life. They can carry on living in their own home, following their own routine and having their own space. The other angle is that they stay. Stay in a home they know well, in a community they are a part of, in a place they have control over, for as long as possible. And, of course, this is often a cheaper option than paying for assisted care.
But aging in place over the long term will probably involve making some changes. It’s worth researching the physical changes that they could make to their homes, for example getting a stairlift installed, if stairs are becoming a problem, or getting grab bars put in, to make sure they’re safe in the bathroom. Home care services are available for that bit of extra help your parents may need, but what about finances?
Who will look after your parents’ finances if they start getting a bit forgetful, or if something does happen to them? Are you willing to step into that role? Is another family member?
Helping your parents to age in place will likely involve researching what sort of help is available and how you can be a part of it. But when should you start thinking about this, and how do you talk to your parents about this sensitive subject?
Finances: How do you start the conversation?
It is better to be proactive and deal with finances as early as possible, rather than waiting for something to happen and dealing with the consequences. With senior citizens being prime targets for financial fraud, it’s always best to have a trusted friend or family member to help them keep an eye on their money. However, with age come other problems, and you should always be on the lookout for warning signs that your parent is struggling to manage their finances. The four main warning signs your parents may not be as on top of everything as you might have thought are:
- Unpaid bills
- Bounced checks
- Calls from creditors
- Unusual or frivolous purchases
It’s a difficult conversation to have, but it shouldn’t be avoided. There are definitely some ways you can approach the subject with your parents in a way that will be constructive.
Firstly, it’s important to think about their feelings. This may be the first situation in which your roles are reversed. They have always taken care of you. They are the caregiver and you are the one who needs looking out for. It may be scary for you, but the reversal of this relationship is probably going to be much harder for them, and they may not be ready to accept this big change. You can help them out by making sure you’re on equal footing. Use this opportunity to check your finances and make sure that yours are in order before checking theirs. You could even do it together and talk through your situation. Then, when it comes to their finances, do the same. Make sure you focus on the positives – this is preparation for the future. Reassure them that it needs to be done, but remember that it doesn’t necessarily mean your loved ones can’t do it themselves. You’re just there for backup.
How do you approach such a sensitive subject?
Approach the subject in a smaller group, don’t bring the whole family into the matter. If you hold some sort of intervention, your parents could feel cornered and get defensive, whereas if you have an open, casual conversation they are much more likely to understand your reasoning. When you do have the conversation make sure you’re honest. If you have concerns, tell them, but also be understanding – don’t be too forceful. After all, it’s their life you’re talking about and at the end of the day, it is their decision to make at every turn, even if you don’t agree (and this includes letting you help with their finances). They may just not want to get you involved. But they might. And having your support might be exactly what they need.
So, you want to organize your parents’ finances. How do you do it?
First you need to find out where they get their money from. This is important. Make sure you have access to all of their assets from savings accounts to house deeds, and find out how much they’re worth. This will be important when planning for their future, especially if they can no longer age in place and need to pay for an assisted living facility or nursing home. Here’s a handy list of all the documents you need to track down before you start:
- Vehicle titles
- Bank accounts
- Property deeds
- Credit card statements
- Social Security statements
- List of loans and other debts
- Tax returns (for three to seven years)
- Pension, 401k and annuity documents
- Birth certificates and marriage licenses
- Social Security benefit verification letter
- Insurance policies — life, health, and property
- Dues-paying memberships (HOA, AARP, clubs, etc.)
- Monthly bills (utilities, rent/mortgage, subscriptions, etc.)
- Investment documents (savings bonds, stock certificates, brokerage accounts, etc.)
Once you have all the information, try to reduce it down as much as you can. Fewer bank accounts lead to less work, and if everything’s in one place, you can keep track of it more easily. Then work out how much they’ll need, to do the things they have planned. Do they have long-term healthcare insurance? Or enough money to support them for many years to come? The National Council on the Aging provides information on eligibility for discounts on property taxes, utility bills and health care. This could be a good resource to see how much they will need, and how much help they could get.
One final important document to consider getting is a Power of Attorney. This would give you the authority to act on your parents’ behalf. In a worst-case scenario of illness or mental decline this document could save you a lot of time and energy. Without it, you would have to apply for guardianship of your parent through the court system, which requires a judge’s approval.
If you need an impartial advisor to help you and your parents out when it comes to sensitive money matters, it is always a good idea to get a professional involved. They might offer some good insight, and help to reassure your parents that they’re doing the right thing.