A financial topic for senior living is money, it can be a sensitive topic thus many people tend to avoid it. Generally, it can be a controversial and also polite thing to do because it seems everyone has their own opinion on what to do, even the experts. However, when it involves adults, children and their parents, the conversation should probably happen. Failing to discuss financial, life insurance and legal issues with your parents could make it difficult if you need to help them or help transition them over to a professional management, such as money or entirely take over their financial obligations and decisions in the future.
Why is retirement planning important?
The average life expectancy is rising, and there are high chances that you will pay for healthcare in retirement. Also, during retirement, you'll have a lot of free time, which should be occupied by valuable activities you must prepare for. Many people do not want to burden their children when they retire, seeking the help of a licensed professional to help guide your income streams can be well-planned, and diversified might be essential. One should start planning for retirement and investing wisely to hopefully sleep better at night, and avoid the pitfalls of guessing at saving.
How can aging parents be financially stable?
One way to keep in mind for aging parents is to help them set a goal to be financially stable, have them check their daily financial situation. Know their monthly income, make sure they can manage finances and their basic expenses, such as rent, mortgage, groceries and utilities. Essential financial planning can be a litmus test for checking if your parents are properly managing their finances.
It is also crucial to gauge your parents' credit health. Ask them to read their credit reports, maybe they will ask you to go over it together with you, make sure they review the statements, ensuring that all the information is up-to-date and accurate. Pay attention to their histories and credit accounts, noting any debts that have not been paid on time. If they have difficulty repaying debt, ask if you can assist them in formulating a payment plan that suits their financial situation to avoid defaulting.
How to support aging parents
One way to financially plan to support your aging parents is to locate essential documents. Finding vital financial records is critical in case you need them in an emergency or if the older adult becomes incapacitated. This might help you protect their assets when they cannot handle affairs themselves. See if your parents have concerns about you accessing their financial documents, or use them in an emergency or when they cannot, make sure they feel comfortable about this since this is not an easy change for some people. In either way, make sure to get professional help or guidance if needed. These professionals, such as a financial advisor, CPA or attorney may help guide them through this process if they do not want to have you access these documents.
The business professionals may need access to their financial accounts, so make sure the professionals are licensed, insured, read about their profile via whomever the regulator is. This process may require planning and some specific paperwork. Banks have strict rules on who can access reports, so a transfer of account may be needed for one to manage, however please note there are risks associated when it comes to others managing money or one's life. You will need to make sure to do your homework, speak to more than 1 person, speak to many people to make sure that the information is consistent and that your parents and you trust whomever will manage these documents and assets. Keep in mind, even if you have power of attorney, you may still be required to fill out other bank documents, so make sure to have a professional team of licensed individuals where you can ask questions and make sure they concur with the process and other vital information, creating your own checks and balances.
To withdraw money or write checks from seniors accounts means whoever has access to this can also conduct transactions. So be careful of who has access as you will want to monitor this on a daily basis. The authorize an 'agent' or 'deputy' might be also able to obtain access to a safety deposit box. It is good to consult an elder law attorney, fiduciary, or financial planner before you get joint access to an account or sign any paperwork. This will help avoid unintended consequences in the future.
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Senior citizens fraud is prevalent for several reasons, including:
- Seniors may have strong credit and robust savings
- Might be trusting others to be prudent
- Sr’s might be less likely to go to the authorities to report fraud
Fraudsters take advantage of these qualities to exploit seniors, so educate your loved ones on how to avoid and identify such scams, and report them when it happens to your state and local authorities.
Generally, never provide personal information or direct payments to unknown people via the phone, especially social security and bank account numbers. You can also research and take them through common identity theft and fraud schemes and show them tips on how to identify fraudsters.
If a loved one falls victim to a scam, reassure them that they should not be embarrassed to come forward and to inform you if needed. It is okay to report identity theft and fraud, at times there might be a personal recovery fund for some, depending on the circumstances.
How to discuss long-term care options with aging parents
Talking to your parents about long-term care costs and options is an important conversation to have. Ask if they have a place set up if they require eldercare and how they intend to pay for it. If there is no plan, they can consider long-term care insurance or consult a financial advisor to help craft a plan to cater to eldercare or perhaps alternative matters, such as a reverse mortgage.
The local community may have affordable elder care options, such as a religious organization or senior center. If they have preferences, ask them what they would like should they require the service in the future.
How to do estate planning
Estate planning is another complex topic to discuss with your elderly loved ones as it touches on end-of-life arrangements. However, it could be essential to plan for the end of life care and funeral arrangements while your elderly parents are still healthy. Ensure they have updated their living wills and do the same with existing powers of attorney.
It is also good to review life insurance policies with your loved ones to ensure sufficient coverage for the mortgage, estate taxes, funeral expenses, and any other debts they might leave behind.
All adults should have a written will, especially if they have dependents. Ensure that someone in the family has durable power of attorney to make significant decisions concerning their finances. The person should be trusted to act in your parent's best interest, and everyone should know the arrangement. If a power of attorney is given to you, document all transactions and keep records. It is also suitable for your elderly loved ones to choose a health care proxy to make healthcare decisions when they no longer can.
In conclusion, seniors need to be prepared to be financially sound and have a financial plan to ensure they have a pathway for retirement. There are laws that forbid taking advantage of seniors, and these laws need to be known to all so that you can be aware of what people might take advantage of. You should seek the guidance of an attorney, CPA and financial advisor to help you out with various pathways.