Dear Carrie: My parents are in their early 80s. Fortunately, they're in relatively good health and still quite independent, but I want to help them be prepared should things change. How can I get involved with their finances without being intrusive? — A Reader
Dear Reader: While popular wisdom might say that 80 is the new 60, the reality of aging means that no matter how young we may feel now, chances are we're going to need some type of help in the future. And while it's often difficult to get older adults to accept that possibility, being prepared ahead of time is the best way to ease the transition.
That said, money can be a touchy subject at any age, so you're wise to be sensitive to your parents' desire for independence and their potential reluctance to discuss the future. But the realities of today — particularly the prevalence of scams targeting the elderly — mean it's more important than ever to get the conversation going.
Start by Asking Your Parents About Their Current Financial Security
A lot of families don't like to talk about money. But if you come from a position of concern for your parents' well-being, they might feel more comfortable. And at their age, it only makes sense for them to share certain financial details with their family. Here are some questions to start with:
— Are they easily handling everyday expenses? Do they have enough income to cover the essentials — or even things like a gym membership that help them thrive? If they're struggling to stay on top of bills or debts, you might help them create a more realistic budget or set up automatic payments for certain monthly expenses. You may take something like autopay for granted, but your parents may not have considered it.
— Do they have a financial adviser? Would they be willing to introduce you and perhaps include you in a meeting? If they don't have an adviser, maybe you can take the lead in helping them make a simple financial plan. At the very least, you might help them take an inventory of their financial resources — pensions, individual retirement accounts, brokerage accounts and Social Security benefits — so they have a clear idea of the money they have available for both the short and long term.
— Have they updated their estate plan? Perhaps you've already talked to them about whether or not they have an estate plan in place, including an advance health care directive and powers of attorney for both finances and health care decisions. If not, don't hesitate to bring it up. A basic estate plan is something everyone should have, no matter their age — yourself included. If they have a plan, when was the last time they reviewed it? Have things changed since then?
— Are important documents accessible? In case of emergency, it's important that you or someone else whom your parents trust be able to locate important documents. These can include wills, trusts, bank and brokerage statements, insurance policies, mortgage documents and safe-deposit box information, as well as passwords for online accounts.
When introducing these topics, make it clear that you're not questioning their capability; you just want to be a resource should they need help.
Discuss Their Views on Future Living Arrangements
The 90-year-old mother of a friend of mine is adamant that she wants to stay in her own home no matter what. On the other end of the spectrum, another friend's parents decided to move into a continuing care retirement community before it became necessary because they wanted to make the decision while they were still capable. You might want to talk to your parents about their preference should they need physical help. Position it as just an exploration of future possibilities — not any recommendation on your part.
If they're open to the idea of moving into a senior community at some point, now might be the time to do a little research together on senior living facilities in their area.
Plan Ahead for the Cost of Care
Home care and assisted living are both costly propositions. According to the Genworth 2018 Annual Cost of Care Survey, the national median annual cost for assisted living is $48,000. A home health aide is slightly higher at $50,336. And so much depends on where you live. In the San Francisco Bay Area, those home care costs are closer to $70,000 a year. In Alabama, they're under $40,000. And these costs are generally per person.
From a practical standpoint, it makes sense to discuss your parents' desires and the potential costs ahead of time so they know what their real options are. While future care can be an emotional flashpoint, it's also an important financial consideration. They — and you — should know what they're able to afford and whether you might need to supplement any costs.
Know What Benefits and Services Are Available
According to the Council on Aging, there are more than 2,500 benefits programs nationwide to help with the cost of elder care. And it's easy to do an online benefits checkup. The Family Care Navigator provided by the National Care Giver Alliance can also help you find support services in your state. Benefits.gov and your local Area Agency on Aging are also helpful resources.
Be On the Alert for Abuse
Financial fraud is a very real threat these days. According to the Securities Industry and Financial Markets Association, seniors in the U.S. lose an estimated $2.9 billion every year in financial exploitation. And that's only the reported cases. While senior investor protection laws are in place in many states and more are in the works, I think everyone needs to be on the alert for any kind of potential scam. SIFMA is a good resource for specifics on what to watch out for and action you can take.
Be sure to discuss this with your parents. As a precaution, it might be wise at some point for you or another trusted family member to have your name on some of your parents' accounts to monitor transactions.
Have a Family Meeting
You don't say if you have siblings, but if you do, it's important that all of you are aware of your parents' situation and desires and agree on who is going to take the lead. It's important for two reasons: to assure there's no misunderstanding or disagreement if your parents do need help in the future and to make sure that whoever takes the lead gets the support they need in what could be a very difficult situation.
Keep Talking — and Listening
In sensitive situations like this, it's all about communication style and approach. While the burden can often fall on the kids to get the conversation going, I want to encourage any older adults reading this column to help their children out by bringing these things up themselves. The more open you all are and the more mutual understanding there is about the future — both emotional and financial — the more you'll all be able to enjoy the present.
Carrie Schwab-Pomerantz, Certified Financial Planner, is president of the Charles Schwab Foundation and author of "The Charles Schwab Guide to Finances After Fifty." Read more at http://schwab.com/book. You can email Carrie at [email protected] The information provided here is for general informational purposes only and is not intended to be a substitute for specific individualized tax, legal or investment planning advice. To find out more about Carrie Schwab-Pomerantz and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.
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