Regardless of whether you and your parents have always
talked freely about money or you have never discussed the subject, there may be
important financial issues that you need to raise with them as they - and you -
grow older. The following topics can help you start thinking about, and
planning for, that conversation.
Getting Started
When you decide the time is right to discuss financial needs
and priorities with your parents, be clear about your intentions, but also let
them know that you are not trying to pry and that you respect their privacy.
An initial conversation should be done one-on-one. Involving
too many people can be overwhelming and appear threatening. If you would prefer
not to take the lead and have siblings, select one - perhaps the oldest, most
financially knowledgeable or one with whom your parents may feel most
comfortable.
Remember throughout the process to be sensitive to your
parents' feelings. To some extent, our financial lives influence how we view
ourselves as independent human beings. For many, old age is a time of coping
with a series of physical and emotional losses: hearing, eyesight, mobility,
memory, as well as friendships. With any discussion of money, be sensitive to
the fears and concerns your parents may harbor about their possible loss of
control or independence.
Household Finances
Maybe you have already spoken with your parents about their
handling of regular household finances, but haven't brought the subject up in a
while. If you think that they might
appreciate your concern, then it may be a good idea to check in again.
Determine whether they are staying on top of their household finances. Are
bills getting paid on time? Are investments being monitored?
Also, ask about their use of banking technologies, such as
automatic teller machines, direct deposit and automatic bill paying. For
instance, more than 80% of Social Security recipients use direct deposit for
their benefits checks. Conveniences such as this can simplify money management
for older individuals and provide a sense of security and control over
day-to-day financial affairs.
Estate Planning
Estate planning is the key to making sure that everything
you have worked for in life is passed on according to your wishes. An estate
plan can be as simple as maintaining an up-to-date will, or it can be expanded
to include other planning mechanisms such as trusts for passing assets to
children and managing taxes. Estate plans may also include other legal
arrangements, such as a power of attorney and health care proxy.
A power of attorney is a legal document that designates an
individual to make financial or legal decisions on behalf of another
individual. A health care proxy is a legal document in which an individual
designates another person to make health care decisions if he or she is
rendered incapable of making their wishes known. The health care proxy has, in
essence, the same rights to request or refuse treatment that the individual
would have if capable of making and communicating decisions. Together, these
documents can be very important should a parent become ill or incapacitated.
Health Care Resources
One of the biggest worries of elder Americans and their
adult children is paying for the cost of long-term care, should it be needed.
If your parents are healthy seniors who can look after themselves, they
generally are eligible to enter a continuing-care retirement community that
allows them to buy or rent an apartment and ensures them lifetime nursing care
when it is necessary. Another option for healthy seniors is private long-term
care insurance, which can help cover nursing-home costs or the cost
of an in-home aide.
Should you or your parents consider buying a long-term care
insurance policy? According to current data, the average annual cost of nursing
home care is now nearly $75,000 - well in excess of the average household
income.* Also, keep in mind that the government provides limited financial
assistance for families paying for nursing home care. Medicare will only pay
for care on a short-term basis, and Medicaid is reserved for low-income
individuals with limited assets. For that reason, long-term care insurance may
be a prudent addition to your parents' - or your own - financial plan.
A Gradual Process
Working out a financial plan for your parents' elder years
should be a gradual process that unfolds over time. Don't wait until a crisis
develops to start the dialogue or try to resolve all details in one meeting.
Raise questions that your parents can consider for a follow-up conversation.
After several informal conversations, you may want to consider the help of a
financial professional.
For Your Information
There are many organizations that provide valuable
information and referrals. In addition to the resources listed below, check
your local library or senior services agency for other online support services,
publications and resources.
The National Council on Aging (www.ncoa.org)
A nonprofit organization that helps older people remain
healthy and independent, find jobs, increase access to benefits programs and
discover meaningful ways to continue contributing to society.
AARP (www.aarp.org)
A nonprofit organization focused on enhancing the quality of
life for Americans over the age of 50. The AARP offers a multitude of products
and services to address health care, travel and leisure and financial issues
for its 38+ million members.
Administration on Aging (www.aoa.gov)
An advocate agency of the federal government, the AOA offers
a variety of print and online materials for elders, their families and
professionals regarding housing, medical, caregiving and services for seniors.
ElderWeb (www.elderweb.com)
A rich collection of online resources for the elderly and
their caregivers on financial matters, health care, living arrangements and
social, mental and legal issues.
*AARP Bulletin, March 16,
2007
This article is
not
intended to provide specific advice or recommendations for any
individual.
Consult your financial advisor, with questions. John Bennett Petrick
and the
representatives of Perennial Financial Services are registered
representatives
with and offering securities through LPL Financial, Inc.
Member FINRA/SIPC. LPL Financial representatives offer access
to Trust services
through The Private Trust Company N.A., an affiliate of LPL Financial, Inc. CA Insurance License #0E03441
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