There comes a time when your parents may need you to step in and help them out with money management and bill paying. After all they’ve given you throughout your life, helping them with finances is one way you can give back, making sure they get the most out of their golden years.
If either of your parents struggles with memory loss, or struggles with daily tasks, this is especially pertinent. The acts of keeping up with bills, managing investments, cashing checks, and dealing with technology can pose difficulties for the aging adult.
Here are some key suggestions for helping your elderly parents manage their finances as they age.
Assess Their Needs
It can be difficult to know just when is the right time to step in, and lend a hand. Look for the following signs to help you make the decision to approach your parents to offer assistance:
- They seem confounded, or frustrated with modern banking technology.
- They’re having a hard time changing the way they manage their money.
- They struggle with counting change, or paying at stores and restaurants.
- They cannot easily communicate their present financial status, or the amount of money they hold in their accounts, or investments.
- They become frustrated when balancing finances, or paying bills.
- They pay the same bill more than once; or, their bills are uncharacteristically past due.
- They forget which bills have been paid, or do not recognize previously familiar accounts.
- They forget when payments are due, or how much they owe.
- They forget to deposit checks, or move money; or begin to lose the cash and checks they’ve received.
- They are easily duped by scam artists, fraudulent emails, or phone calls.
Any of these occurrences may indicate an issue with your parents’ ability to adequately manage their money. It can be useful to record these occurrences when they happen, so you have something to (gently) refer back to, when suggesting they accept help with some financial responsibilities. Remember, you never want to make your parent feel embarrassed by their mistake. Simply offering to help goes a long way.
Find a Trustworthy Manager
It’s an unfortunately common tale – elderly individuals need help, and are fleeced of their retirement savings, and investments, by the very people who are supposed to be helping them.
Should you decide to search outside of your family (though, be cautious even within your own family), it’s critical to try and find a trustworthy neutral party who can help your parents manage their finances. If you go with a non-relative, make sure the individual you choose has no vested interest in the finances, outside of administrative fees.
Avoid using an in-home caregiver, who has easy access to information such as bank accounts, benefits information, credit cards, and cash. It may be a difficult trade-off, but it’s important that the financial manager is carefully restricted, and closely monitored. Our financial goals change drastically as we age, and the financial direction of our investments should evolve as well.
A financial advisor can be a great source of information, especially when deciding what to do with investments, and equity. Remember, no one cares more about your parents’ well-being than you.
Determine a Power of Attorney, or Living Will
Illness – mental or physical – can strike any time, and it’s impossible to predict how quickly a person’s health may decline. It’s vital to establish a living trust and/or power of attorney, to protect your parents and their assets.
Your parents should have a clear understanding – and clear documentation – of who will become their agent, in the event they can no longer make financial decisions. These documents will be necessary to show to financial institutions, and therefore should always remain close at hand.
If you’re the chosen power of attorney, you can begin to put your name on their bank accounts – so you can pay bills, and monitor expenses on their behalf. This gives you and your parents great peace of mind.
Create a Support Structure
You can’t always be at their sides when your parents are making day-to-day decisions. That’s why it’s important to lean on siblings, friends, acquaintances, and other individuals who can look out for them when you’re not there.
Keep siblings in the loop – ask them to keep you involved, and let you know if they see anything that might cause alarm. Talk to your parents’ friends and neighbors. Even if primary financial responsibility is delegated to one individual (or family), divide tasks so the burden isn’t limited to one person.
This may improve visibility as to how finances are being allocated, and help alleviate money arguments between family members later on.
Let’s face it – helping your parents manage their finances involves protecting your inheritance, as well. Aberrant money management can swiftly devastate financial savings that took a lifetime to build. Despite this reality, parents aren’t always keen on handing over the reins – especially when they’ve been actively managing their own money for years.
If you meet resistance, but the signs are there, start small. Offer to pay certain bills on their behalf, with their permission; ask to be included in any financial decisions over a certain dollar amount; maybe even do some research with them.
For example, a reverse mortgage is a financial mortgage tool everyone over 62 should investigate for their retirement plan as it can eliminate mortgage payments and help alleviate stress. These conversations can help lay a foundation of mutual trust that will allow everyone to feel comfortable about the arrangements.
Helping your parents manage money is a delicate task. It can be an uncomfortable role reversal, and can pose an emotional challenge – for both the parent, and the child. The importance of protecting investments, avoiding scams, and keeping up with bills is too large to ignore.
Look for signs that your parents need assistance, and offer it gently. Build a support structure, by reaching out to family and friends; make sure their documents are in order; and find the right financial advisor, or third party manager, to help you and your parents make smart financial decisions moving forward.
Contributed By: Mehran Aram, a graduate from the University of San Diego School of Business in 1984, founded Aramco Mortgage in 1998 after spending almost five years in the industry. Today, Mehran Aram is President and CEO of The Aramco Group, and has recently been honored with the distinction of CRMP(Certified Reverse Mortgage Professional) a certification held by less than 50 brokers nationwide. Mr. Aram currently heralds the title of “Mortgage Analyst” on San Diego radio stations: AM 600 KOGO, AM 760 KFMB, AM 1170 KCBQ, AM 1210 KPRZ, FM 98.1, and Fox News Monterey’s AM 1460. Garnering endorsements across the state of California, including from radio personalities, Roger Hedgecock, George Chamberlin, Mark Larson, and Ladona Harvey, Mehran Aram along with his nearly 20 years of industry experience has effectively become California’s Mortgage Expert in reverse mortgages, refinances and purchase loans, among many other loan products.
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Category: Money Hints