Organize important financial documents. One of the easiest ways to help your parents financially is too help them organize all of their important financial documents like last wills, Social Security cards, birth and marriage certificates, life, health and property insurance policies, and mortgage information. Be sure to store these documents in a safe or safety deposit box that you have access to. It may also be a good idea to know your parents’ PINs and account numbers to their bank accounts and where they keep their money in case you need to access it in an emergency.
Discuss their living situation. Talk with your parents about where they live and what their plan is for when they get older. Make sure that they are close to a hospital, grocery store, pharmacy, and all other essential places they may need to get to. Discuss how they will get to these places if they cannot drive a car. Robert Powell, author of “7 Ways to Help Aging Parents Handle Finances” suggests talking to your parents about moving closer to a more populated area with easy access to essential businesses by bus or walking as they approach retirement. Powell suggests having your parents set up a neighborhood call list in case your parents need to be driven somewhere when you are not close or able to take them.
Create durable and health care powers of attorney: Stephanie Morrow, author of, “7 Ways to Help Aging Parents with Their Finances” suggests appointing a trustworthy individual to help manage your parents’ finances and health care. Morrow offers the following definitions of what a durable and health care power of attorney is and why they are important.
“A durable power of attorney lets your parents choose someone to execute financial transactions on their behalf should they become incapacitated. It can be set-up to only take effect if a specified event occurs, such as dementia, an incapacitating illness, or the death of the spouse. This type of power of attorney can help ensure your parents maintain control of their finances until the time comes when assistance is needed.”
“A power of attorney for health care appoints a trusted individual to make health care decisions for your parents if they become unable to. Typically created in conjunction with a living will, which establishes your parents’ particular health care decisions in the event of incapacity, a health care power of attorney gives a trusted individual the ability to make medical decisions on your parents’ behalf.”
Seek advice from a financial expert. Having the opinion of a professional is a good idea when it comes time to help your parents with their finances. Financial professionals like financial planners, accountants, or money managers can help develop budgets and plans for your parent’s money. Speaking with a financial professional may make your parents feel more comfortable and allow them to maintain their financial independence.
Monitor your parent’s financial situation. Be sure to look out for any warning signs that your parents’ ability to be financially independent is faltering. Examples would be missing payments or duplicating payments, high credit card debt, or collection notices. These may be warning signs that your parents need help in managing their finances.
Finally, be sensitive to their situation. Your parents may be hesitant to talk about their financial situation with you right away. A good time to start the discussion about their future financial plans is when they are healthy and financially able. That way the process can be more gradual and smoother. Make sure that you are respectful and considerate of their situation.
For more information, check out:
“7 Ways to Help Aging Parents Handle Finances” by Robert Powell
“7 Ways to Help Aging Parents with Their Finances” by Stephanie Morrow