The following is Provided by CSA: http://www.csa.us/Even though many seniors have planned for their retirement by investing in IRAs and 401(k)s, paying off large debts such as cars and homes, and reducing their discretionary expenses, there is one factor that people tend to overlook: planning for the day when they turn their money management over to someone else.
Because seniors are living longer than ever, thinking about the possibility of a time when they need help with financial matters is increasingly necessary. For many independent seniors, the idea of turning over their money management is frightening, but advance planning can make the transition easier both for seniors and their adult children.
Where to StartIt's best to discuss finances before a problem arises. Once the money is running out or a medical emergency arises, it might be too late for a financial plan to be effective.
Signs that a senior might need help in managing his or her finances include the following:
• bounced checks
• piled up mail
• unpaid bills
• mounting credit card debt
• calls from creditors
• forgetfulness
Financial Document ChecklistIn organizing a senior's finances, the caregiver must obtain a variety of information. The following financial information and/or documents should be located (or created), then stored in a safe place.
• Bank account numbers/brokerage statements
• Names and contact information for lawyer, broker and insurance agents
• Social Security cards
• IRA/401(k)/pension statements
• Tax returns for the past 3-5 years
• Deed to the house
• A list of debts (loans, etc.)
• Copies of all insurance policies
• Copies of wills
• Copies of all power-of-attorney documents and trusts
• Prepaid funeral contract
Tread LightlyChildren and other caregivers should raise the subject of finances during a stress-free time, and in a non-threatening manner. It's often helpful to include an attorney or financial advisor in this discussion. Focus on planning for financial security rather than sharing opinions about financial priorities.
A good first step is to get a firm handle on the senior's income and expenses. Remember to approach this stage in a non-judgmental manner, simply gathering information. Determine the following:
• Monthly income
• Monthly expenses
• How bills are paid (by written check versus automatically)
• Medical and other extraordinary expenses
• Outstanding debt
• Investments
Be sure to over-estimate how long the senior will need to live on his or her fixed income.
Other ConsiderationsIn addition to financial records, the caregiver should obtain information about the senior's:
• Will
• Living Will
• Power of Attorney
• Insurance: life, medical, long-term care, disability
• Estate planning
Seniors often delay writing wills or planning for the disposal of their estate in the event of their death. But the best time to address these topics is while the senior is still fully cognizant and able to make sound decisions.
Get More InvolvedOnce the caregiver has a full picture of the senior's finances, a collaborative financial plan can be created. In the short term, the caregiver should be added to all of the senior's accounts (financial accounts, as well as household-type accounts). Adult children might need to monitor their parents' finances periodically, perhaps simply by regularly reviewing financial statements.
Over time, the caregiver can take over managing the senior's finances. Because this is a delicate transition, it's helpful to follow some guidelines:
• Maintain complete and accurate records.
• Approach the task with a professional attitude, rather than personal.
• Keep the senior involved and aware of his or her finances as long as possible.
Security in the Golden YearsDiscussing finances with an aging parent can be difficult for adult children. Seniors can be reluctant to give up their independence, so it's helpful to let them maintain a sense of control over their financial situation. A shared approach is best at first, with a gradual transition of financial responsibility to the caregiver. The ultimate goal is to ensure the senior's financial security, to make the "golden years" as comfortable as possible.
