How to help Manage your Elderly Parent’s Money
When it is time to manage your elderly parent’s money, will you know what to do? Studies show that over time, older people are likely to lose their ability to manage their finances but are unaware of their loss of cognitive ability. Being prepared and planning ahead minimizes problems and helps you make better decisions when financial situations arise. Here are some simple steps you can take to avoid stress and costly mistakes.
5 Steps to Help Manage Your Parents’ Money
Having to manage both your own as well as your parents’ finances can be stressful, especially when the responsibility is thrust suddenly upon you. Approaching it one step at a time makes it easier to deal with. These tips can prove useful.
- Review their income options: A sound financial plan ensures you have income from the first day of retirement. There are strategies to convert retirement savings, like 401(k) plans, into income that will sustain mom or dad. Review their investments and consult a financial planner for the right way to go about doing this.
- Calculate their monthly income: This can include employer pension, 401(k) and other retirement savings plans, interests from investments, etc. There are many financial calculators available online to help point you in the right direction.
- Help them make a budget: Help them estimate how much they will need to support their retirement lifestyle. Budget for living expenses (including entertainment), unexpected costs like fixing a roof if they still own a home, medical and age-related expenses like home maintenance tasks. Some of these can be avoided if mom or dad moves to a retirement home. Also plan for a few overlooked but common expenses that can derail their retirement budget. This includes vacations, helping grandkids with college tuition or a medical emergency not covered by their Medicare plan. Death of a spouse with pension benefits can also impact retirement income.
- Tap into government benefits: Explore options for federal and state financial assistance for seniors in advance and apply for them. From Medicare to social security payments and grants/funds for housing with community-based long-term care, there are many facilities available. Submitting and processing applications takes time, so start early.
- Reduce or pay off debts: Loan payments can be hard to manage when you are on a fixed retirement income. Many of the options available to younger people, like working two jobs, are not feasible for elderly people. From a financial perspective, it is a great idea to pay off higher interest rate debts first due to the long term savings you will be receiving.
Strategies to Manage Retirement Income
Financial planning does not end when you reach the age of retirement. At the end of each year, take the time to reassess and tweak their retirement portfolio for optimal tax efficiency. Also review their Medicare plan to determine if it meets changes in their healthcare requirements.
At The Holiday retirement communities, our range of programs and activities help seniors live an active and fulfilled life. From well-appointed accommodations with personalized care by a dedicated team, to nutritious and delicious meals, entertainment and outdoor excursions, we offer high quality services that will make you feel like you are on a permanent holiday. We also hold seminars on topics of interest for our senior residents, such as, ‘retirement planning’ and ‘managing money in your golden years’. You or your elderly loved one can retire in comfort in the company of friends while still maintaining independence and privacy.
Give us a call at 860-233-8208 to learn more about the services and amenities we provide at our retirement communities in Rhode Island and West Hartford, Connecticut. Fill out this online form to book a tour.