Financial Caregiving: How to Help Relatives with their Finances
Can you offer any tips on helping an elderly parent with their finances? My dad always handled the money when he was alive but since he passed away last year, my mom has struggled to keep up.
Millions of adult children today serve as financial caregivers to their ill or elderly parents or other loved ones. Being a financial caregiver involves providing services like paying bills, handling deposits and investments, filing insurance claims, preparing taxes and more. Here are some tips and resources that can help.
Have the Talk
The first step in helping your mom is to have a thoughtful talk with her, expressing your concerns and offering your help in simplifying her financial life. If you're uncomfortable starting the conversation, then feel free to use this column as a prompter. It's also a good idea to get your siblings or other family members on board to help make your case. This can help you head off possible hard feelings. In addition, if others are involved in the conversation, your mom will know everyone is concerned, not just you.
If your mom is willing to let you help manage her financial affairs, your first order of business is to get organized by making a list of all her financial accounts and make copies of her important documents. This will help you understand her overall financial situation and let you know if any important documents are missing. Your list should include her:
Bank accounts: Checking, savings and safe-deposit boxes.
Retirement accounts: Social Security, pensions, IRAs and 401(k)s.
Brokerage accounts and investments.
Insurance policies: Life, home, auto, long-term care, Medicare, etc.
Important documents: Will, advanced medical directive (which includes a living will and health care proxy) and durable power of attorney (which gives one or more people the legal authority to handle her finances if she becomes incapacitated). Make sure these documents are prepared.
Taxes: Copies of your parents' income tax returns over the past few years.
Contact list: Names and phone numbers of key contacts, including insurance agents, financial advisor, tax preparer, family attorney, etc.
The easiest ways to simplify your mom's monthly financial chores is to set up automatic payments for her utilities and other routine bills and arrange for direct deposits (see godirect.org) of her Social Security, pensions and other income sources. You can also make arrangements to have her bank and bill statements mailed directly to you so you can monitor what's coming in and going out each month. Another option to consider is online bill paying through your mom's bank, if available.
Meet With a Pro
Depending on the amount and complexity of your mom's assets, both of you should sit down with your family financial advisor to review her investments and financial situation. If you don't have one, find a reputable, fee-only financial planner who can help you put a smart plan in place. Fee-only planners don't make commissions by selling you financial products and typically charge a flat or hourly fee, which can be around $200 to $300 an hour. To locate one, see napfa.org.
Hire a Money Manager
If you need some help or live far away from your mom, you may want to consider hiring a daily money manager. This is a trained professional who can come in once or twice a month to pay bills, make deposits, decipher health insurance statements and balance her checkbook. Costs range between $25 and $100 per hour. To locate one in your area, visit aadmm.com.
Savvy Tip: If your mom is having a hard time meeting her monthly expenses, go to benefitscheckup.org to find out if she can qualify for assistance programs.
Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living" book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization's official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.