caring for aging parents

A Financial Checklist for Caring for Aging Parents

As if retirement planning wasn’t already tough enough, a recent survey shows that more than 80% of Americans had their plans affected by the pandemic. About 33% reported that it would take them 2 to 3 years to get back on track. This is due to multiple factors, such as unemployment and the unexpected use of retirement savings.

So, if your parents are nearing the age of retirement (or have already retired), you might want to discuss their current financial status — and figure out ways you can help them find financial security.


Estimate their expenses


With the limited income streams some older adults have, doubling down on budgeting is a must. To do this, you need to first identify and list all of their monthly expenses. Groceries, utilities, caretaker fees are some of the bills that come regularly, but also note of occasional expenses like shopping or leisure spending. Note that no purchase or bill is too small. Everything must be accounted for so you can help them create and stick to a budget that is actually within their current means.


Look into their current sources of income

That said, you’ll need to understand what their “means”actually are. In other words, know how much money is coming in too so you can create a budget. There are multiple potential income sources for retired seniors. The most notable one comes from social security. If possible, have your parents delay claiming their social security benefits to maximize their income later on. But be sure to discuss the factors surrounding this decision, such as your parents’ ages and their expected benefits. Other sources you need to know are pension plans, life insurance policies, and investment returns. Maybe they have rental properties as a form of passive income — that counts, too!


Encourage them to invest

For many seniors, returns from their long or short-term investment is one way they can stay financially stable in retirement. We’ve mentioned rental properties as an example, but note that it’s not limited to tangible investments and business dealings. You can help them set up brokerage accounts, which are relatively easy to do online. These can help them invest in a wide variety of securities, like stocks, bonds, and ETFs. And they are a good way to diversify an investment portfolio.

If your aging parents are looking for a “safer” investment option, they can consider opening a certificate of deposit (CD), instead. It’s when you deposit a certain sum in the bank for a set time, which you can withdraw once it matures. CDs are typically offered with reasonable interest rates, allowing the account holder to grow their money in the bank.

Get in contact with a financial advisor


If you’re not confident in your knowledge of investments and financial products, you might want to consult with a financial advisor. They are experts who can help your folks strategize for their retirement, specifically in how they can invest, budget, and stay financially secure outside of the workforce. Financial advisors can also guide them through difficult topics, like taxation and insurance.

Talk about their living situation


Finally, talk to your parents about plans for living arrangements. There are multiple options for senior housing, such as nursing homes, assisted living facilities, and aging in place. The costs for each of these potential living situations vary. For example, nursing homes tend to cost more because they include advanced medical care for residents. Meanwhile, aging in place will most likely require your parents to hire a home caregiver if you can’t personally watch over them.

Retirement is never an easy topic to discuss. The financial aspect of it can be daunting for older adults. Thankfully, these steps can help propel them into financial security in their golden years. Plus, helping your aging parents plan for it gives you peace of mind that they’re ready for this new phase in their lives.

Written by Kelly Greer for walnuthilladvisorsllc.com

Other resources for you:

Help your parents with Downsizing their home

Do your parents understand their annuities

Help your parents understand their IRAs

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