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Council Post: Tips For Caring For The Financial Health Of Aging Parents
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Jim Poolman, former North Dakota Insurance Commissioner, serves as Executive Director of the Indexed Annuity Leadership Council (IALC).

Daughter helping mother pay bills

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Last year, I took an afternoon with my parents to sort through their retirement finances. Tax laws, regulations, investments and savings, technology and retirement expectations have been evolving rapidly since my parents joined the workforce over 50 years ago. I was glad for the chance to leverage my knowledge to help them feel secure about their future.

Regardless of their financial planning experience, aging parents benefit from discussing their plans with a loved one. If you’re lucky enough to have your parents still around, take the time to ask how you can help. A few discussions and phone calls on their behalf could save them time and money down the line, and nothing compares to the peace of mind that will come to you and your folks through some difficult discussions regarding their future.

The Approach

When having a heart-to-heart with your parents, ask them what they envision for their retirement. What are their goals and wishes? This is an opportunity to set realistic expectations based on the preliminary information you have regarding their financial situation. It’s also a chance to have some of the more challenging discussions: what type of help they think they may need in retirement, either from a professional or family member, as well as their wishes toward the end. While the conversation may have a serious tone, express optimism about their future! Their retirement is a moment they worked hard to reach, and they should be looking forward to the experience.

Listing All Accounts

After you’ve begun the conversation, your priority should be to help them organize and consolidate their accounts and information. This includes reviewing existing documents and creating a master list of retirement and savings accounts, life insurance policies and other income sources. It would be wise to cross-reference the records with previous employers’ names to identify forgotten or overlooked employer-sponsored retirement plans that are in their name.

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After categorizing the known, look for any unknown benefits they are due. In my parents’ case, we found existing forgotten policies and some policies where we were unsure of the source. With my parents’ permission, I spent significant time on the phone with banks and investment and insurance companies tracking down all the accounts, set up online access, and update passwords and security settings. You may even find hidden policies, such as customer bonuses that were gifted by a financial institution.

The National Association of Insurance Commissioners (NAIC) has a helpful policy locator for deceased and living persons. USA.gov has an online tool to help find unclaimed money in the form of tax refunds, back wages, pensions and property, to name a few.

Assistance Programs

You will want to determine if your parents qualify for any government assistance programs to supplement their income. The Social Security Administration, for example, provides checks for reasons aside from retirement, including survivor benefits and Supplemental Security Income. Check to see if your parents are entitled to Medicare, which would help with future medical expenses.

Creating A Realistic Budget

Once you all have a better grasp of how much money they have saved, create a budget that will help them stick to their fixed income. Ideally, your loved ones will have more than enough money to maintain their existing quality of life, if not improve on it. In reality, most Americans, even well-prepared ones, don’t have the assets to live comfortably when they retire. Now would be a good time to help your parents create and maintain a budget that works for their future lifestyle. In addition to budgeting the basics: groceries, utilities, taxes, entertainment and other costs that are important to them, they may also want to consider the financial benefits of downsizing their home or relocating to a place where their savings will stretch further. This may also be a good time to meet with a financial planner, if feasible, to cover all bases regarding potential income sources. For my parents, once we established the budget amount, I set them up with a fixed indexed annuity to help provide a lifetime income stream.

Update Legal Documents

I cannot stress enough the importance of ensuring that all legal documents are in order. Healthcare proxies, wills and beneficiary forms, and a power of attorney may feel uncomfortable to discuss now but will ensure that wishes are met during the most emotional and trying times. These are tough but necessary conversations.

Ultimately, helping your parents plan for the future is an expression of how much you love and care for them. The earlier you have these conversations and put things into motion, the easier it will be for them to transition into retirement because the only surprise anyone should face when they retire is the cake at their party.

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?

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