Five Financial Conversations for Seniors
Highlights:
- Having a financial plan in place for aging loved ones can help reduce stress down the line.
- Before tackling more complicated issues, check in with your parents about their day-to-day financial situation, including their income, expenses and savings.
- Pay close attention to your loved ones’ credit accounts and histories, taking note of any debts they are struggling to pay on time.
Starting financial conversations with aging loved ones is often difficult. Even as they age, many seniors are more comfortable taking care of their loved ones than the other way around. They may be hesitant or even embarrassed to discuss their finances.
However, making a clear plan about money while a loved one is still in good health can help reduce stress down the line. These are five important financial topics to discuss with your aging loved ones rather than later.
1. Everyday Money Management
Before tackling more complicated issues, check in with your loved ones about their day-to-day financial situation. Be aware of their monthly income and check their ability to cover basic expenses, such as utilities, groceries and mortgage or rent payments. Basic financial planning can serve as a litmus test for how well your loved ones are managing their finances overall.
If your loved ones are uncomfortable discussing their finances with you, or if they’re struggling with money, don’t give up. Any time you ask your loved ones to disclose personal financial information, be ready to return the favor. Talking about your own finances is a good way to ease the discomfort around the issue.
2. Credit and Debt
It’s also important to gauge your loved ones’ credit health. Encourage your loved ones to request a free copy of their credit reports from each of the three nationwide credit reporting agencies — Equifax, Experian and TransUnion — from www.annualcreditreport.com. Then, review their credit reports with them, making sure that all of the information is accurate and up to date.
Pay close attention to their credit accounts and histories, taking note of any debts that haven’t been paid on time. If you find your loved ones are having difficulty with debt, help them formulate a payment plan that works with their financial situation to avoid falling farther behind.
3. Fraud and Identity Theft
According to the FBI, elder fraud often occurs for several reasons:
- Older people are more likely to have robust savings and strong credit.
- They may be more trusting and polite than their younger counterparts.
- They may be less likely to report fraud because they don’t know how or are ashamed at having fallen for a scam.
Fraudsters prey upon these traits to exploit seniors, so inform your loved ones about how to identify and avoid such scams — and how to report them if they fall victim.
As a general rule, it’s best to never provide direct payments or personal information to an unknown person on the phone, especially bank account and Social Security numbers. Then, research and run through some of the most common fraud and identity theft schemes and teach them how to spot fraudsters.
In the event that a loved one does fall for a scam, let them know that they don’t need to feel embarrassed to come forward and that it’s not their fault. They can report the fraud or identity theft and get a personal recovery plan on the Federal Trade Commission website.
4. Long-Term Care Options
Talking to your loved ones about long-term care options and costs is one of the most important conversations to have.
Ask them whether they have a plan in place if they need eldercare, and how they will pay for it. If they don’t have a plan, they can look into long-term care insurance or work with a financial advisor to help curate a plan to pay for eldercare.
There may also be affordable eldercare options in their community, such as through a senior center or religious organization. If these are attractive options for your loved ones, ask them which type of facility they would prefer should they need it.
5. Estate Planning
Estate planning is among the more difficult topics to discuss with elderly loved ones, as it deals directly with end-of-life arrangements. However, it’s extremely important to plan for funeral arrangements and related expenses while your loved ones are still in good health, so you can be sure you know their wishes.
Make sure their living wills are up to date and do the same with any existing powers of attorney. If they don’t have a will or power of attorney, encourage them to meet with an estate planning attorney.
You’ll also want to review their life insurance policies with them to see that there’s enough coverage in place to pay for funeral expenses, estate taxes, a mortgage and any other debts they may leave behind.
