Caring for Aging Parents - Finances

7 ways to help aging parents handle finances

By Robert Powell

Make no mistake about it, there’s a large generational role reversal taking place in this country. Adult children are increasingly providing advice and counsel to their aging parents about a wide variety of financial and nonfinancial issues. And, they are being asked to answer questions about everything from Medicare to how to reinvest a maturing CD.

Knowing full well that you might be called upon to become a subject matter expert, if you haven’t already, we asked experts for some help.

“Children of aging and/or disabled parents need to help their parents face up to the decisions they need to make now,” said Chris Cooper, the owner and founder of ElderCare Advocates.

Below is what experts said adult children and aging parents ought to consider, now.

Financial matters

All of us are going to lose our ability to make more complex financial decision when we reach advanced ages, said Michael Finke, an associate professor at Texas Tech University. “The problem is that we often don’t recognize the decline,” he said.
Click to Play

Fine-tune your 401(k)

If you plan to retire in five years or less it may be time to adjust your investing strategy. MarketWatch's Andrea Coombes discusses tips on how to improve your 401(k) plan.
How to protect your retirement in 2013

This is very similar to what happens to older drivers, he said. “Since the decline is so gradual and consistent (we measure the decline in financial decision making at about 2% per year), we often don’t recognize when we become vulnerable to making mistakes,” said Finke.

So, his advice to aging parents and their adult children is this: “Part of a retirement plan needs to be accounting for the decline in our ability to make these decisions,” said Finke. “That means sitting down with a trusted relative or financial adviser and putting a plan in place to delegate some decisions in advanced age,” he said.

Selecting investments that require less active management, such as annuities or a managed payout mutual fund can also help. “We need to not only protect our portfolio against market risk, we also need to protect it against the risk of cognitive decline,” said Finke.

And for adult children, Finke’s recommended the following: “Create a plan with an older parent that includes establishing a power of attorney and allowing an adviser to contact a trusted child if they become aware that the parent is making financial mistakes.”

What’s more, Finke advised doing this sooner rather than later. “Putting the plan in place early in retirement before cognitive decline begins may be easier than convincing a parent who is exhibiting signs of dementia that they need to relinquish control of their finances,” he said.

Jack Tatar, author of “Safe 4 Retirement: The 4 Keys to a Safe Retirement,” agrees. “We all end up having the conversation, but usually too late, when mental capacities are diminished and certain expectations may be set, such as one sibling’s belief that they will get this or that.”

Having these conversations, said Tatar, provide peace of mind for everyone. “Allowing the retiring/retired parents to be more comfortable living out their retirement dream and providing the adult child with a major task done,” he said. “These conversations should result in documented plans, which should be updated regularly.”
Get those documents in order

Speaking of documents, Tatar said, one major way adult children can help their aging parents is make sure all their affairs are in order. “Adult children need to be sure that their parents have things documented such as wills, assets, end-of-life considerations, even their medications and health records,” said Tatar, whose new book, “Having ‘The Talk” with Your Parents About Retirement,” will be published in January 2013.

In some cases, an adviser could be the central point of contact or the adult child, or both.

Read more HERE


------------------------------------------

The Law Offices of Jeremy W. Howe, LTD. are ElderLaw attorneys in Rhode Island who specialize in wills and trusts, estate planning, guardianship, probate, and Veterans Aid and Attendance Benefits.

They also are Newport Rhode Island Divorce Lawyers, Attorneys, Mediators, and Arbitrators providing services for family law issues such as divorce, child custody and visitation, support, and military family law.

Call them today at 401-841-5700 or visit them on the web at http://www.CounselFirst.com.