When we think about those struggling with finances, we usually picture recent college graduates and young adults. Yet 60% of seniors are working into retirement because they can’t afford to retire. It’s important to understand the most effective ways to assist your parents and avoid setting back your own finances.
Have a Conversation About Their Finances.
Bringing up finances with your parents may be uncomfortable. However, it’s important to have a conversation about where they stand. Even if they don’t currently need help, knowing about their bills, debts, and assets will help you immensely. Understanding your parents’ finances is an ongoing process. Remain open to their needs to ensure the conversation is productive.
Identify and Discuss Common Financial Scams.
Older adults and seniors are more susceptible to financial scams. The Federal Trade Commission reports that 80% of telemarketing scam victims are over age 65. In your conversation about finances with your parents, it’s a good idea to touch on common scams and how to recognize them.
Look for Warning Signs You May Need to Step In.
It’s possible that your parents will avoid asking for help, even if they need it. Look for subtle signs of uncharacteristic financial decisions and making many large, unnecessary purchases. It’s also important to keep an eye out for bills piling up, frequent collections calls, or past-due notices.
Becoming Their Fiduciary.
Before playing a larger role in your parents’ finances, it’s important to make sure you’re given the authority to access their accounts. A fiduciary is someone trusted to act on financial matters in the best interest of another person. When in control of another’s finances, it’s important to understand this carries several responsibilities.
Plan for the Future.
In your discussion, figure out how they see their future and what plans they have for managing everything as they age. Talk to your parents about their ideal living situation going forward, should their current home become less ideal for their needs.
Protect Your Finances.
It may be tempting to offer your parents money or savings in order to bridge any financial gaps that come up. However, it’s important for both you and your parents to keep your finances as separate as possible. To help protect your finances, make as many payments automatic as possible, including bills and savings contributions.
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