Issues to Consider
Why their their finances matter.
As a family caregiver understanding their finances is important in itself, but also can impact your finances if there is a shortfall.
Your question should be, “how much money does my parent need to do what she wants to do?” and, if she doesn’t have it, “is there another way to get it?” You may have no idea (and circumstances change). Does it make sense to talk to a financial advisor, eldercare lawyer and/or a geriatric care manager (who knows about costs and benefits) to help you estimate both today and in the future?
Professionals can tell you if your parents are getting the best results. Does Dad need everything (policies, life insurance, etc.) he has? Are there documents and other things he should have but doesn’t?
The big picture.
You need the complete financial picture. Can you get your parents to have mortgage and other companies send you copies of their monthly statements? Do you have a grasp of their Social Security and work benefits, savings, investments, liabilities, living expenses and more? Is there a mortgage on their house? Can and should they stay where they are and if so, will they need to pay for home modifications (i.e. ramps, grab bars, widening doorways, adding a downstairs bathroom)? If they have to move to independent living or another kind of long-term care, where will the money come from?
Is there something your parent can do to shave costs or use their current asset to foot the bill for other expenses? For example, if they own a home and are short on money, does it make sense for them to consider getting a reverse mortgage? They can tap the equity for living expenses, hired help, or whatever they want. The mortgage pays the homeowner a loan either as a line of credit, monthly payments or one-time sum. The loan is repaid when the owner sells the house or dies. Is this a good or bad idea? Consult a financial advisor to see if it makes sense for your parent’s situation.
Annuities and insurance.
Some people have annuities. There are different types (fixed, indexed and variable). Generally speaking, it’s a policy a person buys from an insurance company for a lump sum that can give the purchaser a monthly payment for the rest of his life. Again, confer with a financial advisor. It’s not for everyone, but may be right for someone in good health. One website to explore is http://www.sec.gov/answers/annuity.htm. There are other kinds of investments that might work better, depending on their situation.
Help with costs: Medicare and Medicaid.
Health care is a big cost. Does Mom have long-term care insurance, and if so, what does it cover—and not cover? Understand Medicare and, for those with little money, Medicaid. The government’s Medicare Rights Center has a national telephone helpline to understand benefits, choose the right coverage, and steer you to programs that help people on low or fixed incomes pay Medicare costs.
The National Council on Aging offers a free service for low-incomes seniors to determine if they’re eligible for financial help with food, medication, utilities, health care, housing, transportation and other needs.
Medicaid pays healthcare, including premiums costs, if someone qualifies and long-term care, typically in a nursing home. (Doctors’ offices often have medication samples. Some pharmaceutical companies give low-income seniors free drugs, coupons or rebates. State pharmaceutical assistance programs through Medicare are another resource. NeedyMeds can lend a hand not only with medicine, but also mortgage, rent, and utilities.)
Evaluating rational and irrational fears.
Many older people fear they are going broke even when they are financially comfortable. For instance, they might say they can’t afford care, or whatever it is. It will be easier to figure out what is real when you understand their their finances.