7 Steps of Financial Caregiving for Aging Relatives

The recession has depleted savings accounts of many senior citizens at the same time many have seen their pensions evaporate or severely reduced when long-term employers disappear or enter bankruptcy. The timing can be particularly difficult for those entering a stage of life when their medical and living expenses are increasing.

Because many of this generation delayed having children until later in life, these children may have just begun to launch their own careers or face the steep increase in expenses of starting their own families. As a result, this "sandwich generation" isn't able to offer their parents much i n the way of financial assistance.

Still, there are ways you can help your parents or an elderly relative without assuming the entire financial burden. Consider the following check list to see if any of these options are viable at your stage of life.

1. Health Insurance
Review their insurance situation with them and discuss options that can reduce costs in this area. A periodic review is necessary to make sure coverage is adequate but not excessive. If they're unable to make the monthly premiums, offering assistance in this area can save far higher costs down the road. You also might consider helping with out-of-pocket expenses, such as medication co-pays, to avoid more expensive problems. This is a complex topic these days so working together may help you find better solutions.

2. Housing
Hopefully, your parents may not need to move to an assisted-living facility or need home care for many years, but now is the time to address the issue. Discussions can become heated if left until much later, so it's best to consider options before the situation arises. Many older people prefer to stay in their own homes, which may require more maintenance care than they can easily maintain. While they may not wish to move into a senior-care facility, would they consider downsizing to a less expensive apartment or smaller house?

3. Consider a Reverse Mortgage
If your parents are still capable of living in their own home, perhaps now is the time to consider a reverse mortgage. A reverse mortgage allows seniors to keep title to their home, while withdrawing their equity as either a monthly check or in a lump sum. While some may be nervous about going into debt, it's important to note they can never run out of equity or be forced out of their home. When they die or move, the house is sold and they or their heirs will receive any amount in excess of what has already been advanced through the reverse mortgage. The amount of the monthly check is based on the value of the home, their age and the current interest rate. Make sure you understand the terms of the loan before signing. As with all mortgages, Consumer Reports warns predatory lenders will gobble up your home's equity through fees and ballooning interest rates. 

4. Investments
The time may come when your parents will no longer be able to oversee their investment portfolio. Suggest making duplicates of all relevant information, even if the relative uses an investment adviser, so you can monitor any potential problems. 

5. Daily Living Costs
Keep an eye out for sudden changes in daily-living spending habits, late payment of bills or late filing of tax returns. Such changes may indicate your parent is no longer capable of handling their own finances or having difficulty making ends meet. Providing some assistance in this area could save penalty costs down the road. Consider offering to take over managing household bills and maintaining income records, if they are no longer able to do so for themselves. Alternately, you might establish automatic payments made from their bank account for recurring bills, such as utilities, insurance premiums and credit-card bills. You can easily monitor these payments online.

6. Direct Deposit
You might set up direct deposit of any benefit and pension checks into their bank and brokerage accounts. This eliminates checks being lost in the mail, delayed or forgotten at home. 

Become a Joint Partner
To write checks or withdraw funds, consider becoming a joint owner of a bank account or making arrangements through the bank so you can conduct transactions for your parents, should they be unable to do so.

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Posted by Supreet