Your parents did the best they could to teach you how to count your pennies and, more importantly, how to save them. If they’ve reached retirement age, there’s a good chance you could now offer them a few good tips on handling their personal finances.
Improving your aging parents’ financial literacy can feel awkward, especially because having the discussion may mean you’ll need to learn more about how they manage their assets. But if you think they need advice on retirement planning, set your reservations aside to talk about five important issues.
1. Gather vital information.
If you should need to jump in suddenly to manage your parents’ financial affairs, you’ll have an easier time if you know where to start. Ask your parents to help you draft a roadmap of their financial landscape –where they do business and with whom. You’ll need contact information for their lawyer, financial planner, accountant and other professionals. You’ll also need the names of their banks, insurance companies and mortgage firm (if applicable), along with the corresponding account numbers. Finally, ask them what their income sources are.
2. Establish your parents’ net worth.
Planning for your parents’ future can be difficult if they lack a thorough picture of their finances. ElderCare Online recommends that you and your parents do a little financial legwork. Help them gather all their financial records so you can all get an accurate sense of their net worth. If their finances look complex, consider involving a financial advisor.
3. Automate financial transactions.
Your parents may still prefer human bank tellers to online banking, but over time, it might become increasingly difficult for them to make trips to the bank – and to keep track of income. To keep recurring financial transactions running smoothly, Forbes recommends setting up automated deposits for such income as social security and other checks.
4. Evaluate insurance coverage.
Make sure your parents have all the insurance coverage they need, and that they’re aware of the coverage they have. Beyond Medicare, your parents may be entitled to supplemental benefits from former employers, or they may have other coverage or policies they’ve forgotten about, Forbes notes.
5. Take advantage of all benefits.
Your parents may be entitled to senior benefits they’re not aware of, such as discounts on property taxes, utility bills and healthcare. Make sure they’re getting all the breaks they deserve by consulting The National Council on Aging to learn which programs could help them.
Helping your parents become more financially literate will make it easier for them to keep managing their money independently. And these five steps may make it easier for you to step in later, if the time comes when they can no longer handle their finances on their own.
Have you talked to your parents about their finances? What issues did you discuss?