Finances can be a difficult subject for adult children to bring up with their parents, but if aging parents need your help in the future, having some knowledge can save everyone time and problems. Even with careful retirement planning, the rising cost of living can eventually deplete an aging couple's savings and investments. As a consequence, elderly parents often find it harder to make ends meet. With people living longer, longevity is an issue that affects finances over time.
Step 1
Encourage your parents to talk to you about their finances before they need help. Ask them what income and assets they have so you don't find yourself in the dark if the time comes when your parents need help in managing their finances. The time for your parents to make plans and sign a power of attorney is before a health emergency strikes.
Step 2
Step in early to help if you suspect that illness or dementia might be affecting a parent's judgment, particularly when it comes to finances. Suggest that your parents have Social Security and other pension or investment checks deposited directly into their bank account and monthly utility bills automatically debited as a way to handle everyday finances.
Step 3
Look for signs that a parent might not be covering usual expenses. If you notice reason for concern, ask your parents for permission to examine their bank statements. Make certain that your parents are keeping accurate records of deposits and expenditures. Ask about any duplicate payments, several recent transfers from a savings to checking account or amount of charitable donations uncharacteristic for your parents. These could signal trouble.
Step 4
Check into other options for increasing your parents' income if they are having trouble meeting their normal monthly expenses. Personal finance guru Suze Orman suggests borrowing against the equity your parents have in their home as a way to get them additional income. Although this may be a viable option for some people, a reverse mortgage comes with costs of its own.
Step 5
Ask your parents for copies of their insurance policies. Not only should you be familiar with the terms of their auto insurance, homeowner's insurance and life insurance policies, you may need to know if they have supplemental medical insurance in addition to Medicare. In the event of a parent's chronic or debilitating illness, it is helpful to know if your parents have a long-term care insurance policy in place as well. Neal Cutler, a financial gerontology expert, points out that costs related to an aging parent's health care is one of the things that adult children worry about most.
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