Growing older may be more expensive than you think. It’s never too soon or too late to consider the financial situation of your loved one, the impact it will have on your own bank account, and how you can plan for the future. These frequently asked questions and financial planning tips can get you started.
Q: How do I get a handle on my loved one’s finances?
A: Talking about money is seen as taboo, but it is necessary if you’ll need to help make financial decisions for your loved one in the future. Topics for discussion include:
- How much income does she receive? When and where from?
- Does she have a will? Where are her legal documents kept?
- What about life insurance? Long-term care insurance?
- Is there an accountant, financial planner, or insurance agent advising her?
- Where are her PINs, passwords, and other important documents kept? Don’t forget to ask about the keys to her safe deposit box.
Q: How will caregiving affect my finances?
A: You may find that your personal finances are more affected by becoming a caregiver than you expected. Tracking your budget carefully for a few months will allow you to see how much you are spending out-of-pocket on your loved one’s care. You will also need to plan ahead for unforeseen costs. If he needs to move in with you, will a home renovation be required? Will you be able to consider quitting your job or cutting back on hours to care for him?
Look at ways you can save money, and research other financial planning tips for caregivers. Don’t forget to ask about senior discounts on everything from groceries to public transportation.
Q: How can I save money and still allow my loved one to age in place?
A: Many seniors want to remain at home as long as possible. Unfortunately, this can be very expensive. In some cases, care facilities may be cheaper than the level of in-home care required. That said, you can usually compare costs for care and save money as a result. Paid caregivers from private firms are typically cheaper than skilled home healthcare providers, for example. Hiring a sitter or enrolling your senior in adult day care may be other money-saving options worth investigating. It’s also important to follow senior safety tips to ensure your loved one stays healthy and independent as long as possible.
Q: Should a power of attorney be named for managing my senior’s finances?
A: A power of attorney allows a designated person to manage all financial transactions in place of the account holder. This may be necessary in the event your loved one is diagnosed with Alzheimer’s or dementia. Legal documentation is often required in order to handle certain financial transactions, and having it protects you from future issues with the bank or other family members.
Q: How will long-term care be paid for?
A: Talk with your senior about any long-term care insurance policies she may hold, and ask if she has any savings set aside for future care. If your loved one will depend on Medicaid to pay for care, an irrevocable trust may be necessary to protect her assets from being used to pay for care. An experienced lawyer can offer assistance with this document and other financial planning tips.
Planning ahead helps reduce the stress of caregiving. A professional financial planner can also offer additional financial planning tips for caregivers.