As your parents age, you may find that taking care of them becomes a financial issue for you. Even parents who have prepared well for their retirement years can find they need help from their children to handle rising medical costs and other increasing expenses related to getting older.
Figuring out how best to help your parents with a mix of their money and yours, while still budgeting for your own household expenses, can be a balancing act. The best way to prepare for a potential impact to your budget is by doing your homework before any issues arise:
1. Make a list of all assets and sources of income
When you are compiling your list, you should consider not only your assets and sources of income but also what your parents own and earn. Some potential sources of income you might want to consider include part-time employment for your parents, their Social Security benefits and pensions, and the proceeds from the sale of your parents’ home, which could unlock any equity they have in it. Unless you are your parents’ only child, you may want to make sure you involve all of your siblings, and maybe even other family members, so that you can pool your resources to help when it’s needed.
2. Set boundaries
Once you’ve made the list of assets and income, you may have to start making some hard choices. For example, if you have children, will you stop saving for their college and put that money away for your parents? Which of your own assets are you willing to earmark for your parents’ needs? Are you willing to use part of your own retirement savings for their care? These are difficult questions to ask, with no right or wrong answers. But by setting some boundaries, you may be able to make some adjustments now to be better prepared later.
3. Use senior assistance programs
There’s no such thing as free money, but your aging parents may be able to take advantage of a variety of senior assistance programs that many states and communities sponsor. For example, states may give breaks on property taxes for homes owned by seniors, utilities might offer discounts on energy bills and many local social service agencies provide reduced-cost meals and free transportation to doctor appointments, to name just a few.
You can learn more by visiting BenefitsCheckUp, a free service of the National Council on Aging. The website can help you find federal, state and private programs that help adults over age 55 pay for prescription drugs, healthcare, utilities and other basic needs.
4. Consider other resources
To shield your parents and yourself, you may want to keep your money and property separate.
You also may want to review your situation with an attorney specializing in elder law who can answer questions about wills, living wills and financial power of attorney, as well as issues related to long-term care planning and guardianship, and any other issues that could arise.
Having to manage taking care of yourself, your children, and your aging parents all at the same time can be extremely difficult. Doing your homework and being prepared to address issues as they arise can help you make informed decisions based on as many facts as possible.
Steve Repak is a CERTIFIED FINANCIAL PLANNER™ professional, CFP® Board Ambassador, and financial literacy speaker. He is also an Army veteran and the author of Dollars & Uncommon Sense: Basic Training For Your Money. Follow him on Twitter: @SteveRepak