Having difficulty handling money is one of the early signs associated with cognitive decline and dementia among older adults and often the task of managing finances falls upon adult children of aging parents. But most families avoid talking about money matters because the subject can be quite a volatile one for seniors who are used to being in control of their own finances.
The time does frequently come when a trusted family member or close friend must step in and help sort out income, expenses and how future care costs will be funded. Having these discussions well in advance of a health crisis is important so wishes can be honored and a plan put in place. A good way to start helping aging parents with their finances is to make sure annual tax returns have been filed and are up to date. Reviewing returns to ensure all the tax credits that are available to seniors, especially those with chronic health conditions, can save a significant amount of tax dollars.
Insurance is also an important area to take a closer look at for older adults. Knowing which policies are current and understanding what they will cover in terms of long-term care or other medical expenses will play an important role in planning financially for the future. In some cases, seniors may have enrolled in several insurance plans and could be better served by simplifying.
A recent report in the Financial Post advises grown children to be aware of the tax considerations of estate planning and seek professional advice to avoid unnecessarily high fees or other unexpected financial consequences. Most importantly, children should view assets not as their future inheritance but keep in mind money, property and investments are still their parents’ and should be used to support their loved one’s care needs in old age.
While seniors are still of sound mind, they can make changes to their will, power of attorney or advanced directive for health care. It’s important to do this and check for any errors or omissions while older adults are fully capable of making valid changes that reflect their wishes.
It is prudent to talk openly with aging parents about their finances and how they will fund future care but according to a 2017 CIBC poll, 62 per cent of older parents have not discussed management of their finances in the future with their adult children or other loved ones. Aging baby boomers should start now to put a plan in place for their care in old age and talk with their adult children about finances; many children avoid the topic because they don’t want to appear to be after their parents’ money. And with increasing longevity many seniors are living well into their 90s making retirement a lot longer than it was a generation ago, any financial plan should account for this possibility.
Read more about financial planning for old age by following this link to the Financial Post.