“I need help. It’s my grandparents. They live alone and I don’t know what to do. They won’t move and they are making some really bad decisions with money. I feel helpless.”
That’s what a 30-year-old woman said to me recently after pulling me aside outside the post office. These types of conversations aren’t easy because they involve family and emotions. That’s why its so important to make sure you know the right way to approach your elderly parents.
Gather Information
If you are going to take care of someone else’s finances, you need to have a full picture of the money situation. Here is a list of information and paperwork you will need to collect:
- Bank statements, pension statements, TFSA, LIRA, etc
- Insurance policies (disability, critical illness, life insurance)
- Will, power of attorney
- Monthly income, monthly expenses
- List of assets owned
- List of debt owed
- Advisors and Providers (financial advisor / insurance agent, lawyer, accountant, family doctor and specialists)
- Business ownership details, as applicable.
Set Goals
People are living longer and longer, and retirement can be stretch into five decades for some people. When considering your parent’s goals, it is best to divide retirement into three timeframes: 55 to 70, 70 to 85, and 85+. What your parent wants retirement to look like- think lifestyle, travel, and so on. What charities do they want to support? How do they want their life remembered (think legacy). What do they want to communicate to loved ones and what would they like to leave people in their life who they care about? These questions are vital in figuring out how to help plan a retirement.
Action Plan
This is where the entire process comes together into a meaningful document and collection of paperwork to help your parent. The first step is to make sure the parent is protected, such as having a conversation with a lawyer about the different types of power of attorney and making sure the will is up to date. Take time to see if there are enough assets for the surviving spouse in case of death. A life insurance specialist and financial planner will know if there are enough assets to meet the wants and needs of your parents.
This is also the time to create a net worth statement and a budget. All debt should be reduced or eliminated as soon as possible. It’s simple — debt in retirement is not a good idea. Eventually, assets like vehicles and property will be sold, so come up with a plan for when that should happen.
If there is a business involved, make sure a lawyer can advise you of how to deal with selling the business or a buyout if ownership involves other partners.
Review Regularly
Life changes, laws change, and a financial plan must be reviewed and adjusted accordingly. Finances should be reviewed at least once per year. All advisors should also be consulted once per year to make sure you are up to date on changes in legislation that can affect your parents. This is also a good time to update siblings with changes to finances, new expenses that have popped up over the past year or are expected to arise, and so on.
The last thing that anyone wants when taking care of their parents in retirement is guilt. Planning ahead and making sure all of your parents’ requests are fulfilled to the best of your ability is going to give you peace of mind and reduce the stress of having aging parents.
