This is our next article in a series about how to plan and care for our aging loved ones. In this piece, we discuss the potential day to day financial management assistance our parents, or aging loved ones, may need as they age. Below are questions we use with our clients to help guide discussions and provide advice.
What are their sources of income?
The easiest place to start here is with their tax return. The tax return tells all. We can quickly look at social security, pensions, what accounts are generating interest, dividends, capital gains, IRA distributions, etc.
What are their financial investment assets?
We have found most are still getting paper financial statements. Whether paper or emailed, get access for the last 90 days to gather an accurate assessment of their investment holdings.
What are their expenditures?
Here we want to attain access to their checking accounts and credit card statements. We want to review what is on auto pay and what they write checks for each month so nothing is missed.
Who is doing their bill payment?
Often one spouse is in charge of running the bills in the household. Do they handle separately? Do they have a bill payer that takes care of it? This cues the discussion on getting everybody informed and up to speed as needed or preferably beforehand.
Do they have enough income/assets to meet their living needs?
Are they spending just what they bring in? Do they have enough income or assets to support their lifestyle? If not, how do we advise and assist.
Is their investment allocation consistent with their risk profile?
Oftentimes, they are taking way more risk than they realize. For example, if we ask what level of risk they are comfortable taking, we frequently hear back that they would not be comfortable losing more than 10% of their portfolio. Then after looking at their actual investment statements, we uncover they are weighted 60% – 70% stocks. Obviously, that does not add up.
Have we added children as signors on checking accounts?
This makes life easier for a child to step in if/when they are needed to start paying the bills, as well as help avoid probate.
Is there any long-term care?
This is helpful if you suddenly need to bring in a nurse or they need some sort of community living. Is there long-term care to apply to start receiving the benefit.
We then review all the data, assess it and help build plans of what needs tackled. As always, we are happy to help and lead the discussion with you and your family in any way needed.