Over half of all senior citizens live on minimal incomes or survive on poverty wages. That could account for about 25 million people, or more. The average annual Medicare benefits for a senior citizen barely amounts to $11,000. A working senior citizen over the age of 65 makes about $23,000 a year. A senior citizen age 75 and over barely makes about $18,000 annually.
Most people over the age of 65 have never paid into or saved money for a retirement plan. Many retirement age people can’t retire or work part time just to make ends meet. Too many elderly people find themselves unable to effectively deal with their finances. A lot are too proud to ask for help. Many become incapable of handling their finances due to old age and declining health as well. Meanwhile, the standards of living steadily increases.
This ordeal can be painful to watch for the adult children of elderly parents. It can be awkward and unsettling for an adult child to assume the role of caretaker for their parents. If you need to help your elderly parents with their finances, here are some strategies to help you.
Talk To Them
You want to be as sensitive as possible about suggesting you take an active role in helping with your elderly parents’ finances. Never assume or generalize their issues. Talk to them. Ask them if they need help. Identify how you can help them with their finances and express your desire to help. Make them feel like they are a part of the process. After all, you will need their help, consent and financial details to assist them.
Consult a Financial Advisor
There are many financial advisors who specialize in helping the elderly organize their finances. Compare consultation fees. Try to get recommendations or referrals. Be aware that a lot of commission-based financial advisors sell and/or encourage clients to buy financial products exclusively promoted by their company. They may offer some sound financial advice. Still, commission-based financial advisors may be looking out for their own best interests in lieu of the client.
Try to find a financial advisor who specializes in assisting the elderly and who is also a legal fiduciary. Fiduciaries are legally mandated to put the needs of their clients above the need to profit. Most financial advisor fiduciaries are fee-based consultants only. You can look for fee-based fiduciaries at the official National Association of Professional Financial Advisors (NAPFA) website.
Life insurance coverage is cheaper and provides more benefits for younger applicants. Statistically speaking, the older that you are, then the closer you are to the end of life. Also, the older that you get, the more prone you become to declining mental and physical health. Covering senior citizens presents a financial risk to all life insurance companies.
Still, there are many life insurance companies that specialize in providing coverage for the elderly. Research such companies and compare rates. The average elderly-centric life insurance policy is about $250,000. The cost of the monthly premium could be tens of dollars up to $200 a month. Policies with more benefits are much more expensive. As the adult child, you may even be able to apply for life insurance on your parent’s behalf.
A cost effective option is final expense life insurance plan which provides small basic coverage amounts. Generally, these plans are to cover the cost of a funeral and related expenses.
You will need their consent and signatures on the application. This is especially true if you list yourself as a beneficiary. As the adult child, you may have to prove an insurable interest to apply in their stead. This just means that the passing of your parents will cause you financial distress, as in having to pay for their funerals. Also, you will have to specify if you or your parents will pay the premium.
Make a Financial Organization Plan
Communication is key. Talk to your parents. Express your wish to help them. Outline how you will help them with their finances. It may be uncomfortable for you to assume the role of caretaker for your elderly parents.