At Springwater Wealth, we’ve been advising independent women for decades on planning for a secure retirement, and delivering financial peace of mind. So, we know that as an independent woman you sometimes face special challenges in your financial planning.
One of the most significant potential challenges in financial planning for women is the need to provide support or care for ageing parents, or to assist parents with their financial affairs as they age.
If you’re a woman who’ll be taking on caregiving responsibilities for your parents, there are some important steps you can take, and considerations you should keep in mind as you prepare to support them.
A Conversation About Finances
One of the most important first steps in your role as a caregiver is to gain a clear picture of your parents’ finances. Without it, you won’t be able to make smart decisions in their best interests.
If your family never really talks about money, getting the conversation started can be the most difficult part. It may be helpful to have siblings or other family members present, or it may be better to have the conversation one-on-one.
Using “what if” scenarios in your conversation can help address many aspects of aging and finances. These can be about health care wishes, living arrangements, or other sensitive topics. Would your parents prefer to receive care at home or in a facility? If your parents were injured in a fall, would they need help with paying bills and managing their finances?
The better your understanding of your parents’ finances, and of their wishes, the better you’ll be able to carry out those wishes and feel confident about doing so.
A Financial Picture
If you and your parents have agreed that they need your assistance with their finances, you’ll want to fully familiarize yourself with their situation. Have they already named you in a power of attorney to manage their finances? If not, you’ll want to work with an estate planning attorney – or go to court for a guardianship arrangement – in order to be able to do so.
Do you know where your parents keep their financial records? While you may be comfortable using mobile apps and online platforms to pay bills, your parents may still rely on old-fashioned paper statements and invoices.
Do you know where your parents hold their bank, investment and retirement accounts? You should familiarize yourself with your parents’ entire financial picture, so that no potentially expensive oversights occur, like a missed required minimum distribution. A durable power of attorney will allow you to speak to your parents’ banker, broker, insurance agent, accountant or financial advisor about their financial assets.
Do you know what their monthly income is, and where it comes from? Are your parents receiving Social Security? What about a pension? Is there income from investments?
What about bills that need to be paid? You’ll want to be aware of auto-payment arrangements linked to their checking account.
For their health care, are your parents on Medicare or Medicaid? Do they have additional health insurance in addition to Medicare? A health insurance plan doesn’t cover the cost of coverage for assisted living – do your parents have long-term care insurance?
If your parents need physical care, you may be able to take on that role, depending on the level of support they need. But providing care for someone later in life can be time-consuming, as well as expensive.
If the time involved is significant, it may impact your own family’s routine. Do you have siblings or other relatives who can help share the burden?
What if a doctor or other medical professional concludes that your parents will need additional care from a nurse or specialized caregiver? Can your parents afford to pay for someone to help provide care when you’re unable to?
Don’t leave your future to chance. Contact our team at Springwater Wealth today to learn how we can help you develop a financial plan for your peace of mind.
What It Means for Your Plan
In your role as caregiver for your parents, you may find that their financial resources aren’t sufficient to meet their current or anticipated needs. What can or should you do?
It may seem natural to use your own resources to support your parents, but doing so may jeopardize your own financial security and plans for retirement. If you’re committed to providing some level of financial assistance to your parents, you should make sure to have your financial advisor include this in your own financial plan, so that you can understand the impact of doing so.
If the assistance you’re prudently able to provide won’t be enough, you may need to turn to siblings or other relatives for help, or you may need to consider selling some of your parents’ assets, or looking into options like a reverse mortgage, to generate income.
Millions of Americans are unprepared for retirement. This isn’t only because of a lack of resources, but more broadly because of a lack of planning. If your parents haven’t adequately planned for the future, but may need a caregiver at some point, there are steps you can take now to help them get better prepared.
As we get older, it’s natural to take pride in our independence and self-reliance. So, a conversation with your parents about planning ahead for financial and caregiving decisions can be framed in the context of maintaining that independence for as long as possible, and ensuring that their wishes are always carried out.
While starting the conversation may be awkward at first, it will ultimately help you – and your parents – feel better-prepared and less-stressed.
A Certified Financial PlannerTM professional can help you get ready for the future with a robust financial plan that includes caregiving support for your parents, while also creating a secure and happy retirement for you.