Money Management for Elders and their Caregivers

As we age, we may need to become caregivers to elders or prepare for others to become caregivers to us. In addition to healthcare considerations, there are also important financial considerations to be made. Here are a few important aspects of money management for elders and their caregivers to keep in mind.

Set Expectations

Starting a conversation about money can feel tricky, uncomfortable, and maybe even embarrassing—especially if the caregiver in question is a younger member of the family. It’s possible that money was never before openly discussed, or that there were certain unspoken family rules around money which might be awkward to talk about in concrete terms. Still, it’s important to set expectations. Be clear and specific about who will be looking after what aspects of an elder’s finances. If certain financial tasks—such as paying bills, receiving bank statements, or depositing Social Security checks—will be taken over by the caregiver, put it down in writing so everyone knows who’s in charge of what.

Some important questions to ask while setting expectations include:

• Who will have power of attorney to manage finances if an elder is no longer able to do this?
• How are bills paid currently and would it be smart to automate these payments?
• Where are financial records stored? Who can access this information?
• Is long-term care insurance a necessity? How about medical insurance?
• How will spending and budgeting be managed in retirement?

Estimate Financial Needs

It’s important to estimate elders’ financial needs in order to create a budget. Aim for financial prudence, but don’t underestimate costs: you don’t want a budget that’s impossible to stick to. According to the experts, a comfortable retirement requires around 80% of a pre-retirement salary. However, this can vary widely depending on geographical location, lifestyle, medical costs and so on.

Housing is usually the most pricey expense in retirement, especially if an assisted living facility is required. The median fee for such a residence is around $4,000 per month. Other expenses to look out for include Medicare out-of-pocket costs, taxes on 401(k) or other retirement plan withdrawals, and of course the fun activities like travel and entertainment. Utilizing an online calculator such as the Fidelity Healthcare Cost Estimator can help you prepare for expenses elders and their caregivers can expect.

Financial Assistance After Retirement

A number of resources exist to help elders and their caregivers ensure that expenses are covered. One useful resource is BenefitsCheckup.org, a platform created by the National Council of Aging (NCOA). The website links retirees to over 2,500 benefit programs, helping elders receive discounts and benefits related to medical expenses, food and nutrition, housing and utilities, and lots more. There are also links to income assistance programs, for direct cash assistance to elders who qualify. And, be sure to visit www.SSA.gov if you have any questions or concerns about accessing your Social Security benefits or what you are entitled to.

More Tips to Help

• Work with professionals that are fiduciary, meaning they have a legal obligation to act in the client’s best interest when managing assets
• Search for free support and resources at acl.gov, which links older adults and their families to local services for elders
• Seek community resources through employers, religious organizations, and local area groups such as Massachusetts Senior Resources
• As a caregiver, look after your own mental health, ask for help if you need it, and be willing to relinquish control to experts if the responsibilities are overwhelming
• Be on the lookout for signs of financial abuse, as unfortunately, elder adults are common targets of financial scammers