Things to Consider When Caring for Aging Parents

Imagine this. Your kids have all graduated college and are starting their careers, you’ve paid off most or all your mortgage, you have no high-interest debt, and you’ve been disciplined about saving for retirement. Retirement finally feels like a distinct possibility! Then, your father suddenly suffers a stroke. While your mother is in good health, she won’t be able to be the primary caretaker for your father, so they will need to live in a long-term care facility. To make matters worse, they don’t have long-term care insurance and are unsure of how they’ll be able to pay for the high cost of long-term care.

So, your mother asks you for financial support so that your father can receive the care that he needs. While you want to do everything that you can to help your parents, this could drastically alter your plans for retirement. Situations like this unfortunately happen far too often.1 No one wants to plan for the possibility of caring for their aging parents, but it’s something that needs to be considered during the retirement planning process. Let’s review some financial planning tips to consider for people who are caring for aging parents.

1. Communicate Openly with Them

We hope that everyone in your family remains in good health for as long as possible and can live their best life while they’re working and in retirement. However, we want you and your family to be prepared if something happens to you or your loved ones, whether it’s an early death, serious illness, etc.

If your parents are in the latter stages of life, have they talked to you (and your siblings, if you have siblings) about legacy planning? Death and incapacity obviously aren’t fun subjects to talk about. However, consider some of the potential alternatives if you don’t have those discussions with your parents.

Maybe you assumed that you were going to receive a large inheritance, but instead your parent(s) decided to leave their estate to a charity.
Maybe your parents lived a frugal lifestyle in retirement when they didn’t have to, but you didn’t realize it until it was too late.
Or maybe your parents lost a substantial amount of money from a financial scam, but didn’t realize it due to cognitive decline.

We could list several more examples (and we will share a few more in this article), but hopefully you’re starting to get the point. It’s important to have open and honest communication while they’re still healthy. That way there hopefully won’t be as many tough financial conversations if/when you need to start caring for your aging parents.

2. Make Sure They Have a Current Estate Plan

This ties right in with our first financial planning tip for caring for aging parents. It’s important to understand that if an individual doesn’t have an estate plan, there are state laws that dictate what the probate court will do with the estate. Probate can oftentimes be a lengthy and costly process.

Additionally, there’s a misconception that having a will-based estate plan means that the estate will bypass probate. Having a will is important to make sure nothing slips through the cracks, but properly establishing and funding a trust can help avoid probate. The two basic trust structures are revocable trusts and irrevocable trusts. While a revocable trust (AKA, a living trust) can be managed and modified by its creator, an irrevocable trust can’t be changed after it’s created without the consent of the creator’s beneficiaries and/or court approval depending on the situation.

Also, it’s critical that an estate’s assets are properly titled. Whether you’re vetting your own estate plan or you’re caring for your aging parents, make sure all assets have a transfer on death (TOD) or payable on death (POD) or that they’re jointly titled.

As you’re talking to your parents about estate planning, make sure that you both have the following documents.

Last will and testament
Revocable living trust
Beneficiary designations
Advanced healthcare directive: living will and medical power of attorney
Financial power of attorney

3. Regularly Assess Their Living Situation

We mentioned earlier that the cost of living in a long-term care facility has continued to climb. Even if your parents are still healthy and able to live on their own, make sure that their financial plan weighs the possibility of them requiring a long-term care stay or moving into an assisted living facility. That’s one of several retirement planning considerations that’s mentioned in our Retirement Plan Checklist. Download your copy below and review it with your loved ones to gauge each other’s ability to get to and through retirement.

Retirement Plan Checklist

Caring for aging parents might be easier for some compared to others due to the proximity of where the parents and their children live. If you live far away from your parents and aren’t able to see them often, do you have other friends and family who can regularly check in on them to make sure that their living situation adequately meets their needs?

Some people might insist on living at home unless they require urgent medical care. If your parents have that frame of mind, is their house compliant with ADA standards?2 If it’s not, can it be ADA compliant with some repairs and how much could those potential repairs cost?

Another option for caring for aging parents is for the parents to move in with their adult children. While that might (at least temporarily) avoid taking on the cost of your parents living in an assisted living facility or the stress of safely living on their own, can your home accommodate their needs? And do you have the time to care for them, especially if you’re still working? Whether your parents are living at their home or your home, the support of an in-home caregiver is another option to consider.

4. Assist with Monitoring Their Finances

Just to make sure you’re seeing the theme here, having open and honest communication with your parents about finances is a big part of each of these financial tips for caring for aging parents. Income planning and monitoring expenses can get much more complex in retirement. Whether you’re 65 or 95, Medicare and other health insurance options can be incredibly complex.

It doesn’t help that seniors are also one of the top targets of scammers.3 Along with offering to help with monitoring your parents’ spending and expenses, help protect them from being victims of cyberattacks.

5. Make Sure That You and Your Parents Are Working with a Team of Financial Professionals

There are several more specifics we could dive into when it comes to financial considerations for caring for aging parents. One of the main things we want you to know is that you don’t have to do it alone.

Whether your parents are now suddenly relying on you for financial assistance or you want to prepare for the possibility of that, our team is here to help. Everyone’s situation is different, but the bottom line is that there’s no shame for you or your parents to seek assistance with wealth management.

Think of it this way. You and your parents (hopefully) both go to the doctor for annual checkups, right? Hopefully, your doctor will tell you that you’re healthy and that they’ll see you next year. But if they do find something that’s wrong with you, hopefully they’ll detect it before it potentially gets worse.

It’s the same concept with hiring a wealth management firm to do a checkup on all aspects of your finances. We’re ready to build you a comprehensive financial plan that’s tailored to your goals. That plan should include things like planning for the possibility of a long-term care stay, estate planning needs, other multigenerational financial planning considerations, and much more. Start a conversation with our team below so we can learn more about your situation and build your plan accordingly.

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Do You Have Any Questions?

Just like we don’t want you to feel all the pressure of managing your family’s finances, we don’t believe that should be the responsibility of one financial advisor either. That’s why our team consists of CFP® Professionals, CPAs, CFAs, estate planning specialists, insurance specialists, and other wealth management professionals that work together on behalf of our clients. We want to help you live a better life!

Resources Mentioned in This Article

Downloads

Retirement Plan Checklist

Other Sources

[1] https://www.nea.org/nea-today/all-news-articles/when-retirement-means-caring-your-parents

[2] https://www.access-board.gov/ada/#ada-224

[3] https://www.americanbar.org/groups/senior_lawyers/resources/voice-of-experience/2024-april/a-guide-to-safeguarding-seniors-from-cyber-threats/

Investment advisory services offered through Modern Wealth Management, Inc., a Registered Investment Adviser.

The views expressed represent the opinion of Modern Wealth Management a Registered Investment Advisor. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.