Guest Post by Daniela Baker
According to a 2010 report by the Associated Press, there are an estimated 38 million Americans caring for an elderly relative. And while the President included in his proposed 2011 budget an additional $103 million for programs designed to assist the aging population, these Americans still need assistance to cover their bills to maintain a high quality of life.
Here are some steps that you can take if you have personally taken on the care for your aging parents. These financial decisions will help you to ensure your parents are able to continue to enjoy their retirement.
Discover your parents’ wishes
As suggested by Senior Citizen Journal, you will also want them to grant you authorization to access these accounts if needed for medical or continuing care needs.
You will also want to take to your parents about their outstanding debts including all open credit cards. This will help ensure that payments are being made on all accounts to decrease interest paid and prevent penalty fees from being tacked onto the accounts.
Meet with a financial advisor
A trusted financial advisor will help you understand the options available with your parents’ investment accounts. Forbes.com recommends working with a financial advisor who specifically specialized in multigenerational planning, as they will understand your needs. They will help you devise a plan that will help ensure you can take care of your parents’ needs while also working with you on your own needs, like retirement and college funds for your kids.
When you meet with the financial planner, they will evaluate your parents’ current income (social security, IRA distributions, etc) to see if there is a more optimized approach that could be taken.
Discuss insurance polices
When parents age, they often stop paying their life insurance premiums. This is because they assume they have enough in savings to cover their final expenses.
If your parents want to discontinue their life insurance, you may want to consider paying the premiums for them. Do the math to see what the difference will be between you making the payments for the next 10 – 20 years versus the insurance payout.
Uncover hidden tax benefits
If you have assumed the full care of your parents, you can claim them as a dependent. This will help you offset some of the costs that you have taken on.
Claiming your parents as dependents is possible if you are paying for more than half of their expenses such as housing, medical, food and clothing; when doing this, you must include Social Security benefits in the equation.
Take advantage of government programs
There are numerous programs available to assist the aging American population. This includes Social Security, Medicare, Supplemental Nutrition Assistance Program and prescription drug plans. Be sure to enroll your parents in these programs as soon as they are eligible for the benefits. This will help to ensure your parents’ carefully planned and saved assets will last as long as possible.
You can determine your parents’ eligibility for these programs through the aid of the National Coalition on Aging, which offers a benefits checkup.
About the author: Daniela Baker is a social media advocate.