Start Talking Now About Post-Retirement

As your kids leave for college and begin their lives as adults, your thoughts begin to turn to your aging parents. Millions of baby boomers currently assist their aging parents with their finances. Complicating matters, many boomers must manage their parents' financial affairs long distance.

While the "Greatest Generation" who lived through the Great Depression and World War II has a reputation of being prodigious savers, the reality is that many live on a fixed income of Old Age Security, Canada Pension or a small private pension. Besides the home, they have few assets.

Having 'The Talk'

The first step to helping your parents involves just talking to them. This should occur before a crisis, like an illness or death of a spouse. Some parents will welcome the conversation. Others may become defensive out of fear of becoming dependent or losing control, or they simply may be reluctant to burden you.

In this conversation, find out what your parents' needs and goals are now and for the future:

• Are your parents able to pay their bills and taxes on their own or do they have an accountant?
• Have they prepared an estate plan, and can they locate all of the necessary documents (wills, trust, charitable vehicles)?
• Have your parents purchased long-term care insurance and, if not, should they?
• Can your parents live independently or do they require home care? Should they consider community living, such as an independent or assisted living facility?
• Do your parents have a living will and medical power of attorney?
• Have your parents protected their assets, and do their investments generate sufficient income?

In this planning process, your parents must decide who can act on their behalf. While parents are generally uncomfortable playing favorites, they should still select one child with the skills to perform certain critical roles under a medical power of attorney or as an executor of a will. When multiple parties are responsible for the same task, the process can slow down to the detriment of the elderly parent.

Personal Data Records

After talking with your parents about their plans, the next step is creating a personal data record to compile important information. The data record should contain the following:

• Financial information: banking and investment account information, real estate holdings.
• Legal information: wills, durable power of attorneys, health-care directives.
• Funeral and burial/cremation plans: prepayment information, final wishes.
• Medical information: health care providers, list of medication, medical history.
• Insurance information: policy numbers, company names, toll-free phone numbers.
• Location of important records: keys to safe-deposit boxes, real estate deeds.
• Financial advisor information: contact information for any professional service providers.

Be sure to make copies of all documents and keep them in a central place where they are readily available in an emergency. We have seen many instances where legal or financial documents had to be faxed to a service provider to have critical information released or quick action taken on an important issue.

Supplemental Income

Once assessed, you may determine that you need to help support your elderly parent with a monthly stipend or by paying for legal fees or insurance coverage. While these financial arrangements are not uncommon, many people are understandably embarrassed at accepting help from their children, so these arrangements are often kept private.

Identifying Additional Help

If you are unable to personally care for your parents, you may want to hire a Financial Planner who can help assess your parents' ability to:

• Live independently.
• Recommend home health care.
• Coordinate round-the-clock care.

Helping your parents with their financial affairs is challenging and time consuming, but it is ultimately satisfying when you secure your parents' future.