Senior citizens are particularly vulnerable to financial distress once they're living on a fixed income and experiencing some cognitive decline. Here's how caretaking children can help:
9. Discuss the money. The World War II generation tends to guard financial information and independence, driving some proud seniors to foolhardy measures, says Kenneth Kamen, president of Mercadien Asset Management in Princeton, N.J., and an expert in retirement planning. An older woman he knows racked up $31,000 in credit-card debt before her family found out. It resulted from household expenses that were just beyond her fixed monthly income. "For some seniors, [debt's] the only way they're getting by," says Kamen. The financial details need to be teased out, he says, especially if you suspect your parent might need to lean on you. He recommends starting the money conversation with an advice-seeking approach: "Dad, Sue and I are thinking of buying long-term-care insurance. Did you and Mom do that?" If he shrugs you off, explain you're simply trying to plan your own finances and wonder if you might need to someday help pay for his care.
10. Add a caveat to the durable power of attorney. Another document to complete is a durable power of attorney, which names a person who will control Mom's finances if she can't. Technically, no one else has access to the financial records, so errors can go unnoticed, says Kim Hubbard, interim director of the elder abuse prevention program at the California advocacy group WISE Seniors. Moreover, she says, the majority of financial elder abuse is perpetrated by a relative—sometimes the one holding power of attorney. She recommends that seniors add a detailed paragraph that names a second person, be it a professional accountant or personal friend, who will take a look at bank statements monthly and do an in-depth analysis of all financial records yearly.
11. Find extra money. Financial tools like a reverse mortgage can improve seniors' cash flow, but Kamen suggests downsizing into an affordable, senior-friendly condo first. Your parents might be eligible for benefits that reduce their heating bills or take the edge off prescription drug costs, but it requires looking—and applying. "There are lots of programs out there to make ends meet," says Scott Parkin, a vice president at the National Council on Aging, "but it's rare that more than half the people who qualify actually use them." The council's benefitscheckup.org can direct people to assistance programs.
12. Protect against scams. Seniors are particularly vulnerable to telephone solicitations for phony investments, say, and to getting tricked into sharing their Social Security number. This year, officials reported a spate of deceptive sales of Medicare Advantage plans. It's a good idea to have parents get their credit report checked; all three issuing agencies—TransUnion, Experian, and Equifax—must provide a free annual report upon request. Starting this month, residents of all states can put a reversible "security freeze"—different from a fraud alert—on their credit report, which should block identity thieves from obtaining new lines of credit.