Money Management: Helping Aging Relatives in Tough Economic Times

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Money Management: Helping Aging Relatives in Tough Economic Times

The downturn in the economy has taken a toll on everyone, but senior citizens are often hardest hit by a recession. That’s because they generally live on a fixed income, including the earnings on retirement plan investments that may have declined sharply in value due to drops in stock prices and interest rates.

The Connecticut Society of CPAs provides this advice on how to help your parents or other aging relatives weather a recession.

Anticipate the need

The first step is simply to be aware of the possible effects that the economy has had on an older person’s finances. You may already know that their retirement savings could have been hurt by market plunges, but other consequences may not be quite as clear.

If your parent owns a home, for example, it may have fallen in value due to drops in real estate prices. That could make it harder to take out a home equity loan when it’s needed or could limit the benefits of a reverse mortgage.

If your parent was hoping to downsize or to move into an assisted living facility, those plans may have to be put on hold if the home can’t be sold due to the bleak real estate market.

Ask questions

Once you’ve considered what problems a parent might be facing, it’s time to get specific information about his or her situation. A visit to the home is a good first step, because it will make it easier to see signs that they are scrimping on necessities such as heat or food.

It’s also a good idea to ask if you can review their financial information, such as checking and savings account statements, retirement account statements, and credit card bills. That way, you can find out if changes in the stock market or in interest rates have lowered their monthly income and determine whether or not they still have enough to cover their costs.

As you look over their paperwork, also be alert for notices that they are behind on payments or for demand letters from collection agencies.

Offer to get involved

If your parent is having financial problems, there are ways that you can help, even if you’re unable to pay off his or her outstanding bills yourself. For example, offer to contact your parent’s creditors and try to negotiate new terms on their accounts.

Many creditors, including mortgage and credit card companies, are willing to lower customers’ monthly payments temporarily to prevent the account from going into default. In addition, you can research programs that offer financial support for senior citizens and enroll them into the ones for which they qualify.

Read Full Article (The Ridgefield Press)

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