BOSTON (CBS) – According to the National Council on Aging, more than 13 million older adults are considered economically insecure, living on less than $22,000 a year. Over 30% of older adults rely on Social Security for 90% of their income. In addition, 6 million seniors are at risk of going hungry every day.
Do your parents have enough money to maintain their current lifestyle? Has the recession eroded their nest egg? After gaining their trust and they realize that you, their smartest and brightest child, are not after their money after all, now you can to ask them the tough questions. How much do they have and how are they spending it?
If dad should die would mom be all right? Help them do a net worth statement. Where are their assets and who owns the assets?
Help them create a budget. Write down all of the income; Social Security (which by the way you want to be sure is direct deposited), pensions, retirement plan withdrawals. Then help them figure out where they are spending their money each month. Review their bills.
I was helping a family member and she had signed up for the budget plan with her oil company. She had a $900 credit. She just kept paying the bill each month without questioning it.
You may need to play detective here and find out where the money goes. Are they eating out frequently? Using the shopping channels as entertainment? Making donations to charities that solicit by mail? Giving money to your brother to cover his gambling debts? Are they using their credit cards to supplement their income?
How much debt do they have? According to the Federal Reserve’s latest numbers, 32% of retirees (age 65-74) have mortgages on their primary residences!
Average household debt for those over age 65 rose 164%. There is increased credit card debt among our seniors and bankruptcy filings have tripled in the past 10 years. Seniors make up the fastest growing segment of the population seeking bankruptcy protection. Mom & dad could be up to their ears in debt.
Often times just seeing their finances written down is enough to get someone to change their spending habits. If indeed they are in debt what resources do they have to reverse this situation? What are they willing to do to change the situation? Can you help them or get them some help? Do they need to meet with Consumer Credit Counseling?
Helping your aging parents is a process. You cannot decide to spend a weekend with your parents and get them organized and straighten out their finances. This is an ongoing process. First they need to trust you and then allow you to help them. Role reversal is very difficult. They want to be your parents; they want to be in control. Think about how you would feel if your kids ganged up on you some weekend and told you how to live your life!
One more thing: Check my website www.deelee.net for worksheets you might find useful. Download and print out the Cash Flow worksheet to help with the budgeting process.