How to Help Seniors with Budget Plans

One of the more sensitive subjects to broach with elderly parents is financial planning for seniors…aka them (whether they will admit that or not).  After your parents retire, their financial situation drastically changes and study after study reveals that most people do not adequately plan, financially, for their golden years.  That’s where you (and all adult children) may need to step in to provide, at a minimum, budgetary assistance for your elderly parents.

But where do you start?  Usually over coffee while sitting at the kitchen table, that’s where.  Obviously, how much assistance you provide depends on several factors, a few being the cognitive abilities of the seniors in question and their willingness to openly and honestly discuss their financial “situation.”  You don’t want to push too hard if there is a great deal of resistance.

In this instance, start as we all did, with baby steps.  Gently ask to see a few financial documents like insurance policies, savings accounts, and/or stock portfolios.  Then, just as gently, offer to assist them in creating a budget, if they have not done so already.  Since you’ve gotten to that point, here are a few tips for taking care of your elderly parent’s finances and it all begins with creating a budget.

1. Create a list of all their assets/incomes. This can be done on paper, a spreadsheet like Excel, or with a budget app such as Mint, Budgetpulse, Budgetsimple, or Economiccheckup (which was created by the Council on Aging).  Or, if your folks find these apps too complicated, AARP offers a bare bones worksheet here: https://www.aarp.org/content/dam/aarp/money/budgeting_savings/2014-08/budgeting-worksheet-aarp.pdf

   So what are assets?  Just about anything of value owned by your parents, including property, monthly income, savings, stocks/bonds, pensions, life insurance annuities, family jewels, etc.  As you do this, separate out income (payments of any kind, such as social security) from assets (things of value that are owned, such as a fully paid off home or money in savings).  Doing this will aid you with step three.

2. Create a list of all expenditures. Included on this list is everything that regularly takes money from a budget, usually on a regular basis.  Items on this list would include mortgage or rent payments, utility bills, taxes, car and other transportation payments, food, insurance payments, and regular medical expenses.
3. It should now be easy to compare monies coming in against those going out on a monthly basis.   Simply add up monthly expenditures on one side and monthly income on the other and compare the two numbers.  If monthly income is greater than monthly expenditures, this is a good thing.  If it’s the other way around, it’s not necessarily the end of the world, especially if your parents have a large number of assets.  However, if expenditures exceed income, changes or adjustments will eventually have to be made.  When?  Well, that depends on the discrepancy between expenditures and income and the value of their assets.

Here are a few more pieces of general financial advice for seniors:

• If their home is paid off, consider renting it rather than selling it outright. That way you have another regular monthly payment in the form of rent.
• Plan for escalating health care costs, especially in assisted living communities. In almost all of these communities, as the level of care increases so too does the cost.
• If this gets too complicated and if you and/or your parents can afford it, seek the assistance of a professional financial planner.
• Have your parents place all important financial documents in one place and provide you and others they trust with access. These documents would include wills, insurance policies, bank account numbers, tax returns, social security cards, and Medicare numbers.

While creating budget plans for seniors is no easy task, it is a very necessary one and one many need assistance with.  Hopefully, the above information gives you a good place to start.