The following post is by MPFJ staff writer, Laurie Blank. Laurie is a wife, mother to 4 and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom and to a simpler, more peaceful life.
It’s only been in the last decade or two that personal finance education has really begun to weigh importantly on the minds of adults. Because of that, many people find themselves wondering how to help their aging parents prepare for retirement.
Helping your parents prepare for retirement isn’t just about the money they’ll need to live on after they quit working; there are many other factors that need to be considered. As I recently worked through this with my mom, I thought I’d share our experience and what issues we addressed as we helped mom prepare for retirement.
Figure out Living Arrangements
This is a big one for those considering retirement. Some retirees prefer to stay in the home they’ve lived in for many years; some prefer to move on to less work-intensive living.
It’s important to talk with your parents about how they wish to live after they retire. If they want to and can afford to stay in their own home, who will do the maintenance and upkeep work? Will the kids and grandkids help?
If that’s not an option, can your parents afford to hire out to take care of home projects? Is there room in the budget for a maid? It’s important to have these conversations early so that kids can understand their parents’ wishes and parents can ascertain whether or not it’s realistic to stay in their current home.
If moving is the best option, where will your parents needs best be served? Will a 55+ apartment complex suffice, or is more intensive care – such as assisted living, – needed? If your parents are considering moving, visit several potential places before picking one.
Also, it’s important to start the moving research process early as many senior living facilities have long waiting lists for new residents.
In my mom’s case, we chose (after a lot of research) a basic 55+ apartment complex. The place we chose has a plethora of activities available for seniors but is somewhat small in terms of the number of apartment units.
There are many different types of living complexes for seniors to choose from, which is why you should allow plenty of time for the research period before deciding on where your parents will move should they decide not to stay in their current home.
Establish a Post-Retirement Budget and Financial Plan
How much money will your parents need to live on? How much do they currently have saved for retirement? What will they earn monthly from social security, pensions and part-time jobs?
Income often changes after retirement. Are your parents prepared for this change? Do they have an idea of how they want to live in retirement and if they can afford that ideal?
Some people’s parents may need the help of a professional financial planner to determine how to strategize investments to produce a sufficient monthly income. Others may simply need to sit down and create a realistic post-retirement budget.
Helping your parents assess their current financial situation and create a plan that will allow them to survive financially during retirement is key to making the senior years enjoyable and peaceful for parents and for their children as well.
Create a Realistic Plan for Medical Expenses
Your parents’ current health status is important as you help them determine just how much money they’ll need to cover medical expenses during retirement. Find out what prescriptions they’re currently taking and how much each one costs per month.
Factor prescription and other regular medical expenses in as you work with your parents to create a realistic budget.
Also, work with them to determine what types of medical insurance coverage they’ll be eligible for after retirement. Will they be covered by Medicare only, or do they have insurance coverage eligibility through their former employer or military time served?
How much will they pay monthly for their coverage? What does their coverage cover in terms of expenses and what are the deductibles? Having a thorough understanding of these factors will help you determine if your parents have sufficient income to pay for medical expenses.
Make Sure a Proper Will is in Place
Laws vary from state to state, so it’s important for you to check on the state laws governing estate property where your parents live. Some states require that all property go straight to probate if the property is only listed in a parent’s name, even if the will states clearly who the property should go to upon death of the owner.
In order to avoid long court battles, it’s wise to check on individual state laws where your parents live and to title all property (including bank and investment accounts) in a way that makes sense for your family.
It’s also important to discuss your parents’ burial wishes with them. Although this isn’t a fun topic, it’s important to know what your parents’ wishes are and to plan accordingly for those wishes (both financially and regarding the details) so that those details are out of the way and aren’t creating stress later on.
Retirement can be an exciting time and a scary time for one’s parents as they look forward to a new chapter of life. The more prepared you can help them be beforehand, the easier the transition will be.
How about you all? How have you helped prepare your parents for retirement and beyond?
Share your experiences by commenting below!
***Photo courtesy https://www.flickr.com/photos/rzuranski/6444826991/
