While not all seniors have the same goals, energy, or financial resources, there are certain common milestones to consider. This is why it’s important to talk to your parents about money and care, and initiate that conversation long before advanced aging kicks in.
If your parents have worked with a financial professional, they may have preparations in place. If not, there’s still time. Either way, now is a good time to assess and address the situation, and remember to loop in your siblings. Below, you’ll find an outline of key financial issues for each of the later stages of life, and a checklist of things to consider and plan for with aging parents. Prepare your parents — and yourself — so that you can all look forward to their retirement years.
Age 50-60: Parents approaching retirement. They may be retired, or getting there soon, and ready to enjoy a full life. Though they may not consider themselves “senior” yet, it’s important to make sure your parents:
- Make key decisions. Write a will, and assign the power of attorney and a health care proxy. These decisions are critical — dictating who will have control over the money, as well as your parents’ care.
- Estimate their future income. For Social Security, contact www.ssa.gov. Add up all sources: pensions, 401(k)s, IRAs, annuities, rentals, business assets or sale of a home.
- Get a financial plan. Your parents should talk with a financial representative knowledgeable in insurance, retirement, annuities, long term care and legacy planning.
- Talk it through. Your parents need to tell you and everyone else their preferences for long term care and discuss whether these preferences are realistic.
Age 60-70: The golden years. Your parents are likely retired and may be exploring the world, or gaining fulfillment in other ways. There are important benchmarks during this stage, including:
- Social Security options. Between age 62 and 70, they’re eligible for Social Security benefits. Figure out when they should apply. If they can wait until 70, the checks each month will be about double what they are at age 62.
- Medicare eligibility, which begins at age 65. Your parents need to know how to apply, what’s covered, what isn’t, and how to purchase extra coverage. Medicare can be confusing, so research the choices ahead of time at www.medicare.gov.
- Fixed incomes. Your parents should create a budget, adjust their spending, and consider downsizing. A reverse mortgage, which allows homeowners to use mortgage equity as income, is also an option to investigate.
- Legacy planning. Look into how estate and inheritance taxes can affect their estate.
Age 70-80: Independent, but prepared. Ideally, parents will be enjoying life the same as they always have. However, medical realities can change things. Prepare your parents for what may come:
- Mandatory withdrawals of retirement accounts start at age 70 1/2 for traditional IRAs, 403(b)s, and other tax-advantaged retirement savings plans, except for Roth IRAs.2
- Retirement homes should be researched and chosen with future care in mind.
- You, a sibling, or a third party may have to take over their finances. If parents are losing their mental abilities, get a doctor’s help with testing. You may need to use power of attorney.
- Hospital visits can turn senior care into a full-time job, so, for some families, having parents live with a family member works well, especially if parental income can reimburse the caretaker.
Age 80-90 plus: Senior statesperson. The realities of life as an elderly person have arrived. If everyone has planned, adjusting can be relatively smooth. Some things you may consider include:
- A wearable alarm for your parent(s).
- Assisted living or long-term medical care, which may require transportation, and associated costs too.
- Which property to sell, such as the house or car. Agree beforehand on who is keeping what, and what should be sold.
Summing up: When your parents are youthful and active, aging can seem a long way off, but some changes can happen rapidly. By planning early, transitions will be easier for you and your parents, making their later years rich and rewarding.
1 Jane Gross, “Health: Caring for the Elderly,” New York Times, Feb.15, 2017.
2 Internal Revenue Service, “Retirement Plan and IRA Required Minimum Distributions FAQs," Feb. 15, 2017.