Take Stock Now to Prepare for the Future
Financial planning involves making a realistic accounting of current property and assets, establishing economic priorities and taking steps to realize future needs, hopes and dreams. Financial planning can be difficult and emotional, but handled properly, it ultimately boosts a person's sense of security, comfort and independence.
Some people consider financial planning a family matter; others view it as highly personal, not to be discussed even with adult children. Therefore, the amount of involvement you as a caregiver have with financial planning for a senior or person with disabilities may be limited or extensive, depending upon the expectations and attitudes of both.
Financial planning considerations vary depending upon a person's phase of life. A 30-year-old saving for retirement will make different decisions from a 65-year-old seeking to manage already-accumulated assets. At any age, financial planning begins by taking stock. How much is in the savings account or the IRA fund? How much income can be expected from Social Security or a private pension plan?
The next step is making notes about financial needs and desires. These can include deliberations on planning for long-term nursing care as well as more frivolous items like that long-delayed trip to Spain. Serious financial planning seeks to organize a person's affairs to cover necessities and realize their dreams.
Some financial questions a senior might face include:
If I retire at age 65, how much will my monthly pension benefit be? How much will my Social Security income be? What if I retire earlier or later?
If widowed, what spousal benefits will I receive from Social Security? From my spouse's pension plan?
Do I have other resources, such as IRAs, savings accounts, stocks, bonds or real estate? Have I invested my resources wisely?
When do I want to start withdrawing my IRA funds?
Does my pension plan include health insurance coverage? Do I want to purchase a Medigap health insurance policy?
Do I need long-term care insurance? How do I choose the best plan and company for my needs?
If I don't purchase long-term care insurance, what are the rules about Medicaid eligibility?
A financial planner is a trained professional who helps individuals understand and evaluate their current financial strengths, challenges and options. A good financial planner should be able to provide:
A comprehensive assessment of the senior's current financial situation
An explanation of a variety of financial products, such as bonds, IRAs and stocks, including income potential, risks and other details
Information on public and private health insurance options
An assessment of expected and potential retirement benefits
Assistance in determining financial strengths and needs
Development of a written financial plan, including a timetable
Help in periodically reviewing the plan and adjusting it if necessary
Many different types of professionals offer financial planning services. Some have experience as life insurance agents, bookkeepers, bankers, accountants or tax lawyers, and their particular expertise may match the senior's areas of inquiry. Others have a broader understanding of all aspects of financial planning, which may be more helpful for individuals with complicated and extensive financial interests.
Before seeing a financial planner, gather as much information about the senior's situation as possible. Try to focus on particular goals. For example, a senior who owns a home might want to continue living there and adapt it to address medical needs; another might want to sell the home and move to a continuing care retirement community.
These tips can guide you and the senior in choosing a financial planner:
Ask about the planner's philosophy, approach to planning and the kind of final product to be produced for you.
Ask about the planner's credentials and experience.
Ask to see copies of plans prepared for previous clients, with names and confidential information removed.
Ask about fees and payment schedules.
Check with regulatory agencies to make sure professional credentials are in order. Ask for the names of some previous clients, and call them.
Interview more than one potential advisor.
Finally, create a file for copies of all paperwork the advisor gives you. To facilitate record-keeping, pay by check, not cash.
Contact these organizations if you'd like to know more:
American Institute of Certified Public Accountants
1211 Avenue of the Americas
New York, NY 10036
Certified Financial Planner Board of Standards
1700 Broadway/Suite 2100
Denver, CO 80209