Budgeting-- Even More Important for the Elderly

Budgeting. Ugh, not a process that anyone enjoys but everyone know that should be done. It doesn't matter if your income is $1000/month or $100,000/month, it's still important to plan spending levels. Many people assume that once they retire or reach a certain age that they no longer need to think about budgeting. The reality is just the opposite, budgeting is even more important for the elderly.

The biggest fear that most elderly people have is outliving their money. But, a big mistake that the aging make is to not pay attention to where they're spending their money. I think the assumption is that their expenses at this stage of life are beyond their control. This is far from true.

Here are some examples of places to look to save.

Drug costs. Most seniors today have Medicare Part D prescription drug coverage. But, this doesn't mean that there aren't ways to save. Pay attention to what is prescribed. Some drugs may not be covered in your plan but a good substitute may be. Look into different stores or mail order options to see if the prices vary. Pay a lot of attention to over-the-counter products. There are huge price differences from one retail chain to another. Convenience becomes a factor in these decisions, especially if driving is a problem.

Car-related issues. Cars are expensive to drive, maintain, and insure. Many elderly couples keep two cars. As they age, there may be less of a need for both cars--maybe they always go out together, maybe one really should no longer be driving, maybe they live in a community that provides some transportation services.

Lifestyle. Ah, this is a tough one. Most people, the elderly included, want to continue the same lifestyle that they are used to. Again, it doesn't matter what income bracket. An elderly person's income may not be able to continue to support belonging to multiple country clubs, a lot of restaurant dining, or buying generous gifts for family members. It also doesn't mean going to the other extreme and living like a hermit. But, as hard as it may be to change, staying the course when it comes to day-to-day lifestyle issues may not be realistic.

The key to budgeting is to realistically examine where money is being spent and make conscious decisions about spending instead of blindly going forward month-in and month-out. This is true at any age but especially true for the elderly. There aren't too many options for generating additional income to cover the spending.

Misleading Medical Information and the Dangers to the Elderly

An earlier post was about phishing emails and how hard it was to realize when it wasn't a legitimate email. Today's subject is similar but related to medical and pharmaceutical information. It could go in a number of different directions, but because Kitchen Table Finance is aimed toward baby boomers and their elderly parents, this will focus on information found in mainstream newspapers.

I was sitting at the kitchen table in one of my client's homes, working on their bills. Annie and Bill were a well educated, sophisticated couple. Bill was well into his eighties and suffering from serious vision problems. As he could no longer read the paper, Annie was reading it out loud to him. I couldn't help but hear the information as she was reading. It was about a product containing calcium, vitamin k, and other miscellaneous vitamins. To listen to what the article was saying, you'd think that they had just discovered something as game-changing as Penicillin. They both decided to call the phone number given in the article to order the product. I try to keep up with the news and I was surprised that I hadn't heard about this particular combination and protocol and all the medical problems that it was solving. When I was done, I asked Annie if I could look at the article and copy down some of the information. When I saw what she had been reading I realized that it was an ad set up to look like an article.

The elderly are very vulnerable to getting sucked into buying something that promises to solve all their health issues. Hopefully the product at least does no harm. Beware of 'miracle' cures for anything. Encourage your parents to ask their doctor or pharmacist. At the very least, you can do some research on some of the reliable medical websites. Most elderly people don't have money to waste on useless products and certainly can't risk taking something that could have adverse effects.

Phishing Emails, Online Scams, Etc.

It's almost impossible today to not have some of your personal and financial affairs on the computer. No matter how savvy we think we are, the 'bad guys' are one step ahead. I thought I knew the red flags. I read the articles telling you what to watch out for. And guess what? I fell for one the the Bank of America phishing emails.

I got an email from Bank of America telling me I had a 'member alert'. The email had the Bank of America logo, Bank of America copyright information, and a Bank of America email address. I've since gone back to that phishing email to verify that it was a Bank of America extension on the email address and it was. They gave me a link to go retrieve my alert. Now, in hindsight, I should have not used their link, I should have gone directly to the Bank of America site. In my defense, Bank of America has installed some new security software and at times the login is a bit different. Once I was on the site that I had linked to, I was asked some security information to validate who I was--which I stupidly filled in. I was to then receive a validation code which would let me proceed to my account. Surprise, surprise, that validation code never came. At this point, I had already realized my mistake and was on the phone to the fraud department at Bank of America.

I'm openly admitting my stupid blind trust of a real looking email. I'm somewhat horrified at how easy it was to do. If I fell for it, lots of other people fall for it too.

So, here's some of the lessons I learned:

1. Never use a link given in an email. If the email tells you that you need to do something, go to the company's website directly.

2. Never give a social security number, account number, password, debit card number or any other critical piece of information.

3. Stop and think before you act. Use your smarts (I apparently lost mine yesterday).

4. Take into account the type of firm you (supposedly) got the email from. Would a bank really ask you for certain pieces of information? As another example, there's an email that had been circulating from Apple that lead you to think you had a virus on your computer and wanted you to buy a defender piece of software. As you were going through the process of ordering this software and doing a virus scan, these loud beeps went off every time it supposedly found a virus. Thinking logically, Apple would never have this jarring, awful noise go off--that was when I realized it was a scam.

Hopefully for me, I caught my mistake in time. I had to close my Bank of America account and put an alert on our information with the Credit Reporting agencies. I hope that by telling you what happened to me, it'll save it from happening to you.

KISS - Keep It Simple, Seniors

Keep it simple is the goal, start to simply early on. I see my elderly clients with multiple checking accounts, CD's at various banks, a number of small life insurance policies and annuities with different companies. What happens is a lot of confusion, a lot of paper, and a huge administrative issue. What seemed like good financial sense at the time ends up being overwhelming.

Does this scenario sound at all familiar?

It seemed like a good idea to go to another bank in town to buy a CD as their rates were slightly higher than their primary bank. It seemed like a good strategy to take advantage of an annuity that their bridge partner's son was selling. After all, it was nice to help a friend's son out when he was just beginning. Back in the day when Money Markets were paying a decent amount of interest, it made sense to open up another checking account. But, that account couldn't be used as the main account as only a certain number of transactions were allowed per month. Some of these financial investments were titled individually, some jointly, some in a trust account.

The examples could go on and on. The repercussions range from the mundane daily overload of statements to the legal implications upon the death of one of the account holders. Maybe one of your parents enjoyed spending time taking care of their finances, researching opportunities, and investing/purchasing different investment vehicles. That may have worked when they were younger and could keep on top of everything. But, that may no longer be the case.

Listen when one of your parents starts to make little comments about being overwhelmed trying to keep track of their finances. They may be embarrassed to admit that they need help. When you visit with them, notice if there are piles of papers accumulating. That's a sure sign that no one is looking at them.

The first thing to do is to start to make a list of all their accounts, where they are held, how they are titled, how much they are worth, and if there is an advisor or sales rep handling the account. This may take some time to accomplish. I've been working on this with one of my elderly clients and thought I had it complete. Totally out-of-the-blue, an IRA statement came in the mail that I hadn't known anything about.

Once you know all the accounts, a plan can be devised to try and simplify things. Ideas can be to merge checking accounts so that there is only one account to use and keep track of. If there is a primary investment accounts, other scattered items can be brought under the envelope of that primary account. For example, the client I mentioned before has some annuities that were separate from her primary brokerage account. They now are being moved under the umbrella of her brokerage account.

Depending on your level of knowledge, advise may need to be obtained from a CPA, attorney, or financial advisor prior to making too many changes. Tax and estate planning implications need to be looked into before making any changes.

Bringing this conversation back to the original idea of KISS -- your elderly mother shouldn't be confused as to which checking account to write a check from, be stressed about all the statements coming in the mail, or worry about who is watching over all her accounts. Simplifying things will help her now, and you and your siblings when the time comes that one of you need to take things over.

Family Dynamics and the Impact on Aging Parents

One of the common themes running through both my business and this blog is the impact of family dynamics on the life of the aging parent. We all have 'it' somewhere on the spectrum --few of us have The Waltons, few of us have truly dysfunctional situations. Some of the stereotypical profiles that I've encountered are:

Practical Patty. This is the sibling that gets the job done, that finds the help the aging parent needs, and figures out the insurance issues.

Hand-wringing Hannah. This is the sibling that worries what's going to happen, imagines every possible awful scenario, and is usually immobilized.

Peter Pan. This is the one that has never grown up, the one that never plans ahead and whose head is in the clouds - and probably can't be relied upon.

Squirrelly Sam. This sibling usually has a hidden agenda. It might be that they have been planning on an inheritance as their finances aren't in good order and that underlies all their input into the situation.

Marge in Charge. This is the bossy one who tells everyone what to do - whether they want to be told or not.

I'm sure most of you can recognize some of these profiles and have long histories with your siblings. By acknowledging these issues they can be built into planning for the care of your aging parent. This is the reality of the situation, maybe not the ideal.

Some family histories and dynamics are so emotionally charged that the best option is to acknowledge that the siblings can't work together. In my experiences, the aging parent usually knows this in advance and sets up their affairs so that they are independent from their children's involvement. This situation is even more pronounced when there is a daughter or son-in-law involved that the aging parents doesn't like or trust.

The important take-away from this blog topic is for both the adult children as well as the aging parent to recognize the realities of their own family dynamics and plan accordingly. As I said in an earlier post --if you and your siblings can't get along in a non-stressful social type situation, the chances are really high you aren't going to be able to work together at a stressful, emotional point in time.

Computers, Social Media, and Aging Parents

Twitter and Facebook, online banking and ATM's, blogs and ipads -- they've all become part of many of our daily norms. Some seniors won't touch a computer beyond getting pictures of their grandchildren, some are computer savvy.

The use of technology has many implications when figuring out how to handle the financial affairs of an aging parent. The decision has to be separated into multiple layers.

When an aging parent begins to need help to take care of their financial affairs, the obvious first answer is to have one of their children start to take over. Today, even if the child doesn't live locally, a plan can be implemented due to the technology available. Bills can be sent via email, access can be set-up to bank online, consent can be given to have duplicate brokerage statement sent.

But, even the elderly that are comfortable with technology may balk at this plan. Why? Yes it is partially due to the issue of security of their personal information. But, it's more than that. It's the lack of human involvement that is equally as much the issue. This becomes more pronounced the more home bound the person has become. Sometimes I think we forget how much there is to be gained by the 'old school' way of interacting.

Molly was well into her 80's when we first began to work together. She had had a career in the garment industry in New York and continued to lead a very active life when she retired to Florida. After some medical issues, she needed some help taking care of her household finances. Nothing was terribly complicated and her son that lived out-of-state could have easily set everything up so he could handle things online. Molly was home alone more and more. After having lead a very active, social life she was now very lonely. It was better for someone to come to her home each week to not just pay the bills, but to sit and visit for awhile. I was fortunate to be that person and learned far more from her than I could have ever learned from sitting at the computer.

So, text and tweet, watch movies on your ipad, get your information from google searches, take advantage of whatever the next generation of technology brings. The technology may be very good at getting the mechanics done. But, don't forget to sit at the kitchen table and talk to your grandmother, a friend or a neighbor!

The Conversation About Finances Between Adult Children and Aging Parents

The issue of how much detail parents should tell adult children about their finances is a complex one. All sorts of factors come into play, from the practical to the hot button issues of family dynamics. Every situation is different and there is no boilerplate right answer. The scenarios below are meant to be representative of ones I have experienced in my practice.

John and Mary have always lived well and that has continued into retirement. Their children assume that they have a substantial amount of money and therefore think nothing of coming to them for help. The reality of their finances is that they have always lived right up to the edge – and at times beyond. They aren’t sure how to begin to correct this illusion and change habit patterns.

Eva is widowed and living on a fixed income. She’s proud and very independent. Recently she realized that it was time to stop driving so she hired a woman to drive her when needed. As more and more of her friends have stopped driving, she has had to begin using the driver more frequently. The cost of this is starting to have an impact on her finances but none of her family lives in the area to help out. She doesn’t want to ask for her children for help so she’s staying home alone more often instead.

Dave and Anne were financially very comfortable, not rich but very comfortable and very private about how much money they had. Their son-in-law has never made much money and never seemed very ambitious. Dave just passed away and now Anne is working through things such as Power of Attorney, signatory authority on her accounts, access to the safe deposit box, etc. She’s uncomfortable having her son-in-law know how much money she has but knows that her daughter is the logical choice for these responsibilities.

Adult children as well as their aging parents may be uncomfortable initiating or being involved in conversations about topics that haven’t been discussed before. But, it is important to have the conversation and develop a plan before a crisis or emergency occurs.

Sweepstakes Scams and the Elderly

Most junk mail is no more than just a pain in the neck and environmentally unfriendly. But, for people that are trusting and vulnerable, it can become more than that. Fraudulent sweepstakes and contests via the mail as well as over the phone rob the elderly of huge amounts of money every year.

There are many legitimate sweepstakes and contests (Publisher’s Clearinghouse and Reader’s Digest are two) and the laws that they must abide by have been strengthened over the past several years. Unfortunately, there are many other types of sweepstakes that use strong tactics to entice money out of people. The elderly are a prime target because not only are they vulnerable, when they realize what’s happened, they’re too embarrassed to report the crime.

Here are some rules of the road:

It’s illegal for a company to require you to pay a fee or buy something to enter a contest or sweepstakes.

If you really do win something, taxes will be deducted from your winnings or you pay them directly to the government. If they tell you to mail the taxes to them and then they will send your check, it’s a fake and they will just keep your money.

No legitimate sweepstakes company will ask you for your credit card number. Do not give this information to a caller telling you that you’ve won a contest.

Some of these fraudulent companies purposely have names that are misleadingly similar to the legitimate ones.

Be careful of those very official looking envelopes. Con artists know that using words like ‘urgent’ or putting official types of seals on the envelope make the recipient more likely to believe the contents.

If the postage on the envelope is bulk postage, a lot of people got the same mailing telling them they are winners. Don’t believe it.

If you are at an elderly person’s home and you see an extraordinary number of sweepstakes mailings, start to ask questions. Once someone responds to one of these fraudulent contests, their names go out on the mailing lists and they receive more and more mailings.

Again, if you’re at an elderly person’s home and you see a large number of magazines, ask questions why. They may be subscribing to magazines thinking it will increase the chances of their winning.

You will never be asked to wire money to a legitimate sweepstakes company.

Keep telling yourself – if it sounds too good to be true, it probably is.

It All Starts with the Mail

To some of you, dealing with the mail each day is routine, something you don’t give much thought to.

For others, the mail is an overwhelming task that leaves you exasperated on a daily basis. There can be varying reasons for this – the beginnings of Alzheimer’s, multiple people getting the mail and leaving it everywhere, or simple disorganization. When mail gets ‘misplaced’ throughout the house life gets much more stressful and complicated than need be. Bills don’t get paid and extraordinary amounts of time get spent searching for things, never mind the mess.

I have been in people’s homes and in the hunt for the mail and bills, found them in kitchen drawers, on kitchen counters, in the car, in bedroom night tables, in between cushions on the couch, and so on. Sometimes it has been opened, sometimes it hasn’t. The consequences of lost/misplaced mail can be serious. For example, checks may become invalid after a certain number of days, insurance policies lapse if not paid within a certain time frame, and interest charges on credit cards mount up.

Regardless of the reason that the issue exists, the important thing to do is to establish a routine that everyone follows:

1. The mail should be sorted immediately if possible, or at the very least, get rid of the junk. This will reduce the clutter.

2. It is critical that one place be designated as the holding place for bills. It can be anything from a shoebox to a specific drawer to a priceless antique accessory. Wherever that place is, everyone - spouses, children, cleaning help, and aides –must follow the routine.

3. For those with the beginnings of Alzheimer’s or someone living with a person with Alzheimer’s, it is critical to emphasize the routine over and over again. If the person with Alzheimer’s is getting the mail, the routine that’s emphasized is simply to put all the mail in the one designated place. Someone else must do the sorting.

4. Keep a shredder handy. The following are some of the things that should be put through the shredder, not just in the wastebasket: anything with an account number on it; credit card solicitations; convenience checks that come with your credit card bill - those blank checks that they give you to use to pay other bills.

And finally, be practical. Don’t set up a system that’s too fussy for everyone to keep up with for the long haul. It doesn’t matter whether you use a stack of empty shoe boxes or this really cool $198 mail organizer I saw in a catalog, there’s one constant. The mail comes every day, and every day you’ve got to deal with it.