The downturn in the economy has taken a toll on everyone, but senior citizens are often hardest hit by a recession. That’s because they generally live on a fixed income, including the earnings on retirement plan investments that may have declined sharply in value due to drops in stock prices and interest rates. The New Jersey Society of Certified Public Accountants (NJSCPA) provides the following advice on how to help your parents or other aging relatives weather a recession:
Anticipate the Need
The first step is simply to be aware of the possible effects that the economy has had on an older person’s finances. You may already know that their retirement savings could have been hurt by market plunges, but other consequences may not be quite as clear. If your parent owns a home, for example, it may have fallen in value due to drops in real estate prices. That could make it harder to take a home equity loan when needed or could limit the benefits of a reverse mortgage. If your parent was hoping to downsize or move into an assisted living facility, those plans may have to be put on hold if the home can’t be sold due to the soft real estate market.
Once you’ve considered which problems your parents might be facing, get specific information about their situation. Visiting their home is a good first step as it will make it easier to see signs that they are scrimping on necessities such as heat or food. It’s also a good idea to ask if you can review their financial information, such as checking and savings account statements, retirement account statements and credit card bills. That way you can find out if changes in the stock market or interest rates have lowered their monthly income and determine whether they still have enough to cover their monthly costs. As you review their paperwork, be alert for notices that they are behind on payments or letters from collection agencies.
Offer to Get Involved
If your parent is having financial problems, there are ways that you can help, even if you’re unable to pay off their outstanding bills yourself. For example, offer to contact your parent’s creditors and try to negotiate new terms on their accounts. Many creditors, including mortgage and credit card companies, are willing to lower customers’ monthly payments temporarily to prevent the account from going into default. In addition, you can research programs that offer financial support for senior citizens and enroll them in the ones they qualify for. More information is available at www.benefitscheckup.org, a website sponsored by the National Council on Aging. It offers details on federal, state and local programs that help seniors pay for meals, medications, utility bills, taxes, health care and more. Remember, if your parents’ monthly income has declined because of market declines or other factors, they may be eligible for more aid programs than they were in the past.
Consult Your CPA
Conversations about money can be embarrassing and troubling for families. Your local CPA can help. Turn to him or her for advice on any financial issues facing your family, including problems encountered by older relatives in a tough economy.
If you don’t have a CPA, you can easily locate one online using the NJSCPA’s free, online Find-A-CPA service. Just go to www.findacpa.org, and in a few clicks you can locate a highly qualified professional who can assist you.
For more information on various personal financial matters, visit the NJSCPA’s public service website at www.MoneyMattersNJ.com. While visiting, you can subscribe to Your Money Matters, the NJSCPA’s free, monthly email newsletter to receive valuable personal financial planning advice throughout the year.
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