Assisting Aging Parents with their Finances

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Nearly 20% of Bucks County residents are over the age of 65, according to the census. If you are an adult with aging parents, this article will help you help your parents with their finances. It can be a sensitive topic, so approach gently. Asking questions and displaying compassion will generally be more effective than simply telling your parents they need help. In addition to Bucks County’s Area Agency on Aging, your longtime community bank The First is here to help you and your family!

Help your parents create a budget

One of the first steps toward organizing your finances (or helping your parents organize theirs) is to create a budget. This is especially important if one or both of your parents is transitioning to retirement. Try to answer questions like:

  • What are your parents’ monthly recurring expenses?
  • What about semi-regular expenses such as property taxes, insurance payments, etc.?
  • What goals are they saving for, such as travel and holiday gifts?

For more on budgeting, check out our recent blog articles on “6 Habits of Successful Savers,” “Money Management Tips For Couples,” and “How Can I Improve My Credit Score?”


Set up retirement buckets

The “bucket system” helps retirees divide their portfolio into two or three categories depending on when the money will be needed. Here’s how it works:

  • Cash bucket: Should hold enough money to pay your regular expenses for the next 1-3 years. Using your budget from the first step, minus any guaranteed income streams such as social security, pension, and/or annuities, figure out how much cash you’ll need to cover the rest.
  • 3-10 year bucket: This is the money you’ll need in the mid-term. Consider keeping it in investment-grade bonds and bond funds that will offer stability as well as growth.
  • Long-term bucket: The rest of your money can be invested more aggressively, as in stocks, because you won’t need to make withdrawals until the more distant future.

As your cash bucket gets low on funds, you can replenish from either of the other two buckets, depending on market conditions and performance. Our Investment Management team can help you design the best bucket strategy to fit your life and needs.

Optimize your sign-ups for Medicare and Social Security

If you’re still working as you approach the age of 65, you may want to delay your Medicare sign-up. Here’s what to know:

Medicare Part A is also known as Hospital Insurance

You may want to sign up for it when you turn 65, even if you’re still working and have health insurance through your employer, because there is no cost to you if you paid Medicare taxes long enough while working. However, if you have a Health Savings Account (HSA) that you’d like to continue contributing to until you retire, you’ll need to delay your Part A enrollment.

Medicare Part B is the “medical insurance” part of Medicare

The only reason to delay your enrollment in Part B is if you’re still covered through an employer-sponsored health plan from your job or your spouse’s job.

Talk to your employer or union benefits administrator before making a decision on delaying your Medicare enrollment.

The enrollment window for Social Security retirement benefits is age 62-70. However, if you start taking SS before your full retirement age, your benefit will be reduced. If you delay SS after your full retirement age, your benefit will increase until you turn 70, at which point there is no further incentive to wait.

Talk to one of our Certified Financial Planners about the best time for you to start receiving SS benefits.


Take stock of your retirement savings and any other income streams

“How much money do you need to retire?” is the top question on many people’s minds as they approach retirement, especially if you don’t have a defined-benefits retirement plan such as a pension.

As with other aspects of retirement planning, the answer depends on your specific circumstances. “You’ll need about 80 percent of your pre-retirement income,” according to AARP, though that doesn’t include variables like travel, healthcare expenses, and any goals you have to leave money to your kids and/or a charitable organization.

Of course, social security benefits will cover some of your living expenses, though you shouldn’t count on SS alone.

What about other income sources, such as an annuity or a few rental properties? The bottom line is that there is more than one way to have enough money to live on in retirement.


Help your parents keep financial information organized and safe

The best approach to securing financial information is to organize everything in one central, ideally fireproof location. Label file folders for easy access and file financial papers immediately upon receipt. Electronic records should also be organized in a central folder. Shred any documents you no longer need to keep. Keep digital and physical files locked with a password, key, etc.


Set up automatic bill pay

Help your parents streamline their finances with automatic bill pay. This way they don’t have to remember each and every bill or suffer penalties if they forget.


Contact our wealth management team today!

If your parents aren’t working with a financial planner already, our wealth management team can help them get organized, plan for the future, and stay on track through retirement. The First also offers a complete menu of convenient products for seniors including free premium checking. Learn more about our retirement savings options, trust services, and estate administration, and schedule a conversation today!