SPECIAL FROM Next Avenue
Recently, my sister and I spent the better part of a month providing urgent care to our 89-year-old father, who had a kidney removed, and our 84-year-old mother, who faced complications related to Alzheimer’s disease. (I blogged about how we did it and still kept our jobs.) One good thing came out of the experience: I saved my parents nearly $5,000.
This found money will come in handy because they just got a full-time, live-in caregiver, and that’s mighty expensive.
You might be able to save your parents some serious money, too, by taking a close look at their finances the way I did with mine.
The Eye-Popping Insurance Bill
While my father was in rehab recuperating from the kidney surgery, I retrieved his mail, which included an annual renter’s insurance premium for the one-bedroom apartment he and my mother share in an independent-living complex. I was shocked to discover that their longtime insurer was billing them more than $5,000, partly because it valued the contents of their apartment at $580,000.
My parents have a perfectly nice sofa, bedroom set and kitchen table, along with a couple of TVs and some pieces of silver and jewelry. But the total value of these possessions is nowhere near $580,000. In fact, I’d estimate that it’s more like $30,000. This means their renter’s insurance should have cost much, much less than $5,000. I figured it ought to be closer to $800, maybe even less than that.
So I called my parents' agent and gave her a piece of my mind. I told her that the insurer should have known better than to value the contents of their apartment so ridiculously high and charge them such an exorbitant premium -- especially when they’re at an age when they can’t afford to overspend.
The Waiting Game
The agent didn’t apologize, but said that if I sent her a letter from my parents with the amount of coverage they wanted, she would go back to the insurer to reprice the policy. I followed her instructions and waited. … And waited. …
A month passed. Then I called the agent back and learned that she hadn’t contacted the insurer yet. As my decibel and blood pressure levels rose, I demanded that she do so.
A few days later, I spoke with the agent again. She said the insurer wouldn’t write a policy for my parents, because the company offers renter’s insurance only with much higher coverage. But she gave me the name of another agent who worked with other insurers and said he could probably help.
Big Savings From Another Agent
I called that agent, and sure enough, he came back with a policy that cost $295 a year.
After this experience, I had a conversation with my dad. I told him I wanted to be sure that he and my mom weren’t being overcharged for anything else. He then let me scrutinize his checkbook, and I was relieved to find no other inflated expenses.
Having the Talk With Your Parents
It isn’t easy to ask your parents to let you see their financial records. Having "the talk" is probably as awkward for you as "the talk" they gave you as an adolescent was for them. An excellent article by the National Endowment for Financial Education on Next Avenue notes that your parents may consider their financial information to be private, or may fear a loss of control associated with showing it to you.
But getting their approval can help them enormously, particularly since studies have shown that elderly people who suffer cognitive impairment -- as about half of people in their 80s do -- make significantly more financial errors than others. If your parents have trouble balancing a checkbook or express concern that their money was stolen or is missing, these could be warning signs, indicating that they have problems managing their finances.
Reviewing your parents’ finances could help you find ways to cut their costs. That, in turn, will boost their savings or give them found money to spend on things they want or need.
Your detective work could also reveal that your parents have been making unwise financial decisions -- they might even be victims of financial fraud. (Next Avenue has a helpful article on financial scams targeting the elderly.) If so, you’ll obviously want to take action quickly.
Be sure to scrutinize how your mom and dad are using credit cards. Some older people fall for come-on offers from credit card issuers that promise very low interest rates. What they may not realize is that those promotional rates end -- and often turn into absurdly high rates. The result: serious debt problems for the cardholder.
What to Do Next
Once you have tracked your parents’ expenses, you can help them set up automated payments from their bank accounts for recurring monthly costs. This eliminates any worry that they’ll forget to pay utility bills, car loans, the mortgage or rent.
You might also want to get your parents to sign durable power of attorney documents, which give you and your siblings the authority to handle their financial transactions if your parents are unable or not competent to do so.
Finally, have your parents tell their banks and brokers either to send you copies of their monthly statements or to let you see their online statements. This will allow you to keep an eye on your parents’ income and expenses inconspicuously. It also means you won’t have to keep asking your mom and dad to show you their records, which could make all of you a little uncomfortable.
Richard Eisenberg is the Senior Web Editor of the Money & Security and Work & Purpose channels of Next Avenue. Follow Richard on Twitter @richeis315.