By Gregg S. Fisher, CFA, CFP® Chief Investment Officer, Gerstein Fisher


As life expectancies continue to climb, more adults are caring for their aging parents and loved ones, even as they enter their own retirement years. The support elderly individuals need takes many forms—emotional, physical/medical, logistical, and also financial. In the 20+ years I’ve spent working with individual investors, many clients have informed me that they are assuming responsibility for their parents’ finances — and are seeking guidance in this important but often daunting endeavor. While every individual’s financial situation is different, ranging from the fairly straightforward to the very complex, I’d offer six key recommendations to anyone looking to assist aging loved ones with their finances. Considering all of the facets of his or her financial life and having the right things in place before a crisis will let all parties involved feel comfortable and confident that they are doing the right thing. 1. Understand the total picture.

It’s important to take inventory of your loved ones’ assets and liabilities. On the asset side, consider savings and checking accounts, pension and other retirement accounts, and brokerage accounts; as well as hard assets such as real estate, autos, and valuables. On the liability side, do they still have a mortgage? What kind of credit card or other debt remains to be paid off? Understanding both the financial resources available to your parents/loved ones and their obligations can help you set up a plan to ensure these are in balance. Additionally, figures such as equity in home and mortgage owed can be helpful for determining Medicaid eligibility.

2. Review investment allocations.

Investments are often a key component of the total financial picture detailed above, and it’s important to ensure that your loved ones’ asset allocation is appropriate for their age, liabilities, and ability and willingness to take on risk. You can work with an investment advisor to help determine the appropriateness of the portfolio given these factors.

3. Locate and consolidate important documents.

Collect important legal documents such as birth and marriage certificates, insurance cards, Social Security cards, tax returns, bank statements, and wills, and keep these in one location that you can access. (With respect to a will, it also may be a good time to review beneficiaries, trustees, and key provisions to ensure these still reflect your loved one’s wishes.) Also obtain user names and passwords for accounts accessed online, if applicable.

4. Consider their income and expenses.

Are they receiving a pension, Social Security, annuity payments or interest or dividends on any investments? Income is another key metric looked at by the IRS in determining Medicaid eligibility. What does this amount to monthly, and how does it line up with fixed expenses like utilities, medication, and insurance premiums? Also anticipate potential future expenses and budget for these if, for example, they will need to move into an assisted living or other care facility in the near future. For those over 70 ½, make sure they are taking their required minimum distribution (RMD) from any qualified retirement plans, as the tax penalty for failing to do so is significant.

5. Get a handle on insurance coverage.

What medical, life, home, or other insurance policies do they have in place, and are premiums up to date? If they do not have a long-term care (LTC) policy in place, discuss with them whether this might be appropriate. LTC can be especially critical if long-term care expenses risk depleting their financial resources. Keep in mind that the average annual premium for LTC is based on current age. Therefore, people at the younger ages will pay less for their coverage. You may also want to research what state tax deductions they are eligible for on LTC premiums, as these vary widely by state.

6. Consider their power of attorney.

It’s important to identify who will make important financial decisions for your loved ones if/when they should become unable to do so themselves. Discuss both a financial and medical POA with them, possibly in conjunction with an estate attorney.

While these guidelines are not exhaustive, they cover key areas on which to focus when you want to help your aging loved one get his or her financial affairs in order, and put yourself in a position to be of assistance when it’s needed most.

Content is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any investment or service. Neither Gerstein Fisher, nor its affiliates offer tax or legal advice. The views and strategies discussed may not be suitable for all investors. Securities offered by GFA Securities, LLC., member FINRA and SIPC. Investment Advisory services offered through Gerstein Fisher, an SEC registered advisory firm.