After down markets, more seniors need FINANCIAL HELP
The fall in equity and bond values last year hit many investors hard, but some of the most unfortunate are seniors. The markets have improved lately, but many seniors sold their holdings at the worst time and remain in financial difficulty.
Add to this increased health care costs and consumer price inflation, and many retirees are facing financial difficulties for the first time in their lives.
They may be hesitant to discuss their financial problems with their offspring. If your parents are facing financial problems, I urge you to raise the issue with them.
I am fortunate that, as a result of a good defined-benefit retirement plan, Social Security benefits and a conservative portfolio, I don’t need financial support from my children — and they have never asked me whether I need their support. I imagine that the majority of children with parents in retirement have never asked their parents if they needed financial support or advice regarding retirement issues.
If you do raise this issue with your retired parents, and they indicate there are potential problems, what are the issues you can discuss with them? Here are some possible issues to review.
Life insurance: Do your parents have life insurance policies with high premiums they no longer need? If so, they can consider either terminating the policies or selling the policies to a company (Coventry, for example) that purchases policies that policyholders no longer need. Another option is to redeem policies that have substantial cash values on whole life policies that are no longer required; another option is to take loans from such cash values.
Portfolio review: If your parents have lost a significant amount of capital from their equity and bond portfolio, does the portfolio need a review? Is the portfolio too risky? When individuals are planning for retirement, it makes sense to have growth stocks in their portfolio. However, at retirement, it makes sense to have a more conservative portfolio with more of an emphasis on income. If you don’t have the expertise to review the portfolio yourself, you can urge your parents to consult a fee-only financial planner to review their portfolio on a one-time basis.
Home options:
Are your parents living in a home that is too large? Does downsizing make sense? If your parents want to stay in a home they are having problems with financially, does a home equity (HELOC) loan make sense? Should they consider a reverse mortgage? I wouldn’t recommend a reverse mortgage without the terms being reviewed by a competent fee-only financial adviser, unless you have some expertise in this area.
Review of health care options: Do your parents have adequate health insurance? If not, you should either review their coverage or recommend your parents have their health care needs reviewed by an impartial insurance agent.
Bottom line: If you are retired and are facing financial problems, don’t hesitate to raise these issues with your offspring. If your parents are retired, assume they have financial issues, unless they tell you otherwise. If they need your advice or financial support, offer it. They may be very hesitant to raise the issue with you.