The Wealthy Senior: How to Manage Money and Determine Priorities

wealth management senior livingWith the stock market near record highs and the real estate market rebounding nicely over the last year, your parent may be sitting on a substantial nest egg. If they invested wisely and own their home, their net worth may be situated comfortably in the seven-figure range, and they may also be pulling in a nice monthly income from various sources such as Social Security, veterans’ benefits, and private pensions. But while they may be sitting pretty financially, it’s still important that they manage their money well and make decisions that will stretch the financial assets as far as they can go.

It’s a good idea to sit down with your parents, along with their financial advisor, to decide how their money should be used and how best to handle their assets. Here are several areas you should consider.

Senior Living Options

With substantially accumulated wealth, your parents should have no problem affording the Senior Living option of their choice. Perhaps it’s important to them to live in a community with such amenities as an oceanfront view, on-site swimming pool, state-of-the-art fitness center, tennis courts, and gourmet dining facilities. If it’s within their financial reach, they may believe they’ve worked hard in life and deserve an upscale lifestyle in their retirement years.

However, they must also determine their priorities. If their goal is to leave behind a larger estate for their loved ones or to bequeath a substantial sum to a charitable organization, they may wish to select a modestly-priced and comfortable Senior Living option that does not consume the majority of their assets.

Additionally, even though your parents may have substantial assets at the outset, they should be cautious about what they can afford over the long term, as we explained in a previous article on OurParents.com. Take into account such factors as their life expectancy, the rising cost of senior living, and the potential need for additional services and care as they age. What may seem like a lot of money initially can go quickly if you don’t plan carefully for the various scenarios that may impact their assets in the future.

Estate Planning

wealthy seniors wealth managementMany seniors want to leave an inheritance for their children and grandchildren. This is possible for seniors whose estates are large enough to pay for their living expenses—with the expectation there will be assets remaining after their deaths.

To have an orderly transfer of assets to their survivors, older Americans should make sure they have a will or a living trust. While a will is less expensive and easier to set up, many prefer a living trust because it allows their survivors to avoid probate.

Estate planning is a multi-faceted process that honors the individual’s wishes for passing on valuables, as well as instructions for your care should you become disabled or incapacitated. An estate plan also creates a strategy for minimizing taxes and legal fees. Be sure you have a lawyer with experience in elder law and estate planning to ensure you cover every aspect of the process.

Legacy Planning

Legacy planning is an aspect of estate planning that provides consideration of financial as well as non-financial assets. Many individuals want to pass on something that reflects the values they had in life, so they may wish to give a gift to a favorite charity or non-profit organization.

In some cases, the legacy might involve attaching their name to an ongoing charitable endeavor, such as a memorial golf tournament that raises money for cancer research, or an annual scholarship fund that benefits students pursuing the same life passions as the decedent (i.e. music, art, or theater). They may also wish to pass on an art collection or book collection to a local museum or college. Keep in mind that whenever bequeathing something of value, it’s a good idea to have the work appraised so you know its true worth.

How You Can Help

Ultimately, the wealth that your parent has is theirs and should be used in the way they see fit. However, having substantial wealth makes elderly individuals more susceptible to scams and/or being taken advantage of by those motivated by self-interest.

Additionally, you’ll want to be alert in the event that your parent starts exhibiting cognitive decline, as it may impair her financial judgment, or make him more susceptible to outrageous financial offers that may ultimately harm his financial standing. Ask your parents for permission to review their bank and financial statements or offer to help balance their checking account: doing so may provide you with the vital information required to ensure their financial house is in order.

Focus on helping your parents hone their financial literacy, thus ensuring their financial interests come first. Your parents have spent a lifetime accumulating their wealth, so do what you can to help them use it wisely—and according to their wishes.

SHARE YOUR STORY: How do you help your parents manage their wealth and set priorities for their money?

 

 

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