Helping Aging Relatives in Tough Economic Times

April 19, 2009

The downturn in the economy has taken a toll on everyone, but senior citizens are often hardest hit by a recession. That’s because they generally live on a fixed income, including the earnings on retirement plan investments that may have declined sharply in value due to drops in stock prices and interest rates. The Virginia Society of CPAs provides advice on how to help your parents or other aging relatives weather a recession.

Anticipate the need

The first step is simply to be aware of the possible effects that the economy has had on an older person’s finances. You may already know that their retirement savings could have been hurt by market plunges, but other consequences may not be quite as clear. If your parent owns a home, for example, it may have fallen in value due to drops in real estate prices. That could make it harder to take a home equity loan when it’s needed or could limit the benefits of a reverse mortgage. Also, moving into an assisted living facility may have to be put on hold if the home can’t be sold due to the bleak real estate market. 

Ask questions

Once you’ve considered which problems your parents might be facing, it’s time to get specific information about their situation. A visit to their home is a good first step, because it will make it easier to see signs that they are scrimping on necessities such as heat or food. It’s also a good idea to ask if you can review their financial information, such as checking and savings account statements, retirement account statements and credit card bills. That way you can find out if changes in the stock market or in interest rates have lowered their monthly income and determine whether they still have enough to cover their costs. As you look over their paperwork, also be alert for notices that they are behind on payments or for demand letters from collection agencies.

Offer to get involved

If your parent is having financial problems, there are ways that you can help, even if you’re unable to pay off their outstanding bills yourself. For example, offer to contact your parent’s creditors and try to negotiate new terms on his or her accounts. Many creditors, including mortgage and credit card companies, are willing to lower customers’ monthly payments temporarily to prevent the account from going into default. In addition, you can research programs that offer financial support for senior citizens and enroll your parent into the ones for which he or she qualifies. More information is available from a website sponsored by the National Council on Aging: http://www.benefitscheckup.org. It offers details on federal, state and local programs that help seniors pay for meals, medications, utility bills, taxes, health care and more. Remember that if your parents’ monthly income has declined because of market declines or other factors, they may be eligible for more aid programs than they were in the past.

Consult your CPA

Conversations about money can be embarrassing and troubling for families. Your local CPA can help. Turn to your CPA for advice on any financial issues facing your family, including problems encountered by older relatives in a tough economy.

The Virginia Society of Certified Public Accountants (VSCPA) is the leading professional association dedicated to enhancing the success of CPAs. Founded in 1909, the VSCPA has 8,300 members who work in public accounting, industry, government and education. The VSCPA is celebrating its Centennial anniversary this year — 100 years of an organized CPA profession and a strong organization uniting and representing CPAs across the Commonwealth. Visit /Centennial to learn more about the VSCPA’s Centennial Celebration. For general information, please visit the Press Room on the VSCPA website at , e-mail vscpa@vscpa.com or call (800) 733-8272. To search for a CPA in your geographic region, visit http://www.financialfitness.org and click on "Find a CPA."

© 2009 American Institute of Certified Public Accountants