Senior Money Management Problems: Implications for Caregivers

UNP-0042, Updated December 2008, Bernice B. Wilson, Ph.D., Extension Resource Management Specialist, Alabama A&M University

According to the Administration on Aging, the adult population age 65 or over will increase from 35 million in 2000 to 40 million in 2010, and then to 55 million in 2020. By the year 2030, the older adult population is projected to grow to 71.5 million people, nearly doubling since 2005.

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The Role of Caregivers

Caregivers are among America's unsung heroes. They are the millions of people helping an ill or elderly spouse, parent, child or other loved one with everything from medications and bathing to money management and banking, while juggling their own responsibilities. How many people are caregivers? Probably more than you may think.

A survey released in 2004 by the National Alliance for Caregiving and the American Association of Retired Persons (AARP), found that 1 in 4 American families or 23 million households care for someone age 50 or older. That does not include the millions of other families caring for younger adults that are incapacitated due to illness or injury. Some 43 percent of these caregivers are over the age of 50 as well. Thirteen percent are over 65 and spend a good portion of their weeks on chores such as medication management, bathing, feeding, clothing, and/or arranging health care services. Their numbers are growing each year due in part to medical advancements that enable people to live longer than in the past.

When it comes to finances, the typical caregiver helps with or arranges bill payments, deposits, insurance and benefit claims, savings and investment decisions, housing and adult daycare, tax preparation, and countless other financial duties.

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Precautionary Measures

The Federal Deposit Insurance Corporation (Fall 2003) offers these helpful tips for caregivers when dealing with loved ones who are in poor health.

• Know where important papers are located. Important documents include bank and brokerage state-ments, wills, insurance policies, pension records, and other documentation. Older or sick relatives may be reluctant to share this information, but inform them that you respect their privacy and need access to these documents in the event of an emergency.
• Make arrangements for automatic bill payment. Water, utility bills, health insurance, and mortgages are just examples of bills that may be paid electronically from a checking account. Such arrangements will make life easier for loved ones and avoid delays in payment of bills.
• Direct deposit checks into banking accounts. Although consumers distrust electronic banking, it is safe and more convenient than paper checks. Direct deposit eliminates delays in getting funds and the possibility of checks being lost in the mail or forgotten at home. It is also important to be aware that a 1996 law, with certain exceptions, requires that federal wage and retirement payments be sent as an Electronic File Transfer. Some individuals may not have enough or the proper insurance such as life, disability, or long-term insurance to protect them in the event of an emergency. Seniors, on the other hand, may purchase too much insurance or the wrong kind that may be covered under conventional medical insurance policies.
• Promote saving, investing and sensible spending. Encourage loved ones to establish sound financial goals and/or a relationship with financial professionals they trust, such as a banker, accountant, or financial planner that may be able to assist them in emergencies.
• Encourage relatives to establish a will or an estate plan. Estate planning distributes a person's assets and can reduce taxes at death. This may entail making and routinely revising a will through an attorney. Also, "trusts" or "gifts" can be arranged for preservation of assets.
• Establish a durable power of attorney. A durable power of attorney is a legal document that provides one or more individuals with the authority to handle finances, property or other personal matters in the event that a relative is incapacitated.
• Recommend a "living will" or other medical care instructions. If state laws permit, most individuals should have a living will that outlines specific types of medical care in the event of emergencies. Experts also recommend a "health care power of attorney" or "health care proxy" that designates a family member to decide medical care.
• Assess your loved one's financial status. This will greatly help caregivers if their relative keeps his or her finances a private matter.
• Guard against scams. Fraud artists know that ill or elderly people tend to be lonely and are willing to listen to and trust strangers who call on them. These people are ideal candidates for telemarketing fraud, bogus home repairs, and get-rich-quick schemes. Be on the lookout for questionable solicitations or withdrawals.

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After an Emergency

A caregiver should seek solid financial and legal advice from professionals they trust when faced with a crisis regarding the care of a loved one. Such professionals include accountants, bankers, financial planners, lawyers, or insurance agents they might have used in the past. Share your problems and concerns with them and ask for suggestions about how to proceed in handling such matters.

Professionals such as lawyers and financial advisors that specialize in helping the ill or elderly should be given first consideration. For instance, an Elder Law attorney will have considerable experience in handling estate planning, Medicare and Medicaid issues, insurance disputes, fraud cases, and other legal affairs affecting the elderly. Some lawyers provide free consultation on the first visit. Professionals such as money managers are experienced in paying bills, balancing checkbooks, monitoring insurance claims, and handling other daily financial responsibilities for other people. Also, nurses or social workers are trained to help with certain tasks such as money management and/or evaluating housing options. Be mindful and take advantage of such services since many are free or offered to caregivers at reduced rates.
In Alabama, you might seek the help and services of private organizations and government agencies. For example, take advantage of financial counseling that is available through employers for employees and their families. Social service agencies that are government sponsored, private organizations, including religious groups, or health-related organizations with local or national offices like the American Cancer Society or the Alzheimer's Association, also provide financial counseling. The Eldercare Locator, a service of the United States Administration on Aging, is an excellent way to track down these programs. In addition, a caregiver should:

• Respect your relative's judgment and independence. "Caregivers want to help but often out of their own anxiety and guilt, become overly protective and begin making decisions that the relative is fully capable of," says Gail Hunt, executive director of the National Alliance for Caregiving, a Washington-based organization for families caring for older Americans." "The care recipients, even if physically frail, should always be making his or her own financial decisions. The caregiver may have to step in if confusion, dementia, or mental illness becomes an issue," Hunt says, adding that important decisions should be in consultation with other family members, if appropriate.
• Distribute financial decisions and share responsibilities among family members. It is important to examine and discuss current financial concerns with family members. The caregiver should allow their sick relative the opportunity to make as many decisions as possible. Meetings should also be held for family members to voice their concerns and to keep everyone up-to-date on actions that have been taken. Also, make sure that good notes are being taken of all activities to avoid future conflicts.
  Although a family may have developed or have specific skills needed in handling the concerns of an ill or incapacitated relative, it is wise to share responsibilities among other family members or friends. If help is provided regularly, it helps to take the stress off of the caregiver. Furthermore, caregivers should be aware of any liabilities when providing care for a loved one. Chicago attorney James N. Mulvaney recommended that before a caregiver signs a document such as a power of attorney that is "prepared by or for someone else, it's good to get a second opinion from a lawyer who is loyal only to you, the caregiver."
• Watch for out-of-pocket expenses. Caregivers are not compensated for their efforts and should be aware of extra expenses they may incur such as long-distance phone calls, travel, groceries, medications, and personal care items.
• Be aware of your potential liability. A caregiver may become a joint owner of a bank account, serve as a legal representative (through a power of attorney) or become someone's trustee or guardian. Any time you agree to share responsibility with or for someone else you may be taking on unexpected risk and liabilities.
• Benefit from available housing options. While many relatives may desire to stay home, be aware of other housing options that are available throughout the community such as in-home nursing care, housekeeping services, adult day-care centers, or retirement communities.
• Visit your relative and the workers caring for them frequently. If your relative is in alternative housing, make sure you know the people who care for them to make sure they are receiving proper care both physically and financially. Plan unexpected visits during the day or night. Caregivers should also be aware of any financial scams that are directed at the sick or the elderly.
• Borrow money wisely. There may come a time when your relative needs extra money to pay for medical or other expenses. A credit card or a bank loan may suffice. Elder home-owners may be able to borrow against the equity in their home through a second mortgage, home equity loan, or reverse mortgage. Also, some financial institutions have loan programs just for the disabled, such as loans to buy specially equipped vans or funds to make homes accessible to the disabled.

Move cautiously when seeking financial help, and make sure the debt is manageable. Be sure to thoroughly research and discuss the pros and cons of the pending financial transaction. Also, remember that under the Equal Credit Opportunity Act, a creditor cannot deny or cancel a loan because of someone's age or disability.

Routine care can be overwhelming to the caregiver, and the stress may force a caregiver to neglect his or her own health and responsibilities. Also, burnout could occur, which is not good for anyone. Nevertheless, more resources are available to caregivers today. Caregivers do not have to be alone when determining whether to receive help or guidance from family, friends, or professional advisors. By all means, take advantage of local and government agencies and religious and private organizations that provide services to caregivers, the sick, and the elderly.

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References

Administration on Aging. (2008). A profile of older Americans: 2007. Retrieved October 27, 2008.

Crute, S. (November/December 2007). Caring for the caregiver. AARP The Magazine. Retrieved October 27, 2008.

Federal Deposit Insurance Company. (Fall 2003). Financial caregiving: A survival guide. Consumer News, Special 10th Anniversary Edition. Retrieved October 27, 2008.

National Alliance for Caregiving & AARP. (April 2004). Caregiving in the United States. Retrieved October 27, 2008.

United States Census Bureau. (2000). The 65 years and over population: 2000. U.S. Department of Commerce, Economics and Statistics Administration. Retrieved October 27, 2008.

For more information, contact your county Extension office. Visit http://www.aces.edu/counties or look in your telephone directory under your county's name to find contact information. Issued in furtherance of Cooperative Extension work in agriculture and home economics, Acts of May 8 and June 30, 1914, and other related acts, in cooperation with the U.S. Department of Agriculture. The Alabama Cooperative Extension System (Alabama A&M University and Auburn University) offers educational programs, materials, and equal opportunity employment to all people without regard to race, color, national origin, religion, sex, age, veteran status, or disability.