I have financial power of attorney for my 59-year-old mother, who earns around $11 per hour and just manages to cover her $700 monthly rent and living expenses. I’m her only child and live in a region where the cost of living is low, while my income is decent. How can I effectively prepare for her financial needs as she ages, given that she essentially has no savings? I find myself increasingly anxious about this. What are your recommendations for long-term financial support?Anthony F.
Your concern for your mother’s financial well-being is both touching and pragmatic. First, kudos for already having power of attorney—that’s a key step in managing financial affairs for a loved one. Let’s slice through your situation to dig out the most actionable advice.
- Emergency Fund: Build up a cushion for unexpected expenses. Aim for three to six months of her living expenses.
- Downsizing or Rent Support: Look into whether it makes sense to relocate her to a less expensive apartment or consider subsidizing her current rent from your income.
- Healthcare Strategy: Her benefits package likely includes some healthcare provisions, but as she ages, the likelihood of medical expenses popping up increases. Investigate additional insurance plans, especially ones focused on senior healthcare.
- Employment and Income: Depending on her health, investigate part-time or freelance opportunities that could be easier on her as she ages but still offer some income.
- Retirement Accounts: Traditional retirement accounts may offer limited utility given her age and income level, but a Roth IRA could still be beneficial. You can contribute to it yourself, and she won’t be taxed upon withdrawal.
- Legal Documents: Make sure her will, healthcare directives, and any other essential legal documents are up-to-date.
- Asset Review: Conduct a meticulous review of any assets she may have. Even something as simple as an old car can be sold to bolster her financial position.
- Your Own Financial Planning: Given you’ll be supporting her, don’t forget to make your own adjustments. Meet with a financial advisor to adapt your financial plans.
- Government Assistance: Look into any government programs or grants she might be eligible for such as Social Security, food stamps, or housing aid.
- Investment in Quality of Life: At this stage in life, the focus should also be on comfort and peace of mind. Put aside a small fund dedicated to enhancing her quality of life, be it leisure activities, travel, or simple luxuries.
By sowing the seeds now, you’re preparing for a future that offers your mother the respect and comfort she deserves in her later years. It may require difficult conversations and a bit of sacrifice on both ends, but the peace of mind it will bring is worth its weight in gold.