Don't Let the Independent Myth Ruin Your Retirement

By FeaturesFOXBusiness

We all want to keep our independence as we age, but when your financial future is in jeopardy you also have to realize when it’s time to ask for help.

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According to a new survey from Fidelity Investments, 6 out of 10 older adults don’t want to burden family by asking for help managing finances, yet 8 out of 10 adult children actually want to be involved. The Independent Myth study also found that 60 percent of older adults have seen friends lose financial independence, yet only nine percent think it will happen to them.

“Since studies show that financial decision making peaks around age 53 and gradually declines, preparing to share this responsibility is something we all [must consider],” says  Suzanne Schmitt, vice president of Family Engagement at Fidelity.

According to Schmitt, the consequences of failing to take action can include a greater risk for financial fraud, potential loss of assets, or simply the creation of chaos and confusion when it comes to ensuring one’s financial wishes are carried out if one were to become incapacitated or pass away.

She says there are a few “tipping points” when adult children should step in and get involved in a more direct fashion, such as when a parent or loved one makes a direct request for financial assistance, or when age starts to become a significant factor. (On average, children step in when parents are 75 years old).

Schmitt shared with some more advice for adult children, and ways that seniors can retain financial independence, but also prepare for the unexpected.

Boomer: What advice do you have for adult children on this matter?

Schmitt: Get involved before there’s an issue and make sure that a strong plan is in place to help your loved one continue to live as financially independent a life as possible. This is why it’s important for families to be in sync about what needs to happen in the event it’s necessary to help take control of financial decision making for a loved one. Keep in mind, the transition from financial independence to interdependence could never possibly come with a definitive roadmap. However, for most families, the road is gradual, beginning with low knowledge and involvement for adult children of a parent’s financial situation and eventually building over time to high knowledge and direct involvement. Throughout the journey, an important focus should be ensuring that parents or loved ones stay in the driver’s seat and retain independence for as long as they possibly can.

Boomer: Where do we begin the road to financial interdependence?

Schmitt: Although everyone’s circumstances are unique, as a general rule, by the time you’re 50 or an older loved one reaches 75 (or whichever happens first), it’s time to start taking the following actions:

Take stock of the people you consider family (by birth or by choice) and draft a family financial roadmap. Think about how old each of you are today and working ahead in increments of five years, project how everyone’s needs are likely to change. Think about things such as finances, housing, health, caregiving and end-of-life. Remember: your plan is only as complete as the plans in place for those whom you might be responsible.

Assemble a team of trusted advocates. Make sure you have in place friends, families and professionals that understand your personal balance sheet and are prepared to step in should you need help. And, make sure they know what they are expected to do.

Get your paperwork in order. Make sure you have the basics in place: designated beneficiaries on bank accounts, investments and insurance policies; a current and complete will; a healthcare proxy; and a living will. Also, make sure you scan and store your legal documents some place safe—and share this information with your loved ones.

Develop a family “crisis management” plan. Although no one wants to think about getting sick, the best time to plan is before you are facing a crisis. Take the time to complete your “in case of emergency” plan.

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