How to Ensure Your Parents Remain Financially Comfortable
Research has revealed that 1.9 million pensioners are living in relative poverty in the UK. This means they have an income of less than 60% of the median among pensioners after housing costs. Sadly, finances for many pensioners do not stretch as far as they need, and it is a daily struggle to scrimp and scrape to get by.
The study, conducted by Age UK, exposed some worrying statistics:
- 708,900 older people have damp in their homes
- 572,600 older people cannot keep their homes warm
- 286,300 older people cannot pay their bills on time
- 1,299,600 older people do not have a car and cannot afford taxis
- 945,100 older people could not replace their cooker if it broke
With the current state pension set at just £129.20 a week, pensioners without other income sources are living on £6,201 per year – less than half of the average salary of somebody earning the National Living Wage.
We envisage retirement to be a golden age for our parents; free from work and stress. Whilst many older people maintain their independence, others find their pension can suddenly seem very small. If you are aware your mum or dad is anxious about their finances, there are things you could do to help.
Will your parents put you on their accounts?
If your parents are confused or their finances have got out of control it could be beneficial for you to be granted permission to discuss bills on your parents’ behalf. You can contact the companies and ask what their protocol is – some will be happy for your parents to give permission over the phone whilst others will want a written letter. If you have power of attorney, you already have legal power over your parents’ finances so you will simply need to provide evidence of this to any companies you contact. Gaining consent will enable you to decipher your parents’ finances, ensure they aren’t paying above the odds and that bills are settled on time, therefore avoiding late fees.
Are your parents receiving benefits?
Every year around £3.5 billion of Housing Benefit and Pension Credit goes unclaimed by pensioners. Other benefits your parents could be entitled to include:
- Winter fuel payment
- Council tax support
- Cold weather cash
- Bereavement benefit
- Disability living allowance
- Free travel, eye tests and hospital travel costs
You can use the Age UK online benefits calculator to estimate what your parents could be claiming. The tool doesn’t guarantee your parents benefits but it can help give you an idea as to what they are due. Furthermore, you will be able to get in contact with the relevant department to secure any unclaimed benefits going forward.
Will your parents give you access to their bank account?
If you have power of attorney you can legally request this from their bank, but if not, you will need to seek arrangements with your parents’ bank or building society. There are two options available if you want to help your parents keep their finances in order.
Joint account holder
This option will give you full access to your parents’ accounts so ensure they are aware of this. When you are a joint account holder, any debt of the account legally falls to you as well; you and any account holders jointly responsible. However, you also have complete control over the account, allowing you to fix any issues.
If you want to be able to keep your eye on your parents’ day to day banking habits setting up a third-party mandate on their bank accounts would be an ideal solution. If they accept and the bank actions the plan you will be able to pay bills and set up direct debits. There are limits, such as you cannot close accounts or increase an overdraft, but you have enough access to make helpful changes.
Did your parents give you power of attorney?
At any point in their lives your parents can draw up a power of attorney for themselves to activate during later life if they need it. Power of attorney means that if your parents no longer have mental capacity, due to dementia or another illness, you would control their private affairs, businesses, finances and all legal matters. Essentially you become their legal guardian and representative.
Many older people who deteriorate mentally due to illness can struggle with their finances; they simply cannot remember or do not understand anymore. This is when power of attorney is important and can help prevent any further monetary issues.
Would your parents agree to selling assets?
Although it can be emotional, sometimes money becomes so tight that the only option is to sell certain assets. Sometimes parents have gotten themselves into debt, whereas other times residential or home care needs to be paid for. Regardless, money needs to be obtained and often cars, businesses and properties need to be sold to ensure your parents are financially comfortable. You can discuss options with an independent financial adviser to seek the best route for your parents.
Sell house without estate agent
However, if you and your parents are considering selling a property to generate some cash to downsize or fund care, WeBuyAnyHome could be the help you need. You can receive a free cash offer on a property from us and, because we are cash buyers, the home could be sold in as little as seven days. If you are unsure check out our how it works page or call us today on 0800 002 9141.