If you are working with your parents on a long term care plan, you want to be sure that your loved ones do not have costs that could deplete their retirement savings. Sometimes people seek an early retirement but still have expenses that they have yet to pay off or complete.
While people have varying kinds of debts, some expenses are more common. The Motley Fool breaks down three different costs that are important to deal with before they drain assets that should go towards long term care.
An unpaid mortgage
If your parents have a few years worth of mortgage payments left, it may be better to resolve them before your parents leave the workforce. Keep in mind that the home your parents live in could incur other costs, such as property taxes, utility bills and repair bills from storm damage, so you should keep home expenses to a minimum.
Large credit card debt
You might expect your parents to still use credit cards, but there is a difference between racking up a balance of $1,000 and one over $10,000. Paying off a large balance may take time and can also add up expensive interest payments. Your parents could keep working for a while to pay off their cards or you and other family members might assist in paying down the debt.
Paying for family expenses
It is also important to know if your parents have outstanding costs to other family members. They may be loaning money to siblings or children or paying for housing and food for a son or daughter. Such ongoing costs might cause your parents to dip into the retirement savings if they no longer have a work income.
Removing debt obligations can preserve retirement money for expenses that may emerge later, such as making a home safer for your parents to live in as they get older. Setting aside money into a long-term care insurance plan may also be an option.