Helping Aging Parents Manage Their Finances

It is said that getting old is not for sissies. Well, neither is watching your parents slow down, mentally and physically, as they age. As our parents once did for us, adult children must know when to judiciously step in and help navigate the increasingly complex financial waters for our aging parents. But knowing when to step in, and to what extent, can be difficult.

Your loved one may not feel comfortable or even be aware that they need help. You may not be aware. Sometimes our loved ones go to a great deal of trouble to cover up declines in their physical and mental abilities. Frequent interaction and close attention to their daily lives and activities can provide clues that you should start lending a hand. If you observe even slight changes in their physical abilities, hygiene, weight, memory, driving or home maintenance, these might be indicators that you need to start taking the reins, if you haven’t already.

First and foremost, it is important to take a proactive approach and have open and constructive conversations early and often with your loved one. If possible, it is best to include all the adult siblings in these conversations to air out issues and avoid miscommunication. These conversations can sometimes be tough to initiate, but they are necessary conversations to have. You need to understand their preferences as they age. This way, you can respect their autonomy and independence, and introduce support incrementally as needed. Helping an aging parent with financial and healthcare decisions can be stressful, and it often takes more time than you anticipate, so don’t procrastinate.

Some of the financial measures you might take as your parent ages include:

• Have estate plans, including financial and medical power of attorneys, in place so that you or other trusted loved ones can make decisions on behalf of your parent. If your parent is agreeable, ask them to introduce you to their estate planning attorney and financial advisor.
• Consider adding your name to any taxable individual accounts, as joint owner or as power of attorney. Generally speaking, this is a wise move if your parent needs assistance with bills and other members of the family are agreeable.
• Do some preliminary research on the cost of ongoing medical care and how insurance or family members might be leveraged to help keep these costs manageable.
• Keep track and limit, if necessary, all lines of credit on credit cards, margin accounts and home equity lines. Be sure to periodically check their credit report.
• Limit the amount of cash in their accessible checking accounts. This places a limit on the amount of financial damage that can be done. If you can, do a periodic review of the checks they are writing. According to Jim Gore, Chief Investment Officer at THOR Wealth Management, elderly clients are susceptible to paying bills twice or making repetitive donations unintentionally due to memory declines or faulty recordkeeping.
• Discuss the possibility of financial scams. Elder exploitation is a very real and unfortunately common danger. If you learn of a current scam on the news, be sure to have a conversation about it with your loved one. Also, make sure they know to never take a call from anyone claiming to be from Social Security. The Social Security Administration will only contact you by mail or by phone if you have requested a call or have ongoing business with them. Have frequent conversations reminding them to never give out their Social Security number or any other personal information over the phone.
• If possible, develop a system early where you periodically can review their mail. As they get even older, you may want to take care of the mail yourself. Requests for donations, credit card and insurance policy offers and other financial documents can be very confusing to an elderly person and can be an open door to financial mishaps.

Navigating the aging process is challenging and can at times be overwhelming. Hindsight is always 20/20, but by starting conversations early, avoiding procrastinating and taking pre-emptive measures you can rest easy knowing you have done everything within your capabilities to help your aging parents with their finances.