How to Help Aging Parents With Their Financial Planning

While a lot has been studied and written about raising a child, we know less about the dynamic between adult children and their aging parents. At what point does the traditional caregiver role switch from parent to child? That question becomes even more critical when one parent dies. 

The major issues that adult children and aging parents need to confront have one thing in common: finances. From physical health to aging in place to declining cognition, how to help parents live out their final years with dignity is tied to their financial resources. 

How can you ensure that your parents’ financial health is sound? What protections and support can you put in place without overstepping boundaries? What resources are available to you and them to have productive discussions about issues of aging in place, wills, and related topics? 

Here are five steps that can help you navigate this challenging, but ultimately rewarding, responsibility. 

1. First, talk with other family members 

Start by talking with siblings and close relatives. If you don’t have those connections, there may be someone who knows you and your parents, maybe a neighbor or family friend, who can fill the role. 

Figure out the best way to begin the parental discussion, including who the best spokesperson is. It doesn’t have to be all of the children. It may be best to limit the initial dialogue to one person to avoid a sense of “ganging up.” 

And have the talk early—earlier than you think you need to. 

Studies indicate that the ability to make complex decisions like those involved in financial planning starts to diminish after age 60. Michael Finke, professor of Wealth Management and program director of the Wealth Management Certified Professional® (WMCP®) program at The American College of Financial Services, studies the relationship between cognitive decline and financial decision-making. 

As Finke told Kiplinger, “Often, by the time parents have lost their ability to make sound financial choices, they’ve also lost the ability to evaluate who they can and can’t trust.” That can open the door for ill-intentioned family members or outsiders posing as financial advisors. 

2. Provide help, not control 

It’s possible, and perhaps likely, that your parent or parents won’t see any need for your advice, at least not initially. So don’t give advice or try and take control — offer help instead. 

If your parents are still doing in-person banking, offer to drive them and take them out to lunch — an unforced way to meet their banker and transition to money talk afterward. If paying bills is becoming a chore, either because of vision challenges or forgetfulness, volunteer to step in. (And if you have a child who is old enough to take this on, even better). 

Another tactic: give the gift of technology, a tablet or laptop that they’ll need help to set up and learn. What begins as a great way to create and share photos of the grandchildren can transition to viewing their portfolio online and managing their bills. 

Gradually, you’ll become a natural part of the financial management “team.” 

3. Set up efficient systems 

With your foot in the door, you’ll get a better sense of what you’ll need to do next and how much responsibility you’ll need to take on. Simple observation can help: if you notice unpaid bills and collection notices on the kitchen counter, it’s time to become more involved. 

Set up automatic payments for essential ongoing services; credit card and bank statements can give you an idea of what these are and which may be redundant and/or unnecessary. Consolidate multiple accounts. As part of a volunteer spring cleaning, make sure you know where documents like wills and life insurance policies are located (and don’t forget the lockbox key). 

Finally, make sure that your parents are receiving every benefit they’re entitled to, from employer benefits to Medicare. 

4. Anticipate what’s next 

At some point, and depending on your parents’ health, you’ll need to assess the potential for long-term care. Check out options when there’s no immediate medical emergency to deal with, and include your parents in the process if they’re open to the possibility. 

You will also want to obtain a durable power of attorney, which gives you a broad range of responsibilities such as paying bills, managing assets, and filing taxes. A durable power of attorney remains in place even if your parents become incapacitated, and avoids the delay of going to court to be appointed the legal guardian. 

5. Enlist the help of a financial advisor 

If involvement in your parents’ financial affairs is problematic, enlisting the help of a neutral, outside expert may be best for you. Given the complexity of financial management, the amount of time it takes, and the emotional toll involved, it may be the preferred course of action, regardless. A credentialed advisor can provide your parents and you with the financial peace of mind that only comes with professional experience. 

While you’re at it, start thinking about your retirement years so your children won’t go through the same experience you have. If you’ve found a good financial advisor for your parents, they might be a good fit for you too. 

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