Managing your aging parents’ finances

Quick insights

• As their parents age, some people gradually take on more of their parents’ financial tasks, such as setting up autopay bill payments for them or reviewing their insurance needs.
• In many cases, the first step to helping elderly parents with money management is to talk with them about their finances.
• A common next step is to be aware of signs that they may have difficulty managing financial tasks independently.

Parents often aim to set their children up for financial success in life, but as your parents age, the day may come when they need your help with money management. It can be challenging to know how to intervene in their finances in a helpful way. With clear communication and sensitivity, you can work with your parents to establish an arrangement you’re both comfortable with.

This guide explores ways to help aging parents with their finances.

How to help an aging parent with finances

Starting financial planning for aging parents can be challenging. There’s no universal approach to help your parents with financial matters, and it may take some trial and error to find an arrangement that works. We’ve gathered some ways people help support their aging parents’ financial well-being and sense of independence.

Have an open conversation

Having a financial talk with your parents is often the first step to assisting them with their finances. You and any siblings can determine who will initiate this conversation. The goal is to get a sense of how your parents are doing with money management and financial planning.

These conversations with your parents are also opportunities to begin collecting relevant information and documents. Here are some of the financial and legal records people typically collect from their aging parents:

• List of bills
• List of financial accounts
• Income and assets
• Debts
• Insurance policies and documents
• Personal information and ID documents
• Estate planning and legal documents

Noting any account numbers, log-in information or relevant contacts can be useful. In addition to securing copies of documents, people often find it helpful to discuss with their parents where to keep important original documents like birth certificates and wills.

The time to talk with your parents is generally before a problem arises. Regular check-ins may help identify when your parents need additional financial support.

Gently increase your support

After a lifetime of managing their personal finances, your parents may be reluctant to relinquish control to you right away. It’s possible they’ll be more receptive to a gradual approach that allows them to still feel a sense of independence.

That means slowly taking on their financial tasks while being sensitive to what could be a difficult transition for them. One way to start is by asking them if there are any difficult or inconvenient tasks you can handle for them.

Another option is to do some tasks together. For example, you might work with them to pay a few bills. You can slowly take on more in-depth responsibilities, such as budgeting, as your parents become more comfortable with the arrangement.

Keeping parents informed about financial decisions made on their behalf may support transparency and continued trust.

Review their insurance needs

Insurance coverage can impact financial health. With the rising medical costs that usually come with aging, choosing insurance can be an important decision, and your parents may appreciate your help with this.

Here are some questions to consider as you review your parents’ coverage:

• Is their current healthcare coverage sufficient for their medical needs in the coming year?
• Do they need dental and vision insurance?
• Do they need long-term care insurance?
• Do they need life insurance?

Discuss a power of attorney

A power of attorney is a legal document that gives you the authority to make financial or legal decisions on behalf of a parent. There are several different kinds of power of attorney. It may be temporary and limited to specific instances, or it may give you complete authority to make financial, legal and medical decisions.

Generally, people put a power of attorney in place before an elderly parent needs it. You may contact an attorney who specializes in elder law to draft this document.

Keep family members and relevant institutions informed

People often find it helpful to keep their siblings as well as their parents’ siblings informed of any actions they take related to their parents' money. In many cases, clear communication can prevent misunderstandings.

If you get power of attorney, there may be a variety of people and institutions who must be notified. Typically, people inform relevant authorities such as the Social Security Administration (SSA), Centers for Medicare and Medicaid Services (CMS), doctors and banks when they want to use their power of attorney.

Keep separate finances

While a joint bank account can be a convenient way to manage an elderly parent’s finances, there are several possible downsides, including a range of financial and legal implications. There are a few alternatives that could provide similar benefits.

Alternatives to joint bank accounts include:

• Setting up automatic payments: Setting up automatic payments can help parents manage recurring bills, such as utilities, cable and internet, reducing the risk of missed payments. In many cases, the vendor will allow you to set it up online, or you can set up bill pay through many banks and credit unions.
• Becoming a trusted contact: Some bank accounts allow the option to designate a trusted contact who can receive alerts about potential unauthorized transactions. This person is usually notified whenever the bank account holder doesn’t respond to notifications.
• Becoming an authorized signer: Your bank may allow you to get signature authority on an elderly parent’s bank account, allowing you to access their account to pay bills, manage their expenses and handle other financial requirements.

Keep in mind that the above options may have downsides, too, and your parents’ bank or credit union should be able to provide the complete terms for these arrangements.

Look for warning signs

If you’ve already created a plan for helping your aging parents with their finances, usually the next step is to watch out for signs that they’re no longer able to manage their money.

Here are a few warning signs that could indicate that your parents are struggling with financial decisions:

• Uncharacteristic spending: Sometimes elderly parents start making unusual purchases. If you notice your parents giving large gifts or participating in multiple sweepstakes, that could indicate it’s time to step in with money management. Additionally, unexplained withdrawals from their bank account could mean that they’ve fallen prey to a financial scam.
• Unopened mail: In many cases, bills piling up can be a sign your parents are overwhelmed by routine financial tasks.
• Physical impairments: A physical decline may not always interfere with finances, but some setbacks can make going to the bank or making payments nearly impossible. 
• Memory problems: Cognitive impairments could make it difficult to stay on top of their finances.

In summary

As your parents age, you can start an open, ongoing conversation with them about their financial health and plans for the future. You may slowly take on routine money-related tasks from them and increase your support over time.

Tasks like paying bills, visiting the bank, account monitoring and evaluating insurance needs can become difficult for elderly people, and while a joint bank account can seem like a convenient solution, it has financial and legal downsides in many cases.

When financial tasks become challenging due to physical and cognitive decline, some people use a power of attorney to begin fully managing the parent’s money.