Helping aging parents manage their finances involves coordinating many different aspects of their lives. This includes medical care, accounts, insurance and long-term care. You also need to factor in potential emergencies when deciding when you should take over your elderly parents’ finances. Rather than managing all of these things yourself, you can start building a financial care team, with each person bringing their own expertise.
Starting a Family Conversation
Approximately 62 million people in the U.S. are over 65 years of age, making up for 18% of the population. As the aging population grows, families should prepare more for the financial needs of their aging members.
Financial caregiving often begins informally. You might start paying a utility bill, help with online banking or accompany a parent to a doctor’s appointment. Without a proper conversation, these responsibilities can expand until only a single person is managing a parent’s finances without a plan in place.
Having a plan helps spread the load evenly among everyone. Discuss these topics with parents and siblings:
- Which account pays the household’s regular bills?
- Who should be contacted in terms of an emergency?
- What insurance policies and retirement accounts exist?
- What are the parents’ preferences for future care?
- How much do they have in liquid savings?
- How much can family members contribute?
Assessing Medical and In-Home Care Needs
At some point, you might wonder when you should take over your elderly parents’ finances. One of the most important things you have to consider is their health.
Financial planning and healthcare planning for your parents are inseparable. A parent’s health dictates whether they can continue living independently, whether they need help at home or whether they might need residential care. The better you understand what they need, the more realistic your financial plan can be.
Long-term care costs vary, ranging from $24,700 to $116,800 in 2023. Budgeting for these potential services is a crucial part of the care team’s job. You also need to distinguish between different types of home healthcare services for your parents. Home health professionals can provide medical management, physical therapy and in-home nursing. Alternatively, an in-home care aid may help with daily living such as bathing, dressing, meals, companionship, transportation and other household errands.
Securing the Legal Foundation
One of the most important documents the family needs to discuss is a durable power of attorney for finances. It authorizes a trusted person to handle a parent’s financial matters when the parent may be unable to do so independently. Your parents should understand what they are signing and should be legally capable of consent.
Without this document, family members may have difficulty accessing accounts, paying bills, managing property and handling other financial responsibilities.
Organizing Daily Finances and Bills
Every day money should be simple, visible and repeatable. Gather mortgage or rent information, insurance policies, retirement account statements, investment accounts, Social Security and pension, utility and other recurring bills, property records, and other financial documents. A master list of this information can provide transparency for both parents and children to show what each account is, where it is held, what it is used for and how it can be accessed.
Automate utilities, insurance, mortgage payments and other recurring expenses to prevent forgotten bills. You can also use credit monitoring services to receive transaction alerts and safeguard parents against scams and fraud, given that older adults are prime targets for unauthorized withdrawals and other forms of financial exploitation. Other things you can do to safeguard these accounts include using strong passwords, enabling multifactor authentication and reviewing statements regularly.
Hiring Professional Financial and Legal Help
A certified financial planner can help the family in coordinating retirement income, investments, taxes, insurance and long-term care costs. Elder law attorneys can provide support with Medicaid planning, long-term care, incapacity, estate planning, trusts, guardianship concerns and other complex family situations.
These professionals should function as part of the same team rather than disconnected advisers. They should understand the legal plan, the family’s financial circumstances and who has the final authority to make decisions.
Maintaining Your Own Financial Health
Adult children can help their parents best if they are financially stable themselves. Make sure you don’t neglect your own retirement savings, emergency funds, debt repayments and other household expenses. Create a strong boundary around what you can afford to contribute to your parents’ expenses without harming your own financial goals.
Helping with your parents’ finances doesn’t have to be writing a check. You can contribute in other ways, such as organizing paperwork, coordinating appointments, researching care options and managing administrative tasks. These contributions are extremely valuable.
Moving Forward with Confidence
Building your parents’ financial care team starts with a conversation with the family. After that, you can establish the legal foundation, organize the day-to-day finances, understand care options and seek help from financial professionals when the situation becomes too heavy to manage alone. It’s best to establish a team before emergencies arise.
Your parents should be at the center of the entire process. Their money, preferences, dignity and wishes should guide the long-term decisions you make.
