Assisting Aging Parents with Their Finances

As the Baby Boom generation reaches retirement age, more adult children will find themselves in a caretaker or helper role. While your parents may still be able to manage most of their day-to-day finances, it’s not too early to start a conversation about their wishes for the future. This can be especially helpful while both parents are still living, as usually, one spouse handles the finances. In this article, we’ll help you determine the right time to start the conversation, how to approach the topic, and what steps to take next.

When is the right time to talk with your parents about their finances?

Have you noticed any signs, however small, of cognitive decline in your parents? If so, here are some warning signs that a financial intervention is needed to safeguard their money.

• Phone calls: Suspicious or unusual requests for money from creditors, charitable organizations, or “friends.”
• Mail: Sudden credit card promotional offers for “balance transfers.” Envelopes changing colors from collection agencies. Is unopened mail piling up?
• Checking account: Do your parents seem to know how much cash they have on hand? Are they bouncing checks or ignoring unpaid bills?
• Spending: Increased or out-of-character, impulsive purchases.

It’s hard to acknowledge your parents are aging and, depending on your relationship with them, you may feel like the time is never right to bring it up. However, the potential consequences of not having “the talk” are too severe to ignore:

• Damaged credit
• Fall victim to identity theft
• Give away money to scammers
• Falling behind on bills
• Even having their home go into foreclosure

How to bring up finances with your parents

If you’re lucky, your parent(s) will ask for help before you have to offer it. If this doesn’t happen, try to approach the topic gently. Their sense of pride and independence may be at stake, and there are sure to be “big feelings” from all parties involved. Instead of telling your parents what they should do, try these conversation-starting questions to ease in:

• How did you budget and build wealth when I was growing up?
• I’ve been thinking through my own estate planning process lately. When was the last time you updated your will or powers of attorney?
• What are your current priorities, financially and otherwise?
• How can I help you preserve what’s important to you?

Asking questions and sharing your own experiences is a non-confrontational way to start a conversation with your parents. Keep in mind that instead of one conversation, you may need to have a series of conversations with your parents before reaching a resolution.

Start with the basics: financial overview and budgeting

If one of your parents has already passed, and that person was also the one who managed family finances, you may need to spend some time going over financial basics with your surviving parent. Involving your parents in the process of budgeting can also make them feel empowered and more receptive to having you help with finances.

Locate and safeguard important legal documents

Collaborate with your parents to make a list of important documents, such as birth and marriage certificates, deeds and titles, etc. If they aren’t already in a safe and secure place, decide where to store them, such as in a fireproof safe at home or a safe deposit box at your bank.

Help start the estate planning process

If your parents don’t already have a will, it’s important to talk about the estate planning process and how everyone in the family can benefit from advance planning. Read more about our Estate Planning Services to learn how to get started.

Establish a joint account with your parent(s) to help them manage their money.

If your parents are amenable to the idea, they can add you as a joint account holder on their personal deposit accounts (checking, savings, money market, etc.). This gives you access to their account and daily transactions so you can make sure nothing unusual or suspicious is happening. 

Automate payments using online tools like bill pay

Your parents may not be as comfortable with online banking as you are. Help them set up bill pay to automate part of their finances and eliminate the risk of missed or late payments. 

Understand their net worth and expenses

Your parents’ net worth simply equals their assets (account balances, physical property, insurance policies) minus any outstanding debt. And from your earlier budgeting exercise, you should have a handle on their recurring expenses. Now is the time to think through how much money your parents have and how much they’ll need to live comfortably for the rest of their lives. For example, how will future medical expenses be paid for?

Establish power of attorney

This may be the touchiest part of the conversation, so emphasize that your parents can continue to manage their own finances after signing the power of attorney (POA). A POA is simply a precaution so that you can step in when the time comes.

Teach your parents to recognize scams and phishing

Older people are a prime target for scammers. Regularly talking to your parents about the latest scams and teaching them cybersecurity basics can help them avoid falling victim to a scam. Also, let them know you’re here as a resource, and they can always check with you first if an email or phone call seems suspicious.

Town and Country Bank and Peoples Prosperity Bank can help!

As your community bank in Illinois, we are here to help you take care of your parents’ finances. From checking and savings accounts to personal financial planning services, give us a call or visit your nearest branch to get started!