As parents age, it’s common to be concerned about their ability to manage their finances, especially when faced with cognitive decline or other medical concerns. Here are some tips for talking to aging parents about their finances and how to step in with assistance.

TIP # 1 - INITIATE THE CONVERSATION EARLY

Financial discussions focused on planning for the future can be less stressful than conversations triggered by an event such as a medical diagnosis. Start the conversation by asking your parents if they have a healthcare power of attorney or financial power of attorney in place in case of emergency. Different individuals can be named for each, for example one sibling may have more financial acumen or one may live in closer proximity should a medical emergency arise. This conversation starter could lead to a broader discussion about their estate plan, in which case you may suggest consulting with an attorney to understand the legal aspects and proper documentation necessary.

TIP # 2 – ALERT TO SCAMS AND ELDER FRAUD RISKS

In 2023, $3.4 billion was lost in scams to seniors, as reported by the FBI’s Internet Crime Complaint Center (IC3). [i] Educate your parents on common scams targeting older adults, such as phone or email fraud. Advise your parents to NOT give out personal information over the phone or click on links in text messages. Familiarize yourself with common elder scams including grandparent scams, government impersonation scams, and romance scams. Keep in mind, seniors especially, feel embarrassed or ashamed after being scammed and may not report it. Let them know that even the most careful people can fall prey and offer to monitor their accounts for suspicious activity.

TIP # 3 – HELP WITH INSURANCE AND HEALTHCARE COSTS

The rising cost of medical care is cited as one of the top concerns to seniors in the University of Michigan’s National Poll on Health Aging [ii]. Fluctuating expenses make it particularly difficult for seniors living on a fixed income. Offer to review their health insurance and supplemental policies to ensure they have adequate coverage. Suggest scheduling a meeting with their insurance or healthcare provider’s business office. Medicare or other plans can be confusing, so navigating these options together can be very helpful to your parents.

TIP # 4 – ORGANIZE FINANCIAL DOCUMENTS

Help your parents organize key documents like bank statements, insurance policies, and tax records. You or the person holding power of attorney may need to help them with their online access when compiling statements. You may also need to provide assistance with backing up any records kept on a computer or shredding unnecessary paperwork to reduce clutter. AARP suggests seniors sorting these documents into categories such as financial documents (investment records, tax returns, mortgage statement) and personal records (social security card, marriage license) [iii] and maintaining a physical binder for ease of recordkeeping.

TIP # 5 – SIMPLIFY FINANCIAL TASKS

As parents age, they may struggle with complex financial decisions, leading to mistakes or avoidance of financial tasks altogether. Automate bills and regular payments to reduce stress and prevent missed payments. Consolidating accounts, if appropriate, can also make things simpler. Bank of America’s “Better Money Habits” encourages children of seniors to look for signs that it may be necessary to step in, including unusual purchase activity, frequent complaints about money, or piles of unopened mail. [iv] Periodic check-ins can help catch issues early, but sensitivity to potential cognitive changes is essential.

Helping elderly parents manage their finances can be essential for their well-being and peace of mind. These tips can help navigate financial matters smoothly while respecting their independence. If you have concerns about your elder parents and their financial well-being, reach out to your Clearwater Capital Partner advisor today.

[i] https://www.fbi.gov/contact-us/field-offices/losangeles/news/fbi-releases-2023-elder-fraud-report-with-tech-support-scams-generating-the-most-complaints-and-investment-scams-proving-the-costliest

[ii] https://www.healthyagingpoll.org/reports-more/report/their-minds-older-adults-top-health-related-concerns

[iii] https://www.aarp.org/caregiving/financial-legal/info-2018/organize-financial-records.html

[iv] https://bettermoneyhabits.bankofamerica.com/en/saving-budgeting/aging-parents-finances#:~:text=Keep%20your%20finances%20separate%20It's%20not%20a,keep%20your%20personal%20assets%20and%20funds%20separate.