At some point, you may need to become involved with your aging parents’ care, which may include immersing yourself in your parents’ finances. Taking over elderly parents’ finances can be a sensitive issue that needs to be done with a great deal of care, patience, and regular (clear and honest) communication.
Your loved ones’ finances can be complicated by a number of issues, including the cost of any care they might need. According to the most recent survey by Genworth, the median cost of an in-home health aid is $6,292 per month, while an assisted living facility can run around $5,350 per month, depending on where you live.
While healthcare costs will likely only continue to climb, seniors are typically living on a fixed income. This makes careful money management particularly important for older adults. Read on to learn what you can do to help your parents (or other elderly loved ones) manage their money and ensure they don’t outlive their funds.
Tips for Budgeting for an Elderly Parent
Figuring out how to take care of your elderly parents’ finances – without putting a strain on your relationship – comes with a bit of a learning curve. Here are some tips that can help ease the process.
1. Starting With Small, Gradual Changes
It can be a good idea to offer support in small, gradual steps in the beginning. You may want to sit with your parents while they plan how to live on a budget or offer to set up automatic bill pay with them.
If you need to offer financial support, consider starting small, such as paying for prescription medications. Ideally, you’ll want to give as much independence to your parents as they can handle.
2. Making a List of Their Financial Documents
It can be very helpful to create a document that lists all of your loved ones’ financial and legal documents, including where they are located, along with contact information for any professionals they use, such as doctors, lawyers, and accountants. This is a valuable step in terms of Some documents you may want to look for include:
• Mortgage statements
• 401K, IRA, stock certificates, or pension records
• Income tax records
• Property deeds
• Outstanding loans
• Automobile registration and insurance
• Homeowners insurance
• Health insurance
• Life and disability insurance
• Passport, driver’s license, and social security information
• Birth and marriage certificates, divorce decree
• Contact info for doctor, lawyer, investment banker, accountant, clergy, etc.
• Military service records
• Medical papers, such as advance directives, DNR
• Final wishes regarding burial arrangements, cemetery, and funeral home
Recommended: How To Keep Your Finances Organized
3. Creating an Organized Budget
Budgeting for elderly parents is similar to budgeting for yourself, except that the budget line items and amounts will likely look different from your own. Retirees may also have significantly less income coming in than when they were employed.
When helping them set up a budget, here are some monthly budgeting categories you may want to include:
• Mortgage or rent
• Utilities
• Credit card payments
• Health insurance payments
• Phone bills
• Medical bills
• Food
• Transportation
4. Setting up Automatic Bill Payment for Simplicity
Automatic bill payments can be a big help when it comes to taking care of elderly parents’ finances. If you’re handing the payments, it will eliminate the mental energy it’ll take for you to pay another set of bills each month. Plus, you’ll worry less about things like having their utilities unexpectedly cut off or their insurance canceled.
5. Communicating Changes With Them
There may come a time where you need to make changes that will affect their lives. If you need to switch care providers, for example, it can disrupt their routine and expectations. To make the adjustment process easier, you’ll want to communicate any changes early, often, and honestly.
6. Looking at Senior Programs
When budgeting for eldercare, it can be wise to look for senior programs in your area. Not only can they be a tremendous relief on the budget, but they can also enhance the quality of life for your elderly parents.
They may be able to qualify for housing, food, or energy assistance. Eldercare services can also include transportation, meals, health insurance counseling, caregiver support, and in-home services You can learn about programs in your area at Eldercare.gov.
7. Reducing Costs Where You Deem Fit
Be sensitive as you approach budget cuts with your parents. You may be able to see things that don’t make sense to pay for anymore, but your parents may view things differently. Keep communication lines open and respect their wishes as much as you can. It’s important to spend time acquainting yourself with typical retirement expenses, how those might be lowered, and what is discretionary spending.
8. Researching Options for Insurance Plans
Medicare, the healthcare insurance program for those over 65, isn’t as simple as you might expect. There are four parts of Medicare: Part A, Part B, Part C, and Part D. Each has their own benefits, deductibles, and copays. To browse medicare options in your area, you may want to take a look at Medicare.gov.
Depending on their financial situation, your parents may qualify for Medicaid (the public health insurance program for people with low income). In addition, you may want to look into supplemental health insurance, called Medigap. Medigap is sold by private companies and can help fill in “gaps” in Medicare, such as copays, coinsurance, and deductibles.
9. Separating Finances From Yours
Whatever help you’re able to give an aging parent, it can be a good idea to keep your finances separate from theirs. This is generally the easiest and most ethical way to keep a record of what is happening in your parents’ accounts.
When you’re in control of someone else’s finances, it puts you in the role of a fiduciary, which means you must act in their best interests, rather than your own. If you want to learn more about the different types of financial caregiving, you can look at the guides from the Consumer Financial Protection Bureau.
10. Staying Aware of Any Unplanned Charges
Financial exploitation of elderly persons is on the rise. In the most recent year surveyed, financial institutions filed 88,000 suspicious activity reports related to elderly financial exploitation, up 84% over the previous period reviewed and totaling $3.1 billion in losses.
It’s concerning how often elderly persons’ are taken advantage of, especially when it comes to their finances. Being aware can help prevent financial abuse of an elderly parent. Some red flags you may want to watch out for:
• Large, frequent withdrawals
• ATM withdrawals that are not typical of your parent’s behavior
• Transfers between bank accounts your parent cannot explain
• Insufficient funds fees or unpaid bills
• Attempts to wire large sums of money
• A new friend accompanying them to the bank
• Suspicious or forged signatures on checks
• Reluctance to talk about transactions or shame surrounding their money
• Altered wills or trusts
If you suspect your parents have been the victim of financial exploitation, you can report it to their bank and ask for their help to investigate and stop it. Your town or state Adult Protective Services department may also be able to help. If you strongly suspect fraud, it’s also a good idea to notify your local police.
The Takeaway
Taking care of your elderly parents’ finances is a big step that often requires time, patience, sensitivity, and maintaining open and clear lines of communication. But it can be well worth the effort. By coming up with a financial plan and helping older loved ones better manage their income, savings, and spending, you can ensure that they live as well as possible during their golden years.
If you need a banking partner to help you through this or any other season of life, you may want to consider what SoFi offers.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
FAQ
How do you financially help elderly parents?
You can help your parents financially by going over their finances with them, helping them set up a budget, and connecting them with any senior financial support services offered in your area. Helping elderly parents financially doesn’t have to mean giving them money. However, if that’s necessary (and you are able), you may want to start slowly by covering a few expenses here and there and, if needed, gradually increase.
What do you do if you have an elderly parent with no money?
You can help by looking for senior support programs that may be able to help them meet their needs. Beyond Medicare or Medicaid and Social Security, there are a host of other programs your elderly parents may qualify for, including assistance for housing, energy, and food. Eldercare.gov is a good place to start your research.
How do you make a budget for the elderly?
Making a budget for the elderly is similar to making a budget for yourself, except the expenses and allocations will be very different. A good first step is to go through their monthly bank and credit card statements to determine how much is coming in each month and how much is going out. You can then look for places where they may need to cut back.
Photo credit: iStock/Ridofranz
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