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 undertaken 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 a 2021 survey by Genworth , the median cost of an in-home health aid is $5,148 per month, while an assisted living facility can run around $4,500 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 and living on a budget 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 make 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 a prescription. 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. Some documents you may want to look for include:
• Bank statements
• 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
• Will and or trust documents
• 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 Organize Your Finances & Keep Them 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
• Credit card payments
• Health insurance payments
• Phone bills
• Medical bills
Recommended: How to Make a Budget
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’ll 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.
Recommended: Typical Retirement Expenses to Prepare For
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) as well as Medicare. 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 2021, financial institutions filed 72,000 suspicious activity reports related to elderly financial exploitation, which was 10,000 more than 2020, according to the U.S. Consumer Financial Protection Bureau.
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
• Withdraws made from an ATM 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.
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 yeast.
If you need a partner to help you through this season of life, you may want to consider opening a bank account with SoFi Bank. We offer a competitive APY, plus a number of handy features that can make banking with elderly parents easier, including direct person-to-person transfer service and an easy option for adding a joint account holder.
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 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
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
SoFi members with direct deposit activity can earn 4.50% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
SoFi members with Qualifying Deposits can earn 4.50% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.50% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 8/9/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet..
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.