What's the Best Way to Help an Elderly Parent with Their Finances?

Dear Carrie,

Our mom recently passed away, and my sister and I are concerned about our dad. He's 87, fiercely independent, and lives alone. Mom handled most of their finances. We're worried about dad's ability to manage on his own and being taken advantage of by fraudsters. How can we best help him?

—A Reader

Dear Reader,

This is a sensitive situation that's becoming more and more common as people live longer. It's not only that we worry about an elderly parent's ability to make good financial decisions, it's also that fraudsters are getting increasingly sophisticated. However, as much as we want to protect our parents, at the same time we have to respect the common desire to remain independent. It can sometimes seem like a catch-22.

Many studies report that, while a person's ability to manage money declines as they age, their confidence in their ability to do so remains constant. So it's understandable you and your sister are concerned, especially since your mom handled most of your parents' finances. Another recent study found that seniors with low levels of financial literacy may be more likely to experience cognitive decline, and suggests that maintaining and improving financial literacy are important in preserving cognitive health, promoting well-being and lessening susceptibility to financial fraud. 

Given his need to be independent, helping your dad with his finances could be a delicate balance. While each individual's circumstances will be different, here are five ideas that can be a starting point as you and your sister work together to support and protect his financial—and overall—well-being.

1. Communicate—Talking about money can be hard, but it's probably the most important first step. Decide with your sister how you'll approach the subject. Make sure you're on the same page, then set a time to talk with your dad.

Tell him you're willing to help and why. Be upfront about how seniors are targets for financial exploitation. Ask questions about his personal concerns and where he might welcome some help. Does he do things online? Is he aware of scams and how to protect himself? Look for cues that might indicate he's confused or vulnerable. Encourage him to share information with you like income, accounts, taxes and insurance. Let him know that by sharing this information, he'll be helping you understand the big picture and make it easier on you if something happens down the road. 

The more you talk about money, the easier it will become. So once you've opened this door, keep it open. Consider setting up regular times to check in with him. Also make sure you and your sister are open with each other. This needs to be an ongoing, three-way communication.

2. Collaborate—One of the keys to working smoothly together is to agree on roles and responsibilities. There may be things your dad wants to keep doing himself, and that's important to acknowledge and maintain. Once you know where he'll accept help, and where he may need the most help, you and your sister can divide and conquer based on your comfort level, skills and background.

For instance, one of you could be the point person for healthcare, making contact with doctors, while the other handles finances and getting in touch with any advisors. In fact, having a relationship with your dad's advisors and health care professionals can be important in spotting any troubling signs. Also, many financial firms now offer an account holder the ability to designate a trusted contact to protect against unusual activity. This could be either or both of you.

If you and your sister are clear on your roles, your father won't feel as if you're both hovering over him. Rather, he'll know to whom he can turn when he needs a specific type of support. However, smooth collaboration means you need to keep each other—and your father—informed.

3. Consolidate—With a better idea of your father's financial situation, you could help him simplify things by, for instance, consolidating accounts or rolling over retirement accounts in one bank or brokerage firm. If he has several sources of income—social security, pension, IRAs—is there a way to streamline things so distributions all come into a single account? The devil is in the details, but the simpler you can make managing his money, the easier it can be for him—and you—to stay on top of it.

4. Coordinate—From the everyday to the long-term, a bit of organization and coordination can help avoid misunderstandings. For instance, does your dad have a record of his accounts in a safe and accessible place? If not, help him create one. Do you and other loved ones know what to do in case of emergency? Also encourage him to use systems like auto-pay to simplify day-to-day tasks like paying bills.

With your mother's recent passing, you may already be aware of any estate plans your parents had, but now would be a good time to review them. Talk about things like powers of attorney for finances and health care. Make sure your dad's will and beneficiaries are up to date and that he has an advance healthcare directive on file with his doctor and local hospital.

Whether your dad has long-term care insurance or not, create a long-term care plan, including what he wants to do if he's no longer able to live on his own. All of this can be overwhelming for your dad, but if you and your sister coordinate things for him now, it will make the coming years easier on all of you.

5. Calculate—One of the most common fears people have is outliving their money. You can help your dad evaluate his situation by looking at all his assets and liabilities, income and expenses, and making sure there are no major gaps in insurance. Perhaps he and your mom already had a financial plan. Review and update it now, both for his peace of mind and your own.

Once you understand your father's present needs and have a plan in place, check in with him regularly. Needs change, and you may have to adapt to meet them. But laying the groundwork now will make you more able and ready to help as necessary—and make your dad more willing to let you.

Have a personal finance question? Email us at askcarrie@schwab.com. Carrie cannot respond to questions directly, but your topic may be considered for a future article. For Schwab account questions and general inquiries, contact Schwab.