Helping your aging parents manage their finances can be difficult—especially if you’re just starting to get involved. It can be a challenge to figure out what accounts they have, how their bills are paid or whether they even have enough money to pay the bills. On top of that, you might be meeting with resistance from your parents, who need your help but aren’t too willing to accept it.
To avoid getting overwhelmed, consider tackling one task at a time. This will allow you to ease your way into your parents’ financial lives with, hopefully, less friction. And it will make your role as financial caregiver more manageable.
This month-by-month plan can help you figure out what you need to do as you get involved with your parents’ finances. To increase the chances that your parents will accept your assistance, offer to take over these tasks for them as a way to lighten their load so they have more time to do what they enjoy.
January: Figure Out Where Your Parents Stand Financially
You might have a general idea of where your parents stand financially, but you need to gather as many details from them as possible about their finances. The goal is to get a list of all of their financial accounts (with usernames and passwords, if possible), sources of income, monthly bills, debts owed, and insurance policies. If your parent suffers from Alzheimer’s disease, dementia or other cognitive impairments, you might have to go through their mail and files to gather account statements and the information you need.
Also, make sure your parents have essential legal documents such as a will, financial power of attorney and advance health care directive. These documents need to be drafted and signed while they still are mentally competent. Most importantly, you’ll need to be named your parents’ power of attorney to have legal access to their accounts and to make financial decisions and transactions for them.
[ See: Legal Documents to Make Your Wishes Known ]
February: Consolidate Accounts and Automate Payments
If your parents have several bank, credit card, retirement or investing accounts, make things easier for you and them by consolidating those accounts. Encourage them to do the following to streamline their finances—or do it for them if you are their power of attorney.
- Transfer checking or savings account funds to the account with the lowest or no monthly maintenance fees.
- Take advantage of balance-transfer offers or a personal loan to consolidate credit card debt.
- Fill out a Transfer Initiation Form with the investment firm where you want to consolidate your parents’ retirement or investment accounts.
After consolidating accounts, set up automatic bill payments if your parents haven’t already. Help them create online accounts and keep a list of the usernames and passwords (you can use a password manager such as provided by Carefull). Also, consider having your parents’ statements mailed or emailed to you. That way, they won’t get confused and mail in checks in addition to the automatic payments that are being made.
[ Read: How to Put Your Parents’ Finances on Autopilot ]
March: Get Ready for Tax Season
By now, your parents should have received tax forms such as 1099-R for pension income and SSA-1099 for Social Security benefits. Offer to help them gather these forms and other documents to prepare their tax return. (Bonus: If you’ve had trouble getting information about your parents’ finances, helping them fill out their tax return will give you a lot of information about their financial situation.)
If your parents are no longer able to file a tax return on their own, you’ll need to file one for them if you are their power of attorney. This guide to filing a tax return for a parent can walk you through the steps.
April: Check Your Parents’ Credit Reports
You can get free credit reports from each of the three credit bureaus—Equifax, Experian and TransUnion—at AnnualCreditReport.com. Checking your parents’ credit reports is a good way to see all the lines of credit they have, amounts owed and any negative information such as late payments that might be hurting their credit scores. It’s also important to look for accounts they didn’t open, which likely is a sign that they are victims of identity theft.
To get your parents’ credit reports, you’ll need to provide some of their personal information—including their Social Security numbers—to AnnualCreditReport.com. So you and your parents might need to work together to provide the necessary information. If you discover suspicious accounts on their credit reports, visit IdentityTheft.gov to report that their identities were stolen and to get a recovery plan.
May: Create a System to Monitor Accounts
Checking your parents’ credit reports is a good first step for monitoring their finances. However, you should have a system that helps you keep regular tabs on their credit and accounts.
Sure, you can log into their accounts weekly or even daily, but that’s time consuming. You can lighten your load by using the Carefull service, which will monitor your parents’ accounts, credit and identity for you. Carefull will review each and every transaction on bank, credit card and investment accounts that are linked to the service. You’ll get notifications when there are unusual transactions, signs of fraud and money mistakes such as possible late or missed payments.
Carefull also monitors the Internet and dark web for misuse of personal information and will alert you to changes in your parents' credit reports, such as new accounts opened in their names.
June: Review Your Parents’ Spending
Now that you’ve been monitoring your parents’ accounts, take a closer look at where their money is going each month. Consider helping them create a budget if they don’t have one already. You don’t have to call it a budget, though, because that might feel restrictive to them. Instead, tell them you’d like to help them create a spending plan.
List sources of income. Then subtract all essential expenses to see how much they have left each month to spend as they wish. It might help to create two separate accounts—one for bills and one for spending. If their debit card is linked to the spending account, you’ll lower the risk of running out of money before the bills are paid. Or you might need to get your parents prepaid debit or credit cards if overspending is a problem.
July: Find Ways to Help Your Parents Save Money
The budgeting process might reveal that your parents need to find ways to lower their expenses—both essential and non-essential—so they don’t run out of money. To help them save money, start by reviewing non-essential expenses that can be eliminated, such as magazine or book-of-the month club subscriptions. You can use Carefull to automatically surface recurring expenses and subscriptions they may have forgotten about. Find ways to trim services your parents don’t want to ditch, such as opting for a cheaper cable TV package.
Then help them reduce essential expenses. They could reshop their auto and homeowners insurance policies to see if they can get lower rates. They might be able to reduce the electric bills if they live in a deregulated market and can switch providers. They may be able to save on prescription drugs by switching to generics, using a mail-order drug program or using programs such as Medicare’s Extra Help for low-income adults. For more cost-cutting tips, see 12 Ways Retirees Can Save Money.
August: Audit Your Parents’ Wallets
Your parents might be reluctant to open up their wallets to you but encourage them to let you help them review the contents and get organized. The key is to limit the damage if their wallets are lost or stolen.
Make sure they’re not carrying their Social Security cards with them. Also, check for old Medicare cards that have their Social Security numbers on them. In 2018, Medicare issued new cards with unique numbers. Ensure that your parents received new cards and destroy the old ones.
Also, encourage your parents not to carry more than one debit card and one credit card. If careless spending is a problem, you might need to take away the debit and credit cards and give your parents a cash allowance. And you can minimize confusion when they do go to pay for things by removing membership and loyalty cards.
September: Look Into Government Benefits for Your Parents
If your parents are struggling financially, they might qualify for government assistance programs. Use the Benefits.gov Benefit Finder to see if they are eligible for any financial benefits, housing assistance or healthcare assistance. The U.S. Administration on Aging has an Eldercare Locator that helps connect older adults with local support services. For more, see 15 Government Benefits That Can Help Seniors Save Money.
October: Review Medicare Options
Open enrollment for Medicare health and drug plans typically begins in October. This is a good time to help your parents review the coverage they have and consider whether they should make changes—including switching to a Medicare Advantage Plan offered by an independent insurance company. They should receive a “Medicare & You” handbook in the mail with information about coverage and changes for the coming year. And the Medicare Plan Finder can help you compare coverage options.
If your parents already have a Medicare Advantage Plan, you should help them compare it with plans offered by other insurers to see if they can save money by switching. The Medicare Advantage open enrollment period runs from January 1 to March 31. You and your parents could use a free service such as Boomer Benefits to help review their Medicare options and find the best coverage at the best price.
To manage Medicare benefits for your parents, you must be appointed their authorized representative. Medicare has a form your parents can fill out to appoint you, or you can complete it if you are their power of attorney.
November: Make a Plan for Long-Term Care
November is National Alzheimer’s Disease Month and Family Caregivers Month. You could take advantage of these awareness campaigns to start talking with your parents about long-term care.
You should discuss where they want to receive care if they need it, who will provide care for them and how they will pay for care. Encourage them to have a back-up plan if they want to remain at home and have a family member care for them because their home and family might not be equipped to meet their needs as they age. You also might want to encourage them to meet with a financial planner who can help review their assets and help them create a plan to pay for long-term care.
December: Get Support for Yourself
If your responsibilities as a financial caregiver have become overwhelming, don’t be afraid to reach out for help. Of course, tools such as Carefull can help you lighten the load and knock a handful of tasks off of your list right off the bat. If you feel that you would also benefit from professional help, there are a number of places you can turn.
You could hire a daily money manager to help with your loved one’s daily money matters. You can find a fee-only, fiduciary financial planner through NAPFA.org to help create a comprehensive financial plan for your parents. An elder law attorney can help you navigate legal issues. And an aging life care professional (also known as a geriatric care manager or elder care professional) can help manage care for a loved one, assist with financial matters and connect you with local assistance programs. You can find one through the Aging Life Care Association.
[ Keep Reading: Emergency Planning Guide for Seniors and Their Caregivers ]