Help your parents stay financially healthy without compromising their dignity

The U.S. Census Bureau estimates that the over-65 year-old segment of the population will increase 147% between the years 2000 and 2050. And as our parents live longer, they must reckon with a changing financial landscape: Complicated insurance policies, rising medical costs, scam artists engaging in identity theft, and learning to save money while living on a fixed income.

Just as they once taught you how to navigate life’s twists and turns, you’ll likely need to help them manage their money in this new financial reality. Although money is a sensitive issue, it is possible to tactfully help your parents with their financial planning.

Here’s a guide to helping your parents shore up their financial health:

Proceed with caution
Money often has a direct connection to our sense of independence and self-worth. Hearing that you want to play a larger role in their financial life is likely to feel threatening to your parents. And you will likely have some discomfort about increasing your caretaker role. Therefore, it will take a combination of sensitivity and resolve to broach the subject with your parents. If they are resistant to discussing the topic with you, have a list of reputable financial advisors ready to hand to them. (See Hire a Financial Advisor and the “Reduce the workload” topic, below, for more guidance.)

Start by getting organized
The first step you need to take is to learn where your parents keep their financial documents, including their bank and investment account statements, insurance policies, tax records, and will and other legal documents. This way, you’ll be able to find them in case of emergency and you’ll also be able to gauge how organized (or unorganized) they are. If there’s anything missing or scattered, help them get everything up to date and easily accessible.

Reduce the workload
To make your parents’ daily financial lives a little easier, arrange for the direct deposit of their Social Security and/or pension checks and their regular bills to be paid automatically. If they’d like to shed even more of their daily financial management responsibilities (and if you don’t want to or aren’t able to take them on), consider hiring a Daily Money Manager. These professionals pay bills, balance checkbooks, and organize financial documents, generally for an hourly fee. You can learn more about the profession and find a service provider near you through the website of the American Association of Daily Money Managers at www.aadmm.com.

Teach them to be wary of strangers
The same people who taught you to be wary of strangers as a child now must learn to fend off the many scam artists who prey on the elderly. Educate your parents to never give out sensitive financial information over the phone or Internet. (See Prevent Identity Theft for more information.)

Contemplate power of attorney
Speak to your parents about anticipating a time when they may no longer want or be able to manage their own finances and help them designate someone to act on their behalf should the need ever arise. Their lawyer can help with this process by creating a power of attorney document—generally a very affordable service.

THE BOTTOM LINE:Now is not the time to storm in and announce that you’ll be handling all your parents’ financial affairs from here on out. By taking it one step at a time and proceeding with sensitivity, you’ll be able to offer assistance that your parents will truly appreciate.