How to help aging parents manage their money

Kiplinger's Personal Finance

Numerous studies have shown that our ability to manage complex tasks diminishes as we get older.

For financial tasks, the decline typically starts after age 60. But because the decline is gradual, many seniors don’t realize that they’re having trouble managing their money, says Michael Finke, dean of the American College of Financial Services, who has researched cognitive decline’s impact on financial decision-making.

That’s why it’s crucial to start talking to your parents while they’re still able to make appropriate decisions, Finke says.

“Often, by the time parents have lost their ability to make sound financial choices, they’ve also lost the ability to evaluate who they can and can’t trust,” he says. That makes them vulnerable to bad advice from unscrupulous relatives or financial advisers.

Knowing that the ability to make good financial decisions starts to diminish in one’s peak earning years can provide an opening for baby boomers to discuss this sensitive topic with their parents. Tell your parents that you have started to discuss your finances and retirement plans with your own children or others you trust.

Another effective way to broach the topic of your parents’ finances is to ask them whether they have core estate-planning documents, including powers of attorney for finances and health care, a will and, in some cases, a living trust. You also should ask your parents whether they’ve updated the beneficiaries for life insurance policies, retirement savings plans and other types of accounts.

If they’re reluctant to share details of their finances, stress that your main concern is to be able to locate these key documents if they become incapacitated.

The next step may be to suggest you assist your parents with financial tasks, such as bill paying and investing. Many seniors are understandably reluctant to allow anyone, including their children, to move money on their behalf. But you may be able to persuade them to let you monitor their financial activities, which can help you identify problems early on.

Some investment firms even provide read-only statements to family members designated by the client.

Thomas Lapp of Philadelphia says his father gave him access to his online accounts so that Lapp could keep an eye out for unusual credit card charges or other potential problems. That was about three years ago. Recently, Lapp’s father gave him permission to manage the accounts.

“It was a transition from me being a second pair of eyes and looking over his shoulder to him looking over my shoulder,” Lapp says.

Eileen Ambrose and Sandra Block are senior editors at Kiplinger’s Personal Finance magazine. Send your questions and comments to

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