Three-fourths of midlife adults either currently provide financial support to their parents or expect to do so in the future.1 And while that statistic refers specifically to monetary support, there are many other ways that adults can and do assist their aging parents with financial tasks.
Likewise, there are many reasons people end up in this position, from a parent with diminished health or mental capacity, to one who simply wants to set down the burden of managing their finances. Regardless of the why behind the need, the insights that follow can help grown children assist their aging parents without derailing their own financial plans.
Have conversations, get information
Many people find it useful to have conversations that give them a big picture view of their parent’s finances. This can include discussing income and expenses, and reviewing your parent’s financial documents, from account statements to insurance policies and estate documents. You might also ask how to access this information in the future, including relevant websites and log-in credentials.
Get helpful insights for having family financial discussions in this Insights article.
This transparency may uncover specific ways you can assist. For instance, if you find that your parent is living beyond their means, that might lead to a discussion on ways to reduce spending. Or you might help a parent find ways to make money management easier, such as through automatic deposits or online bill payments. And you might find that your parent truly does require monetary support.
Discuss family roles
Not every person is a good fit for every financial responsibility, so it’s helpful to talk about which roles each family member should play. For instance, one child may have the financial resources to provide monetary support, while another has the time to help their parent build a budget or reconcile their checking account. Likewise, the family may want to discuss who is the most appropriate person to be assigned power of attorney to make financial decisions if your parent cannot.
Gradually increase involvement
When possible, both you and your parent might benefit from making a gradual transition of responsibility. For instance, if a parent isn’t ready to relinquish control of their checkbook, you could still help by having more frequent conversations about their finances or reviewing bank statements. This may help you gain insights on your parent’s day-to-day financial management and help them spot red flags.
As the process moves forward, your parent may be willing to have you become more involved in their financial affairs. For instance, they may let you help with bill payments and include you in meetings with their financial advisor, estate attorney or tax advisor. In fact, these meetings may increase your parent’s comfort and confidence in having you help. And it may give you a better understanding of your parent’s financial plans, strategies and goals.
Help with fraud prevention
Unfortunately, older consumers are often targets of scams and fraud. You may be able to help them watch for warning signs. For instance, by reviewing bank and credit card statements, as well as credit reports, you might spot suspicious activity. You could also help your parent set up account monitoring, and email or text alerts.
Safeguard your own finances
When an aging parent needs monetary assistance, you may want to do everything you can to provide it — especially if you’re in a more comfortable financial situation than your parent. But it won’t help anyone if you put your own financial security at risk. That’s why it can be helpful to review your personal financial plan before a parent needs help.
This may allow you to adjust your saving and investing strategies. For instance, you may decide to set aside funds every month into an account designated for financially supporting a parent. Or you might earmark certain investments for that purpose.
Don’t go it alone
It can be hard for a grown child to take on financial responsibility for a parent. If possible, bringing in other family members to share tasks may help lessen the burden on any one individual. In addition, your Hancock Whitney team can help in many ways — from financial planning to helping manage bill payments — allowing you to focus on simply being a family and enjoying your time together.
To learn more about how we can help, contact a Private Banker today.
1 “Midlife Adults Are Supporting Parents and Adult Children,” Laura Skufca, AARP, posted January 2020, https://www.aarp.org/research/topics/economics/info-2020/midlife-adults-providing-financial-support-to-family-members.html, accessed Feb. 9, 2022
2 “How to Handle the Financial Responsibility of Taking Care of Aging Parents,” Gabrielle Olya, GOBankingRates, posted Nov. 4, 2021, https://www.gobankingrates.com/money/financial-planning/how-to-handle-financial-responsibility-taking-care-of-aging-parents/, accessed Feb. 9, 2022
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