A Hand for Mom and Dad

Question of the week:My parents are in their late 70s and I'm worried about their finances. Any advice on how I could give them some help taking care of their money? --W.B.

Dear W.B.,

People are living longer, so they need to make their money stretch longer and manage it to an older age than ever before. According to the Census Bureau, there are 35.6 million Americans over the age of 65 (and 4.5 million over the age of 85).

You're not alone. When we asked about the state of their elderly parents' finances, we found plenty of worried Armchair Millionaire community members. This was a typical response:

Dark days ahead for mother-in-law. "I believe that my parents will have a comfortable retirement. They don't have big expectations about traveling the world so they'll be able to get by. Now, my mother-in- law is a completely different story. She has no retirement savings, no life insurance and no health care. We have tried numerous times to get her to 'see the light' but she lives in a bubble that I am worried is going to burst sooner rather than later. She lives in a different country so I don't think she can come to live with us but I am worried we are going to get stuck paying her medical bills and subsidizing the dog food she will have to eat in retirement." --mdonalds

As people grow older, they face a new set of financial issues, including Social Security, pensions, different insurance polices and wills and trusts. This challenge is compounded if they also have the stress of living on a fixed income or of health worries. However, there's plenty you can do to help your parents age with grace financially. My guide will get you started.

The Armchair Millionaire's Guide to Lending Parents a Financial Hand

• Tread carefully. Money is deeply connected to our feelings of personal independence and dignity. Any steps towards taking over control of that money naturally threatens those feelings. At the same time, you're likely to feel uncomfortable bring up the subject with them, as well. However, you need to overcome this to help your parents avert problems in the future. If they don't want to discuss the topic with you, provide them with the names of several reputable financial advisors, preferably ones who specialize in the finances of retired people.
• Organize paperwork. Know where they keep their financial documents, including insurance policies, bank and investment account information, tax records, and will or trust, so that you can easily find them if there's an emergency. If their paperwork is incomplete or unorganized, help them get it shipshape.
• Make it easier. Save your parents some banking chores by arranging to have their Social Security and pension checks deposited automatically and bills paid automatically. Less stress for everyone. If your parents are no longer up to taking care of their day-to-day financial tasks, and they're not something you can do, either, consider hiring a Daily Money Manager, a professional who can take care of bill paying, balancing the checkbook and organizing records. You can find one through the Web site of the American Association of Daily Money Managers at www.aadmm.com.
• Help them protect themselves. Older people are a favorite target of scam artists. Encourage your parents to never give out any financial information (such as credit card or checking account numbers) to anyone calling them on the phone, as well as take steps necessary to safeguard their identities.
• Consider power of attorney. Encourage your parents to look ahead to a time when they may no longer be able to manage their finances, and to designate someone to act on their behalf if the need arises. A power of attorney document can be created inexpensively by your parents' lawyer.

THE BOTTOM LINE: Just as your parents helped you when you were young, the time may come when you need to help them as they age. Go slowly and respectfully, and your help will be much appreciated.