Warning Signs That Your Parent's Finances Are Off Track


"I just can't get this checkbook to balance this month." Those words were my first inkling that mom might not be as sharp as she once was. I was taken by surprise. After all, she had managed her own finances with aplomb for many years and all I did was a little coaching. She remembered all her appointments, all her meds, and often reminded me of dates to remember. How did I miss this? Had I purposely been blind to subtle indicators? The answer was "yes," because I didn't want her to change.

Why Things Go Awry

Even those who are "young" and "well" might have some trouble managing finances. Things don't necessarily improve in later years and can go from good to bad or bad to worse. Why aging parents need help can vary greatly and the need can be insidious or abrupt, but odds are that they will require help some day for some time.

Mom's financial difficulties were partly due to her illness and the medications she was taking. Fiercely independent, she fought to maintain her mental fitness. She exercised her brain with crosswords, word games, solitaire and TV's Jeopardy. But in her 80s, lupus took its toll on her money management skills.

Statistics from The National Council on Aging show that 29 percent of homeowners over 62 have difficulty or need help with one or more ADLs or IADLs (instrumental activities of daily living) which includes money management, along with shopping, cooking, cleaning and using the telephone. Be observant. If you notice a problem in one area, there might be problems in another. Physical illness and/or response to medications, loss of a spouse, and depression are among the most common precipitating factors.

Finances can also get off track because your aging parents don't have as much money as they used to. They may be too proud or independent to let you know. A 2007 study by the Center for Retirement Research at Boston College revealed that 40% of retirees between 67 and 80 suffer a decline in income and assets, the greatest being due to the loss of a spouse. Inflation, poor spending habits, inappropriate investments, and failure to plan how to use assets are other reasons for a decline.

Signs Your Elderly Parent May Have Financial Trouble

Since finances are a very personal issue, I did feel a warm glow because my mom had overcome her independent spirit and admitted the problem to me. I offered to help...offered, didn't just take over! Armed with my calculator, I assured her it would just take a few minutes to straighten out. But things were so muddled, that I got bogged down in a bigger mess than I expected.

Mom didn't have the obvious signs of trouble: piled up mail, bouncing checks, forgetfulness, unpaid bills or calls from creditors. I made sure her taxes were on target and had automated payments for utilities. She didn't have a computer so she couldn't get in trouble on-line. Thank goodness she watched TV Land and the Game Show Network. Whereas, one of my clients found 21 sets of sheets and comforters in her mother's basement – all ordered from a television shopping channel!

Yet, I discovered that she had mounting credit card debt due to mail order purchases and charging her medications and charitable donations. She admitted that she bought gifts for the family and she believed there was a better chance of winning the various sweepstakes and drawings advertised in the junk mail flyers if she bought something. She bought lottery tickets so she could leave us a legacy.

She gave cash gifts to her cleaning lady on top of her hourly charges, "because she is such a nice girl." Fortunately she had not given her anything more valuable, although a piece of keepsake jewelry disappeared mysteriously during that time.

Luckily, mom had learned to hang up on telemarketers or tell them "She's not home" when they asked for her by name! According to the Federal Trade Commission, 80 percent of the victims of telemarketing scams are over age 65, especially those who live alone and look forward to the phone ringing.

What to do to Take Care of Your Parent's Money and Finances

Suffice it to say that your elderly parent might have different money problems than my senior mom, who had a variety! So besides the things I mentioned above:

  1. Be observant & listen. Remember the statistics and recognize subtle changes.
  2. Encourage your mother and father to use professional advisors for taxes and investments, especially if you don't live nearby.
  3. Know who they talk to or see. Friends, relatives and caregivers can be abusive both physically and financially.
  4. Put your elderly parents on the No-call lists for telemarketers (visit the National Do Not Call registry at http://www.donotcall.gov/)
  5. Make yourself available. If you don't manage your own money well, you might avoid the issue otherwise.
  6. Offer to take care of home repairs or major purchases so they don't get scammed.
  7. See if mail gets opened or piles up or if they send out responses to contests.
  8. Watch for inappropriate purchases – like beauty and health products, subscriptions or 21 sets of sheets!
  9. But remember, it's still their money and they have the right to choose, make mistakes, and retain their independence as long as possible.

The National Council on Aging suggests that planning for this situation should begin in your parent's early 60s with a family council meeting. But for many, that time has passed without that meeting and it is up to family caregivers to provide the best safety net we can.

June Schroeder is a Certified Financial Planner (CFP®) with Liberty Financial Group in Wisconsin, and has been working in financial services since 1979. Schroeder is also an RN, having received her degree from UW-Milwaukee in 1969. She served for 7 years as the Director of Economic Security for the Wisconsin Nurses Association, making her uniquely qualified for her role as a certified financial planner. She has written extensively for local publications as well as CNBC.COM. She has taught courses and lectured nationally on financial planning for universities and colleges.

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I'm still mad at my aunt who did not tell me years ago that my mother and step-dad had failed to pay their 2004 taxes because my aunt did not 'consider it her place to tattle on her older sister." My mother gave me durable POA in 2002, but hid many things from me until 2009. It's taken two years and cost much in penalties, plus required getting a CPA who actually works instead of the so called friend of the family who was semi retired.
I started preparing my mother's taxes for her CPA in about 2004. I started noticing an increase in her charity donations. Most of which I had no knowledge. Then I discovered she was putting all this money out and dipping into her annuities to pay her bills. She was gettng about a foot of mail every day, mostly from obscure charities and fortune tellers. In 2005 she had paid out over $7000.00 for both. Even her advisor, where her accounts were, was becoming concerned. My parants had set it up to where my brother and I had POA, when and if they ever unable to handle their finances, in their trust. My brother lives 2000 miles away, so it was up to me. That is when, I took over her finances. I contacted the local Post Office to have most bulk mail eliminated. For those that had address return requested, I drafted a letter informing them that the cow was dry, do not contact her again. A month later her mail was only 6". After being diagnosed with Alzheimers, we moved her in with us. We only gave the important contacts a change of address. The fortune tellers and foreign charities were the worst about hanging on. Eventually, even they gave up.
If there is a problem, take charge. I saved most of the investments, mom and dad had saved, for when she needs them. Maintain a periodical interest and don't find out too late, after their retirement money is gone. Beware of nursing home insurance scams. Mother paid out several thousand a year and got nothing back when the payments discontinued.
My mom had all these signs and I was not aware these were all indications there were bigger problems than i could see on the surface. My mom is now in a ALF and I manage all her finances...but it was a ugly mess to weed through as well as I feel as I came in too late and she has very little money left due to all the above issues she fell prey to. I hope more people read this and are better prepared and know the signs than I was.