“I just can’t get the 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. She had managed her own finances with aplomb for many years, and all I provided was a little coaching. She remembered all of her appointments and medications and often reminded me of important dates. How did I miss the warning signs? Had I purposely been blind to the subtle indicators that something was off? The answer was yes, because I didn’t want her to change. This is true for most adult children as they watch their parents’ abilities decline.

When Finances Go Awry

Even those who are young and healthy can have trouble managing their finances. Things don’t necessarily improve as the years pass, and the situation can deteriorate quickly if no one is paying attention. The reasons why aging parents need help can vary greatly, and they can be insidious or abrupt. Regardless of the underlying reasons, it is highly likely that Mom and Dad will require help some day.

My mother’s financial difficulties were partly due to her illness and the medications she was taking. Fiercely independent, she fought to maintain her mental fitness with crossword puzzles, word games, solitaire and Jeopardy. But in her 80s, lupus took its toll on her brain function, affecting her ability to manage her money.

A study published in The Journal of the American Geriatrics Society found that financial capacity decreases with advancing age, especially for women. Be observant. If you notice a problem in a seemingly unrelated area, there might be problems managing other areas of independent living. Difficulty with activities of daily living (ADLs), such as eating, bathing and transferring, and instrumental activities of daily living (IADLs), such as housekeeping, meal preparation, and managing medications are often associated with increased risk of financial incapacity. Physical illness, side effects of 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. Retirees often experience a decline in income and assets, which can be due to the loss of a spouse, inflation, poor spending habits and inappropriate investments.

Signs Your Elderly Parent May Have Financial Troubles

Since money is a very personal matter, it was a relief when my mom overcame her independent spirit and admitted the problem to me. I responded with an offer to help but did not take over. Armed with my calculator, I assured her it would just take a few minutes to straighten everything out. However, things were so muddled that I got bogged down in a much bigger mess than I had expected.

Mom didn’t have the obvious signs of trouble like piled up mail, bounced checks, forgetfulness, unpaid bills or calls from creditors. I made sure her taxes were on target and had set up automated payments for her utilities. She didn’t have a computer, so she couldn’t get in trouble online. Fortunately, she occupied herself by watching TV Land and the Game Show Network, unlike the mother of one of my clients, who preferred TV shopping channels and stashed her purchases (including 21 sets of sheets) in her basement!

Yet, I discovered that Mom had mounting credit card debt because she had been charging her medications, making mail order purchases and donating money to charities. She admitted that she bought gifts for the family and believed she had a better chance of winning one of the various sweepstakes advertised in junk mail flyers if she bought something. She purchased 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 telemarketing scam victims are over age 65, especially those who live alone and look forward to the phone ringing.

How to Keep an Eye on Your Parent’s Financial Wellbeing

My mom had a variety of financial issues when I finally stepped in, and your parents may have some unique problems of their own. The National Council on Aging suggests that planning for this situation should begin with a family meeting, ideally in your parent’s early 60s. For many, though, that opportunity has passed. However, it is still up to family caregivers to provide the best safety net we can. Look for the following red flags in addition to the ones I observed with my mom.

  1. If possible, discuss appointing a financial power of attorney (POA) before any issues or signs of incompetence arise. This will give you or another responsible family member the legal ability to manage their finances. Should they become incompetent without naming a POA, guardianship proceedings may be necessary.
  2. Be observant, listen and learn to recognize subtle changes in daily functioning.
  3. Encourage your mother and father to use a trustworthy professional for help with taxes and investments, especially if you don’t live nearby or have experience in these areas.
  4. Take a genuine interest in their life and get a feel for who they talk to or see on a regular basis. In addition to strangers, friends, relatives and caregivers can all take advantage of a senior’s generosity.
  5. Add your parent to the National Do Not Call Registry to protect them from telemarketers. Be sure to register their land line AND cell phone number at http://www.donotcall.gov.
  6. Make yourself available to help. If you don’t manage your own money well, take this as an opportunity for both of you to improve your financial health together.
  7. Offer to assist with home repairs or major purchases to ensure they don’t get scammed.
  8. Ensure that their mail is checked regularly AND being opened. Keep an eye out for piles of unopened envelopes, late notices and the nature of their outgoing correspondence. Report any mail scams like sweepstakes, free prizes and vacations, and fake donation requests to the U.S. Postal Service.
  9. Watch for inappropriate and excessive purchases like beauty and health products, subscriptions, or 21 sets of sheets!
  10. Remember, it’s still their money. As long as they are competent, they have the right to choose how to spend it and make their own mistakes. Your goal is to help them retain their independence (and their financial security) for as long as possible.

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 and served for 7 years as the Director of Economic Security for the Wisconsin Nurses Association, making her uniquely qualified for her role as a CFP. 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.