Mom, Dad, let's talk about your money

Two women review financial statements.

Are you prepared to help your parents with their finances as they age? Do you even know when you should offer to help?

By 2030, there will be 72.1 million people over age 65, more than twice the number in 2000 according to the Department of Health and Human Services. And while longevity is a nice problem to have, when it comes to the financial aspect, there are issues that need to be addressed.

At age 70, 10% of people start to lose some of their cognitive functioning abilities — and that number rises sharply with age, according to a report from the University of Michigan. By age 80, half of all people have some cognitive impairment. That can lead to bad financial decision-making (during the recession many older households pulled money out of stocks and put it in cash at the wrong time for instance) as well as the ability to just keep up with day-to-day financial management like paying the bills.

According to the National Endowment For Financial Education, nearly every family in America has dealt with mental aging issues, from someone forgetting to pay a bill to experiencing the devastating fallout from Alzheimer's disease. Yet, a Harris Interactive online survey found that seven in ten say major barriers are preventing their families from openly communicating about who will make financial decisions on behalf of an aging family member if they become unable.

What steps do you need to take – and when? Here are some guidelines. I’ve also pulled together a Caregiver’s Master List of Resources for those of you who finding yourself in those shoes. Even if you’re not there now, you may want to bookmark it for later.

Starting The Conversation

Locate important documents and contacts
Ask about the important documents and people in your parents’ lives. You want to know where command central is. If you were to have to go in and help with the financial management, where would you find the files and other information, like contacts for the bank, lawyer, accountant, and others? Ask the same about wills, powers of attorney, and other estate planning documents.

Identify trigger points
Your parents don't need your help now, and that's fine, but see if you can get them to pinpoint a couple of things that might be a call for you to step in (mail piling up, calls from collectors, overdraft notices, as well as confusion and forgetfulness in general).

Involve both parents
If you still have both parents, get them both involved. Chances are your mother is going to outlive your father - and she may not have the information she needs to take over daily money management. It's better that she learns how to do this now, while healthy.

Taking Precautions

Conduct an expense audit
Just as your needs change from time to time, your older parents may no longer need things they’re paying for. Are they carrying life insurance they no longer need? Do they pay for cable channels they don’t watch or a health club they don’t go to?

Initiate a meeting - review the overall picture
At the point where it becomes clear that your parent is having trouble, sit down and go over the finances - bills, investments, etc. If there is a financial advisor or other professionals in the picture, go to the next meeting

Automate bill payments
Automate whatever you can to make bill payment easier and make sure fewer things can slip through the cracks. Try to schedule things so that the social security or pension checks arrive, clear, and then the bills are paid. If and when your parents are comfortable, they can give you access so that you can monitor their accounts online and help pay the bills. Some billers will notify you if your parents miss a payment.

Focus on one area at a time 
Take it step by step. Helping your parents financially works best when it evolves, so pick one thing to help with at a time - perhaps they'd like it if you took taxes off their plate.

Getting More Involved

Obtain durable power of attorney 
This gives you the ability to make financial decisions on their behalf if they become unable to do it for themselves. This also solves the problem of having your parents add you to their accounts - that can cause problems with the will (if your name is on the account you inherit what's in it, which might cause problems with siblings) and creditors (if you have debts, they can come after your parent's account if you're a joint owner). If your parent is reluctant and you still believe it necessary, involve a doctor in the conversation.

Review investments
As your parents get older they should have more and more money in safe place. If they haven't been revisiting their mix, they may need your help to do it properly.

Review credit reports
Older people are often easy targets for financial scams. You can sometimes flag it by looking at a free copy of their credit report from Also, look at the history of bill payment and check writing keeping an eye out for large sums of money being paid to organizations or individuals that look curious.

Finally, remember that if you can't help, find someone who can. You can turn to the family accountant or financial adviser, but also look for a Daily Money Manager (DMM) or a billpaying service who can help pay bills, keep records and keep up with the day to day tasks.

Jean Chatzky is the financial editor for TODAY. Follow her on Twitter @JeanChatzky.