What to Do When a Parent's Cognitive Decline Impairs Money Management
The warning signs, plus experts' advice on how to step in
In the months leading up to Ken Rupert’s dad’s Alzheimer’s diagnosis at age 71 in 2008, Rupert noticed his father having trouble taking care of normal money matters he easily did for decades. His dad forgot to sign paperwork transferring one brokerage account to another, couldn’t answer simple questions about his finances and had a ransomware scam on his computer.
“It was a pretty much a good sign that it was time to have ‘The Talk’ with my parents,” says Rupert, 55, a Hampstead, Md. financial strategist and author of The Financial Black Belt’s Financial Self Defense Training Guide.
Rupert ultimately told them that it’s an electronic world with people constantly trying to rip them off and that they needed a guardian at the gate.
Bad financial decision making is usually one of the first signs of things to come.
According to a study published in Health Economics in 2019, people in the early stage of Alzheimer’s disease face a heightened risk of damaging financial outcomes — likely due to their compromised judgement, memory lapses and vulnerability to fraud.
Signs of financial cognitive decline include not paying bills on time, not opening mail, excessive shopping, hoarding, taking longer to read and comprehend financial information and falling for financial scams.
Mild Cognitive Impairment and Money Issues
“Mild cognitive impairment — a state where someone has something going on that is a little more than the ‘normal age-related forgetfulness’ most everyone experiences in their seventies or eighties — tends to convert into early dementia within about three years,” says Stephen G. Post, director of the Center for Medical Humanities, Compassionate Care and Bioethics at Stony Brook University in Stony Brook, N.Y.
And Post says bad financial decision making is usually one of the first signs of things to come.
That’s why it’s essential for adult children noticing such signs to step in. A 2017 study by Merrill Lynch and the Age Wave research and consulting firm, found that 92% of caregivers handle financial matters for their loved ones.
You can start helping out by talking with your parent about what you’re noticing. That could lead to either assisting your mom or dad with money management or hiring someone to do so.
Not a One-Time Conversation
“Like talking about sex with our children, talking finances with elderly parents is not a one-time conversation,” says Patti B. Black, a Certified Financial Planner in Birmingham, Ala. “Start the conversation early and keep it going.”
Post recommends using a light and respectful tone. That helped Rupert, who says he handled his initial conversation in a way that made his parents feel like they were still in control by offering to watch things for them. He then added his name, with their permission, to their bank and brokerage accounts, credit cards and utility bills.
Once when Rupert was monitoring his parents’ credit card by reading the online statement, he spotted an unusually large online purchase and was able to call up his father and say: “Dad, have you ever browsed on Amazon and wanted to click and buy something?”
Turns out his father had bought expensive sunglasses on Amazon, which was completely out of character; his dad doesn’t spend much time outdoors.
His father thought the glasses only cost a few dollars. Rupert then was able to have a conversation about possibly being overcharged and cancelled the transaction.
Finding, and Managing, a Parent's Financial Documents
If you’re spotting cognitive/financial issues with your parent, it’s a good idea to learn where his or her important financial documents are kept. You may also want to get a durable power of attorney designation drafted, giving you the authority to assume financial decision making if needed.
Many financial experts also recommend getting your name added to your parent’s bank and brokerage accounts and the ability to see those statements, as Rupert did. Doing so will help you keep an eye on things and spot potential problems.
Learn what bills your parents pay, what credit card and brokerage accounts they have and whether there is still a mortgage. You may want to advise them to streamline things, to make life easier, by having just one credit card and one brokerage firm.
Try to set up as many automatic bill payments as possible, especially for utilities. This will ensure the bills get paid and the service doesn’t get shut off.
Black wanted her parents to move closer to her once her dad starting having signs of dementia, so in helping with that, she was able to find important papers, set up automatic bill pay for utilities and get her name on some of their accounts. She started by simply asking what she should do in case of their sickness or death, and that got their attention and cooperation.
Meet the Financial Adviser
If your parents have a financial adviser, Black recommends meeting with that money pro along with them. This way, you’ll discreetly let the adviser know you’ll be looking in on your parents’ financials and, conversely, want to hear if anything seems amiss.
Once you have partial or even total control over your parents’ finances, don’t keep the purse strings so tight that they, like children, have to ask for an allowance.
“To the extent you can, give them some control about things that they can make decisions about,” says Black.
Finally, one thing Black says is helpful if a parent balks at something you want them to do financially is ask: “Would you consider doing this for me because it would give me peace of mind?”
There’s a good chance the answer will be Yes. “Your parent, no matter what age you are, still wants to parent you and make you feel OK,” says Black.