Understanding a parent’s finances is an important part of caregiving. A senior’s financial situation affects their ability to live comfortably and receive care, and it can also impact family caregivers if there is a financial shortfall. Taking the time to understand the full picture helps families plan ahead, reduce stress, and make informed decisions about future care needs.
Why understanding a parent’s finances matters
As a family caregiver, one of the most important questions to ask is:
How much money does my parent need to do what they want to do?
If the answer reveals a gap, the next step is understanding whether there are other ways to cover those costs. Financial needs can change quickly due to health issues, housing transitions, or increased care requirements.
It may be helpful to speak with professionals such as:
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A financial advisor
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An elder law attorney
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A geriatric care manager
These professionals can help estimate current and future expenses, explain available benefits, and identify options that may improve financial stability.
Reviewing coverage, policies, and important documents
Professionals can also help determine whether your parent’s existing financial arrangements are still appropriate. Important questions to consider include:
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Does your parent still need all of their insurance policies or financial products?
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Are there important documents missing, such as a will, power of attorney, or healthcare directive?
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Are there protections or benefits your parent should have but does not?
Regularly reviewing these items helps ensure finances align with your parent’s current needs and goals.
Understanding the big financial picture
To make informed decisions, caregivers need a clear understanding of the complete financial picture. This may include:
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Social Security, pensions and employment benefits
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Savings and investment accounts
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Monthly living expenses
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Outstanding debts or liabilities
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Housing costs, including mortgages
Some families find it helpful to have banks, mortgage companies, or other financial institutions send copies of statements to a trusted family member.
Housing and long-term care considerations
Consider whether your parent can and should remain in their current home. If aging in place is the goal, plan for potential home modification costs, such as:
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Ramps or stair lifts
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Grab bars and safety rails
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Additional lighting
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Widened doorways
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Adding a main floor bathroom
If a move to independent living, assisted living, or another type of long-term care becomes necessary, it is important to understand where the money will come from.
Making financial adjustments
In some cases, seniors may need to adjust how assets are used to cover expenses. For example, homeowners who are short on cash may consider a reverse mortgage. This option allows them to access home equity through:
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A line of credit
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Monthly payments
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A one-time lump sum
The loan is typically repaid when the home is sold or after the homeowner passes away. Reverse mortgages are not right for everyone, so consulting a qualified financial advisor is strongly recommended before making a decision.
Annuities and insurance options
Some seniors have annuities, which can provide a steady stream of income. There are several types, including:
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Fixed annuities
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Indexed annuities
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Variable annuities
Annuities are usually purchased with a lump sum and may provide monthly income for life. While they can be helpful in certain situations, annuities are not suitable for everyone. A financial advisor can help determine whether this option fits your parent’s health, financial goals, and overall situation.
Other investment options may also be more appropriate depending on individual needs.
Help with healthcare costs: Medicare and Medicaid
Healthcare is often one of the largest expenses for older adults, making it essential to understand available coverage options.
Medicare
Medicare helps cover many healthcare costs but does not pay for everything. The Medicare Rights Center offers a national helpline to help families:
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Understand Medicare benefits
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Choose the right coverage including Medicare supplement plans
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Find programs that assist seniors with low or fixed incomes
Medicaid
For seniors with limited financial resources, Medicaid may help cover healthcare expenses, including premiums and long-term care, typically in a nursing home setting.
Additional resources may include:
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Prescription assistance programs
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Medication samples from doctors’ offices
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State pharmaceutical assistance programs
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Nonprofit services that help with medications, housing, utilities, and other essential needs
Evaluating financial fears
Many older adults worry about running out of money, even when they are financially comfortable. These fears can cause them to delay necessary care or support. When caregivers understand the full financial picture, it becomes easier to separate rational concerns from unnecessary anxiety.
Clear information allows families to make decisions based on facts rather than fear and to better support a loved one’s long-term well-being.
Getting a feel for a parent’s finances is a foundational step in caregiving. By gathering information, seeking professional guidance, and planning ahead, families can reduce uncertainty, protect financial stability, and help ensure seniors receive the care and quality of life they deserve.
