No one wants to admit when getting older starts affecting them. It can a sore subject that hurts an individual’s sense of pride and confidence in their ability to care for themselves. Think about how many stories you’ve heard of adult children having to have a talk with their elderly parents about no longer driving because their eyesight has significantly deteriorated or how stubborn a grandparent can be about using their cane or walker even though they are clearly in pain and struggling.
But not all ailments are physical. What about mental atrophy? A recent study shows that 10% of Americans over 65 have dementia and 22% experience mild cognitive impairment. The risk gets worse as you age, research shows, with half of all people in their 80s showing at least some mild cognitive impairment, which likely still allows them to live alone, but can make it difficult to stay on top of all the information required to manage money.
Cognitive decline is a risk we don’t often associate with the money side of retirement but is something everyone ought to consider. Here’s why.
1. Retirement is Already Complex
Navigating the complexities of the stock market and living off your retirement savings, including taxes and sequence of return risk, is already a tenuous balancing act for the majority of DIY investors. Add cognitive decline to keeping up with required minimum distributions (RMDs), balancing a portfolio to avoid overexposure to risk, and remembering important deadlines and you’ve got enough to add stress to even the most experienced investor.
2. Missed Bills can be Disastrous
Today, keeping up with all of your financial obligations, such as monthly bills and donations, may be a nuisance, but add in cognitive issues and it can be a tall order. Miss the wrong bill, such as a Medicare payment, and you could be dealing with a more serious issue like a gap in health insurance coverage.
3. Get Family Involved Early
Everyone seems to have a horror story about extended family or a close friend’s family waiting too long to get important paperwork completed and then their loved one is too far gone to be legally able to sign. The headaches and legal work that situation creates can last months, if not years. So, talk to your loved ones now about the different “what if” scenarios that can arise, including cognitive decline, and get a financial power of attorney lined up who has the legal ability to act on your behalf should you need help even with just making sure your bills are paid and any other money management tasks are completed.
4. Scammers are Targeting You
Your favorite grandson is on the phone and he sounds desperate. He’s in huge trouble and needs you to send $50,000 to him right away. He does sound slightly different, but, hey, who wouldn’t in a time of extreme stress like this? And this is just one way hundreds of thousands of grandparents have been scammed out of money. Having an extra layer of protection, such as a trusted family member as a financial power of attorney, can help safeguard you and your assets from scams and even would-be hackers.
5. Lean on the Experts
Sometimes, you need an unbiased expert in your corner as another layer of protection and help, especially if your family can be a little overwhelming. Plus, there are plenty of great family relationships that money can complicate. A financial advisor can listen to your concerns and wishes and then help you build a plan to protect your assets in case of cognitive decline. They also will help guide you to the right steps and paperwork that needs to be completed for powers of attorney, insurance coverage, and more to make sure you are taken care of and your wishes are met.
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