Reports of seniors being robbed of small fortunes are all too familiar in Bermuda. Persons who’ve accumulated well deserved wealth over a lifetime of hard work and sacrifice should not have to endure financial hardship in their twilight years because their cognitive skills have declined in a way that is natural.
Studies have shown that age-related financial decline is something that happens to all of us.
According to the National Endowment for Financial Education: “It is inevitable that people will see a decline in their financial skills and decision-making ability as they age. No one is exempt: Everyone experiences normal cognitive aging in their later years, which in turn affects various financial skills. In some cases, normal cognitive aging may be compounded by other disorders, such as Alzheimer’s disease, thereby accelerating cognitive decline and also financial skill decline. Thus, cognitive decline in aging could be as benign and gradual as commonplace forgetfulness, or as severe as full-blown dementia. The key is to be prepared for when — not if — this decline occurs.”
We can help our loved ones protect themselves against financial exploitation by recognising the signs of financial decline, and putting specific measures in place to alleviate the effects of it. The warning signs of financial decline are generally easy to spot. If you have an aging family member, you should look for the following signs:
They take longer to complete everyday financial tasks like paying bills, checking out at a cash register, or filling out important financial papers.
They show reduced attention to key details on financial documents, especially bills that may be overdue, or bank statements.
They exhibit a decline in everyday math skills related to their finances such as difficulty calculating a medical deductible, a return on an investment, or correct change for the bus or a vending machine.
They understand financial concepts less and less, showing difficulty with bank statements, especially interest rates, balances and investment risks.
They cannot comprehend risks in an investment opportunity, choosing to focus on the potential returns instead.
Of course, these warning signs are only significant if they represent a marked change from a person’s prior financial functioning. I, for example, probably show a few of these indicators right now. This is not because I am in age-related financial decline, but because I have always been a mess.
So, for fifty-somethings like me, who want to get their own finances in order, and simultaneously watch out for the elders in our lives, here are some ways to arrest the slow encroachment of age-related financial decline.
The most obvious way to help alleviate financial decline is to address the health concerns that may put elders at risk. Monitor medications, and try to encourage a diet that feeds the mind.
When elders reach retirement age, which is 65 in Bermuda, help them to simplify their finances. Get on top of legal tools like power of attorney and living trusts. Authorise your lawyers and financial planners to contact a trusted relative or friend if they suspect that financial moves are being informed by diminished cognitive abilities. Find a trusted person to monitor the elder’s accounts. This can be a family member, friend or a professional fiduciary.
The ways to assist elders with managing financial decline are timing, trust, and care. Act early, as soon as the signs appear. Choose individuals who have integrity, who you know won’t take advantage of an elder whose money management skills are slipping. And, be gentle. It’s not easy to lose control of your financial life at any age, so show compassion.
