When it comes to finances, aging has its advantages. Medicare kicks in, social security checks are coming in the mail, perhaps you have a pension that has started to pay out, and hopefully your retirement funds have seen some good earnings over the past few decades.
Of course, like with anything in life, there is always a bit of yang to the yin. While finances are hopefully a bit easier than they were when you were just getting started in life, cognitive abilities can become an issue and being sure you stay sound with the money that you’ve proudly earned is important and spotting financial decline can be tricky.
People aren’t always intricately involved in their aging parents’ financial management — after all, they likely taught their children how to manage money. And if you’re experiencing financial decline yourself, you may brush off a missed utility bill payment or two as a mistake.
But there are warning signs and risks associated with financial decline. There’s also help available. Let’s discuss both.
What to Know About Financial Decline
From early signs of financial decline to common misconceptions, here’s what you need to know about aging and money management.
Be on the Lookout for Warning Signs of Financial Decline
Knowing what to look out for can help you help yourself or a loved one mitigate risks associated with financial decline. Here are key warning signs:
- Needing more time to complete financial tasks that used to feel straightforward, like paying bills, writing a check or filing taxes.
- Forgetting to include important information on financial documents. These details may consist of not entirely writing out a check or forgetting when bills are due.
- Finding everyday math more complicated. Math may not have been your best subject in school, but if you or a loved one are having trouble making change or figuring out how much to tip a hairstylist, financial decline may be an issue.
- Having more difficulty understanding financial concepts, including the minimum balance on a bank statement or an insurance deductible.
- Not realizing the risks in investment opportunities, such as real estate or the stock market.
Financial Decline Makes You More Prone to Falling Victim to Scams
Dementia is a risk factor for financial decline, and bad actors often prey on people with this condition, one study suggests. And anyone experiencing cognitive decline is more susceptible to getting scammed.
Part of it is that people struggling with financial decline often have trouble weighing the cons of investment opportunities. For example, a scammer may call and offer a chance to invest in a new company or timeshare. The catch? They need a one-time fee upfront. People experiencing cognitive and financial decline are less likely to question the fee or whether the company even exists (in investment schemes, the business is often fake). As a result, the victim forks over the money and loses it without a return on investment.
Family and Friends May Exploit Someone Experiencing Financial Decline
Strangers aren’t the only ones who prey on people with financial decline. Unfortunately, sometimes the biggest cons are people someone knows and loves. In 2015, the New York Times ran a feature on cognitive decline. The piece included a story about an 84-year-old man whose wife drained his bank accounts, despite family members’ attempts to intervene.
You Don’t Need to Have Alzheimer’s to Have Difficulty Managing Money
People with Alzheimer’s and other neurodegenerative diseases are highly prone to financial decline, but they aren’t the only risk factors. Experts say our brains age even without disease, much like we don’t have to have arthritis to develop joint pains. You should still note signs of financial decline as you and your loved ones age, even in the absence of a neurodegenerative disorder.
Financial Skills Are Often Some of the First to Go During Cognitive Aging
Financial decline is less obvious than physical decline. However, studies indicate money-management skills are one of the first things to go for people with mild cognitive impairment. It’s important to remember that this is common as we age, and there’s no shame in reaching out for help or trying to assist a loved one.
What to Do About Financial Decline
There is no cure for Alzheimer’s, and we can’t always reverse cognitive impairment. But there are ways to stay sharp and protect your money as you age, even if you or a loved one are experiencing financial decline.
Optimize Brain Function
Medications can help alleviate various physical ailments and even emotional issues. However, some, like Ativan which is used in patients with anxiety and depression, interfere with cognitive thinking. You might speak with a geriatrician or physician who adheres to aging-well healthcare standards, including finding medications that align and don’t interfere with a patient’s goals. It’s also important to ensure you’re getting enough exercise and sleep.
Protect Yourself or a Loved One
If you or a loved one is struggling with financial decline, you can put safeguards in place to help ensure your bills get paid and you stay protected from a scammer.
- Make things simple. Experts encourage seniors to de-clutter their financial lives. For example, you can streamline your mutual funds by having just a few at a reputable institution.
- Use legal tools. Living wills and financial powers of attorney protect your finances and ensure responsibilities, such as the ability to make financial decisions on your behalf, are delegated to specific people you deem trustworthy.
- Stay educated on scam tactics. The IRS and government agencies will not ask you for personal information like your social security number. And if an investment opportunity sounds too good to be true, it probably is. Consider researching opportunities and running them by a family member before taking someone up on them.