Old age should come with a caution label for many
reasons. Most of us expect to live longer than our
parents or grandparents. And with longer life come
difficulties – and sometimes financial predators.
We all know the major difficulty of making sure that
your income can keep pace with your cost-of-living
increases, especially if your retirement lasts 30-plus
years. We often speak about the need to plan and
have your portfolio designed to account for that length
But another problem is a bit more disturbing: our aging
brain. Studies have shown that as people age they
become more focused on maximizing positive
emotions and social interactions, and more determined
to block out negative experiences. Researchers call
this socio-emotional selectivity.
More simply, this process means some older people
pay more attention to those who make them feel
comfortable and content. This often leads seniors to
overlook signs of danger they might have clearly
noticed when younger. Recent research shows that
highly intelligent retirees (even those with no signs of
dementia) find it harder to distinguish safe investments
from risky ones.
The news constantly discusses thieves close to elderly
victims, whether a family member or a care aide.
Those older than 65 are 34% more likely than 40-somethings to have lost money on a scam, according
to a recent report from the Financial Industry
Regulatory Authority’s Investor Education Foundation.
The Investor Protection Trust (IPT) adds that more
than seven million older Americans – one out of every
five citizens older than 65 – already fell victim to a
financial swindle. Often victims, tricked by an apparent
atmosphere of care, allowed the crooks access to a
checkbook or personal information that made access
to the money easier.
Here are three points to help protect ourselves and our
elderly loved ones:
1. Though thieves always preyed on the elderly, such
crimes now seem on the rise. In response, many
organizations like the IPT established formal programs
and publications to educate both seniors and those
who love them.
The IPT program, for example, “educates healthcare
and legal professionals to recognize when their older
clients may be vulnerable to or victims of financial
abuse, particularly those patients with mild cognitive
impairment, and then to refer these at-risk patients to
state securities regulators, local adult protective
services professionals” and others.
2. If you’re in your 40s and 50s, you may not realize
how quickly your mental processes can decline. You
may need now to get your affairs in order, both in
terms of estate planning as well as financial planning.
Once your plans are in place, discuss with your spouse
and financial advisor a stipulated delay before large
changes to the plan and estate documents, especially
as you age. From here on, always discuss with a
trusted advisor big alterations to your financial plans.
3. If you’re responsible for dealing with your family’s
financial situation, work with a planner who involves
you and your spouse.
Even if you can still handle the situation, both you and
your partner must understand what the plan entails
and the reasoning behind certain decisions. This
becomes especially important if you die first and your
spouse then assumes full control over the plan.
Prepare now so that both you and your spouse
recognize the potential and special financial
vulnerabilities of the aging brain.
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