Aging brings many changes to a person’s life. While retiring tends to result in more relaxation and less stress, it can also include mental changes that may affect a senior’s ability to solve financial problems. But, by learning to plan ahead and mitigate serious problems before they occur, you could equip yourself and your family with tools to reduce financial confusion and the stress that accompanies it. How do you recognize the warning signs of cognitive decline? Do you know what steps to take if you begin to notice symptoms of financial decline in yourself or a loved one? Read on to learn the answers to these questions and many more.
What is Financial Decline?
Simply put, financial decline occurs when someone begins to experience age-related mental issues that may interfere with their abilities to manage their personal finances. In other words, such problems as dementia, Alzheimer’s, and general mental decline that comes with aging can interfere with a person’s ability to manage his or her finances.
When understanding financial decline, it is essential to realize that it can happen to anyone. In fact, according to researchers at the Center for Retirement Research at Boston College, seniors often experience decline in financial ability even when they don’t develop dementia or other associated cognitive impairments. Basically, financial decline isn’t the kind of issue to brush off even if you or your loved ones are active and otherwise healthy. Keep an eye out for the warning signs of cognitive decline as discussed below.
Recognize the Warning Signs
Every individual is unique and experiences mental changes in different ways. However, there are several common warning signs of cognitive decline that may result in worse management of personal finances. Consider the following common problems as potential indicators of more troublesome underlying issues:
- Taking a long time to complete everyday financial tasks. Having trouble with basic actions like preparing bills to mail, filling out a check register, and filing income taxes may indicate cognitive decline.
- Reduced attention and focus. Easily getting sidetracked, losing focus when doing simple tasks, and becoming more forgetful in general may be especially concerning when combined with some of the other symptoms described here.
- Decline in every day mathematical skills. Ask yourself or a relative to count backwards from 100 and subtract by seven each time (100, 93, 86, 79, etc.). If confusion arises from basic math problems, a greater issue may be occurring.
- Decreased comprehension of financial concepts. Failure to understand concepts like interest rates or deductions could indicate cognitive decline.
- Difficulty judging financial risks. Making uncharacteristically risky investments, becoming addicted to gambling, and otherwise ignoring risk could be a warning sign for financial decline and other problems.
- Falling for scams and financial fraud. Scammers often target seniors because they tend to fall prey to fraud as a result of cognitive decline. If you or a loved one gets scammed, this may be indicative of a larger concern.
Prepare for the Future
Prevention is the best medicine, right? In general, avoiding risky medications with cognitive side effects, maintaining a nutritious diet, staying on a consistent exercise regimen, and living an active lifestyle will lead many seniors to better overall health and mental wellbeing. Of course, speaking with a medical professional is always your best bet. There are also plenty of steps that you can take to protect yourself and your loved ones from the damaging repercussions of financial decline.
- Simplify financial portfolios. As you approach retirement age, think about reducing the complexities of your or your loved one’s existing financial situation by consolidating various accounts and investments into simpler forms.
- Use the law to your advantage. Set up living trusts, financial power of attorney, and other legal tools that will make it easier for family members to step in if you start facing difficulties.
- Authorize lawyers and financial planners to intervene. If a professional suspects diminished financial abilities, they will be able to contact trusted relatives or friends before a disaster happens.
- Allow a trusted person to monitor your account. Often, family or a professional fiduciary can be arranged to help manage your finances. To prevent arguments and confusion, this is best done before cognitive decline begins.