Our financial decision-making abilities peak in our 50s and can decline pretty rapidly after age 70, researchers tell us. That’s how otherwise smart older people fall for sweepstakes frauds, Nigerian investment schemes and the grandparent scam, where con artists pretend to be grandchildren in a financial jam.
But few people want to hear that they’re not as sharp as they used to be. Many won’t recognize the rising risk of losing hard-earned life savings as they age.
Adult children who want to protect their parents from fraud and bad financial decisions have to tread carefully, says Jessie Doll, wealth management adviser with TIAA in Fairfax, Virginia. Money may be a difficult subject, and parents may resent the interference or fear losing their independence.
It may help to frame the issue as one all of us will face if we live long enough. Talking about your own efforts to “future-proof” your finances can start the discussion of how they can defend their money against bad decisions and bad guys.
Together, parents and children can:
Draft powers of attorney. Two documents everyone needs, regardless of age: a power of attorney for health care decisions and a power of attorney for financial decisions. This paperwork names the people we want to speak for us in case we become incapacitated.
Adult children can:
Stay in touch. Isolation is the fraudster’s best friend. Weekly calls to catch up and regular visits can help loved ones spot red flags, like a pile of sweepstakes offers or the investment salesman who’s getting too friendly.
Keep up to date on the latest scams. Some places to learn about their ever-evolving schemes include StopFraud.gov, AARP’s Fraud Watch Network and the IRS, which offers consumers alerts and an annual list of the “Dirty Dozen” top tax-related scams. Discussing news reports about frauds, such as telephone impostors pretending to be IRS agents or Microsoft tech support, can help you keep relatives informed.
Lastly, parents can:
Get more eyes on your money. Financial institutions offer text or email alerts to notify you of unusual activity, and so do sites that provide regular looks at free credit reports. Once you’re older than 65, consider setting these up so that the person you want to make financial decisions for you also gets them.
Give your doctors and any financial professionals, such as your adviser or accountant, permission to contact your wingman if they suspect you’re suffering serious cognitive decline.
Plan with your family about what to do if you show signs of diminished capacity but you don’t know you are impaired.
To help protect assets as people age, consolidate and simplify. One bank. One brokerage firm. Two credit cards, one for daily purchases and one for automatic bill payment. That’s the prescription for simplified, consolidated finances that will be easier to track as we age. Having fewer accounts helps the fraud-sniffing software that banks and brokerages use to detect suspicious transactions.