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Financial Disconnect among Seniors is Harsh Reality
Thursday, July 18, 2013 7:25 AM

A recent survey by the National Endowment for Financial Education among 2,059 U.S. adults, finds that seven in 10 say major barriers are preventing their families from openly communicating about who will make financial decisions on behalf of an aging family member if they become unable to.

“Americans are living longer and they have concerns about becoming a burden to their loved ones. But with aging comes a high probability that mental decline can occur and without a financial plan, the burden looms,” says Ted Beck, president and CEO of NEFE. “The negative consequences of families delaying or avoiding a conversation about the financial impacts of cognitive decline are too high to ignore.”

The warning signs of diminished capacity in financial decision making can take on many forms. The NEFE survey finds that among those who have themselves or those who have family members that have experienced cognitive decline 47 percent have had trouble with bills, paying them late or not at all; 36 percent have had difficulty calculating simple math problems; 35 percent have made irrational purchases; and 21 percent have depleted their savings accounts.

While 86 percent of those surveyed indicate they would trust a family member to make financial decisions if they are unable to, the majority of people say there are family-dynamics that are getting in the way of making this happen.

Families can begin the process of creating a financial plan by having an aging parent select who they prefer to take leadership of their finances should their capacity to make financial decisions diminish. Tips for family members facing cognitive decline issues include

  • Gather information. Take the time to learn as much as you can about the illness or medical condition that is impacting an aging family member’s financial capacity. This also is a good time to do a financial inventory. Consolidate accounts into as few as possible so it is easier to track and manage transactions. Also make sure that a will and financial power of attorney are current.
  • Be compassionate. Approach the family member experiencing cognitive decline in a positive and supportive way to let them know that you are there to offer your help and support. Be sensitive to their point-of-view.
  • Implement the plan. Once the time has come for a plan to be implemented, the family member in charge of overseeing the aging parent’s finances should create a calendar of bills to be paid each month, checking in to ensure that bills are being paid on time and for the correct amounts. Accounts of aging parents also should be monitored to check for any unusual activity and annual credit checks should be done to safeguard against identity theft.
  • Divide caregiving duties. Have an honest and open discussion with siblings about a parent’s cognitive decline, what needs to be done, and what caregiving roles each family member wishes to play.