By Joel Dresang

I was hiking Wisconsin’s Ice Age Trail on a recent overcast afternoon. At one point, where a rural highway intersected the path, I read on a post that the crossroad was called Bilge Road.

We were at a higher elevation with no water in sight. The nautical name Bilge didn’t make sense to me. So, I checked the post on the other side of the crossing, and I read Ridge Road.

My wife charitably suggested that maybe the paint had worn off on the first sign. But I have noticed that occasionally I scramble letters when I’m reading, imagining words that strike me as incorrect or out of context. I saw an online item recently that I read as, “Do you want different costumes for your business?” The word was outcomes. But, hey, it was Halloween!

I’m not worried about myself (yet), but my mix-up on the trail reminded me of recent research that suggests baby boomers should be more concerned than previous generations about cognitive impairment.

A study published online in the Journals of Gerontology: Social Sciences found “clear and alarming” evidence of declines in cognitive functioning among baby boomers compared to earlier generations. Findings could mean a reversal in recent trends of less dementia among older Americans.

“With the aging population in the United States, we were already likely to see an increase in the number of people with dementia,” lead author Hui Zheng, a sociologist at  Ohio State University, said in a statement. “But this study suggests it may be worse than we expected for decades to come.”

The financial fallout from a drop-off in cognitive skills is that it tends to coincide with the time in life when wealth is near its peak. In other words, just when they’re most comfortable financially, many people are most vulnerable to mistakes with their money.

Warning signs of diminished financial capacity

  • Trouble paying bills
  • Difficulty doing simple math
  • Depleted savings accounts
  • Falling victim to scams
  • Disorganized checkbook
  • Unexplained purchases
  • Serious credit difficulties
  • Inappropriate investments

National Endowment for Financial Education; University of Alabama at Birmingham

Nobody understands that connection better than scam artists. And fraudsters have become particularly active during the COVID-19 pandemic, as the Financial Industry Regulatory Authority and the North American Securities Administrators Association noted in an October joint alert for investors.

“COVID-19 makes this a perilous time for people struggling with cognitive decline,” Kim Blanton blogs for the Center for Retirement Research at Boston College.

In its annual report on protecting older consumers, the Federal Trade Commission told Congress on Oct. 18 that Americans older than 60 were more targeted for fraud, disproportionately affected and least likely to report rip-offs.

Also, new research published by the FINRA Investor Education Foundation confirms that financial decision making worsens as cognitive functions weaken, especially among those who weren’t as money savvy to begin with.

Researchers have estimated that the peak decade for financial literacy is in our 50s and that about half of everyone in their 80s is diagnosed with a cognitive impairment or dementia.

Other Money Talk articles from Joel Dresang

Acknowledging that we are inclined to decline as we grow older is an important part of protecting our investments. We should pay attention to inevitable slumps in our cognitive functions and how they can harm the wealth we have spent a lifetime accumulating.

One easy safeguard is to provide investment advisors with trusted, independent contacts they can reach out to if they suspect uncharacteristic behavior or foul play.

Other steps entail getting your ducks in a row financially:

  • Arrange. Organize information on all your financial assets. Include contact information for each account. Review designations for beneficiaries.
  • Simplify. Don’t make your financial life more complicated than it needs to be. Consolidate accounts when appropriate. Automate bill payments—just make sure to regularly monitor them for irregularities. That includes freezing your credit. If you don’t plan to open new lines of credit, alert the three credit bureaus that any requests in your name are probably fraudulent. Read more about it here.
  • Communicate. Determine how you want your investments and estate managed. Formalize it in a will, but also make your wishes known to your offspring and advisors so they can support you. Share information and plans with your spouse and children. Bring them with you when you meet with your investment advisor.
  • Deputize. Not only are more heads better than one, but trying to do everything yourself can cause stress. Allowing view-only access to financial accounts will let others help you monitor monthly statements for suspicious activity. Consider having more than one individual watching out for you. Provide for your eventual decline by setting up powers of attorney for your assets and health care.

Like a lot that happens in our lives—including getting older itself—cognitive impairment is a development over which we have little control, ultimately. With vigilance, some preparation and the right assistance, we can minimize how much impairments control us.

It’s easy to put these things off. At least start by filing a trusted contact form and getting it to your investment advisor.

Joel Dresang is vice president-communications at Landaas & Company.

Learn more
Trusted contacts for your sake, from Landaas & Company
Advancing age, declining capacity, by Joel Dresang
Keeping family in the financial loop, a Money Talk Video with Isabelle Wiemero
5 tips for naming beneficiaries, a Money Talk Video with Mike Hoelzl
Prepare for Financial Changes as Family Members Age, from the National Endowment for Financial Education
Avoiding and Reporting Scams, from the Federal Trade Commission
Coronavirus scams spreading as fraudsters follow the headlines, from AARP
Fraud and Your Investment Accounts During COVID-19 Pandemic, from the Financial Industry Regulatory Authority
(initially posted October 29, 2020)

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