The other facet of aging is declining mental ability. This needs to be better understood, particularly as it applies to a person’s ability to manage their financial affairs.
We all have to make financial decisions. Now more than ever, everyone needs to protect themselves against financial fraud.
Theft through fraud is big business, especially when it comes to seniors. Anyone with declining financial abilities is vulnerable and at risk.
In 2016 Texas Tech University and the University of Michigan conducted research into the declining financial abilities of seniors.
The first noteworthy finding is how early financial abilities can start to decline. Starting at age 60 seniors’ financial literacy begins to decline and continues to do so.
“The ability to answer basic financial questions decreases as respondents age, and this rate of decline almost exactly matches the gradual erosion of memory and problem-solving abilities later in life.”
People are living longer than in past generations. Therefore, for some, a large part of their lives will be lived during a time of declining financial skills.
Plus, seniors are more likely to have substantial assets. A lifetime of saving, investing, and real estate appreciation has resulted in many older Canadians with significant wealth.
The second striking thing learned from the survey was the respondents were still confident in their financial abilities. Due to the gradual nature of the problem, they didn’t notice the decline. This compounds the problem.
It is human nature to be on the defensive when at risk. The key to shielding yourself from risk is understanding that you are at risk.
If a senior continues to be confident with their financial abilities they are less likely to be on guard against financial risks.
Seniors are encouraged to be realistic about their own financial abilities.
I encourage seniors and their families to discuss financial governance. Identify trusted individuals to be involved with financial aspects of their lives and what the checks and balances are.
Discussing impending mental decline is a difficult conversation. Regardless, it is an important conversation.