You probably already know that many older adults develop problems managing finances as they age.
Now how would you answer the questions below:
- Has your aging parent planned for a decline in financial abilities?
- Are you prepared to detect signs of a financial decline?
- Do you know what to do if you do notice problems with finances?
Many people, even the ones who are caring and well-informed, will often answer “no” to these questions.
But this post will equip you to start answering yes. And I want you to be able to answer yes, because declines in the ability to manage finances are very common among older adults, and often causes serious health and life problems.
The trouble, of course, is that financial decline is uncomfortable for older adults and their families to think about. Managing money, after all, is one of the ways we maintain autonomy and control over our lives.
So nobody likes to confront the fact that our ability to manage money will — in all likelihood — someday decline. (Research suggests that even aging adults who don’t develop dementia often experience declines in financial ability.) And families are understandably squeamish about monitoring an older relative’s financial abilities.
Fortunately, a little education and guidance can make it much easier to be more proactive about this tough topic.
In this post, I’ll cover
- Five warning signs of financial decline
- Five important things to know about aging & finances
- How to protect aging parents from financial problems
- What to do if your aging parent is having trouble managing their finances
I’ll also cover some ways that geriatricians and other healthcare providers can help, both to reduce declines in financial ability and to properly evaluate them when they occur.
5 Warning Signs of Financial Decline
Research funded by the National Endowment for Financial Education (NEFE) identified the following five key warning signs of financial decline in aging adults:
- Taking longer to complete everyday financial tasks, such as paying bills or balancing a checkbook
- Showing reduced attention to details in financial documents, such as noticing that a bill is overdue
- Decline in everyday arithmetic skills related to managing finances, such as calculating the correct change due as part of a cash transaction
- Decreased understanding of financial concepts, such as understanding a medical deductible
- Difficulty identifying risks in a financial opportunity, such as the key risk in an investment scenario
To learn more about these five warning signs, and for a summary of this important research, see the executive summary of the NEFE report here: Early Warning Signs: Impact of Aging on Financial Decision-Making.
I also recommend this NY Times story about this research, which includes useful examples and real-life stories:”As Cognition Slips, Financial Skills Are Often the First to Go.”
Now, here are five important things you should know about aging and financial decline.
5 Things To Know About Aging & Financial Decline
1. Declines in financial ability can easily be exploited by family, friends, and strangers.
This point is especially vividly brought to life in the Times story, which starts off by relaying the true story of a man who got remarried late in life to a younger woman. This new wife proceeded to financially deplete her husband’s finances, despite the man’s family attempting to intervene. In other words, declines in financial ability make older adults very vulnerable to financial abuse, which can be perpetrated by family members and friends, as well as by scammers and strangers.
If you’ve been concerned that someone may be exploiting your older loved one, I have more on what to do here: Financial Exploitation in Aging: What to Know & What to Do.
2. Even people who don’t have Alzheimer’s or a neurodegenerative disease often experience increasing difficulties managing their finances as they age.
This is consistent with our improved understanding of “cognitive aging,” which the Institute of Medicine covered in a groundbreaking 2015 report. Basically, even in the absence of disease, the brain’s abilities change as people age. This process proceeds a little differently for every person but it’s analogous to the aging that we see in other parts of the body: things change with age and wear. Not all changes are negative, but the changes can eventually make managing finances harder.
Research suggests that older adults who have to take on new financial responsibilities in later life (e.g. due to bereavement or a change in household situation) are especially likely to have trouble.
3. The ability to handle financial matters is often one of the first skills to decline in Alzheimer’s and other common causes of dementia.
Multiple studies, such as this 2009 study, have found that declining financial abilities are common in mild cognitive impairment, and are linked to progressing to actual dementia.
I can confirm that in my own experience, the ability to manage finances is almost always affected in people with early dementia, because this is a skill that requires a lot of mental coordination plus correct assessment of financial risks. (And people with dementia usually get worse at assessing risks.)
4. If you notice signs of financial impairment, you should start looking for other signs concerning for Alzheimer’s or another dementia.
This is an important issue that I see families sometimes miss. Now, it’s certainly possible to develop some difficulties with finances and not have it be Alzheimer’s. It could be mild cognitive impairment, it could be depression, it could be another medical problem, or it could even be cognitive aging. (See my article on Cognitive Impairment in Aging: 10 Common Causes & 10 Things the Doctor Should Check for more information on common medical problems that can mimic Alzheimer’s.)
That said, it’s obviously quite common for aging adults to develop Alzheimer’s or another dementia, especially if they are older or if it runs in the family. And we know that Alzheimer’s is often diagnosed much later than it should be, in part because families aren’t sure what to do and primary care doctors usually aren’t good at picking up on signs of early dementia.
So if you notice signs of financial impairment or any of the five warning signs listed above, one of the next things you should do is look for other signs concerning for Alzheimer’s.
I list several of these in my post, “8 Behaviors to Track if You Think Your Parent is Getting Alzheimer’s.”
5. Review medications and take other steps to optimize brain function if you are concerned about financial impairment.
You can pursue this whether or not someone has a dementia diagnosis, or is getting evaluated for possible Alzheimer’s.
The main way to optimize a person’s brain function is to identify and reduce medications that interfere with thinking skills. You should also help the older person get assessed for medical problems that interfere with thinking, such as depression, thyroid problems, vitamin B12 deficiency, and so forth.
In my experience, it’s fairly common for older adults to be using sedatives such as benzodiazepines or zolpidem. (Here’s a post on how you can help an older adult stop a benzodiazepine such as Ativan.) High doses of anticholinergic medications can also interfere with thinking. For more on medications that affect memory and thinking, see 4 Types of Medication to Avoid if You’re Worried About Memory .
Other things that help optimize brain function include getting enough sleep, regular exercise, and avoiding excess stress.
How to Protect an Older Adult From Future Financial Decline
An ounce of prevention is worth a pound of cure, as the saying goes.
Since I’m a doctor, I’m most familiar with health approaches that can delay or prevent future financial decline. Briefly, those are to avoid risky medications and otherwise reduce the risk of Alzheimer’s and cognitive impairment.
But since declining financial ability is so common, it’s a good idea for older adults and families to pursue some preventive financial safety tactics as well. Here are some useful practical strategies to consider:
- Encourage aging adults to simplify their financial lives. This should ideally be done around retirement age (e.g. when one is in one’s 60s), before the risk of having trouble with finances goes up.
- Address financial planning early on through legal tools such as financial power of attorney and living trusts.
- Preauthorize lawyers and financial planners to contact a trusted relative or friend if the professional suspects diminished financial abilities. This can make it easier for professionals to get an older person’s care circle involved sooner rather than waiting for a frank financial disaster to happen.
- Encourage older adults to allow a trusted person to monitor their accounts. This could be family, or could be done by a professional such as a fiduciary. Again, I would imagine this is best discussed and arranged early. (In my experience, older adults often become defensive and even a bit paranoid once they start slipping cognitively, so that is usually a hard time to suggest monitoring financial accounts.)
What to do if your aging parent is having trouble managing their finances
If you’ve gotten worried about your parent’s ability to manage finances, or noticed any of the warning signs listed above, then you may be wondering what to do next.
Especially if your parent has been experiencing memory loss or other signs of changes in their thinking abilities, it’s common for them to become defensive when you bring up your concerns. They may even deny the problems you are noticing.
This makes helping out a bit tricky. But it’s not impossible, if you use patience and a better approach.
Generally, what I recommend people do is the technique I describe in my book, When Your Aging Parent Needs Help: take stock, take aim, and only after that, take action.
Taking stock means you start off by observing and listening, before trying to fix things or get your parent to listen to you.
Specifically, if you’re concerned about finances, you’ll want to observe your parent to document the specific financial safety issues that are happening. You’ll also want to try to gently get their perspective on what’s been happening.
Once you have this information, you’ll want to look into ways to get your parent more support, and probably also more supervision, with their finances. What’s appropriate will depend on the specifics of your parent’s financial difficulties, and also on what else seems to be going on with their memory and thinking.
Doing this kind of research and brainstorming means you figure out what to aim for, before you start trying to convince your parent or otherwise “fix” things.
After that, you can make a plan to take action.
I’ll be honest: this is all easier said than done. It IS doable, but it almost always takes patience, time, and some research and thinking to figure out each next step.
The thing is, your aging parent DOES need you, if they are slipping financially. You usually won’t be able to fix things are quickly as you’d like.
But if you persist and are patient, you’ll probably be able to help your parent be financially safer. You’ll also be building up valuable skills in supporting a declining aging parent, along the way.
(And if you need some extra help and guidance in working through this: my Helping Older Parents with Memory Loss program covers stepping in to help with finances, and you’ll be able to ask me your questions as you work through this. Learn more here.)
What’s Been Your Experience with Aging Parents & Finances?
It’s usually not easy to help an aging parent plan ahead for future financial problems. And it can certainly be tough to step in once you notice problems.
If this issue has come up for you and your parents, I’d love to know what you found helpful.
This article was first published in 2015, and was last updated by Dr. K in March 2022.
Henrietta Carter says
My family is very fortunate that my relative’s father attended law school and was very active in seeking out and setting up a will and revocable trust for her before he passed away, still mentally sharp, at the age of 100.
My relative, for whom I am now becoming caregiver and host, now diagnosed with mild cognitive impairment and short term memory loss caused by traumatic brain injury, has a more complicated history than most, having been born one month prematurely, and lived with dyslexia and difficulty with reading comprehension all of her life.
At this point my most difficult task is being patient and forgiving of her repeated restatements of the same topics and questioning of things around us and her inability to understand current events or to follow a plot in a movie or TV show. She enjoys humor that does not require remembering what happened earlier in a show, but is composed of quick incidents and one-liners like Family Feud and Golden Girls.
We are both blessed in that we both enjoy listening to music of all kinds. She accompanies me to several music classes and rehearsals every week, and occasional performances. Two of my classes are led by a music therapist who recommended this to me. It was a great relief that she could do this, because I NEED my musical activities to stay alive and well, and for the social connections they provide. I had hoped I could involve her in the singing, but she prefers to just listen.
There exists a music education program by Carl Orff to train young children to make music by listening and playing on xylophone like instruments without having to read music notation. I wish there was such a program for seniors. I play hand chimes and handbells in two of my groups, but they depend on reading music notation. I have not yet found a casual sing-along, daytime karaoke type group in which we could participate with rote singing and without being concert oriented.
Nicole Didyk, MD says
Thanks so much for sharing your amazing journey Henrietta! I fully agree that your musical activities are vital to your caregiving role.
The connection between music and cognition is one that has been studied in detail and results seem very positive. Here’s just one article I found: https://pubmed.ncbi.nlm.nih.gov/26896913/. Many Alzheimer’s societies have music programs as well, like “Singing for the Brain” in the UK, and “The Music Project” in Ontario, Canada.
Maybe some of those links will lead you to an appropriate program in your region. In the meantime, it sounds like you’re a marvelous caregiver and musician and keep up the good work!
Alison Griffin says
My father has always been very with it financially he has a will I am as executor and I have two sisters. He is 80 and all of a sudden there’s this woman in his life that he’s met who is moving into his house and talking him into updating all these things and we’re worried about his financial sense concerning her and his decisions .. we have thought about before she came into the picture trying to get him into a nursing home or Assisted Living and I want to know what my first step would be into protecting us against this woman may be having him sign things over to her?
Leslie Kernisan, MD MPH says
This does sound worrisome, so it’s good that you are looking into what you can do.
I go into more detail about what you can do in this article: Financial Exploitation in Aging: What to Know & What to Do. (See the section “What to do, if you suspect the financial exploitation of an older adult”)
In general, I would recommend careful and thoughtful communication with your father, both to learn more about how he sees the situation and to maintain/strengthen your relationship and his confidence in you.
What you can actually do will depend on many things, including whether you think the woman has committed any actual crimes and whether you think your father is cognitively impaired.
Do take a look at the related article, and good luck!