5 Things to Know about Aging & Financial Decline

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 older relative 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.

Unless, that is, you learn to plan ahead to minimize problems, and take effective action once problems occur. Which may not be as hard as you think it will be.

The trouble, of course, is that financial decline is uncomfortable for seniors and for 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 — some day decline. (Recent research suggests that even seniors 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 for seniors and families to be more proactive about this tough topic.

Hence I was thrilled to see the New York Times recently address financial problems in seniors, in an excellent article titled “As Cognition Slips, Financial Skills Are Often the First to Go.”

This article was in the NYT “Money” section, but senior financial problems are definitely a senior health problem.

Furthermore, there are definitely some medical approaches you can take, both to reduce declines in financial ability and to properly evaluate them when they occur.

In this post, I’ll share what I found most useful from the NYT article. And then I’ll add some advice from what we know in geriatrics, so that you’ll better understand how health care can help you prevent and evaluate problems with finances.

6 Warning Signs of Financial Decline

An especially valuable part of the article is that the Times includes a sidebar explaining the key warning signs of financial decline (from the National Endowment for Financial Education). They are:

• Taking longer to complete everyday financial tasks
• Reduced attention to details in financial documents
• Decline in everyday math skills
• Decreased understanding of financial concepts
• Difficulty identifying risks in a financial opportunity

For each of these warning signs, the NYT lists several specific examples (e.g. taking longer than usual to complete a check register.) If you’ve had any concerns about an older person’s financial abilities, I highly recommend you review the list.

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 perpetuated by family members and friends, as well as by scammers and strangers.

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 recently covered in a groundbreaking new 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.

The Times notes that research suggests the ability to manage finances peaks when people are in their mid-50s.

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.

The article cites this 2009 study, which found that declining financial abilities were linked to progressing from mild cognitive impairment to actual dementia.

The article doesn’t otherwise provide much information or advice regarding financial problems and Alzheimer’s, but 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 was not really part of the NYT article, but it’s important and I see families often miss this. 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 “How We Diagnose Dementia” post for more information on common medical problems that can mimic Alzheimer’s.)

That said, it’s obviously quite common for seniors 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 (see the sidebar of the NYT article), one of the next things you should do is look for other signs concerning for Alzheimer’s.

I list these in my post, “8 Behaviors to Track if You Think Your Parent is Getting Alzheimer’s.”

5. Be sure to work on optimizing brain function if you are concerned about financial impairment.

This is another key point that is not mentioned in the NYT article but that you really should know. 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 a senior stop a benzodiazepine such as Ativan.) High doses of anticholinergic medications can also interfere with thinking. For more tips on identifying problem medications, see here.

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 financial decline is so common, it’s a good idea for seniors and families to pursue some financial prevention tactics as well. Here are some useful practical strategies that I learned about in the NYT article:

• Encourage seniors to simplify their financial lives. This should ideally be done around retirement age (e.g. when one is in one’s 60s), before the ability to manage finances declines. Seniors may be more willing to do this if we collectively get better at educating people about how common age-related financial problems really are.

• 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 a senior’s care circle involved sooner rather than waiting for a frank financial disaster to happen.

• Encourage seniors 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, seniors 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’s Been Your Experience with Aging & Finances?

It’s not always easy to help a senior 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 relatives, I’d love to know what you found helpful.

I also have more details on what you can do if you’re concerned about financial exploitation in this article:

Financial Exploitation in Aging: What to Know & What to Do

If you haven’t had to address this issue yet, I’d love to know what you plan on doing next.