Cognitive decline and financial issues

[Malcolm2]

This has been mentioned in bits and pieces elsewhere, or if I have missed it regrets.

It would be informative to see some input here from those that are in their late 70's-80's as to what they have done to guard against cognitive decline as it relates to financial matters. What do you do when you are not sure you can manage your portfolio with confidence, or don't want to? Please no suggestion of annuities, as they are usually a profit center for others. How to protect against making a large financial blunder when you are old and a easier target to con artists.

I think this will be an increasing problem and many retire with significant 401k/IRA/other self directed accounts.

M

[clifp]

I don't know if we have many late 70s or 80s posters. I will say it is one of the more troublesome issues that bothers me. How do I know when I am getting senile?

[Livin Large in MT]

I think this is a great discussion item. I find myself thinking along the same lines. The reality is, you either find a trusted advisor early in the game...or you bring along a trusted family member to help. Both are fraught with risk...on both sides since an aging person with a portfolio can become paranoid and accusatory and it is hard for an outsider to know who to believe. The best bet is to remain alert and mentally capable but also scale back the portfolio so it is easy to manage. I love all my dividend paying stocks and weird little REITS that give my portfolio a bit of a boost. But as I age, that stuff will have to go into an easier to manage mutual fund or ETF. Plus I have to remember that my adorable spouse also has zero interest in any of this and he is likely to outlive me...so again I have to make it easy for him too. Still, I realize how lucky any of us are to have this "problem"...yes?

[braumeister]

When I feel myself starting to slip, I hope I will be able to arrange for residence in a continuing care facility for my remaining days, with any remaining residue accounted for in my will.

Whether I'll be able to recognize that I'm beginning to slip is the question. Some of my friends might say the decline began long ago.

[Amethyst]

"Whether I'll be able to recognize that I'm beginning to slip is the question."

All jokes aside, I think this is the main issue - people not wanting to acknowledge their decline until it is too late. For example, my parents probably should have sold their home and moved to a condo by the time my father was in his 80s, but he couldn't stand the idea of sharing walls, and Mom (who was a lot younger) didn't like the notion of "only being around old people." (As if she was around anything else! Dad pretty much was her life). So they didn't do it, and Mom was left with a house she was no longer able to care for.

Amethyst

Quote:

Originally Posted by braumeister When I feel myself starting to slip, I hope I will be able to arrange for residence in a continuing care facility for my remaining days, with any remaining residue accounted for in my will. Whether I'll be able to recognize that I'm beginning to slip is the question. Some of my friends might say the decline began long ago.

[Accidental Retiree]

I can say from very close personal experience that there will be plenty of people who may notice your decline, if/when it comes, and may tell you about it repeatedly, but you may not want to hear or believe what they are telling you.

And so you may well just go on your merry way until some catastrophe occurs.

How do you decide whom to trust? It seems to me that when people around me have gotten older, even those who they trusted are no longer trusted when the message they are bringing says that cognitive decline has arrived.

For that reason, I keep trying to simplify our portfolio and financial business, and our trustee/executor will be well aware of how to handle our finances if we need her to serve as our financial POA.

[Semiretired2008]

My Mother and two Uncles of mine lost / gave away their nest eggs due to not recognizing senility and or not recognizing what the market could do to them - My Mother and one Uncle in 2003 and the other in 2009. I have a plan to switch to simpler investment style before it happens to me. Since my wife is younger and I expect her to out live me - I need to keep it as simple as possible - my plan is for some kind of an account with automated withdrawals / deposits into a spending account...

[MichaelB]

Excellent topic, very difficult to discuss. As Amethyst pointed out in another thread,

Quote:

Suspect the reason it isn't much discussed is that no one has a clue what to do about it.

So true. Nords' thread is the best reading on the forum for this http://www.early-retirement.org/foru...ons-55688.html

Having a spouse or family member to help makes such an impact it becomes a complete different discussion. One of the most critical contributions a family member can make is to let you know you have dementia. It is gradual, not at all obvious, and very difficult for the affected individual to accept. By the time everyone is aware, the cognitive loss can be too great to even make reasoned, intelligent decisions.

[JoeWras]

Great subject! But I don't have the answers. It is a concern of mine judging from family history.

Let me tell you about my mom and dad. Mom has since passed, so it is mostly dad. This gives you an idea of how it can slip. He never realized it was slipping until we finally asked for POA, and I showed him a bunch of double-payments he made. Companies returned checks to him and he just filed them. Total confusion.

Here's how it went.

Age 70: sharp, got papers ready with elderlaw attorney. Sold and moved houses. Dad does own taxes, perfectly. This paperwork set him up well for me and my siblings to handle his affairs today.

Age 80: almost made some very bad decisions regarding the lure of annuities due to some sales pressure. We stopped them before it happened. Dad still doing his own taxes, but keeps getting corrections back from IRS.

Age 83: dad struggling with taxes, finally gets a CPA to do them, even though they are simple.

Age 83-85: didn't like his CD rates, so got fixed tax deferred annuities. He really didn't know what he was getting. He was confused by his friend's talk of their variable annuities. In any case, the insurance companies they are through are good, so he didn't screw up too bad. His long time banker explained to me that my dad wanted an annuity, by golly, so he did is best to honor fiduciary responsibility and not get anything that would screw dad over. The banker actually bailed dad out a few times (stopped him from cashing a bogus "Bahamian Lottery" check), so under the circumstances, he did OK.

Age 86: started having issues with writing checks. Will send money to any charity in the mail (small amounts, thankfully). Gets approximately 10 charity requests by mail per week.

Age 87: gave me and siblings responsibility and POA.

Age 88+: He doesn't handle his finances anymore, and actually doesn't understand how a checkbook works anymore. Total confusion. We screen all mail for "lottery checks" and charities. Thankfully, Dad still remembers family. Finances are just completely baffling to him. Also thankful he never made any major mistakes. A few hundred bucks per year to bogus charities is not a disaster. Thankfully, it never got worse than that.

---

So, judging by this, I think I need to get my ducks in a row in my 70s and be ready to hand it over by my early 80s. My grandmother had the same pattern.

[ejman]

Quote:

Originally Posted by JoeWras Great subject! But I don't have the answers. It is a concern of mine judging from family history. Let me tell you about my mom and dad. Mom has since passed, so it is mostly dad. This gives you an idea of how it can slip. He never realized it was slipping until we finally asked for POA, and I showed him a bunch of double-payments he made. Companies returned checks to him and he just filed them. Total confusion. Here's how it went. Age 70: sharp, got papers ready with elderlaw attorney. Sold and moved houses. Dad does own taxes, perfectly. This paperwork set him up well for me and my siblings to handle his affairs today. Age 80: almost made some very bad decisions regarding the lure of annuities due to some sales pressure. We stopped them before it happened. Dad still doing his own taxes, but keeps getting corrections back from IRS. Age 83: dad struggling with taxes, finally gets a CPA to do them, even though they are simple. Age 83-85: didn't like his CD rates, so got fixed tax deferred annuities. He really didn't know what he was getting. He was confused by his friend's talk of their variable annuities. In any case, the insurance companies they are through are good, so he didn't screw up too bad. His long time banker explained to me that my dad wanted an annuity, by golly, so he did is best to honor fiduciary responsibility and not get anything that would screw dad over. The banker actually bailed dad out a few times (stopped him from cashing a bogus "Bahamian Lottery" check), so under the circumstances, he did OK. Age 86: started having issues with writing checks. Will send money to any charity in the mail (small amounts, thankfully). Gets approximately 10 charity requests by mail per week. Age 87: gave me and siblings responsibility and POA. Age 88+: He doesn't handle his finances anymore, and actually doesn't understand how a checkbook works anymore. Total confusion. We screen all mail for "lottery checks" and charities. Thankfully, Dad still remembers family. Finances are just completely baffling to him. Also thankful he never made any major mistakes. A few hundred bucks per year to bogus charities is not a disaster. Thankfully, it never got worse than that. --- So, judging by this, I think I need to get my ducks in a row in my 70s and be ready to hand it over by my early 80s. My grandmother had the same pattern.

Thank you. Very good post. How did you go about getting the POA from your Dad at 87?

[W2R]

Quote:

Originally Posted by Malcolm2 This has been mentioned in bits and pieces elsewhere, or if I have missed it regrets. It would be informative to see some input here from those that are in their late 70's-80's as to what they have done to guard against cognitive decline as it relates to financial matters. What do you do when you are not sure you can manage your portfolio with confidence, or don't want to? Please no suggestion of annuities, as they are usually a profit center for others. How to protect against making a large financial blunder when you are old and a easier target to con artists. I think this will be an increasing problem and many retire with significant 401k/IRA/other self directed accounts. M

To me, a rephrasing of your question would be, "Who can I trust with my life, completely, who will never fail me?" For me, the answer to that question would be God if I was religious, but I am not. I cannot put the burden of that level of trust on anyone but God, though.

So, my planning goals in that respect are to make certain I can survive, and yet depend as little as possible on others to do so. If someone does not live up to the level of trust that I might wish, despite their best intentions, I will be able to forgive them and maintain my loving relationship with that person because they cannot mess up too badly.

As for the specifics - - -

At that age I plan to have automated bank deposits from at least six small income streams. My portfolio income will be "icing on the cake". Sure, I don't want to be conned out of it or to make foolish financial decisions. So, I will trust my family members and friends to protect me from con artists and to help me with my financial decisions and in managing my portfolio, interceding as necessary as Joe Wras described in his post above. One option might be to put my portfolio entirely into target retirement funds, to make its management nearly foolproof. But anyway, even if I lost my entire portfolio due to mismanagement or poor screening of con artists, I would still have more income than I have been spending so far in retirement, coming in each month from other income streams.

I have had automated payments of almost all my bills for the past 13-14 years or so. I can easily set this up for the rest as I get older. I have looked into the cost of continual care facilities here in New Orleans, and my income will be enough for that if I decide that I am going to need it.

[nun]

As far as investing is concerned Im already pretty passive, but as I age I'll probably just go with one of the balances retirement income funds that Vanguard etc has or...... psst just put every thing in Wellesley.

I don't know how I'll avoid scams, but I did buy some LTC insurance a while back.

[DeborahB]

My mother died 5 years ago, dad still alive at 92. My brother is living with him. Mom took care of the finances and carefully set up living trusts and POA and all that. We are co-signers on the checking account and so on - but I think the POA goes into effect if dad is incapacitated. He isn't.

Dad loses bills and thinks it's fun to pay the utilities late. He won't let my brother take over, or have them set up to auto-pay. Money is not an issue. Dad is alert when he wants to be, but he procrastinates on EVERYTHING.

Anyhow we have the POA - my brother is waiting to see if the utilities get turned off and maybe at that point he can step in.

For myself, I intend to stop managing my investments so heavily myself and put it into some nice, steady, dividend-paying mutual funds that don't need to be looked at often. But not yet. I have thought about it, though. I enjoy investing so right now it's fun - when it becomes a chore, I will re-evaluate. I'll probably need someone to manage it if I live long enough.

[braumeister]

Quote:

Originally Posted by JoeWras This gives you an idea of how it can slip.

My mom had always handled the family finances for her and my father.

She was a very smart woman, and still sharp enough to handle her finances with no problems. But after my father died, when she was in her early 80s, she started hinting that it was becoming somewhat of a chore, and would be glad if she didn't have to deal with it any more.

Eventually, I got the hint, and offered to take over. She was delighted, and we did all the necessary paperwork. For the rest of her life (another 15 years), she never had to worry about bills, taxes, or anything else. She had one credit card to use at restaurants and stores, and when she needed cash she just asked me for some (I visited her at least a few times a month). A very happy camper.

From what I've heard, I was very lucky in choosing my parents.

[JoeWras]

Quote:

Originally Posted by ejman Thank you. Very good post. How did you go about getting the POA from your Dad at 87?

As mentioned, Dad and Mom got their papers in order at age 70. The POA was contingent on being "not competent". Most would still judge Dad competent.

So, my siblings and I discussed the situation with dad multiple times over the last year. We mentioned the double paid bills and refunds and other issues. He finally said, "I think I need help." We knew it for 10 years, it took that long for him to admit it. We suggested the next step, to take over his finances, and he was finally able to let go.

But better yet, we went to the same lawyer that Mom and Dad used years earlier. Dad also dealt with him with my mom's passing in recent years. Because of this, the lawyer was able to explain to dad what was going on and confirm our thoughts. He also knew dad's history and has also witness the decline. With a third party confirming, and knowing our history, we all felt confident as a unit that this was the right thing to do.

So, with counsel's expertise and affirmation, we got it done.

The lesson here: don't wait too long to have this discussion and get your papers in order. Mom and Dad didn't wait too long, thankfully. Their wishes are very clear. This next step of a durable POA could be taken in confidence, even if Dad didn't understand 100% what was being signed. And we know exactly how Dad wants things managed. Talk about this before you are too old.

DW and my challenge is we don't have kids. We're going to have to find the right party to discuss this with. Sounds like a common theme, see a few of the posts above.

[Livin Large in MT]

These threads about aging parents are pretty identical to my own experience. But, I believe our parents mostly serve as a lesson in what we should not do...thus, the spouse and I go to a lot of trouble to have good relations with our grown kids by treating them like adults and being available to help out when they need us...as opposed to our parents who bragged about "not being babysitters" and making it clear it was our job to move out and get out of their pocketbooks ASAP. And then spend their time telling us how great retirement is because they never have to deal with us...and then demanding that we come visit on our dime so they can show off their grandkids when they wanted to. I know everyone loves to revere that generation but I have seen a lot of very selfish self involved behavior that I do not want to emulate.
We have done our best to be part of our family and do it in an appropriate way that is not too intrusive but that keeps us in the loop with them. Have I helped them out financially when they needed it? You bet I did but within our means. And I subscribe to the notion that there is a difference between helping out and being taken advantage of. But I would like to think I have a good loving relationship with my kids.
And we plan to move proactively as we age...already my kids ask us what our plans are, when we plan to downsize. I don't get insulted or annoyed: I ask their opinions and make it clear that the day will come when we will make a move and we will make the transition when we need them to assume POA and I expect them to help us see when that day has come. I never want to do to them what my parents and my aging in laws are doing to us. If we screw up in our old age, I hope it isn't by repeating what our parents did to us.

[ChocoKitty]

Quote:

Originally Posted by JoeWras DW and my challenge is we don't have kids. We're going to have to find the right party to discuss this with. Sounds like a common theme, see a few of the posts above.

It does seem to be common, but it's great people are so open about the challenges here. My challenge is that I'm single (and likely will never marry) and an only child. I suspect my other single/divorced friends may put together a Golden Girls-type arrangement when the time comes. I don't know, and it worries me.

[old woman]

Mom was never good with finances but as dad got older he gave her more money to put in her credit union so when he died she knew where the money was. Mom was ok with buying CDs for a while then she said she didn't want to because she might forget when they matured. My brother offered to remind her but then she remembered they send you a reminder. I have done her taxes for the last 25 years or so and she put my brother on her bank accounts so he could help with them. She has some stocks now but only knows about Coke stock and has an Edwards Jones guy my brother uses, so she is happy with that. I read her check book for last year and she only writes one check a month to pay my brother for room and board and deposits her pensions and SS checks and 4 checks a year for estimated taxes. She simplified 4 years ago, sold her house, sold her car moved in with my brother. They take care of cell phone, cable tv and all the other little things. Her finances are very simple yet she had my brother balance her check book. She is lucky we are trust worthy but she has general control. She said her boyfriend got one of those papers for his son so she though she should get one. She wasn't sure what one of those papers was but it turns out it was a power of attorney so she got one now. She is quick to give up when the check book doesn't work and totally trust me, brother and daughter in law and grandchildren. Grandson took her to the doctor and doc said she needed physical therapy but she said she didn't think so but grandson said yes she did want it so she let him make her an appointment and she went. Grandson is 43 and an insurance adjuster so he is the one she turns to for insurance advice.

I don't have kids but one niece has offered to take care of me in old age. Her job is placing people in assisted living or nursing home so I will hope I can trust her to find me a good place to live if I can't do it. She isn't great with money but I think she might be honest. I trust another niece and nephew a little more with money I just hope I am right.

[Malcolm2]

Good posts, we have all been through these things with our folks. For the most part they didn't have the benefit of online communities like ER.
My specific concern is how to best automate things to avoid making my son deal with them, and to give me peace of mind that my spouse would not need to either.

I see a near future of many, many sharks circling the large communities of persons who depend more on their large IRA type accounts than in the past. The temptation will be much greater as there is more to profit from selling questionable products to those with fewer pensions but more liquid assets. This will be different than our folks generation I think.

M

[Tyro]

Quote:

Originally Posted by clifp How do I know when I am getting senile?

If you have to ask, you probably can't afford it.