What age are you too old to manage your money

[nwsteve]

I accidently tripped across this story in Marketwatch regarding a new study by Center for Retirement that explores when cognitive capacity for dealing with financial issues becomes a problem. https://www.marketwatch.com/story/at-what-age-are-you-too-old-to-manage-your-money-2017-01-25. Research study is here: http://crr.bc.edu/wp-content/uploads/2017/01/IB_17-1.pdf

The good news first: Most people who don’t suffer from cognitive impairment can continue managing their money in their 70s and 80s. The researchers separated cognitive capacity into two categories--fixed and fluid. Fixed is using your acquired knowledge whereas "fluid" is the ability to process new information in new ways--think going from writing paper checks to paying bills online.

It is the arena of fluid cognition where seniors are most at risk. Researchers reported that fluid cognition can start to diminish as early as the 30's!

What have you found to keep your fluid cognition "firing"?

 

[DeborahB]

Well... I’m 70 and I mostly manage my money myself (no pension). I use a stockbroker for ideas and trading. Point is, I’m able to adapt and keep doing it. I think at some time I will lose interest and possibly just put it all in a few steady mutual funds. But until then - I’m good. I watched the dimishment of my father’s ability to cope with change and even to care if the bills were paid. But he did not have dementia. He just was old. He died at 95 of old age, organ failure... your body shuts down. I wouldn’t trust myself to manage it much past 85. OTOH, my mother was 85 when she died, and she was sharp until the end.

 

[Nick12]

Didn't look into it much but better safe than sorry perhaps meet with family and lawyers on the subject of power of attorney.

 

[RunningBum]

I think age is not a good criteria to use for this.

 

[Sunset]

.....
It is the arena of fluid cognition where seniors are most at risk. Researchers reported that fluid cognition can start to diminish as early as the 30's!

....

In another study researchers found people can die before age 20....

Just because it's possible someone can win the lottery doesn't mean it will be me.

So I just plod along, way past 30, wondering which new skill I should develop next.

As for finances, I have a long term plan to simplify the number of accounts and investments, so that when I die, DW won't have to be concerned with more than a few accounts of a few broad etf's/funds.

 

[Dtail]

I manage my parent's investments, but my mother at 86 still pays all the bills. My father managed his investments until 87 y.o.

 

[Nemo2]

I think age is not a good criteria to use for this.

Although, in certain cases, it might be a criterion.

 

[imoldernu]

I think the article is spot on. "too old?" I are one.

We split the responsibility. I look at the big numbers , jeanie pays the bills.
She's good... one past due bill in the past 20 years. Keeps our credit rating @815.

My job is to make sure we have enough.

Cognitive decline (stage 4 AZ) means I don't get into the nitty gritty, so just look at the month end statement.

A good example about failure... This month the house insurance came due, and I looked at the amount... Seemed high, so I spent an hour or so checking and looking. After talking with two alternate Insurance companies, I realized mine had been increasing our costs to cover inflation on house and cars for years, and was overvaluing our house by 45%, and was still carrying collision insurance on our cars. Saved about $600 this year, but negligence thru past years probably cost a few thousand dollars.

Made a mistake about the annuity... not taking it early enough, Gives us an extra $8K/year. Now instead of going in to our estate.

Lazy? stupid? trusting? Am smarter than that but it didn't seem important.
A matter of age, and feeling comfortable. Money doesn't seem to mean as much as it did when we used to turn off the lights to save electricity.

Next, comes the overpay on Internet, Tv etc.. another $1500.

Back to the article... and the word "cognitive" ... besides dementia, it means
"awareness"... and the setting of priorities. At age 83, for me (us) , money is not the most important thing in life.
.................................................................................................
This does open up the door to the coming challenge. Who to trust to watch over finances. Family too far away, and don't know who to turn to handle the money. No investments to speak of, so not a broker. Financial advisor? Probably, but what about the day to day stuff... credit cards, bank account, paying monthly bills?

Certainly not the end of the world, and overall, the amounts are not significant, still the article hits home, and puts this part of life in perspective. Thanks for posting.

 

[Doribe]

I try to keep up with the changes in technology. I saw my mother decide computers weren't for her. She missed a lot in the last decade of her life because she didn't want to learn new tricks. I am currently consolidating my assets into Fidelity, for ease of management. When I w*rked, I enjoyed spending time managing my assets, now that I am retired, not so much. I think with simplified accounts and a simple portfolio, I should be able to manage my own assets unless dementia sets in. If I need help I plan to hire a fee based financial planner on an annual basis. If things get worse, I'll turn everything over to my oldest child.

 

[Scrapr]

I try to keep up with the changes in technology. I saw my mother decide computers weren't for her. She missed a lot in the last decade of her life because she didn't want to learn new tricks.

My MIL did not touch a computer. Then FIL died. A few months after a neighbor she loves came over with an I Pad. Neighbor had an extra so gave it to MIL. About a week later MIL goes out and buys a new I pad. Now on Netflix. And e mails her sister in Cali ...(with pictures!)

I'm very proud of her to be open to the I pad

 

[brett]

I really think that it depends on one’s mental capacity and financial acumen.

My father managed his right up to his passing at 87. My SIL is 60 years old. She has mismanaged her finances for just about all of her adult life.

 

[Nemo2]

My father managed his right up to his passing at 87.

DW's father does his at 93.....he also files electronic taxes for DW's sister, and for her brother's side of the family.

 

[CaliKid]

I just talked to a client the other day. She is over 100 and still manages all her own finances.

 

[SecondCor521]

My father is turning 83 soon and he is managing his money less and less over the past few years. As I'm the local kid, I'm helping him out.

Mostly what I do is watch his taxes for him and make sure he's withholding enough and that his RMDs are on track. I also help minimize taxes between him and my Mom's bypass trust. I also sometimes chase down refunds and help him cash out credit card rewards and so forth.

A lot of it can be automated to help where he might otherwise forget or make mistakes.
So he's done a lot of that (automation) too. He stopped trading stocks. He has all of his regular bills on autopay. He has his RMD automated. His pension and SS are auto-deposited. Basically all he needs to do is make sure there's enough in his checking account to cover bills - I've offered ways to automate that too but he hasn't done that yet.

He has made some money mistakes lately. He took a withdrawal from his Roth last year even though that doesn't comport with his stated plans. He can't remember if his RMD is automated and asks about that regularly. He bought a timeshare and then sold it back, losing thousands. He bought two sets of plane tickets for a trip last year. He keeps mistakenly signing up for subscriptions (like Amazon Prime, Amazon music, and those 30-day-supply-free commercials). Those are the ones I know about anyway. I try to respectfully correct these as I find about them, but I also don't want to babysit or make decisions for him when he is still mostly capable of deciding things himself.

One thing I wonder about is a person losing capability before they recognize it. It's much better I think to stop doing things or handing them over to someone else before losing the ability, but I can imagine how hard that would be to try to time optimally.

 

[Sunset]

..
One thing I wonder about is a person losing capability before they recognize it. It's much better I think to stop doing things or handing them over to someone else before losing the ability, but I can imagine how hard that would be to try to time optimally.

Yes, this is key.
Old people can be sold lots of financial scheme's/products , none are illegal but certainly not in the person's interest.
How about selling an 82 yr old an annuity that does not pay out for 10 years ! The sales pitch was "You will pay less taxes" to the bad taxman

 

[Scuba]

My MIL is starting to get confused about her bills. She is 82. She lives alone and is very independent, still driving and very involved in her community. She lives in a small town and almost everyone knows her. Fortunately a few of her close friends also know us. A couple of them have contacted us recently expressing concerns about her driving and her ability to manage her bills. However she doesn’t feel she’s ready for any help in these areas. We live 2,500 miles away so we can’t push too hard. She has one local son who feels she is fine, but he is the eternal optimist and not all that responsible. Tough situation.

 

[donheff]

Key quotes from the study:

"Normal cognitive aging generally does not affect
financial capacity enough to warrant intervention. "

"The flip side of the role of knowledge in preserving financial capability is that those without such knowledge are vulnerable. These financial novices are typically individuals who take over the responsibility of managing their household’s finances after a
spouse dies or becomes incapacitated. They are likely
to need help with all aspects of financial management."

"Unlike the normal cognitive changes associated with aging, cognitive impairment, which is increasingly likely for those in their 80s, can rapidly erode financial capacity."

"A crucial characteristic of cognitive impairment is that people are usually unaware that they are slipping. Several studies have shown that people with MCI to full-blown dementia continue to feel confident about handling financial matters.15 The combination of high self-confidence, intact knowledge of financial procedures, and impaired financial judgment makes people with MCI more likely to be victims of fraud."

My biggest concern is with MCI. I need to come up with a plan for a cognitive assessment if DW or the kids notice any slippage but I will probably resist in the event. If I die DW (who is a very smart lawyer) recognizes that she can't handle investments. Her plan is to turn taxes over to an accountant and delegate the portfolio maintenance to the kids.

 

[Lewis Clark]

Just look at many of the people surrounding us, or read many of the financial media reports, or even some threads in this forum about consumer debt and people living paycheck to paycheck or beyond their means. There are lots of people at all ages who are unable to manage their money adequately.

Perhaps somebody could develop a test to determine whether people any age are financially competent.

 

[PatrickA5]

Dad did his own taxes by hand until age 90 when I finally was able to talk him into letting me do it on Turbo Tax. He spent a couple of weeks going over the tax return and kept questioning whether or not Turbo Tax was correct as he founds some "errors".

He paid his own bills until the very end (age 97). I had access to all of his accounts so I kept up with things to make sure they got paid. Towards the end, he did lose interest in most things and became increasingly paranoid about his finances - including things like accusing me of stealing money and him not wanting to give the grandkids $50 for Christmas "because he won't break even with what the grandkids give back".

He'd also do things like pay $100 land line long distance bills, when I provided him with a free cell phone that wouldn't cost him a penny. His home insurance was triple what it should have been. After begging him to let me look into it, he relented. His agent said his old policy ($3,000) was from an old line of insurance and would be glad to change that out to a new policy ($1,100) with the same coverage. He'd been overpaying for 25 years. He paid dutifully on a $10,000 life insurance policy for 55 years! He even got a letter congratulating him for paying for 50 years and "thinking about his loved ones". He cashed it out at $9,000. He spent close to $20K over the years.

Yes, I think it's important for older people to have someone they can trust looking after their finances. Hopefully, one of my kids will do the same for me.

 

[gauss]

Exercise, manage diet/weight/blood pressure/ etc.

Some of the cognitive impairments and worse, such as white matter disease, appear to be very related to this.

I believe this is the condition that my DM has and she engages in all the behaviors associated with it. Very said, but a good cautionary tale for myself.

-gauss

 

[DeborahB]

After looking through the last few posts, I see things that I noticed in my father as he aged. My mother died eight years before my father, at 85. She was the one that handled the finances in the house. My father, at 87, was faced with learning to do that and having no experience with it. He had run a business, but it had been years since he had to manage the day-to-day bills. I think the hardest part is giving up control. I was lucky in that all the powers of attorney were in order but actually having my father let me exercise them was hard. After the gas company tried to take the meter off the house, and we noticed how much he owed on his American Express account, my brother and I automated the bill paying. Luckily we were co-signers on dad’s checking account. There was no issue of lack of funds.

 

[OAG]

I have a simple financial life. Made it so to benefit DW but since she passed first, it has benefited myself. I am 78+ and will have to manage it myself for a while. Ultimately may have to hand off management to one DD who is more than capable of handling it.

 

[HI Bill]

I watched my mom try from the early to mid to late stages of dementia. The question is not 'how old', but when is the cognitive function no longer there?

One other thing relates to how prone is the person to being tricked out of their assets? One might fall vicitim to phishing, signing up for unneeded purchase, being careless with checks, door-to-door salesmen, pest control services, insurance salespeople, etc. Once I took over my mom's finances, I breathed a large sigh of relief. I put almost everything on auto pay, and set up account alerts. That way, I could monitor her finances for irregular activities. By then, she had forgotten she had cable TV, although she used it every night. She failed to pay the bill, and they were threatening to disconnect her.

 

[kgtest]

including things like accusing me of stealing money and him not wanting to give the grandkids $50 for Christmas "because he won't break even with what the grandkids give back".

Ouch. DF is 68 and he meets with me monthly, sometimes I instigate sometimes he does. He has mentioned similar things about gifting to family not to break even, interesting you mention that.
I help him with tax strategy, and the rules, often times he will make up his own IRS rule and I will need to cut/paste or walk him through the irs.gov websites language setting him straight.


My only fear with my DF is he gets into legal trouble somehow, by ignoring something or not doing something or doing something he shouldn't as he isn't one to really follow common-law rules.



I know what his pensions are, I know what his social security check amounts to and we tally up his accounts once a month so I can see if he is going backwards, then I'd have to dig deeper. I have access to his insurance information and tax info as well so there is some transparency. I presume once RMD comes and he pays uncle sam a couple years in a row he might just try and get me to help him or do his taxes for him in some automated form. I know he won't be happy cutting one big yearly check, so I'll have to automate it to lessen the sting.
None of his sibling are counting on DM being around but she never concerned herself with finance is on an allowance, so if luck should be on HER side, I would just set up a monthly automatic transfer to her checking account for the money she needs for all household stuff, At some point you stop buying things and only grocery shop, at that point I will bring them to get there groceries. That's when I update my signature at ER to full-time chauffeur.

 

[ExFlyBoy5]

I watched my mom try from the early to mid to late stages of dementia. The question is not 'how old', but when is the cognitive function no longer there?

One other thing relates to how prone is the person to being tricked out of their assets? One might fall vicitim to phishing, signing up for unneeded purchase, being careless with checks, door-to-door salesmen, pest control services, insurance salespeople, etc. Once I took over my mom's finances, I breathed a large sigh of relief. I put almost everything on auto pay, and set up account alerts. That way, I could monitor her finances for irregular activities. By then, she had forgotten she had cable TV, although she used it every night. She failed to pay the bill, and they were threatening to disconnect her.

The taking advantage of the elderly is much too common. When my Dad got into his late 80's, he started buying a lot of "snake oil". Thankfully, we had a very open relationship when it came to money and he allowed me to monitor what was going on. As he approached 90, it was agreed that I take over since he was making some dubious purchases and couldn't really explain why he was doing it. It was sad to see, because he could recognize that he wasn't making good decisions, but he continued to do it. He admitted that once I took over, he felt the financial stress leave his mind...even though he never had to worry about doing without, I think he very much respected money and the lack of it always concerned him.

Even in the last couple of days of his life when he was bedridden and having issues with delirium, he would ask on occasion, "do I need to sign anything? Am I good to go?".

Nonetheless, in his situation, he could have easily been taken advantage of even though he was still pretty sharp for his age.