A study completed by the University of Michigan of Americans over 50 and their spouses over the span of ten years found that as cognition declines for the “financial decision maker,” money management is eventually turned over to his (or her) “cognitively intact” spouse. However, the study found that this transfer of financial responsibilities is happening far too late after a serious dent has happened into a couples financial well being. In fact, 80 percent of the spouses who were approaching or experiencing dementia symptoms, and had been responsible for the couples finances previously, were still responsible for the couples’ money.
In addition to the transfer not happening early enough there are multiple other concerns that the report mentions. With the transfer of financial responsibilities not happening early enough, elderly couples run into the challenge of their loved one not being lucid enough to educate their partner. Also, financial fraud becomes a much larger issue. According to a 2011 study by MetLife, the elderly loses $2.9 billion annually to fraud.
The article points to the greatest danger being those households that derive their primary income from investments they manage—401(k)s, IRAs, mutual funds etc.“If a household’s retirement income comes primarily from wealth that is individually managed, then the household will be exposed to the risk of poor investment decisions,” the reports states. “In such a case, it would be possible to quickly squander wealth that was meant to last months or even years.”
There are five tips for couples that are given:
- If you’ve assigned one spouse all the financial duties and the other spouse never looks at the investment statements, please stop doing that.
- If one spouse is in charge of deciding where and when to invest and when to make retirement plan withdrawals, the other should pay close attention to those decisions.
- Each spouse should have a power of attorney drawn up, giving the other — or a trusted adviser known as a proxy — the ability to make financial decisions for the couple if necessary.
- If you notice your spouse starting to have cognitive difficulty, don’t delay taking over financial responsibilities — or at least sharing them.
- Finally, if you begin showing signs of dementia, you and your spouse need to develop a realistic plan for the progression of the disease.
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