A normal part of the aging process is the decline in cognitive abilities, including a decline in financial skills. A recent study funded by the National Endowment for Financial Education (NEFE) identifies some of the earliest financial skill impairments that older adults may experience.
If you notice any of the following early warning signs in your aging parents, it may be time to help them manage their finances.
Early Warning Signs
A summary of the key findings from Early Warning Signs of Impaired Financial Skills in Older Adults identifies five signs that aging may be impacting someone’s financial decision making.
- Is the person taking longer to complete everyday financial tasks?
Examples include: slower at preparing bills for mailing, slower at completing check and check register, or slower on completing financial tasks.
- Is the person showing reduced visual attention to key details/facts in financial documents?
Examples include: inability to identify a bill that is overdue, that needs prompt attention, trouble identifying transactions in complex documents like a bank statement, such as gaps in check number sequence, or difficulty completing the payee section of check register.
- Is the person showing declines in everyday arithmetic skills related to his/her finances?
Examples include: difficulty calculating a medical deductible, difficulty calculating a return on a specific investment option, or difficulty making correct change for a vending machine purchase when a dual task is involved (making change for $1, and ensuring receipt of coins sufficient for $0.55 soft drink purchase).
- Is the person showing decreased understanding of financial concepts?
Examples include: difficulty understanding a medical deductible problem, difficulty understanding terms in a bank statement, such as a specific interest rate, minimum balance, difficulty understanding key investment risks, difficulty explaining the “quantity” section of a check.
- Is the person having new difficulty identifying risks in an investment opportunity?
Examples include: trouble identifying key risks in an investment scenario, overemphasizing investment returns while overlooking risks.
If your parent, or another older adult you care for, is exhibiting any of these early warning signs of impaired financial skill, it may signal a need for help in managing financial affairs.
Helping Your Aging Parents Manage Their Finances
The first step in helping your aging parents manage their finances is talking to them. Ask them about how they want their financial matters handled. It may help to assure them that you are not trying to take over their finances, but that you want to help. When you’re discussing financial management, it may also be a good time to discuss the importance of estate planning.
We know that making arrangements for the eventuality of aging can be very stressful and emotional. We strive to remove some of the burden from you and your family by helping you create an Estate Plan that addresses your needs in detail.
Elder Law Group PLLC has been recognized as one of the fasted growing law firms in the U.S. as an Annual Law Firm 500 Award honoree. Contact us or call (509) 468-0551 (Spokane office), or (509) 579-0206 (Tri-Cities office), for personal, compassionate guidance on Long-Term Care planning, Asset Protection Estate Planning TM, or other legal needs of seniors, the disabled, or vulnerable adults and their families.
