Aging is a natural process that can cause shifts in physical and cognitive abilities. Confusion over money and a decline in the ability to perform regular financial tasks are among the earliest warning signs of diminished capacity and the easiest to spot. In fact, for persons with Alzheimer’s or other common forms of dementia the ability to manage financial tasks is often one of the first skills to decline.
A decline in financial capacity can leave individuals vulnerable to mistakes, missed obligations or even exploitation. To provide support for your loved ones, watch for these early warning signs.
Signs of Diminished Financial Capacity
Difficulty completing everyday financial tasks
When tasks that were once routine, like paying bills or tracking expenses, take noticeably longer to complete or are no longer as automatic and easy, a person may be experiencing diminishing capacity. They may also develop a new and uncharacteristic confusion when completing financial tasks.
Reduced Attention to Detail in Financial Documents
A person may become forgetful with bills – paying some multiple times and others not at all. They may also have trouble reading and finding specific details in a bank statement, increasing their vulnerability to financial exploitation.
Struggles with Basic Math
Simple money calculations, like determining how much to tip at a restaurant or calculating the tax on an item, may become difficult. The steps to figure out simple calculations become unclear as financial capabilities decline.
Difficulty Understanding Financial Concepts and Contracts
Your loved one may begin to express confusion about concepts they previously understood well, like interest rates, overdraft and insurance deductibles. They might also struggle to understand important contracts like insurance policies or loan documents.
Difficulty Identifying Financial Risks
As we age, it can become more difficult to accurately identify both our own risk tolerance and the risks present in offers such as advertising, investment pitches and telephone or mail solicitation. This can increase a person’s vulnerability to financial abuse, theft or fraud. Watch for signs of uncharacteristic purchases, changes to your loved one’s investment portfolio that are not aligned with their risk tolerance, or communications with a new friend or pen pal.
How You Can Provide Support
Encourage Naming a Trusted Contact Person
A Trusted Contact Person (TCP) is someone a financial advisor can contact under specific circumstances to help protect a client’s financial well-being. Naming a TCP provides an additional layer of protection to help safeguard against financial exploitation and fraud.
Learn more about naming a Trusted Contact Person
Set Up an Enduring Power of Attorney (POA)
A POA is a legal document that allows a trusted individual or individuals to manage another person’s financial or personal affairs (or both) if they are no longer able to do so. Establishing a POA before a person experiences financial decline ensures their wishes are captured and may help protect against financial exploitation.
Learn more about the Power of Attorney
Watch for Signs of Financial Exploitation
Sudden changes in spending habits, noticeable declines in hygiene, or unexplained financial transactions can be red flags of financial abuse or exploitation. Stay vigilant and act quickly if you notice any of these signs.