Regardless of age, we all have moments when we walk into a room and forget what we were looking for or start a sentence and forget what we were going to say. However, as we get older and these occurrences perhaps become more frequent, it is important to consider how our aging brain may be impacting other areas of our lives.
In 2015, the Center for Retirement Research at Boston College released a report on how a decline in cognitive skills affects financial decision making. The study conducted an annual review of a group of aging individuals’ financial literacy or knowledge, confidence in making financial decisions, and level of responsibility for managing their finances.
The study found that while a decline in cognition lead to a significant decline in financial literacy, it did not reduce individuals’ confidence in their ability to manage their finances. As a result, many individuals maintained primary responsibility over their finances despite a decline in their ability.
The results of the study support the importance of developing a plan before the onset of cognitive decline. Work with an Estate Planning attorney to designate Powers of Attorney and Trustees to handle legal or financial matters if you are unable to do so yourself. Create a system of checks and balances when making financial decisions.
Consider consulting with a CERTIFIED FINANCIAL PLANNER™ to assist with managing your finances. Adult children may not always live nearby or have the ability to monitor your cognition and how it may be impacting your decision making. Working with a financial planner may help alleviate decisions that could harm your financial well-being. Once you find a trusted advisor to work with, it is important to designate an individual that you give your advisor permission to contact if they start to notice potential cognitive issues.
Contact Sharkey, Howes & Javer at 303-639-5100 to set up a complimentary consultation to discuss how we can assist in making financial decisions for you or your parent.