Diminished financial capacity a reality for seniors
It’s one of the most difficult conversations for families to have with their elderly loved one.
It centers around the warning signs that a senior is experiencing diminished financial capacity.
The warning signs can take many forms, according to the National Endowment for Financial Education, a nonprofit organization. Those include having trouble with bills, paying them late or not at all, having difficulty calculating simple math problems, making irrational purchases and depleting their savings accounts.
“Americans are living longer and they have concerns about becoming a burden to their loved ones. But with aging comes a high probability that mental decline can occur and without a financial plan, the burden looms,” says Ted Beck, NEFE chief executive. “The negative consequences of families delaying or avoiding a conversation about the financial impacts of cognitive decline are too high to ignore.”
But the conversation often brings up other uncomfortable family issues.
“Frequently there is defensiveness, denial, embarrassment and sibling rivalry when entering into a dialogue between adult children and a parent concerning their finances,” Beck said. “Families need to come together, clear the hurdles that limit communication and do what needs to be done with advanced planning before aging family members start to experience these types of events.”
Creating a financial plan is critical, especially having the senior designate the person who will manage the finances, should the senior become unable to do so.