Planning For Diminished Capacity

It’s a perfect storm. Americans are living longer than ever before, and often with more wealth than previous generations. According to the 2016 U.S. Census, individuals age 65 to 74 were the fastest growing population in America. They were also among those with the highest median net worth, according to the U.S. Federal Reserve.

Yet as people age, cognitive capacity often declines, and they may not be able to manage or make decisions about their own financial matters, which can leave them vulnerable to financial abuse. Stories of such abuse appear frequently in the news, even involving well-known celebrities such as Brooke Astor and Mickey Rooney.

As professional advisors, we need to be aware of this trend and actively protect our clients in advance of any decline. Without proper planning, those experiencing decline risk being taken advantage of by caregivers, family members and unscrupulous individuals such as internet, mail and phone scammers. Older women are particularly at risk, as they often outlive their spouses and can end up living alone, with no family or friends nearby. The Federal Reserve Bank of Philadelphia, quoting MetLife, puts the financial damage to older Americans at between $3 billion and $36 billion per year.

Indeed, most of us will be affected by this escalating crisis at some point in our lives, either directly or indirectly. In 2015, an estimated 46.8 million people worldwide were living with dementia, according to the Alzheimer’s Association, and the number was believed to be close to 50 million people in 2017. Worse yet, the number of those afflicted is expected to nearly double every 20 years, reaching 75 million in 2030 and 131 million in 2050.

Be Aware Of And Recognize The Warning Signs

Cognitive impairment is not a specific disease, but a broad collection of symptoms that can range from mild to severe. Dementia and Alzheimer’s disease are the terms you most often hear about, but these are just a subset of the many conditions that can affect cognitive function.

The symptoms of cognitive decline include some or all of the following:

• Repeated instances of poor judgment or decision-making;

• Difficulty following content that was once understood;