The Center for Retirement Research researched the impact of cognitive decline on financial decision-making in older Americans and the ideal time for a child or agent to take over day-to-day financial management.
It surveyed participants (https://bit.ly/3pmCbbq) in the Vanguard Research Initiative, a panel of account holders at the Vanguard Group, Inc., to get their opinions on the optimal time to transfer control once cognitive decline becomes a concern.
They could choose one of three options:
1. Immediately after the onset of cognitive decline
2. During further decline, but before completely losing the ability
3. When completely lose the ability
Most respondents (84%) prefer taking a middle ground, making the transfer after some cognitive decline but before completely losing their ability to manage money.
But by waiting too long, older people can make financial mistakes that endanger their long-term financial security.
Starting a money conversation is critical if you're responsible for eventually taking over your parents' finances. It's a touchy subject, and parents may resist giving up control, have trouble accepting their cognitive decline, and fear a loss of independence.
Here are some tips from Bank of America (https://bit.ly/43tesEN) and Charles Schwab (https://bit.ly/3NrAwcr) about raising the topic with parents and easing yourself into a new role.
Get an early start –To get a feel for their financial landscape, talk with your loved ones about money before an emergency strikes or cognitive decline begins. Expect the process to take time and know that it won't be a one-and-done conversation.
Offer your help – Make gradual changes and start by helping them open, review, and
pay bills together. That way, they'll get comfortable with your involvement.
Automate billing – Simplify the monthly bill paying by automating bill payments and switching income streams to direct deposit.
Inventory financial and legal papers – Start making a list of account numbers and legal documents (birth certificates, insurance policies, and wills, for example), and be sure all the documents are in a secure spot.
Work with professionals – Work with an elder law attorney to be sure all the appropriate paperwork—estate planning and a power of attorney, for example—is in place, up to date, and fits the wishes and needs of your loved one.
Commentaires