As we age, the odds are stacked against us when it comes to our mental competence. One in every five seniors over the age of 75 has experienced some kind of cognitive impairment. For anyone over the age of 80, that risk jumps to one in two people. While many seniors remain capable of managing their finances, it’s better not to take any chances. Even if you’re not yet an older senior, planning for your future now ensures payments won’t be missed, taxes will be filed on time, and bank balances will be accurate. An excellent resource for future financial planning is the Thinking Ahead Roadmap, an online guide powered by AARP and the University of Minnesota, for aging men and women to better prepare themselves the older they get.
Choose a Financial Advocate
Financial advocates are put in place before they’re needed, giving you peace of mind should you face a pressing health situation, such as needing surgery or being hospitalized. They are also in place if a financial project, such as preparing your taxes or paying bills, becomes too overwhelming.
Many people choose a financial advocate from their circle of family or friends; however, they can also be a financial professional. Candidates might be your adult child, your spouse, your sibling, a close personal friend, or someone who specializes in money, for example, a daily money manager. An advocate’s role is to ensure your bills are paid, accurate financial records are kept, and your money is secured.
Look for Excellent Qualities
Your financial advocate should be trustworthy, someone who has proven themselves to be competent with their money. They also need to have a level of knowledge regarding the complexities of your financial situation (healthcare, insurance, investments, home maintenance, etc.) and be proactively willing and able to figure out what they don’t know. They’ll need to be organized, to keep all your records in order. They should also be able to make smart decisions with your best interests in mind.
If no one in your immediate circles fits these criteria, you can hire a daily money manager. If you are widowed, have no partner, or have no children, or don’t want to select any of these as your advocate, an outside party may be your best choice. Plan for your future now while your judgment is intact, and determine who you’ll want to fill this role once you’re ready.
Power of Attorney
A financial power of attorney (which differs from a healthcare POA) is not the same as naming your financial advocate. Your advocate will be an informal person overseeing your finances, while someone with power of attorney is legally determined by you, often done with the support of an estate attorney at the same time you draft your Will. The person you appoint as power of attorney makes financial decisions on your behalf. You might name your financial advocate to have POA, but if you choose another person as your POA, they have legal decision-making powers over your financial advocate. If you trust your financial advocate to make decisions on your behalf, giving them power of attorney is best rather than naming a second person.
Watch for Warning Signs
When will you know it’s time to hand over the financial reins to your advocate? If you’re making mistakes, such as forgetting your bills or medications, if you get lost often in familiar areas, if you have been a victim of scams, if your doctors and/or family express ongoing concerns, or if you have a diagnosis that will make managing your finances difficult, then it’s time. Listen to your loved ones if they should express their concerns about your declining health or ability.
We highly encourage you to read the Thinking Ahead Roadmap yourself or together with your aging senior and commit to a plan moving forward. The best time to plan your financial future is now.
At Organized Instincts, our team of daily money managers will help you understand when you’ll add a financial advocate to your or your loved one’s life. Schedule a no-obligation conversation today and get your future finances in order.