Surprisingly, one of the first signs of mild cognitive decline can be suffering a financial loss due to a mistake, such as not completing an investment transaction correctly or being the victim of fraud or exploitation. In many of these situations, retirees are still highly functioning and have no severe symptoms of dementia or Alzheimer’s disease.
While the first course of action is to take steps to delay, mitigate, or prevent cognitive decline, despite your best efforts, you may still experience some form of it in your later years. Once you accept this possibility, it simply makes sense to develop strategies to protect yourself from financial loss Before symptoms of cognitive decline occur.
With those thoughts in mind, let’s look at six steps you can take to protect your finances, assets, and retirement income. This way you can help prevent not only a financial loss, but also the heartache that comes with it for both you and your family.
Step 1. Simplify and set your income and expenses on autopilot. As much as possible, have your various sources of retirement income automatically deposited into your checking account. Plus, simplify your investments by combining accounts where it makes sense.
Likewise, eliminate all unnecessary regular expenses and reduce the number of credit cards you have. Also consider making payment for your regular expenses on autopay from your checking account or a credit card. If you do, be sure to monitor these accounts closely so you don’t overcharge your checking account or exceed your credit card limits.
Step 2. Blocking of investment accounts. Some financial institutions allow you to block your investment and savings accounts. The lockout feature offers extra security on your accounts by requiring you to go through stricter security procedures to make any changes to your investments or withdrawals. This feature helps prevent fraud and exploitation. Before setting it up, however, you’ll want to specify how you want your accounts invested and choose a regular form of automatic payment into your checking account to help pay for your living expenses.
Step 3. Purchase a low-cost annuity to provide a regular retirement income. You may not have considered this type of product for your retirement, as they are often criticized for their lack of liquidity and flexibility. They usually do not allow withdrawals other than the regular monthly check and give investors little or no control over investments or their ability to adjust the payout amount. However, these features can turn into advantages in your later years when you are less able to manage your money, thus providing protection against losing all your savings through mistakes or becoming a victim of fraud or exploitation.
Step 4. Select a financial lawyer to help you manage your money. One of the best forms of financial protection is to designate a trusted person to help you manage your money should you ever need help in the future. Often a spouse, adult child, relative, or close friend can serve this purpose. However, if you don’t have someone in your life you trust to help, you can also hire professional day money managers. This type of financial attorney can help you with tasks such as paying regular and periodic expenses, tracking your retirement income and investments, paying taxes, and filing insurance claims.
Step 5. Take an inventory of your finances. Helping you manage your finances can be an important job for a financial supporter. You will really help your attorney by taking a detailed inventory of all your living expenses, sources of retirement income and savings, and insurance records.
Step 6. Develop an early warning system. Unfortunately, you’re not like a car with warning lights that come on when something goes wrong. However, there are often signs that it may be time for your financial attorney to step in and start helping you with your finances. You’ll want to develop an early warning system that contains both red emergency signals, such as a doctor diagnosing dementia or a serious illness, and yellow warning lights, such as forgetting to pay some bills or having trouble managing financial assets that previously managed well .
If you want to implement these steps but need more information, there is a solid, online, free source that provides details on all of these steps. It’s the Thinking Ahead Roadmap: A Guide to Keeping Your Money Safe as You Age. It was funded by the AARP and the Society of Actuaries and developed by a team of a social science researcher, a senior attorney, and a retired specialty actuary (full disclosure, yours truly).
Smart planning Now it can help you prevent disruptive pain in the future, when you’ll be vulnerable and less able to recover from significant losses. Take the right steps to protect yourself and your money.
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