As you age, you might become more vulnerable to financial losses due to fraud, exploitation by unethical relatives or friends, or simply making mistakes. Many boomers have witnessed this situation with their parents or older relatives, which should be a wake-up call.
To address your risk of diminished capacity, you’ll want to make a plan to protect your money in your later years. You can use the free, six-step plan in the Thinking Ahead Roadmap: A Guide To Keeping Your Money Safe As You Age. Research and development of the Roadmap was funded by AARP and the Society of Actuaries.
The first step in the Thinking Ahead Roadmap is to select a financial advocate who can help you manage your money in your later years. It’s smart to pick the person well before you need their help. A financial advocate can be a spouse, partner, adult child, or close family member or friend. If you don’t know anybody who can help, you can even hire a daily money manager or other professional.
What can a financial advocate do?
There are many ways that a financial advocate can help in your later years, including:
- Pay for things you need, like groceries and other essentials
- Pay your bills and manage other expenses
- Navigate insurance policies and file claims
- Pay back money you owe
- Monitor your savings and checking account balances
- Monitor and manage your investments
- File and pay your taxes
- Interview, hire, and pay for professional services
- Manage your property
- Make donations to the charities you want to support
- Securely store your financial records
- Protect your money
Of course, you may not need help with all these tasks. Many people share responsibilities with their financial advocate or ask their financial advocate to make sure everything is on track.
What characteristics should you look for when selecting your financial advocate?
The research team developed the Thinking Ahead Roadmap by interviewing more than 100 older adults and more than 20 experts in finance, law, caregiving, and geriatrics. They suggest looking for these positive qualities in a financial advocate:
- Trustworthy
- Organized
- Understands your needs and what is important to you
- Reliable and available to help
- Smart decision-maker
- Good communicator
- Good listener
- Puts your needs first
It may be that you don’t know someone with all these positive qualities. The interviewees felt that the most important qualities are being trustworthy, loyal, and honest.
It’s also important to avoid these characteristics:
- Dishonest or secretive
- Likes to gamble
- Owes money
- Doesn’t pay bills on time
- Has a serious mental health or addiction issue
- Faces personal legal or financial troubles
- Has a strong sense of entitlement
It’s common for people to select their spouse or partner as their advocate. While that can make sense in many situations, consider that your spouse or partner might also experience diminished capacity in their later years or might pass away before you. You’ll want to select a younger, backup advocate to be available in case your spouse or partner can’t serve that role.
It’s important that you and your financial advocate understand the warning signs that it might be time to transfer responsibility for managing your money. Unfortunately, there’s no warning light that comes on to alert you that it’s time, and the signs can be subtle. See this post for details to help you and your advocate develop your own “early warning system.”
The website of the Thinking Ahead Roadmap contains more considerations for selecting your financial advocate, giving that person legal authority and details on all six steps of the plan.
It will take some time to develop your strategy, but it’s well worth the effort. You can enjoy your life in retirement knowing that you have a plan to protect you and your family from big financial losses and the grief that can cause.
Disclosure: I served on the research team to develop the Thinking Ahead Roadmap, along with Marti DeLiema, a gerontologist and research assistant professor at the University of Minnesota School of Social Work, and Naomi Karp, an independent elder law attorney and researcher.