Families need to address the financial realities of cognitive decline

Experts at the White House Conference on Aging (WHCOA) this month met to discuss the many issues facing Americans as they plan for retirement, care for older loved ones and work to improve the quality of life as we age.

And as part of the WHCOA, Bank of America, in partnership with the University of Southern California Leonard Davis School of Gerontology, released resources to help Americans prepare for increasing longevity and cognitive decline.

Among the resources: Addressing Memory & Your Family, a white paper that offers readers a step-by-step approach to building a plan that focuses on both the practical and emotional aspects of cognitive impairment.

Cyndi Hutchins, director of financial gerontology for Bank of America Merrill Lynch, and George Shannon, a professor at USC, answered our questions about cognitive decline.

Q: Are there some symptoms of cognitive decline more obvious than others?

Shannon: Mild cognitive decline is often noticeable only to those family and friends that know the older adult well and are able to notice subtle changes. In general, at the earliest stages, those with Alzheimer’s disease, for example, tend to show signs of paranoia, social withdrawal and difficulty maintaining consistent sleep/wake rhythms. In later stages, those with Alzheimer’s tend to become more irritable and experience significant anxiety with rapid mood changes.

When a person is having trouble remembering names or verbal expressions, this may be part of normal aging, and, it may be noticeable as early as when we are in our 30s. Keep in mind that many health issues can cause problems with memory and thinking clearly. Dementia-like symptoms may be caused by treatable conditions — such as depression, drug interactions, thyroid problems, excess use of alcohol or certain vitamin deficiencies — and these are, often, reversible.

Q: Can you elaborate on the importance of family members asking loved ones: “What happens if you can't care for yourself?”

Hutchins: If a family waits until a crisis to discuss a loved one’s wishes, judgment is likely to be clouded by emotion. And can lead to spur-of-the-moment decisions. Having the discussion before there is a crisis gives the aging person the ability to participate in the process. Identifying one’s own needs, preferences and goals before there is a crisis can be empowering to both that person and their family.

Q: You addressed in the white paper the need to create a “disaster plan.” How detailed should that plan should be?

Hutchins: As detailed as possible. We suggest creating a “family album” which houses all pertinent documents, including wills, deeds, powers of attorney, beneficiary designations, important passwords and contact information for financial, legal and tax advisers. This approach also helps people get medical documents in order, such as advance directives, including a living will and health care proxy.

The plan should also include making your wishes known concerning your own care. Family members should understand where the aging person would like to receive care — at home or in a care facility — and who they would like to deliver that care, be it family members, friends or professional care givers. Family members should also be made aware of who will handle the finances and who will make medical decisions on their behalf. We’d also suggest touring care facilities with family members to determine, if the need arises, which facility the person would be most comfortable with.

In short, gather as much information as possible so that family members will know what to do if there is a crisis.

Q: Isn't establishing a legal and financial strategy something that all older Americans should do, regardless of whether they have cognitive decline or not? 

Shannon: Most retirees rely on some combination of Social Security, savings and investments and other retirement accounts to maintain the kind of quality of life they deserve after a lifetime of hard work and sacrifice. Having a comprehensive strategy and planning around these financial resources in old age is crucial for all older adults.

Baby Boomers anticipate living longer, healthier lives.  Retirees may anticipate 20 to 25 years of reasonably healthy life after age 65, once considered “retirement age” by most Americans. Over time, survivors into old age may expect some levels of mild cognitive impairment, as part of normal aging. .

It is important to note that having mild cognitive decline (MCI) or cognitive decline does not mean the person will develop dementia. Recent studies suggest that between 5% and 20% of older people have MCI of some kind at any time and, of those with MCI, 10%-15% develop dementia.

Q: What worries you most about financial advisers who are not trained to deal with clients who have or who may develop cognitive decline?

Hutchins: Protecting clients and acting in their best interest is the greatest responsibility that a financial adviser has. The loss of ability to make financial decisions and exercise sound financial judgment is, many times, one of the first recognizable signs of cognitive decline.

Obviously, while a financial adviser should not expect to be a medical expert, recognition of possible changes in a client’s behavior and financial decision-making skills can many times be the first indication to the individual and their family that they may need some help.

Lack of knowledge related to signs and symptoms of cognitive decline could result in financial advisers overlooking possible causes for concern. With training, financial advisers can be better equipped to elevate possible issues and ultimately help protect their clients and their families.

SYMPTOMS OF COGNITIVE DECLINE​

1. Memory loss that disrupts daily life

2. Challenges in planning or solving problems

3. Difficulty completing familiar tasks

4. Confusion with time or place

5. Trouble understanding visual images and spatial relationships

6. New problems with words in speaking or writing

7. Misplacing things and losing the ability to retrace steps

8. Decreased or poor judgment

9. Withdrawal from work or social activities

10. Changes in mood and personality

Source: Know the 10 Signs: Early Detection Matters, Alzheimer’s Association, 2014.

Robert Powell is editor of Retirement Weekly, contributes regularly to USA TODAY, The Wall Street Journal and MarketWatch. Got questions about money? Email Bob at [email protected].