You may have watched first-hand as a beloved parent’s money management skills went from smart to questionable. Scam artists take advantage of this, stealing homes and emptying bank accounts of trusting seniors. Research shows that as we age, certain skills, including financial savvy, diminish. The problem is, seniors often still think they are able to manage their money, despite all evidence to the contrary.
US News explains in “8 Ways to Safeguard Your Financial Life as You Age,” that folks of just about any age should take action when they’re young to protect themselves from financial errors later in life. We’ll look at a few of these.
Automate transactions. Automate what you can, like utility and mortgage payments, long-term care insurance premiums, as well as required distributions from retirement accounts. Go with direct deposit for your bank account. Create a list of what you have automated and tell your heirs where it is. Regularly review your statements.
Set up bank alerts. Your bank may provide you with the ability to get an email or text alert in the event your balance drops below a certain level. You can do the same thing for large credit card purchases and bill due dates.
Keep your estate planning documents up-to-date and organize your important papers. Many believe estate planning documents are a “one and done” deal, but nothing could be further from the truth. As your assets, family situation and values change, so should your plan. The laws change, as well, so be sure to reach out to your estate planning attorney regularly. If you procrastinate on reviewing your plan, your heirs could end up paying significant taxes or, worse, your plan might not take care of your family the way you wanted. Make sure trusted loved ones and fiduciaries understand your plan, their roles and their duties now. It’ll make those duties far less burdensome later.
Simplify your accounts. Consolidate your financial accounts and close accounts that have only small balances, giving you less to manage. Get down to just one credit card, if you can, so you have just a single bill to pay.
Don’t make any hasty decisions. Sales people can be pushy, so don’t make any big financial moves, like moving investments or buying a new car, without first discussing it with a trusted friend or relative.
Consider sharing information and giving access to trusted family members or your financial advisor. Having one or even two people who you trust implicitly involved in your finances may be helpful. By providing them with access to your accounts and information, you’ll have another set of eyes on your spending, investments and any kind of movement of assets. If they spot a problem or notice a trend, they will be able to step in to help before it’s too late.
While many estate planning attorneys might simply recommend a power of attorney document to give a trusted loved one legal access to your accounts, a document alone isn’t the answer. Even putting accounts in the name of a trust and having a co-trustee you trust implicitly on the account may not be enough. The best thing you can do is work as a team with loved ones, estate and financial planning professionals to ensure everyone is working together for your best interests.
Find estate planning and financial professionals who advocate for proactive and ongoing relationships and are willing to work together on your behalf. For more information about the importance of an ongoing relationship with your estate planning attorney, explore our website and contact us to schedule your consultation today!
Reference: US News (October 26, 2016) “8 Ways to Safeguard Your Financial Life as You Age”