How Financially Vulnerable Are You?

How Financially Vulnerable Are You?

5 Warning Signs


Aging is a long slow process that we try our best to prevent, delay, ignore, or otherwise avoid at all costs. Inevitably, the day comes that we realize something has changed. We are still the same person, with the same passions and values, but some of our abilities have started to wane.

Cognitive decline is the most significant factor in becoming financially vulnerable. Dr. Mark Lachs of Weill Cornell Medical College and Duke Han of Rush University Medical Center have termed the set of behaviors that lead to poor financial decision-making “Age-Associated Financial Vulnerability”. The reasons for it can vary from lack of sleep to medication changes to changes in the brain. Often, adverse financial behaviors are the first sign that a change has occurred.

It is important to notice the following changes, which can be signs of declining cognitive ability.

Indicators of Vulnerability

1. Late charges on billing statements. This is significant if you have always paid bills on time throughout your life. It can become challenging to remember and anticipate, especially quarterly and annual bills. Sometimes you just lose focus and fail to organize paperwork so bills don’t get lost.
2. Calls from creditors. Again, if you have been in debt your whole life this is probably nothing new, but if it begins in later years, it can be a warning sign. Spending money without managing the timing of income and expenses can be catastrophic. If maintaining a checkbook or money management software has become a challenge, then you may need help to reconcile your accounts and know if you can spend a given amount of money.
3. Donations to many charities. Retirement for some is a time to be generous and philanthropic but if you look back through your checkbook and find numerous donations, usually in small amounts, to a wide variety of charitable organizations then either learn to say no or consider getting some help to manage your money. Charities and scammers who receive small amounts are more likely to sell your name to a list. Then you become vulnerable to all kinds of ploys to get your money.
4. Undeposited checks. If you are losing track of checks and needing to have them re-issued, this can also be a sign that you are vulnerable to the unscrupulous and could become a victim of abuse.
5. Scam victim. Once you become a victim of a scam or fraud, the likelihood of a recurrence is high, even if the original loss was nominal. The 2015 True Link study found that those who lost just $20 from exploitation in one year could be expected to lose $2000 annually to other types of fraud.
The same study found that those with an outgoing personality lose four times as much as introverts. Financially sophisticated seniors lose more to fraud, possibly because they move more money around. Thrifty seniors lose five times as much to fraud because they are enticed by bargains and don’t know how to check on the validity of an offer.

As I said to someone recently, old age should be called the ‘silver years’ because of the way we tarnish! Of course, we all tarnish at different rates, but if you feel that you or a loved one need a little polish to keep your finances shining, we are happy to meet with you to better understand your needs and answer questions about our services.

SOURCES:  “Age-Associated Financial Vulnerability”, Annals of Internal Medicine, Dec. 2015 and the True Link Report on Elder Financial Abuse, 2015.

Your health and peace of mind are worth every step of this journey.