The Financial Impact of a Cognitive Decline

The Financial Impact of a Cognitive Decline

July 30, 2021

Many of us know someone who has been impacted by Dementia or Alzheimer’s.  Some of you may even have family members or loved ones dealing with it right now.  This topic hits close to home for me so I felt it was important to address having conversations with your family members now, before there are signs of mental decline.   

According to the Alzheimer’s Association an estimated 6.2 million Americans age 65 and older are living with Alzheimer's dementia today. This number could grow to 13.8 million by 2060. The cost to care for each patient is significant. In 2021, caring for people age 65 and older with dementia cost an estimated $355 billion annually. 

Most individuals with this diagnosis are without adequate Long Term Care Insurance and therfore find that they COULD lose all or most of their financial assets to pay for care.

While it is not inevitable that everyone will get this disease, it could be a good idea to prepare for it.  This is the time to communicate with family and establish a plan to ensure your wishes are carried out.

Sit down with your loved ones to talk about your feelings about aging and discuss what you would want to happen if your family became concerned about your capacity.

Have legal documents created that will allow a family member or trusted individual to make decisions if you are unable to. This can include: a health care power of attorney (POA) or a more limited living will, either a limited or durable power of attorney for finances, an authorization to disclose account information, and a form authorizing a financial institution to contact your loved ones if concerns arise about your ability to manage finances. Not having these documents when they’re needed can make it considerably more difficult for a loved one/trusted individual to help you. For example, without a POA, your loved one may need to go to court to attain guardianship of you to access accounts on your behalf.

If you have financial resources (bank accounts, retirement assets, investments, etc.) in several locations, consider consolidating accounts in one place. It’s possible you are the only one who knows where things are, so make an inventory and keep it in a safe place. Setting up automatic payments for regular bills is another way to simplify so you don’t forget to pay a bill, a common occurrence that happens during normal aging.

Consider staying financially educated, keeping any important documents up to date, and having an open and honest dialogue with trusted family members about your finances and your wishes if there ever comes a time when you can't make financial decisions on your own.

Preparing now may help you be financially ready for the aging process and help you adequately protect the financial legacy you've worked hard to build.