For our future selves, what more do we need to learn every day – from those cautionary tales of aging, particularly from those who are the older of the old in their later life journey? It should be enough for each of us to take notice, when you take into account aging demographics, curving upward as they are over the next few decades, that we are all going to have to be smarter about making our longevity as financially sound, as it is socially and healthily sound.
One of the longevity intersections, between health and financial, was highlighted in an October 2015 report by Mark Lachs, MD, MPH of Weill Cornell Medical College, New York and S. Duke Han PhD of Rush University Medical Center, Chicago. Published in the Annals of Internal Medicine, Lachs and Han propose a new concept they have named AAFV – “age associated financial vulnerability” to describe a classic issue typically associated with an older persons’ declining ability to manage their financial affairs.
From our professional and personal experience, we can attest first-hand to what any reader here could share from their own stories of helping elder family members or friends. Obvious issues like dementia and other impairments to health can lead to a family or friend intervention, where help with personal financial matters is necessary. Often as we know, the intervention arrives too late and a sudden encounter with a problem like elder fraud can add to the mountain of worry.
Micro and macro financial accountability
There are two levels of help to consider here. One is the micro; the day-to-day management of finances and the other is the macro, such as decision making for longer-term investment strategies. In this video link on Senior Care Options website, Mary Ellen’s interview with financial investment expert Dan Richards, President of Client Insights, highlights in an easily digestible way, the very basics of what people need to consider in this cautionary tale.
One point made in the opening of the Lachs and Han paper states: “even cognitively intact older adults can have ‘functional’ changes that may render them financially vulnerable”. Apart from cognitive decline, two of these potential vulnerability areas for older adults are loneliness/social isolation and, perhaps due to lack of judgment, exposure to opportunistic marketing or “up-selling” of financial investment plans that may not meet the realistic needs of the individual.
The report makes for an educational and thought provoking read that in our minds, really elevates the importance of accountability for observing the symptoms of AAFV, not just for those in the medical community, but for all family members, community care workers, private elder care providers and financial planning advisors. This opens up a broader conversation about understanding the intersection between financial planning and gerontology, which our colleagues, Marie Howes and Suzanne Cook will discuss in upcoming posts.
And a shared vulnerability
Here though, we propose there is an increased social need for advanced learning programs as early as possible, starting at least at the secondary school level, to include financial literacy within recognition of changes in family dynamics; where helping to manage the health and financial affairs of aging parents or grandparents is now becoming an essential life skill.
Who typically is the catalyst in the conversation between the older parent and the financial or legal professionals? The children. How do they begin the open talk about financial affairs while respecting the privacy and independence of the parent? Not always easily or that open. When do these AAFV risk moments arrive most often? In a sudden crisis.
Yet, while you may think you have all the right processes in place for a crisis, there are unmentioned shifts in decisions that happen on the part of the older parent, and the children responsible are vulnerable due to incomplete communication, not knowing for example how the macro financial picture may have changed.
An unprepared, or for that matter even a well-prepared caregiver, with or without P.O.A. responsibilities, can both have exposure to the risks of “age associated financial vulnerability”. So, operating on the premise that “a good precaution is never wasted”, a financially sound longevity plan will incrementally change at different stages of a family life cycle, and in that sense, we all have shared accountability, and a shared vulnerability if we are not well prepared.
Mary Ellen Tomlinson & Mark Venning