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The Snowball Effect: Finances & Aging

Yesterday afternoon, we received a call from a lovely woman asking for assistance with "her hallway of paper".  An introductory visit was set for the very next day.

Not long after walking into her home, it was clear what the priority was for "Anne".  TAXES.  Two days post tax deadline, a week post hospital discharge and a year since her tax preparer retired.   "Anne" was at a loss for how to get started.  Tax documentation, statements, receipts and handwritten notes for the past year in separate stacks lined her hallway floor.  There sat a woman, a PhD not to mention, who was struggling with mobility & recuperation which was clearly being exacerbated by the stress of taxes and money.  "Anne" was clearly one smart cookie that was trying to cope in a debilitating situation that had reached beyond a critical point.

In any search on "finances and aging", there are volumes of information in terms of elder abuse/fraud or warnings/indicators of significant impairment or disease.  Yet, there is limited to no information on the individual's ability to shoulder the general finances of household, Medicare and taxes over time that did not include the impact of the aforementioned factors.   Alarmingly, any type of economic behavioral data amongst older adults is poorly understood.  What is well established is that as we age, our cognitive ability to manage regular tasks, such as IRA distributions, tax preparation and account reconciliation diminish.

In "Anne's" case, as with so many others, this is an uncomfortable topic that is easier put to the side.  Moreover, focus of physical health, not financial, is the primary litmus for assessing a loved one status - "Mom feels great so all is well!"  In any case, regular check ins on the comings and goings of budget, insurance and investments are paramount.

Once an individual begins to skip a payment, not file a receipt or overlook an account notification The Snowball Effect begins.   One utility doesn't get paid, an insurance claim isn't filed correctly, a mortgage/HOA/housing payment is missed..... tax day comes and goes.  Now, the health of their financial affairs are critical and will also have an adverse affect on their emotional, physical and psychological health.

Having the "bills & finance" conversation regularly with loved ones will surely create an air of openness and honesty.  Additionally, the use of outside help, such as a Daily Money Manager, Certified Financial Planner or Financial Concierge, can enable an individual to maintain control and dignity of "owning" their finances with the added assurance of professional review.

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