A recent study conducted by Texas Tech University concluded that the ability to make smart financial decisions peaks at age 50. This decline was observed in both men and women, making both sexes equally vulnerable to financial fraud as they age.
4 Tips for Protecting Your Finances From Scams, Shams and Schemes as You Age
In “4 Ways to Protect Your Retirement Money From Scammers (and Your Future Self)” (Time.com), Liz Weston points out that fraud victims age 65 and older lost an average of $30,000, and one in ten lost more than $100,000.
Now that I have your attention, here are the four tips that Ms. Weston offers for protecting your finances as you age or those of you with an elderly parent or other relative:
- Make Investing Simpler. This tip emphasizes consolidation of similar accounts (such as combining multiple IRA accounts into a single account), replacing individual stocks and bonds with mutual funds or exchanged-traded funds (in general funds will require less attention), and keep two credit cards (one for everyday use and the other for automatic bill payments).
- Assemble Defenders. This tip emphasizes choosing the right person – someone who is money-savvy, trustworthy, and ready to act in your best interest – to step in and manage your finances when you are not able. This is accomplished through naming an agent to act on your behalf in financial matters in a legal document called a Power of Attorney. While your spouse may be your first choice as agent, be sure to choose a younger alternate in case your spouse also becomes impaired.
- Open Up Your Finances. This tip emphasizes sharing your financial information with your agent so that he or she will be able to notice when things go awry. For example, you can set up email or text alerts with your financial institutions that notify both you and your agent when unusually large transactions take place. You should also give your doctor and financial advisor permission to contact your agent if they become concerned about your cognitive abilities.
- Design a Money Blueprint. This tip emphasizes putting together an “investment policy statement” (IPS) which spells out your financial goals over time, what types of investments you will hold, and how much of your portfolio should be allocated to safe and riskier assets. An IPS will not only help you keep your investments on track, but it will also help you resist sales pitches that fall outside of your plan.
Of course, a comprehensive estate plan is the ultimate way to protect you, your family and your finances as you age. Contact us today if you are interested in learning more about estate planning or if you have an estate plan that has not been updated in the past few years.
Whitney Sorrell is a lawyer, CPA, and former IRS Revenue Agent and senior partner of Sorrell Law Firm, PLC, in Scottsdale, AZ. Mr. Sorrell’s law practice focuses on business organizations and federal tax planning, IRS dispute resolution, asset protection planning for small business owners, and estate planning for nigh net worth individuals.