When you think about your ability to make financial decisions, do you think that you do well with your money? For those who have sound spending and saving habits, this may not be a problem. But for those with tendencies to splurge when splurging is not ideal, this could be a problem as they get older.
According to a recent Texas Tech University study, a persons abilities to make financial decisions peaks once they reach the age of 50. Afterwards, these cognitive abilities tended to decline by the age of 60, and they were significantly impacted by age 80.
With financial decision-making abilities declining as people get older, this could be a recipe for disaster for the elderly. Essentially, the study suggested that the elderly could be just as vulnerable financially as they can be physically.
The study should also be an eye-opener when it comes to how families can be affected when it comes to estate planning. It would not be surprising if the parents of adult children have not disclosed anything about their financial well-being. Indeed, the fear of causing (or perpetuating) unreal expectations could certainly be a part of this. But at the risk of keeping up appearances, it would not be in a persons best interests to completely conceal their financial status.
This is not to say that every person over 60 should open up their financial books whenever a loved one asks, but the potential to be defrauded by unscrupulous investors should be enough to start the conversation of protecting ones estate.