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Tips on managing money for the cognitively impaired

It’s not a pretty picture, but it’s becoming a more and more common one as the population ages: older people losing their ability to take care of their finances. It doesn’t happen only to those people who are diagnosed with Alzheimer’s disease or other forms of dementia, but can happen to older adults who have some other kind of “normal” cognitive impairment. Half of all people over 85 have some mental incapacity, according to researchers in the field.

Financial literacy, like cognitive performance in general, was found by one group of researchers to peak in middle age then decline as we age, even if we are not suffering from dementia.

Worse news, our financial literacy peaks at age 45, drops slightly and remains stable through our fifties, then goes into decline. A study from the University of Texas found that people’s knowledge of basics like investments, insurance, credit and money fell 2 per cent each year after age 60. If you live into your nineties, this research showed, you would score just 10 per cent on a test designed to measure people’s financial smarts.

Compounding the problem, older people’s confidencefinancial-literacy-score-competency-Lloyds-Banking-Group-Alzheimer' in their own abilities often increases, even as their actual abilities are declining. Coming to terms with this diminishing competence, like admitting that one can’t drive a car any more, is one of the most difficult problems facing aging adults and those who care for them.

One of Britain’s major banks, Lloyds Banking Group, has come out with a set of money management tips to help older adults, and their caregivers if applicable. It’s in association with the bank’s work with the Alzheimer’s Society in Britain and Scotland. According to a release, as many as 44 per cent of people in the UK are “connected” to someone with dementia.

Angela Rippon, co-chair of the Dementia Friendly Communities Champion group and Alzheimer’s Society ambassador said in a release:

“Dealing with finances when you are living with dementia can be a minefield. People in the early stages of the condition often feel locked out of the system, with all the many passwords and personal details they are expected to remember. When a carer takes over, the pressure of getting to grips with power of attorney and trying to make decisions in the best interests of a loved one can be very stressful.”

Here are the top tips from Lloyds for managing money if you are living with dementia

  1. Discuss money management with your family and plan with them how you want your finances to be managed if you became unable to look after them yourself.
  2. Make sure that all important papers—bank statements, mortgage documents, insurance policies, will, tax returns, pension details—are in order and that you and your caregiver know where to find them.
  3. Set up a trust to manage your financial assets, such as property or savings. This ensures that the assets are managed in a way that you choose, both now and in the future.
  4. Set up a lasting power of attorney (LPA) to make financial decisions for you, including paying bills and collecting income. Do this early, so you can give your full consent, and of course, choose someone you trust.
  5. Speak to your bank manager about support that may be available as your condition progresses, and ways of managing money e.g. using a signature card instead of a PIN number.
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