Retirees: Take This First Step To Keep Your Money Safe As You Age

There’s been a growing awareness of a significant risk that retirees face as they age into their 80s and 90s: They may not be capable of managing their money due to forgetfulness, distracting health issues, or diminished cognitive capacity. This makes them vulnerable to financial losses that could come from simply making mistakes, being exploited by unethical family and friends, or fraud.

MORE FROM FORBESThink Ahead To Keep Your Money Safe As You Age

The ideal time to take steps to prevent these potential losses is when you transition into retirement. But if you’re already retired, it’s not too late to make some changes to protect yourself.

First step to putting a plan in place 

An excellent first step is to name a trusted contact for all your savings and retirement accounts and insurance policies. Many financial institutions and insurance companies are adding this feature due to their growing awareness of the problem.

By assigning a trusted contact, you give the financial institution or insurance company someone they can contact if you stop responding to important notices or if the institution notices something fishy with your accounts. You can often easily name your trusted contact by going online.

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Warning: Your trusted contact can only notify you of potential problems; they can’t act on your behalf unless you also give them the legal authority through a power of attorney (keep reading for more on this topic).  

You want to put some careful thought into the person you name as your trusted contact. Ideally, they’d be someone who is responsible and trustworthy, and cares about your well-being. You don’t want to name a person who has their own legal or financial issues.

Two true stories that illustrate the need 

Many years ago, my wife’s 87 year-old mother forgot to pay her homeowner’s insurance bill. The insurance company had mailed several warning notices that she ignored. Fortunately, my wife noticed the pile of warning notices during a visit to her mother and was able to correct the situation before it was too late.

Another situation didn’t end as well. A retired family friend had put their insurance premium payments on auto-pay from their checking account, which can be a good way to address forgetfulness in your later years. Unfortunately, the insurance company raised the premium amount, but the family friend neglected to change the auto-pay amount, and the original monthly premium payment amount wasn’t sufficient to maintain the policy. The insurance company began sending warning notices, and after several months of being ignored, they canceled the policy. When the retiree’s son finally noticed the situation, it was too late to reinstate the policy. 

Both these situations could have been mitigated or even prevented if these individuals had given the insurance companies a trusted contact they could have notified after it was obvious that the retiree was ignoring the warning notices.

These stories also illustrate that taking these steps is important for people from all walks of life, not just people who have substantial savings and wealth.

Next steps to protect your money

Naming a trusted contact is an easy, first step on the road to building an effective strategy to protect yourself from financial losses. If you’d like to put an effective plan in place to protect your money as you age, the Thinking Ahead Roadmap is a robust website that describes six steps you can take to do that. 

ThinkingaheadroadmapThinking Ahead

The first step of the Thinking Ahead Roadmap is to name a financial advocate to help you manage your finances as you age. The role of the financial advocate is similar to that of a trusted contact, although the financial advocate can do much more for you. Your financial advocate can make decisions and transactions on your behalf, provided if you give them the authority through a power of attorney to act on your behalf. 

The Thinking Ahead Roadmap contains details on all the steps necessary to develop a complete plan to protect your money as you age. It’s a free resource that’s available to anybody. It was funded by AARP and the Society of Actuaries, and the only motive for creating the roadmap was to help seniors and their families.

It’s going to take some effort on your part to protect your money as you age, but it’s time well spent. It will give you peace of mind that your money is protected, particularly when you’re older and may really need the money.

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