As boomers move into their late 60s and beyond, the country is likely to experience a growing number of individuals with dementia who have difficulty managing their financial affairs.
This means financial advisers must be trained to recognize the early signs of cognitive impairment among clients and then plan for deteriorating mental health that may occur over many years. In addition, policymakers must bolster protections against financial exploitation to protect older consumers with dementia.
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Those were some of the observations at a conference last week, sponsored by Transamerica and the Massachusetts Institute of Technology AgeLab, entitled “ Financial Planning in the Shadow of Dementia.” The program, which largely focused on Alzheimer’s disease, featured medical researchers, financial professionals and individuals with early stages of Alzheimer’s who discussed the anticipated increase in the disease and how to meet that challenge.
The statistics are sobering.
More than 5 million people have Alzheimer’s today and that number is projected to rise to 16 million by mid-century. One in three over the age of 85 will develop Alzheimer’s, a progressive degenerative disease affecting memory and behavior. And those with Alzheimer’s typically have the disease for 10 years before it is diagnosed.
The projected cost of the disease is staggering. Medicaid – the health insurance program for people with low incomes – is expected to spend $37 billion this year on Alzheimer’s patients, according to the Alzheimer’s Association. One often-overlooked cost is housing, which is the largest expense for retirees in general. Two years ago, adult day care averaged $26,280 a year, while a private room in a nursing home ran as high as $92,977 annually, according to the Alzheimer’s Association.
Daniel C. Marson, a professor of neurology at the University of Alabama at Birmingham, says warning signs of early Alzheimers’s include confusion, forgetting to pay bills, math mistakes, a new interest in quick-get-rich schemes and anxiety over not having enough money when that isn’t the case.
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Steven Starnes, a financial planner with Savant Capital in Virginia, advises clients with dementia. “We are still learning how to do this,” he says.
It’s important to get other people involved, he says.
For example, both spouses should attend meetings with their financial adviser instead of just one of them, Starnes says. That way, if an illness affects one spouse, the other already has built a trusting relationship with the financial adviser rather than starting from scratch.
Clients in the early stages of impairment also should choose a family member or friend to be an advocate who eventually can step in to help manage finances when they have trouble doing so themselves, Starnes says.
“Getting the next generation involved makes the job easier,” Starnes says.
Dealing with people who have dementia can be difficult, and financial advisers should follow the Alzheimer’s Association tips on communicating with those exhibiting symptoms, he says.
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Several panelists at the conference called for more government spending on Alzheimer’s research as well as greater funding for adult protective services that can help guard people with the disease and other forms of dementia from financial fraud and exploitation.
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