Seniors struggle to manage finances

By Kathryn Roberts, Cox-SABEW Fellow

As people age, their bodies and minds physically decline inhibiting their ability to make cognizant financial decisions, said a leading a clinical neurophychologist at a recent business journalism workshop.

“Unfortunately, this is not something we can avoid,” said Daniel Marson from the University of Alabama-Birmingham. “This is just father time working on us.”

Cognitive aging is a normal phenomenon that deters people’s “financial capacity,” which Marson defines as the ability to manage money in order to “meet a person’s needs” while remaining “consistent with his or her values” and “promotes that person’s self-interest.

Speaking before a room of about 50 business journalists, Marson said some signs of cognitive aging include short term memory loss, a slower processing speed, a decline of organizational abilities and most importantly, weakened arithmetic skills. The workshop was sponsored by the Society of American Business Editors and Writers.

These impairments affect seniors’ ability to perform a range of financial tasks from buying groceries to investing money. Cognitive disorders, such as Alzheimer’s and Parkinson’s disease, further increase these deficiencies, he said.

One of the more serious issues that older generations face is their vulnerability to scams. About 20 percent of people over the age of 55 have been a victim of financial fraud, said Marson.

Along with scams, seniors can become paranoid about their finances, which increases the tendency to make riskier decisions when managing their money.

“As you get older, you want to move away from more aggressive financial decision making because from a cognitive standpoint, you are not as well equipped,” Marson said.

Adults can plan for this mental decline early on by informing an adult child or younger friend about their personal finances. It is also smart to hire a financial planner, said Lauren Young, an editor at Reuters.com, who was also speaking at the workshop.

“You need somebody objective in there because when things get bad, and things can get bad really fast, family members start getting emotional about things,” Young said. “Granted, it is not always cheap but there are a lot of really good financial advisors out there.”