The Biggest Threat To Your Retirement Portfolio: Mild Dementia

June 6, 2015 10:03 AM

End of life planning is hard. There are checklists, like this set from Get Your Shit Together. There are practical tips for making things easier for whoever's dealing with your estate after you're gone, like the tech tips in this previously from MeFi's own Jessamyn. But in the murky middle between living completely independently and being incapable of managing everyday tasks lies a subtler and more difficult question: how to organize and manage your money when financial competence is one of the first areas to decline on the slide from mild cognitive impairment to dementia. SeekingAlpha contributor PsychoAnalyst has a surprisingly nuanced analysis of the steps self-directed investors can take to protect their finances from the underestimated risk of their own declining ability to make good financial decisions, and raises some points worth thinking about for folks beyond the site's investor wonk audience.
posted by deludingmyself (26 comments total)

eponysterical?
posted by lalochezia at 10:17 AM on June 6, 2015 [6 favorites]

IMO this completely explains all the wacky investment and gold bullion advertising you hear on right-wing talk radio.
posted by JoeZydeco at 10:48 AM on June 6, 2015 [17 favorites]

Not mentioned directly - scammers specifically target the elderly for this exact reason. My grandfather just called me (thankfully) after getting an IRS imposter call threatening to sue him, and a family friend's mother was taken for basically everything she had saved a couple years ago by someone who convinced her to wire money out of the country.
posted by T.D. Strange at 10:51 AM on June 6, 2015 [4 favorites]

The author makes a lot of excellent points, but arguably downplays the biggest one:

If you can't find an advisor you trust, or balk at paying their hefty fees, an inexpensive, partially automated advisory service like the Vanguard Personal Advisor Service might be a safe choice. If Vanguard's index funds are good enough for Warren Buffett to recommend to his own wife, they probably will work for you

If you are at retirement age, your investments should be unquestionably safe, stable, and liquid. As long as you can convince yourself (and others) that your money is safe with Vanguard, its arguably the most foolproof of the options outlined.

Also, make it very clear (if it is your wish) that you want to use up your savings to live well and stay comfortable through the end of your life.

We managed to convince my aunts and uncles to spend my grandmother's entire (and fairly modest) savings to buy her the best care possible as her health declined. It was unquestionably the right thing to do, but I never want to have to fight with my family over that topic again.
posted by schmod at 10:54 AM on June 6, 2015 [11 favorites]

If Vanguard's index funds are good enough for Warren Buffett to recommend to his own wife, they probably will work for you.

Worth noting that if you invest through another broker (e.g. Fidelity, TIAA-CREF) they also very likely have a variety of index and low cost funds that you can invest in without the hassle of opening another account.
posted by ryanshepard at 11:02 AM on June 6, 2015 [2 favorites]

The issue isn't so much how dementia will affect the financial management of those of us in our 30's and 40's... it's how it will affect or is affecting our parents.

The single stroke of a pen can create tremendous havoc and hardship. Unfortunately there is no easy way to broach the subject with a parent who still considers themselves competent.
posted by Nevin at 11:22 AM on June 6, 2015 [7 favorites]

When my mother started to get dementia the paranoia started as well. Beyond all evidence and rationale thought, she was convinced that long-loved family members, basically anybody not in the room at that instant, were taking her money. She would literally spend hours pouring over bank statements looking for unexplained withdrawals that she just KNEW must be there somewhere. I found pages of careful totaling and re-totaling of balances where she was clearly looking for evidence of the crime. When she got cash she would hide it somewhere in her apartment and then, thanks to the dementia, forget about it. I was constantly finding "stolen" money in flower vases, underwear drawers, books, and cookware. She even put a password on her bank account so that nobody could access it, and then promptly forgot it.

I'm writing this because, if you've got elderly parents, you should be aware that this can happen. Please don't dismiss ANYTHING unusual your parent says about their finances.
posted by LastOfHisKind at 11:30 AM on June 6, 2015 [17 favorites]

I don't really understand the advice they give in the last article. It seems like, unless you completely trust someone to take over for you if you're feeling grumpy and get-off-my-lawn-ish, but not demonstrably suffering from dementia, you're kind of fucked.

It's sad because my grandparents now have thousands of dollars of credit card debt that my grandmother ran up before anybody noticed there was a problem. The NYT article was a big eye-opener for me because I finally understood how a woman who had her finances figured out down to the penny all her life could be so irresponsible in the last couple of years. But not even my grandfather realized how much trouble she was having balancing the books until it was too late. Unfortunately their children were happy to avail themselves of her generosity for years while she was going downhill.
posted by stinker at 11:30 AM on June 6, 2015 [2 favorites]

stinker, I used the phrase "nuanced analysis" but didn't think the last article gave good enough ideas either. Quite frankly, I found it kind of terrifying, which was part of why I made this post. There's no Mail Goggles (the Google labs option that makes you answer simple questions to prevent drunk emailing) equivalent for accessing your Vanguard account that I'm aware of.
posted by deludingmyself at 11:41 AM on June 6, 2015 [3 favorites]

One of these days I'll get myself a Single Payment Immediate Annuity (SIPA). It works like this: you give a big reputable company like Fidelity a huge chunk of your savings and, in exchange, they pay you a guaranteed salary for the rest of your life. It's like someone doling ouy your savings back to you bit by bit, and at a higher interest rate than you can get from a saving account. A good way for oldsters on the edge of dementia to hand over yet keep control of their cash at the same time.
posted by mono blanco at 11:44 AM on June 6, 2015 [10 favorites]

But what kind of verification questions can they ask they would prevent someone who is emotional and irrational, but not delusional, from making bad decisions? It's such a difficult problem because not even my grandfather noticed that his wife was losing it.
posted by stinker at 11:46 AM on June 6, 2015 [6 favorites]

Well, Mail Goggles asks basic arithmetic, which the NYT article said was one early warning sign, and not something we go around quizzing our elders on. I don't think that's anywhere near a perfect solution - a resourceful individual would grab a calculator and convince themselves that cheat wasn't a big deal - but it's at least some kind of check.
posted by deludingmyself at 11:49 AM on June 6, 2015 [1 favorite]

The Biggest Threat To Your Retirement Portfolio: advertising you hear on right-wing talk radio.
posted by oneswellfoop at 11:49 AM on June 6, 2015 [1 favorite]

They're on the internet too.
posted by bukvich at 12:00 PM on June 6, 2015

Don't follow that link..
posted by bird internet at 12:02 PM on June 6, 2015 [2 favorites]

I can attest that having a parent with even mild dementia is enough to give you sleepless nights, especially considering how much financial damage they could do. But, it would be remiss to point out that one need not be suffering from dementia to do serious financial damage.

As complicated as managing your savings and the necessary evil of investments can be when young, things get a lot more complex as you get older and start staring-down retirement and old age. That's when the they start hitting you from all corners will all sorts of management plans to help stretch your retirement funds across what could easily be 30 more years of life. It's all very complicated and difficult to parse. It's also one of those areas where the great god Internet is pretty much useless, as one can find "information" supporting the primacy of each and every scheme.

And, god help you if some asshats on Wall Street decide once again to crater the economy for grins and profit. The idea of my retirement funds taking a hit as large as the last recession, but when I'm actually deep into retirement, give me the willies.
posted by Thorzdad at 12:32 PM on June 6, 2015 [3 favorites]

My right-wing uncle pissed away everything he had, including his house, and racked up a fortune in credit-card debt, when he started to lose it. My cousins had to literally take the cards out of his hands and cut them up to get him to stop. I think he might own some, uh, gold and silver mines he saw advertised on Glenn Beck or somewhere, old Idaho mines that had already ripped off a previous generation of investors a hundred years ago.
posted by Fnarf at 12:58 PM on June 6, 2015 [2 favorites]

We need tougher financial predator laws. We need more social workers for the elderly. We need a real safety net to ensure a bare minimum for those who either lose everything or never had much to begin with. We need more progressives in the House and Senate.
posted by Beholder at 3:03 PM on June 6, 2015 [13 favorites]

Ugh.

Next week I'm taking my mom to her appointment at the geriatric clinic for a battery of tests. This morning I went by her house and she asked me why the cable bill was so high. I looked at the bill and showed her it was because her bill was a month overdue. She has never missed a bill payment or run a credit card balanc in her life. Now I'm not so sure. This post and earlier comments like Jessamyn's are timely and appreciated
posted by Room 641-A at 4:24 PM on June 6, 2015 [2 favorites]

This book is a guide for fruitful discussions about just this subject: AARP The Other Talk: A Guide to Talking with Your Adult Children about the Rest of Your Life

Read the reviews.
posted by Short Attention Sp at 5:00 PM on June 6, 2015 [2 favorites]

The Biggest Threat To Your Retirement Portfolio: Mild Dementia Generic Legal Forms

Generic legal forms can create legal and financial risks because laws vary by jurisdiction, and specific facts may require different forms and procedures. For example, Get Your Shit Together promotes Legal Zoom, which according to a paper published by The Stanford Center for Legal Informatics:

In recent years, LegalZoom has become the target for allegations of engaging in the unauthorized practice of law. LegalZoom was founded in 2001 and offers online preparation services for basic legal documents such as incorporation papers, uncontested divorces, and simple wills.[61] The company uses logic trees to walk consumers step-by-step though the creation of the desired documents which are then reviewed by non-lawyers. In 2008, the Authorized Practice Committee of the North Carolina State Bar sent the company a cease-and-desist letter expressly rejecting the company’s claim that its services did not constitute legal advice.[62] Years of litigation has still not resolved the question of whether LegalZoom is engaging in the unauthorized practice of law, especially as to it more complex services.[63] While the legal battle continues in North Carolina, in March 2014 the South Carolina Supreme Court approved the company’s business practices finding that the technology used was similar to interactive self-help offered by various state and local agencies.[64] LegalZoom has faced unauthorized practice lawsuits in other states as well: settling two class actions in California in 2012, paying $1.9 in attorneys’ fees in Missouri as part of another class action, and a 2010 lawsuit brought by the state of Washington alleging consumer protection violations.[65]

Free and low-cost legal assistance may be available to help with planning and drafting legal instruments:

The U.S. Administration on Aging (AoA) offers a searchable online directory of state and local Area Agencies on Aging and a telephone referral service at [phone] for a variety of resources, including supportive and caretaker services, elder justice and health promotion programs.

The Department of Health & Human Services (HHS) offers a searchable online Eldercare locator that includes legal assistance and Elder Abuse Prevention resources.

_{via the MeFi Wiki Get a lawyer page}
posted by Little Dawn at 5:23 PM on June 6, 2015 [6 favorites]

Seconding and Favoriting Little Dawn HARD. Avoid LegalZoom, in general avoid nonlawyers offering legal (particularly trust) services.

If you have children, if possible do not keep them in the dark. Introduce them to your attorney and to your financial advisor, if you have them (and you should). This is one of those circumstances where it really helps to have folks who know your family and who are looking out for your best interests. A sudden change of advisors or financial institutions can be a big red flag for the family. Definitely check out Area Agencies on Aging, if you're looking for elder law attorneys, I'd also recommend checking out NAELA, which is the National Academy of Elder Law Attorneys.
posted by percor at 6:06 PM on June 6, 2015 [2 favorites]

This scary FPP offers yet another reason why both members of a couple should be aware of the details of their joint and separate finances. Whether or not you and your spouse/partner comingle funds, you will be each affected, possibly catastrophically, by the other's poor decision-making.
posted by carmicha at 8:14 PM on June 6, 2015 [1 favorite]

The problem is that you cannot save enough money in 30-40 years of working to pay for 30-40 years of retirement.
posted by effugas at 11:31 PM on June 6, 2015 [2 favorites]

But what kind of verification questions can they ask they would prevent someone who is emotional and irrational, but not delusional, from making bad decisions? It's such a difficult problem because not even my grandfather noticed that his wife was losing it.

The real difficulty is political. Specifically that politicians are part of the predator group that preys on the paranoia that comes with dementia and thus have little incentive to protect them.
posted by srboisvert at 8:06 AM on June 7, 2015 [3 favorites]

Mail Goggles asks basic arithmetic, which the NYT article said was one early warning sign,

But not necessarily. When my senile mother had no short term memory, she could still count backwards from 100 by 7s.
posted by Obscure Reference at 10:26 AM on June 7, 2015