When once-simple financial tasks become difficult or confusing, it can be the canary in the coal mine signaling that an elderly person is developing dementia.
Financial problems will soon follow once people with cognitive impairment start miscalculating and missing payments, forgetting and misplacing accounts, or falling victim to fraud.
But some good news has come out of a new study of Medicare recipients: the vast majority of the 5.5 million people over 65 with established dementia – usually, though not, always Alzheimer’s disease – are receiving help from family and other caregivers with balancing their checkbooks, depositing and withdrawing money, and conducting transactions.
Even better, they are actually benefitting from it. The seniors who receive assistance are more likely to be able to pay for their essential expenses like rent, food, prescriptions and utilities, according to researchers at the Center for Retirement Research, which also sponsors this blog.
There was bad news in the report too: a nontrivial share of the older Americans with established dementia – that is, dementia for at least three years – aren’t getting any help. This problem is expected to grow in future generations. One major reason is longer and longer life spans, which exponentially increase the risk of dementia. Nearly one in three people over 85 are in some stage of dementia. Compounding this is the fact that today’s older workers have fewer children and have divorced more, which shrank the pool of who would be willing to pitch in and help them.
Having a caregiver helping with money management wouldn’t necessarily make an elderly person better off financially. Suppose a daughter is unfamiliar with her mother’s finances or a husband isn’t good at managing his own money. In extreme cases, caregivers sometimes steal from the trusting seniors in their care. Even so, it turns out that it’s better to receive help than not. …Learn More
Myra Hindus of Boston, semi-retired at 68, had her financial adviser estimate the 401(k) withdrawals necessary to support her $4,500 monthly budget, which the adviser also prescribed. But Hindus isn’t fully at ease about her finances, despite the professional advice, a paid-off mortgage, and a good bit more savings than most people have.
“It’s a bunch of guesswork,” said the former diversity administrator and consultant to major universities who hedges her bets by teaching college social work courses.
What overwhelms her are the many unknowns that will determine whether her money lasts as long as she does. What if her adviser is wrong? Or what if she lives well into her 90s – like her mother did? She’s also uncertain of the impact of her younger partner’s coming retirement, which isn’t sorted out yet.
“No one knows when you’re going to die so you can’t base it on that. We’re all in the stock market, and we don’t know what will happen to that,” she said.
Brian Jarvis and Connie O’Brien of Beavercreek, Ohio, also have advantages most baby boomers don’t: small pensions from their former employer, Northrop Grumman, and a mortgage paid off with their private-sector salaries. But they got lucky too. The odds that their withdrawal strategy would succeed improved a few months after they retired, in 2010, when President Obama signed the Affordable Care Act. The couple, who are too young for Medicare, no longer had to buy expensive private health insurance – access to the government health exchange drastically reduced the expense. …Learn More
It’s a simple concept. Deposit retirees’ Social Security checks right before their big-ticket bills come, especially rent.
The U.S. Social Security Administration’s current schedule for depositing pension checks in bank accounts is based on each retiree’s birth date– it can be the second, third, or fourth Wednesday of each month.
The problem is that cash-strapped, low-income seniors receiving the earlier checks, on the second or third Wednesdays, can fall into a common behavioral trap: they spend the money soon after it comes in and then can’t cover the rent, mortgages or credit cards due at the beginning of the following month.
According to a clever new study, people who get these early monthly checks are at greater risk of resorting to desperate measures like payday loans than are seniors receiving them on the fourth Wednesday.
Such measures of financial distress are occurring “even though the pay schedule is known in advance,” write researchers Brian Baugh and Jialan Wang.
The advantage of Social Security deposits made on the fourth Wednesday is that retirees can get the big expenses out of the way first, forcing them to make do for the rest of the month with the money they have left. Indeed, people with fourth-Wednesday deposits had fewer bounced checks, account overdrafts, and payday loans, the researchers found. …Learn More
Hyacinthe Rigaud’s portrait of King Louis XIV, courtesy of the Getty Open Content Program
Tontines might be a nifty idea for retirement income. Too bad they haven’t been legal here for a century.
Tontine is a fancy word for betting on how long you’ll live – in a good way. Here’s the concept in a nutshell: many people pool their money in return for guaranteed regular payouts for life, similar to an annuity.
The people who live to, say 90, will receive ever-increasing financial payoffs, because the number of participants in the pool will invariably shrink over time. The catch is that the investors who die young won’t receive as much income as the men and women who live the longest – but they won’t need the money either.
A new study by the Center for Retirement Research (CRR) takes a close look at an idea that is tossed around among finance experts: modifying tontines to use them as a source of retirement income.
Some criticize them as a dubious investment, but they’ve stood the test of time. King Louis XIV of France was the first monarch to raise public funds using tontines, a 1650s creation of Italian financier Lorenzo Tonti. More than a century later, they caused financial hardship among middle-class investors, laying some of the groundwork for the French Revolution.
Tontines made it into American popular culture in the M*A*S*H* television show. Because Col. Potter was the last man standing among his World War I Army buddies, he got the only remaining bottle of brandy from a cache they’d found and drank while camped out in a French chateau. Tontines popped up again in an episode of The Simpsons: grandpa Abe Simpson and Mr. Burns fight over some valuable German paintings in a tontine their Army unit had created back in World War II.
Credit for the idea of a retirement tontine goes to a paper by two professors at York University in Toronto, Moshe A. Milevsky and Thomas S. Salisbury. In his new report, CRR researcher Gal Wettstein agrees that tontines might be a useful way to get regular retirement income – with modifications. …Learn More
The children in this video have a delightful take on our cultural attitudes and mores about money – what it is, what it can do, and whether to share it.
The interviewer borrowed the format Art Linkletter used when asking kids questions on his Emmy Award-winning television show, “Art Linkletter’s House Party,” which aired between 1952 and 1969 – as boomers and their parents will remember.
The new video about kids and money is posted on the American Financial Services Association Education Foundation’s website. The foundation’s mission is to educate people about responsible money management, starting with young children and teenagers.
The adorable factor makes this 6-minute video fly by.Learn More
The scary thing about fully retiring is the obvious thing: the ability to earn stops cold.
Most retirees live on what they get from Social Security and what they can spend from their savings, if they have any. So how many older Americans with fixed incomes can accurately be described as being in difficult straits financially?
Only about 10 percent of retired people today are being forced to cut back on food and medications to pay their other bills, concludes a summary of recent studies on retirement income by the Center for Retirement Research (CRR), which supports this blog.
Tomorrow’s retirees have a more troubling outlook, in part because they will be dramatically more reliant on 401(k)s.
The typical middle-income worker in Generation X, who ranges in age from 37 to 53, can expect his savings to supply 42 percent of his total income when he retires. Savings are necessary for just 27 percent of the total income of current retirees born during the Great Depression and World War II, according to one of the studies summarized by CRR and conducted by the Urban Institute and U.S. Social Security Administration. …Learn More