The Importance of Establishing Financial Safeguards While You Can

You might think that leaving the working world means the end of large decision making, but that isn’t true. You make a lot of decisions in retirement. One of the most important things you’ll need to decide is how to handle your money.

You’ve saved money during your entire working life and now you need to make sure it lasts through retirement. If you can at all avoid it, you don’t want to spend your retirement years struggling to get by.

However, budgeting your money and making sure that you handle it correctly in retirement isn’t the only large financial decision you’ll need to make. You’ll also need to make sure that your financial, medical, and personal wishes are noted and protected in case of cognitive impairment.

It’s understandable that this isn’t something you want to think about. No one wants to picture a time when they aren’t able to make financial choices for themselves. However, it does happen. One in 10 adults age 45 or older report experiencing worsening memory or cognitive decline. An estimated 15-20% of people over 65 experience mild cognitive decline. Plus, about 1 in 9 people age 65 and older have Alzheimer’s.

With these stats in mind, it makes sense to establish protocols in advance, before cognitive decline occurs. 

Trusted-Contact Protocols

Your bank and other financial institutions allow you add a trusted contact person to your accounts. In general, this is a person who the institution is allowed to contact if they’re unable to reach you. Sometimes this is used to handle emergencies. For instance, if there is a sudden large withdrawal or other suspicious activity, the bank will want to contact you to verify the changes. If they can’t reach you, they can get in touch with the trusted contact.

Simply naming someone as a trusted contact does not give them full access to your account. They won’t be able to see your balances or make decisions about your account. They can, however, let the institution know if you are unreachable, hospitalized, or otherwise unable to communicate with them. Adding a trusted contact is useful as it allows the institution to stay updated on your status. If you have a sudden medical condition or if you change your address or phone number and do not inform the bank, they can make sure the institution knows.

They can also help in situations with fraud and help the institution spot signs of cognitive decline. Your financial institution has a sophisticated system for determining “suspicious activity.” For instance, if they notice that a person has unexpectedly taken a large amount out of the bank, or if a person who usually always pays their bills on time has suddenly fallen behind, they’ll notice. In these cases, the bank may contact the trusted person to make sure everything is fine. This is important for security.

Unfortunately, many seniors get taken advantage of by financial scams. There are many scams that try to trick people into believing that someone they love needs help or that there is a sudden legal or other reason to provide a stranger with access to your bank account or a large sum of money. These scams are more likely to affect those who are dealing with cognitive decline. The financial institution involved may contact your trusted contact if they believe that recent activities are suspicious or if they have concerns that you are being exploited. 

A trusted contact can also inform your bank if someone has been appointed a legal guardian, executor, or if another person holds power of attorney. This can be important since, when you reach this point in life, you may not be able to do it on your own.

Adding a Trusted Contact

When you’re deciding on a trusted contact, you’ll want to make sure that it is a person you regularly interact with and who understands your situation. They need to be able to update the financial institution as necessary.

It’s also recommended that you select someone who knows what is “normal” for you. This way, if the bank calls asking if a transaction sounds suspicious, they’ll be able to answer.

However, most of the time, it’s recommended to pick a person who does not have access to your actual accounts. This separation provides additional security and peace of mind.