When it comes to older adults managing their own nest eggs, having the financial literacy, that is the skills and confidence to make smart financial decisions is important. And a common concern is of course interest rates and stock prices. But a big risk that is often less addressed is the risk cognitive decline presents.
Cognitive decline can happen quickly, and impair your judgement, leading one to make poor financial decisions unbeknownst to family members. Making a few bad decisions due to poor cognition can easily wipe out much or all of the lifetime of savings, as the Wall Street Journal recently reported.
Investing and trading firms have set up systems to help minimize this risk. Take firms like Fidelity Investments, Charles Schwab Corp. and Vanguard Group, for example. They’ve developed routine checks to help detect potential signs of cognitive decline, such as requiring frequent password resets and monitoring client calls for keywords such as “confused” and “dementia.”
For more on the systems in place, check out the Wall Street Journal article. And in the meantime, build on your financial literacy with these online resources.