Researchers from the University of Minnesota and Stanford Center on Longevity recently released the Thinking Ahead Roadmap, a comprehensive toolkit funded by AARP that guides people to select someone they trust to help manage their money if financial decisions become too difficult in the future.
“Problems with financial decision-making can appear many years before a dementia diagnosis. Even cognitively healthy older adults may show declines in their financial decision-making abilities,” said lead author Marti DeLiema, Ph.D., with the University of Minnesota’s School of Social Work. “We wanted to create a free resource that encourages people to plan today to safeguard their finances from fraud, abuse and financial mistakes down the road.”
According to the 2020 Understanding America Survey, only 39% of Americans aged 60+ have a durable power of attorney (POA), a document that legally names someone to manage their money if they could no longer handle their financial matters.
“Without this important document, trusted caregivers won’t be able to access the older person’s funds to pay for basic needs like food, prescriptions and housing,” said co-author Naomi Karp with the Stanford Center on Longevity. “Our Roadmap is a clear, step-by-step guide to picking the right person, giving them the legal authority they need, and helping them understand their role and duties as a financial advocate.”
The design of the Thinking Ahead Roadmap, available online and in print, was guided by extensive interviews with financial, legal and healthcare professionals. It provides tips on how to pick a trusted financial advocate who will put the older person’s needs first and carry out their financial wishes.
“It’s a bit like picking a healthcare proxy, but in this case you want someone who is trustworthy and who will make sound financial choices,” said DeLiema. “The Roadmap also offers tips on how to have an open conversation about finances and how to overcome common issues like resistance from adult children who don’t want to acknowledge that their parents are getting older or who are uncomfortable talking about money.”
The website also features a financial inventory that people can download and fill out with their own information to make the job a little easier for their financial advocate. There are informative videos of interviews with people who have used the Roadmap to get started on making an advance financial care plan.
The final step in the Thinking Ahead Roadmap gives advice on how to transition financial decision-making responsibilities to the advocate.
“Having a conversation about the potential triggers, or warning signs that it’s time to get more help with financial decisions, paves the way for a smoother, less confrontational transition in money management,” said co-author Steve Vernon with the Stanford Center on Longevity. “Talking about these signs in advance, around retirement age, actually gives the older adult more control over how the process unfolds.”
In addition to interviewing experts, the research team gathered data from more than 150 diverse older adults (age 60+) to understand where the hang-ups are in the planning process and how to overcome them. According to the research participants, it’s important to plan ahead in order to reduce tension among family members, ease the burden on future decision-makers, and reduce the risk of scams and financial abuse. But ultimately, the most compelling reason for many study participants was the peace of mind knowing that their finances will be in good hands. According to one participant, “Extra effort now can provide peace of mind later.”
Supported by funding from AARP and the Society of Actuaries, the Thinking Ahead Roadmap can be viewed and downloaded for free at ThinkingAheadRoadmap.org.