One of the biggest fears of getting old is the possibility that may end up with dementia or something similar. There is no doubt about that.
However, just because you will one day get old doesn’t automatically mean that you will be unable to make sound financial decisions anymore. Recent studies have shown that fluid intelligence does decreases with age — a this is known as cognitive decline. The research shows that we start to lose cognitive skills at the rate of about 2% per year from age 55 onwards.
To not put a too finer point on it, as we get older, we become less intelligent.
The is some positive news though. Those that have good financial knowledge built up through their lives remain more likely to manage their financial affairs for longer. Knowledge gained from experience and having to make financial decisions, is likely to help you to continue making financial decisions as you get older. You are more likely to retain the ability to think logically and process new information as you get older.
So at least there is some positive news as our physical health starts to decline.
Having a good understanding of the financial world and you own finances, does in part help explain why there is still so much financial abuse of the elderly. Many people do not understand their finances well enough and as such more people in their 70s, 80s and 90s fall victim to money scams than do much younger people.
It’s not unreasonable to wonder, “How could my Dad have fallen for that?” Well, when he was 60, he was more than likely entirely capable. But now that he’s 90, the situation is no longer the same.
It’s therefore essential to always be on guard when you make financial decisions once you’ve entered your 60s — because you’re not likely to manage your money as well as you might have during your 40s and 50s.
As we all learn through experience, we don’t unlearn things; What we learn stays with us into our 80s and 90s. But it also means that if our financial experience was negative or based on incorrect beliefs, these errors will remain locked in our brains for the rest of your lives.
For example, if you have a history of making poor financial decisions — you never saved, you were always spent all that you earned — that’s likely stick with you. On the other hand, if you made some good financial decisions and have always saved, that is likely to always be with you as well.
But even if that is you, it doesn’t mean that you should just rely upon yourself to make all future financial decisions. Consulting an independent financial adviser can benefit you regardless of your financial knowledge and background.
For example, a good adviser can explain how a decision you are about to make could impact other aspects of your financial life in ways you may not have considered.
An adviser can help you avoid financial scams that target older people. And even if a certain course of action seems logical to you, it’s always good to get a second opinion.
Are you concerned about making financial decisions? Not sure how to manage your savings and investments.
Contact us to today. We can review your current situation and let you know what options are available to you.
If you would like to talk to about financial planning, please get in touch for a no-obligation meeting. Go to our website www.miadvice.co.uk and contact us via our “Get in touch” form on our home page or Contact Martin Dodd on 01902 742221.
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It is advisable to take advice from a professional financial adviser when making major financial planning decisions.
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This article has been prepared in good faith and based on Midlands Investment Agency’s understanding of the law and interpretation thereof at the time of creation. The contents should not be regarded as specific advice and we always recommend that specific advice is sort from a qualified professional. No responsibility can be accepted by Martin Dodd or Midlands Investment Agency Ltd., for any loss that may occur by a person acting or refraining from acting on the basis of this article.