Most retirees suffering from mild cognitive impairment or dementia need assistance managing their finances in order to prevent the risk of making financial mistakes or falling victim to fraud and abuse.
The Center for Retirement Research at Boston College (CRR) says the Social Security’s Representative Payee Program can be a major source of support for these individuals. The program allows a designated person to receive and manage another person’s Social Security Benefits — the only source of income for several American retirees. Payees also must submit reports to Social Security indicating that all expenditures were in the best interests of the beneficiary.
However, the CRR’s research suggests that only 9% of those suffering from dementia and 70 years of age or older have a payee. And although this research points out that most retirees suffering from dementia have some source of financial assistance such as a non-impaired son or daughter, much can be done by social services organizations and financial services practitioners to help retirees manage their money and prevent falling victim to fraud.
According to the CRR, “Groups vulnerable to having no help available include those with less education, minorities, and individuals living in densely populated areas.” The research also indicates that those isolated from non-impaired spouses or children within 10 miles are likely to receive no financial assistance.
As for those suffering mild cognitive impairment or dementia and receiving financial help, most seek the assistance of a professional. According to CRR research, 63.2% of these individuals seek financial assistance through a power of attorney. About 36.6% receive help from a child, and about 29.1% receive help from a spouse.
The research also suggests that living in a tight-knit community and involvement with a religious organization may also increase the likeliness of having access to financial assistance. The CRR notes, “Having a strong community, as indicated by involvement with a Catholic Church or residence in a small county, is associated with being more likely to have help.”
Thus, it’s important for financial advisers to maintain strong, personal relationships with vulnerable clients.
The CRR’s study used data from the Health and Retirement Study (HRS) linked to administrative Social Security records in order to document what share of retirees with mild cognitive impairment or dementia use the Representative Payee Program or other sources of financial assistance.
“Are Many Retirees with Dementia Lacking Help?” can be accessed at CRR.BC.edu.