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Retirees: Take This First Step To Keep Your Money Safe As You Age

By: Steve Vernon


There’s been a growing awareness of a significant risk that retirees face as they age into their 80s and 90s: They may not be capable of managing their money due to forgetfulness, distracting health issues, or diminished cognitive capacity. This makes them vulnerable to financial losses that could come from simply making mistakes, being exploited by unethical family and friends, or fraud.

The ideal time to take steps to prevent these potential losses is when you transition into retirement. But if you’re already retired, it’s not too late to make some changes to protect yourself.

An excellent first step is to name a trusted contact for all your savings and retirement accounts and insurance policies. Many financial institutions and insurance companies are adding this feature due to their growing awareness of the problem.

By assigning a trusted contact, you give the financial institution or insurance company someone they can contact if you stop responding to important notices or if the institution notices something fishy with your accounts. You can often easily name your trusted contact by going online. Your trusted contact can only notify you of potential problems; they can’t act on your behalf unless you also give them the legal authority through a power of attorney.  

You want to put some careful thought into the person you name as your trusted contact. Ideally, they’d be someone who is responsible and trustworthy, and cares about your well-being. You don’t want to name a person who has their own legal or financial issues.

Two true stories that illustrate the need

Many years ago, my wife’s 87 year-old mother forgot to pay her homeowner’s insurance bill. The insurance company had mailed several warning notices that she ignored. Fortunately, my wife noticed the pile of warning notices during a visit to her mother and was able to correct the situation before it was too late.

Another situation didn’t end as well. A retired family friend had put their insurance premium payments on auto-pay from their checking account, which can be a good way to address forgetfulness in your later years. Unfortunately, the insurance company raised the premium amount, but the family friend neglected to change the auto-pay amount, and the original monthly premium payment amount wasn’t sufficient to maintain the policy. The insurance company began sending warning notices, and after several months of being ignored, they canceled the policy. When the retiree’s son finally noticed the situation, it was too late to reinstate the policy.

Both these situations could have been mitigated or even prevented if these individuals had given the insurance companies a trusted contact they could have notified after it was obvious that the retiree was ignoring the warning notices.