This is the second in a series of articles about the issues that arise over time for older people who experience mental declines - and how you, as a family member or friend, can help.
Jeanne tried not to gasp when she saw her mother's investment records. Edith, 80, proudly pointed to a drawer full of old, musty, dog-eared file folders. The labels had been crossed out and written over many times.
Jeanne discovered that the labels meant nothing. A statement from seven years earlier for one account might be nestled with last month's statement from another account. It was hard to know which accounts were still open and which investments had been sold years earlier, since the files were incomplete.
Decades of investments - in companies that merged, spun off, vanished, paid dividends, split or reverse-split their shares, changed shareholder service companies, and so forth - were reflected in a bewildering array of actual stock certificates, little deposit chits, statements sent to old addresses and previous names, and so forth. The mishmash of records appeared as impenetrable as a jungle thicket.
Jeanne sighed in disbelief. Taking over her mother's checkbook had been hard enough. But trying to get a handle on the investments was much, much worse.
In Edith's kitchen junk drawer, rubber bands were neatly grouped by size and color. The bands of each unique size and color were bundled together with a rubber band of exactly that color and length. Everything else in the apartment was similarly tidy and organized.
Except the financial records.
It took Jeanne two years to track down and sort out all of her mother's assets. Was her experience unusual? Not at all.
David Laibson, a Harvard economist, was one author of a study about older people and money management. If you think that "older people" means people who are at least 5-10 years older than you are, the study is eye-opening.
It showed that on average, the ability to make good financial decisions peaks at age 53. It also reported that 35 percent of people over the age of 70 have had some mental decline that means they are at risk of making poor financial decisions. And by the age of 80, more than half have this problem.
In an interview in AAII Journal, Laibson advised that people avoid two common pitfalls.
"The first mistake is to think that, for some reason, dementia won't happen to us. We're special, we're different, we're going to somehow protect ourselves ... whether the odds are 30 percent or 70 percent, there are significant odds ... that substantial cognitive decline will affect our own lives.
"The second mistake that I think people make is that they falsely believe that somehow they're going to magically notice significant cognitive decline setting in, and then at exactly the right moment do all these things [get their finances simplified, documented, and organized so that others can step in if need be], before the cognitive decline is too significant. That's a grave mistake. We don't have that ability to suddenly recognize it and do the right thing just before we lose the capacity to make decisions well."
What can you do to help yourself and others avoid the problems that might arise?
First, recognize that no one else is going to watch out for and address this issue.
Elderly relatives who have handled their own affairs for decades are not likely to notice that they are slipping.
By the time doctors notice that individuals are not as sharp mentally as they used to be, financial chaos may have resulted in cancelled insurance policies and credit cards, home foreclosures, bounced checks, tax penalties, outright loss of money due to bad decisions or scams, and so forth.
Second, simplify and organize your own affairs. Having done so, you will be in a better position to say to older relatives, "I read that our ability to handle finances peaks at age 53. Here's what I've done to make my finances easier to manage. I'm interested to know what you have done. Maybe you could give me some advice. Or maybe I can help you."