1 Timothy 5:3 ESV – “Honor widows who are truly widows.”

1 Timothy 5:8 ESV – “But if anyone does not provide for his relatives, and especially for members of his household, he has denied the faith and is worse than an unbeliever.”

As we age, our ability to think clearly often decreases. In addition, we can have age-induced over-confidence in our abilities. To make matters worse, we often resist help because we don’t want someone else to do what we feel we can and should do. We might stubbornly say: “I am able to do this and I don’t need or want your help. I’ve been doing this for forty years.”

With age, we gain experience and knowledge. Experience with growing knowledge is a good thing. It means you can manage many different tasks and perform them successfully, even improving upon them over time. This is crystalized intelligence. It is the ability to use math and read instructions. However, we have fluid intelligence as well. Fluid intelligence is the capability to solve unfamiliar problems, use logic in new situations and to see patterns or trends. This form of intelligence becomes more fragile with time. Crystalized intelligence makes us better investors but declining fluid intelligence can cause us to become poor investors. This can lead to disaster.

In the final months of 2014, as my wife Cindie and I increased our trips to visit her mother in Milwaukee, it became apparent that her mom was having difficulty remembering some of the things that are important for maintaining an independent life. She did not understand her investment statements. I became aware of the places where her money and investments were kept. It did not take long to identify some serious problems as I reviewed her statements.

The problems included excessive and unwarranted charges by her bank, gross mismanagement of her investments by a respected investment company and high fees from her investment adviser to do very little work. The combination was destroying her wealth. Thankfully, Charlotte realized she needed help and was very appreciative of our willingness to help her. Here is the reality: this help can best be provided for your loved one if you have financial power of attorney (POA.)

One of the things Charlotte asked for us to help her with was scheduling an appointment with her attorney to review her will and create POA documents for her health care and finances. We also discussed a family trust, but her attorney recommended other solutions that were lower cost and accomplished the same ends. The attorney also recommended that Charlotte create an agreement to ensure that family members could be compensated for helping with her increased care needs so there would be no question regarding her desires. Generally speaking, family members can sometimes provide care at a much lower cost per hour and provide the family contact that is so helpful for someone with declining health and memory.

After the POA document were in place, I completed the following tasks for Charlotte:

  1. Assisted with the move of her checking and savings to a good credit union.
  2. Closed the IRA account with the foolish broker and moved it and her other IRA accounts to Fidelity Investments. Simplification was needed.
  3. Provided her with free investment management services, including buying stocks and ETFs that increased her diversification and her dividend income. This is caring for a widow.
  4. Set up most of her bill payments to be automatically deducted from her checking account.
  5. Ensured that her IRA required distributions were scheduled.
  6. Assisted her with her income tax preparation.

She is so appreciative. Although her memory is fading, she has not lost her ability to say thank you. In fact, as she continues to decline, I adapt my monthly reporting to her to suit her ability to digest the information. The key is to assure her and answer her questions, even if they are the same questions every day. It is the loving thing to do.

AAII – Declining Cognitive Skills Associated with Overconfidence