Cognitive decline is an inevitable part of aging, but its financial implications can be devastating, particularly for wealthy older investors. Research shows that those unaware of their declining cognitive abilities face significant financial losses, with the top wealth quartile experiencing a staggering average loss of US$92,983 over two years (the research looked at over 16,000 Americans aged 50 to 80).

Looking at what the researchers deemed to be "financial wealth" (assets over which people could most easily make decisions with minimal limitations and stripping out the component of wealth derived from principal real estate for example) showed that unrecognized cognitive decline was associated in losses of 20.5% - enough to seriously derail many of the best laid plans.

Unrecognized decline compounds the dangers of overconfidence in investment decisions, leaving individuals vulnerable to poor financial choices and scams.

One key safeguard is designating a Trusted Contact Person (TCP), a critical yet underutilized tool introduced by Canadian regulators in 2021. While a TCP has no control over accounts, they act as a security measure, providing a second layer of oversight when warning signs of cognitive decline or exploitation arise.

Incorporating measures like naming a TCP and fostering open financial discussions with partners and family can help protect years of careful planning from being undone by unrecognized vulnerabilities.

You can read more about it in my latest column for The Globe & Mail. (This link is a "gifted" link, meaning that this normally paywalled article can be shared up to 20 times to non-subscribers of the Globe.)

Wealthy older investors with cognitive decline risk losing money. It’s one reason you need a Trusted Contact Person
A recent study suggests that how well we perceive our own cognitive decline can have a huge impact on our retirement success
The Globe and Mail
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Why This Topic Matters:
Financial planning is a cornerstone of retirement security, and cognitive decline is a silent threat that can unravel decades of effort. For older, wealthy investors, the stakes are particularly high, as even small lapses in decision-making can lead to outsized losses. Highlighting the role of Trusted Contact Persons not only raises awareness of this proactive safeguard but also empowers individuals and families to future-proof their financial well-being. Taking action now can mean the difference between a secure retirement and one compromised by preventable financial losses.