Tuesday, September 15, 2009

Will dotty oldsters cause a financial train wreck?

Here's something else to keep you awake nights.

Dementia “explodes” after age 60, doubling every five years. By 85, about 50 percent of people have "substantial cognitive impairment." That includes dementia and other mental deficiencies that get in the way of managing one's own financial affairs.

This would only matter to geezers and their heirs if it weren't for the fact that this group has a helluva lot of money, and therefore a potentially huge impact on financial markets.

Some heavy-duty researchers are publishing a report that outlines a range of possible approaches, including “gentle nudges to steer older participants into the proper investments," and "regulating financial products like dietary supplements."

I can testify that this is a serious problem, based on my own experience with aging family members, but no one likes the prospect of handing their financial decisions over to someone else, particularly an investments manager who may put his/her own best interests ahead of the client's. Equally unpopular are government regulations that limit individuals' flexibility.

Stay tuned as this issue heats up in Geezerland over the next 10 years.

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