One of the first signs of cognitive aging, the process by which cognitive abilities decline with age, is problems managing one’s own finances. Even in the absence of disease, it can become progressively more difficult to balance a checkbook, properly review a credit card statement or make good investment decisions. Cognitive aging also puts a person at a greater risk for fraud and exploitation.

To help adults protect themselves, the Federal Reserve Bank of Philadelphia published seven actions to take. They are:

1. Assign trusted contacts to all financial accounts. This is a person whom a financial institution can contact when exploitation or unusual behavior is suspected.

2. Prepare a durable financial power of attorney. A financial power of attorney allows a trusted person (an “agent”) to act on behalf of someone who can no longer make decisions independently (a “principal”). This is a powerful privilege and should only be given to someone who is trustworthy.

3. Prepare a will. Having a will prepared before the onset of any cognitive conditions is important not only to avoid future problems, but also because changing the will requires a person to have the legal capacity to do so.

4. Keep up on the latest scams. The Philadelphia Fed says the Federal Trade Commission (www.consumer.ftc.gov/features/scam-alerts), the National Consumers League (www.fraud.org) and AARP (www.aarp.org/money/scams-fraud/fraud-watch-network) are good sources for information.

5. Monitor your credit and your identity. Since older adults tend to apply for new credit less often, they are also less likely to monitor their credit on a regular basis. AnnualCreditReport.com (www.annualcreditreport.com/index.action) allows reports from all three credit bureaus to be accessed for free each year.

6. Consider hiring a money manager. A daily money manager (DMM) can perform many essential financial services, often at a far lower cost than an accountant or a financial planner. The Philadelphia Fed suggests contacting the American Association of Daily Money Managers (https://secure.aadmm.com) for local DMMs.

7. Consider purchasing financial account monitoring services. These are third-party account monitoring services that help to spot suspicious financial transactions. One company mentioned, but not explicitly recommended, is EverSafe (www.eversafe.com).

Source: “Combining Forces to Combat Elder Financial Victimization,” Jeanne Rentezelas, J.D., and Larry Santucci, Payment Cards Center Working Paper, Federal Reserve Bank of Philadelphia, June 2018.