Memory poses financial risk for aging baby boomers

Baby boomers are known as the generation that doesn't quit. Perhaps one day retirement will come.

But, what happens if memory fails first? And handling finances becomes too difficult a task?

Nearly 20% of Americans over age 70 will suffer some form of mild cognitive disorder, which can put life savings at risk.

"My mother had Alzheimer's (disease) and we had to take over her finances at one point," says John Pelham.{}Pelham is a certified financial planner who recalls the difficult task of taking financial responsibility from his ailing mother.

His experience translates to his job."I have a number of clients who suffer who are either suffering from dementia, or some form on mild cognitive disorder, some have Alzheimer's," says Pelham.The majority of Pelham's clients are retired or 55 and older.

He says the aging baby boomer population needs to have a plan in place. Not only for retirement, but for financial care. In case they one day experience memory loss and can't make wise financial decisions. "You never know when something might begin to happen," Pelham says.One of the best ways to handle that sort of transition is to grant a trusted family member, durable power of attorney. "If I have a husband and a wife, and the husband has a large IRA and he becomes diagnosed with Alzheimer's or dementia, if the wife does not have durable power of attorney, she can call me and say 'I need money' and there's nothing I can do," Pelham explains."In our book, a power of attorney is much more important. Because it provides you peace of mind while you're alive, because it provides a seamless transfer of decision making if you ever suffer a temporary or permanent incapacity," says Bill Nolan. Nolan is an elder care attorney.

He says many of these financial issues start with denial."It's a problem. Because, no one wants to admit that mom has Alzheimer's. It scares people to death. They see mom's memory loss as related to her aging, or her medication she's taking. They don't want to admit mom has a problem. By the time they finally do get a diagnosis, mom's mental capacity has decreased to the point where she's lost the capacity to sign important documents, wills, powers of attorney, trusts, healthcare directives and so-on," Nolan explains.That's why Nolan says aging parents and their children to be proactive instead of reactive. "That's the way to save money. Every time. Save money and avoid all sorts of difficulties if you plan ahead," says Nolan.