Chris Gash
By Liz Weston
September 1, 2015

The good news: Through hard work, thrift, and wise choices, you’re set for retirement. The bad news: You might find it harder someday to make sound financial decisions. On average, money smarts peak at age 53, the Center for Retirement Research reported in 2010. The older you get, the greater your vulnerability to scams, unscrupulous advisers, or just poor judgment.

The stakes are high: Fraud victims 65 and older lost an average of $30,000, Allianz found last year. One in 10 lost more than $100,000.

Taking these measures now will help protect your finances, or those of a parent or other relative.

Make Investing Simpler

Have several IRAs and 401(k)s? Consolidate them for easier monitoring, says financial planner Carolyn McClanahan of Life Planning Partners in Jacksonville. Replace individual stocks and bonds with a handful of mutual funds or exchange-traded funds, which need less attention.

Keep only two credit cards, says McClanahan—one for everyday purchases, the other for automatic bill payments. Even mild impairment can make managing bills difficult; automation can head off late fees and service interruptions.

Assemble Defenders

A strong network of friends and family can thwart exploitation, says Sally Hurme, an elder-law attorney with AARP. Your circle can alert you if an investment or an adviser doesn’t seem right.

From this crew, pick a wingman who can make financial decisions for you when you’re not able—someone money-savvy, trustworthy, and ready to act in your best interest. Draft a power of attorney for finances that names this person and an alternate, in case your first choice can’t serve.

Married people often name their spouse as a protector, but Carolyn Rosenblatt, an elder-law attorney in San Rafael, Calif., advises picking someone younger. A person your age could become impaired at the same time you do, she says.

Open Up Your Finances

The more you share with your backup person, the easier it will be for her to spot missteps or bad advice, says Rosenblatt. Set up alerts with your financial institutions so you both get emails or texts about out-of-character transactions like an unusually large transfer. Use an app like Mint so she can see daily account activity. And give your doctors and financial adviser, if you have one, permission to contact your backup if they are concerned about your cognitive abilities.

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Design a Money Blueprint

To help keep your investments on track, write up what’s known as an investment policy statement, says McClanahan. Spell out your goals, such as preservation of capital; what types of securities you’ll hold, like mutual funds; and how much of your portfolio, at different ages, is to be allocated to safe assets, such as cash, and to riskier assets like real estate. This document can help you resist sales pitches and the temptation to stray from a sound investment strategy.

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