Big Brother is Out to Control All Elders' Money

[IMPORTANT COMMUNICATIONS NOTE: Recently, any email I send to comcast.net addresses is being returned to me, rejected by Comcast as spam. This began a couple of weeks ago and continues, so if you are expecting a response from me – including notification of publication dates on Elder Storytelling Place stories – this is the problem.

I am frustrated, angry and have no idea how to correct this problem.]

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Recently, Cowtown Pattie of Texas Trifles blog sent me an eight-page brief [pdf] from the Center for Retirement Research at Boston College titled What is the Age of Reason? In Pattie's words, it is a “chilling read” and she is not wrong.

The four authors of this brief are identified as a senior financial economist with the Federal Reserve Bank of Chicago, a senior economist with the Federal Reserve System, a professor of finance at New York University and another professor at Harvard.

Among them, they acknowledge funding from the National Science Foundation (NSF) which is a federal agency and the National Institute on Aging (NIA), a division of the National Institutes of Health that describes itself as “leading the federal effort on aging research.” Bear with me – it's important that you know the genesis of this document.

The authors note that the views expressed in the brief

“do not represent the policies or positions of the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of Chicago, or the Center for Retirement Research at Boston College.”

Whether the views of the NSF or NIA are represented is not stated.

Four of those eight pages of the brief are a title page, references and endnotes, so there's not much text.

The majority of the brief, including four graphs, gives a short overview of studies the authors analyzed which, they say, show “The prevalence of both dementia and cognitive impairment without dementia rises rapidly with age” and that older adults make more financial mistakes than mid-age adults.

All right - so far, so good in that this is true for SOME old people, although the information is nothing new. This is what academics do – slice and dice each other's work, sometimes to good effect and sometimes not, and issue thousands of briefs every year most of which sink into oblivion. But then the authors get to their conclusions ominously titled, “Possible Policy Responses”:

“In response to this problem, several policy approaches are possible and government intervention is probably desirable, although the ideal form of intervention remains unclear.” [emphasis added]

The authors immediately dismiss their first and only benign policy suggestion for government intervention - to strengthen financial disclosure requirements to the public – by stating that “we are skeptical that improved disclosure will be effective in improving financial choices.”

Then the brief begins to get scary – remember, this all targets elders. The second suggestion involves “financial driving licenses,” the requirement to pass a test before being allowed to make non-trivial financial decisions. They ask a whole bunch of feasibility questions including the all-important, Who would be required to take the test?

Well, not me; I will resist clear to the barricades. Reading this brief, I'm beginning to have some sympathy for the teabaggers who object to too much government.

In their final suggestion, the authors step all the way across the line into totalitarianism with “mandatory advance directives” in which adults would be required by a certain age to sign a document placing management of their assets with a third party if they become incapacitated.

That's already too much to stomach, but it gets worse.

“...a fiduciary could be appointed to approve all 'significant financial transactions' involving the principal’s funds after the principal reaches a designated age.” [emphasis added]

In regard to that diabological idea, the authors admit that “it might be perceived by some older adults as an unfair restriction targeted against them.”

DUH!

Not content to pull Social Security out from under elders (as too many in Congress are currently attempting to do), now they are thinking up ways to take everything else old people have.

As I noted above, thousands of such studies are written each year and most sink out of sight before the ink is dry. Some of them sometimes work their way through the bureaucracy to become policy or law. I have no confidence that this one, that would give the government or its appointees access to trillions of dollars in elder assets, will disappear.

Remember that two of these researchers work for federal agencies involved with monetary policy of commercial and investment banking, two others with major universities that are paid to supply the federal government with policy research, and the funding for this project comes from two other federal agencies.

Read the brief for yourself here [pdf].

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At The Elder Storytelling Place today, Lois Cochran: Simple Gifts

Comments

[Technobabe]

Why must we be vigilant to keep what is our safe and why must we protect our social security that has been taken out of our pay during our working years? This sounds like one more way to disable the seniors like me and keep us held captive like we were when young as in barefoot and pregnant.

[Rain]

Infuriating. More of what some call nanny nation thinking and if the country accepts this for elders, they will be next. I agree with all you said. grrrrrrrr

[Mage B]

Sheeeeesh.....so far most of us are doing well at being our own big brothers. I hired a broker. Our friend Duck stopped understanding his checkbook in the last two years before his death....a fact we only discovered after he fell and needed help. Yes, sometimes help is needed, but is it the Government....of all things.

[Cowtown Pattie]

Excellent breakdown of the brief, Ronni.

And thanks for the mention!

Agreed; there is something to be said for crying "foul" when government steps miles over the line.

If you strain out the bigoted zealotry from the Teabaggers' manifesto, what's left at the bottom of the cup are a few reusable tea leaves.

[Paula]

Please note the last four words in this phrase I've lifted from a graph below:

would be required by a certain age to sign a document placing management of their assets with a third party if they become incapacitated.

And, it doesn't stipulate who the third party is.

I don't see this as scary, just practical. I watched my parents lose all the money they had saved for decades, because, at 85, my dad was slightly incapacitated and easily conned. My brother and I tried to stop him from buying stupid stocks, entering contests and gambling, to no avail. He was sure he was smart enough to beat the system, which he studied night and day. And, he was smart, just a little dotty.

For me, I'd be glad to sign a waiver requesting help from a third party if I become incapacitated. It might be less humiliating than asking one of my children, now that I think about it.

[Paula]

Obviously I meant I lifted it from a graph above. Maybe I'll need to sign that waiver sooner than I expected.

[KAS]

There are already procedures that can be used to help elders such conservators. You need to go to court, a good thing in my opinion. And I know many middle age folks who should be signed up for financial education classes. This paper seems to state the obvious.

1. Many of us will decline mentally over time.
2. More financial options are a good thing.
3. We are going to have many more elders with the boomers aging.

and finally

More options to handle this larger elder population are going to be needed. And most financial abuse of elders is perpetrated by close family members.

So I am not as alarmed by this paper as the blog post seems to indicate I should be.

[Darlene]

The thing that scares me about this approach is the 'one size fits all'. It is discriminatory. I wasn't aware that there was a given age at which we became so incompetent that we needed a fiduciary. At the age of 85 I still handle my finances, pay my bills and avoid scams.

There are many young and middle aged adults who make stupid mistakes in investing. Why are Elders the only ones that need to have their resources handled by a fiduciary? I am afraid it's just another ploy to obtain money from a vulnerable segment of society.

Of course it is terrible when an elder becomes confused and is duped by a scam and robbed of her/his assets. However, I do want to point out that this is their own money. If a family member is aware of what is happening, the remaining assets should be placed in trust for the elder (providing they are truly have the elders interest at heart and not their inheritance).

There are already remedies for the family if they have an elder member suffering from dementia who are squandering their assets. The closest family member can have them declared incompetent and have a conservator appointed. I realize that is also ripe for abuse, but why would the government approach be any better?

Maybe I am getting dotty and missing the point here. Perhaps this is an issue that someone should take up in another blog. Sometimes there is a problem of an elder who is no longer competent. We should face that problem and ask for suggestions for resolving it. And we must fight tooth and toenail to stop any government program meant to rob us.

[Mary]

This sounds as if written by a bunch of do gooders who think they are smarter than the erst of us. Certainly some seniors made poor decisions about money but so do many people in their teens, twenties, thirties, forties, fifties, etc. Who will be the great "decider"!
and btw Ronnie - stop using Comcast email - switch to a gmail address - both Verizon and Comcast email systems work poorly.

[Elizabeth Rogers]

As KAS notes it may be true that additional options will be needed to assist older Americans in handling their finances and that you can't always trust your family. However, like Ronni, I will fight to the finish before accepting some arbitrary age designation (determined by whom?) or allowing the government to make what should be personal decisions. I'm totally NOT a tea-bagger, but a glimpse of the nanny state run amok, if true, might make Cowtown Pattie's words about a few (very few) reusable tea leaves make some sense.

My husband and I look out for one another, and we also pay a reasonable annual fee to a trusted financial advisor. Conning us wouldn't be easy, although we're 80 and 73, respectively. I'm not about to submit to some government test so I can handle my own money.

[Ronni Bennett]

RE COMCAST DIFFICULTY - Mary:

I do not use a Comcast email address. Comcast is rejecting my emails from another domain.

My gmail address for a specific personal use only and not day-to-day emailing.

[Donna]

At 54 the proposals in this article disgusts me. Not much else I can say, except I will go kicking and screaming if I am required to allow some stranger/government to make my financial decisions for me.

[Nancy]

Dear Ronni,

I called Comcast.net,my Email provider , and they told me that the difficulty was at your end. I do not believe this because I am having a hard time getting through to someone else via Email and feel that it is Comcast who has the problem.

I have been on the telephone with them a couple of times today and will try to get to the bottom of the problem for us.

[mary jamison]

I second Paula. I have mixed reactions to this, too. I've seen too many family members and friends' old relatives who have refused to relinquish, or even share, information, with their kids. Then there are the elder scams. There are the spouses of people with dementia who are utterly powerless to retain control of their money, even a small SS check, because the demented spouse has run up the credit card shopping online.

Yes, some of us have the--I'm going to go ahead and call it smarts--and the money to manage our money even when we're no longer sane. But way more of us, IMO, don't. And financial disclosures are very difficult to make sense of; I know the fight I had to make sense of the choices Citizen's Bank was giving me relative to the new banking regulations.

I'm not advocating this particular solution, and I'd argue that *everybody* needs to pass the "financial test," just as I believe driving tests, if initiated for elders, should apply to everyone, maybe every 10 years or something. But this seems to me to be a reasonable way to start exactly this discussion.

Once a person starts with dementia, it's usually too late to get them to do anything. And what do you do with people who say they can manage their affairs, but can't?

[joni]

I wonder who would decide just when we are "incapacitated" and would have to turn over management of our assets to a third party? And who would this third party be? Some brokers itching to get their hands on seniors' savings?

Anyway, we all age at different rates--there's no one age to stop driving or to stop managing our own money. Sounds horrible.

Yet, just try to get a slightly demented family member to give up any control to another person. If they had him declared incompetent that would be the end of any good relationship.

This is one of those problems that doesn't seem to have any good solution.

[Nan]

Who is to judge the correctness of a decision? Whose values will be used to determine unwise decisions? Just because a person makes a (seemingly) bad choice doesn't mean it's wrong or that he/she shouldn't be able to make decisions. Just as I object to some of the very poor decisions that an adult son is making doesn't mean I have the right to control those decisions, any more than he has the right to control mine.

[annie]

I'm with you on this Ronni...to the barricades. Your sentence near the end says all - this probably will not disappear because it " would give the government or its appointees access to trillions of dollars in elder assets." As always, follow the money.

It is not about competency to manage one's own finances...they could not care less whether we all go bust.

[Diane]

I am with Paula on this one also...and Joni is correct about the "end of a relationship. I sat by and watched my Mother get scammed by psychics and pseudo sweepstakes people. She even had couriers coming to her door to get cash. She went through 10's of thousands. She would not turn her finances over to anyone. Finally Social services stepped in and I had to take her to court to get appointed as guardian/conservator so that I could gain control of her finances and pay her rent so she wouldn't get evicted...Until the day she died she knew I had her ten million dollars....It was a ten year nightmare..To this day when I even hear about Publisher's Clearing House I get the chills!! I think it behooves us all to get something in place before we become "dotty", because as Mary J. says once it starts, it is too late...

[Ashleigh Burroughs]

It's right that we think about it. It's right that we plan for it. It's right that not planning leads to disaster.

The same could be said for pregnancy.... and there's no license to become a parent.

This paper is advocating responsibility regarding financial matters. Do we really need legislation for this? I don't think that's the way to go... will we be fined if we hide our checkbooks?

It's a personal/family thing, not a government issue.
a/b

[Lynn Brenner]

Ronni -- I agree with you that this brief is appalling; but for several reasons, I'm not worried that these suggestions will ever even get to first base politically -- and not only because older Americans vote.

True, the financial services industry would stand to gain big-time from some of them. But they'd probably hesitate to embrace the most radical proposals here because their wealthiest, and most profitable individual clients are the people who'd find them most offensive -- older Americans.

Also, most of these proposals would require truly sweeping legal changes. The laws that govern issues of mental competence to manage financial affairs, guardianship proceedings, etc, are all state laws. This paper is advocating national requirements, presumably mandated by new federal laws. That's a huge political hurdle right there.

Current state laws assume that people can do what they want with their own money, no matter how foolish it is -- an assumption that goes all the way back in common law. (When you challenge someone's mental competence in a guardianship hearing, the burden of proof is on you to show that he or she is incompetent.) These proposals would turn that longstanding legal precedent on its head.

Mostly, I was struck by how slap-dash this paper is -- it's not just short, it's barely thought-out. The authors don't even say why a government solution is appropriate for problem they identify.

One could make an argument that this is a public policy issue because old people who blow all their money on financial mistakes wind up an expense to the taxpayer -- but interestingly, they don't make that argument. Perhaps there's not enough evidence to support it!

[Sheila Silver Halet]

MONEY - we don't have any...we made all gone and now live only on SS and Thank God or LBJ - Medicare. No credit cards no credit - just a house and 1 car - and we live from day to day - month to month - and when it is over - it is over. AND SO BE IT...much easier that way - plus funerals are paid in full.