As Australia’s ageing population continues to increase, there are growing concerns over how health issues will affect seniors and how they manage their money and financial assets.
In particular, there are concerns that declining mental capacities, brought on my dementia and similar diseases, will impact on seniors’ financial stability.
As it stands, one in 10 people older than 65 suffer from dementia – three in 10 older than 85 – and this number is only going to get worse.
Kajanga Kulatunga, a portfolio specialist at the National Australia Bank, says the government and financial advisors need to do more to help older Australians understand how to organise and manage their finances.
“It’s a sad reality that we don’t want to think about but, as we age, our capacity to make basic financial decisions will start to slow,” he told The Australian.
He added that only 23 per cent of people aged between 50 and 70 use a financial advisor.
“And, based on internal research from our adviser network, that figure drops off sharply after the age of 65,” Mr Kulatunga says.
Mr Kulatunga says there is too much focus on how to build towards retirement and not enough on how to manage your portfolio afterwards.
One of the main concerns for many over 60s is the fact they feel as though they cannot trust big banks or financial advisors to right by them.
There have been reports of dementia sufferers being taken advantage of by financial institutions and even charities trying to trick older Australian into donating money.
Mr Kulatunga says scientific studies show many people struggle to comprehend basic calculations as they age, which makes it even more important for them to have a clear and concrete financial plan in place.
“Cognitive decline manifests itself here in many ways: forgetting PIN numbers and account passwords, not updating investment allocations over time, and sticking to sub-optimal tax or investment strategies,” he says.
“People also don’t like to talk or think about having a problem,” he adds.
He says there are concerns many people will struggle to understand the changes set out in the new Age Pension eligibility test, which rolls out next year and suggests that even small steps like simplifying the language in financial documents for older Australians can go a long way towards helping them understand and manage their finances.