Here is something most financial advisors don’t talk about enough: your ability to make good money decisions peaks at age 53. After that, it slowly gets worse. And the tricky part? Your confidence stays exactly the same.
Certified financial planning professional Kevin Lum laid this out in a recent YouTube video, drawing on research from economist Lewis Mandel’s book What Do I Do When I Get Stupid? The title came from a 70-year-old retired pediatrician who asked Mandel that very question, what should I do with my money when my mind starts to fail?
A major study by researcher Michael Finke found that financial literacy declines about 2% per year after age 60. Meanwhile, confidence in your own financial judgment doesn’t drop at all. One researcher called that combination “toxic.” You’re getting worse at making financial decisions, and you have absolutely no idea it’s happening.
The stakes are real. The FBI’s Internet Crime Complaint Center reported that Americans over 60 lost $4.9 billion to scams in 2024. And that figure only counts the losses that were actually reported.
The good news is that you can set up protections right now, while your thinking is sharp. Lum outlined seven strategies to do exactly that.
1. Build an Income Floor
Your essential expenses such as housing, food, utilities, insurance, healthcare should be covered by guaranteed income that requires zero decisions from you. “For most people, Social Security is going to be the base,” Lum said.
Delaying Social Security increases your benefit all the way up to age 70 and creates a higher inflation-adjusted income floor for the rest of your life. Lum also mentioned annuities as one option, though he noted he has “serious issues with building your entire retirement plan around some sort of annuity.”
2. Simplify Your Financial Life
If you have old 401(k)s sitting at former employers, IRAs scattered across different firms, and brokerage accounts here and there, now is the time to consolidate them.
“Fewer accounts means fewer statements. It means fewer passwords. It means fewer decisions and fewer opportunities for mistakes,” Lum said. The goal is to reduce the number of choices your future self will have to make.
3. Automate Everything You Can
Every bill that can go on autopay should go on autopay. Lum said he and his wife automate their house payments, utilities, credit card payments, cell phone bills, insurance, and internet.
“Direct deposit your Social Security. Automate your pension payments. Set up automatic RMDs at your custodian if that’s possible,” he said. Yes, you’ll need to watch automated accounts for fraud, but Lum says the simplification benefits outweigh that monitoring burden.
4. Put Legal Protections in Place Now
Get a durable financial power of attorney today. Not next year. Not when things start slipping. “Once cognitive decline sets in, you may no longer have the legal capacity to sign one,” Lum said.
Name a trusted contact at every brokerage firm you use. Federal rules allow custodians to temporarily hold suspicious disbursements while they investigate. And consider a revocable living trust for assets outside your retirement accounts. Without one, your family may have to go to court to get access, a process Lum described as slow and expensive.
5. Create a “When I Get Stupid” File
Lum borrowed this idea directly from Mandel’s book. Put together one binder or a secure digital vault that contains every account number, income source, recurring bill, insurance policy, legal document, and advisor contact. Update it every year.
If something ever happens to you, the people who love you will know exactly where everything is and who to call.
6. Know the Warning Signs and Tell Your Family
Research from the National Institute on Aging shows that financial red flags can show up five to seven years before a dementia diagnosis. Signs include unpaid bills, confusion about account balances, and duplicate purchases.
Tell your family what to watch for, and give them permission to speak up if something seems off. “Watch for unusual withdrawals or new friends, particularly if it involves money,” Lum said.
7. Have a Plan With Your Financial Advisor
Ask your advisor directly: what’s your protocol if you notice something is wrong with me? A good advisor will already have trusted contacts, updated beneficiaries, powers of attorney, and revocable trusts on file for you.
“They’re able to help slow it down, have a conversation with you, contact your trusted contact to help provide a layer of protection,” Lum said.
The bottom line from Lum is straightforward: act now, while you still can. The best retirement plan is one that keeps working even when you can’t think as sharply as you do today.
“Your confidence is not going to warn you,” he said. “You will not feel yourself declining.”
That’s exactly why the time to set all of this up is right now, not later.