Determining an older adult’s capacity to handle finances

DETROIT – Peter Lichtenberg, director of the Institute of Gerontology at Wayne State University, addressed an expert committee of the Institute of Medicine at the National Academies of Science in Washington on methods to determine an older adult’s capacity to handle finances.

The committee is evaluating the Social Security Administration’s process for determining whether a beneficiary can manage benefits or if a representative payee should be appointed to assist them. Lichtenberg was invited because of his extensive research into the psychological underpinnings of financial decision-making and his recent creation of a set of scales and assessments to uncover whether a person is able to make sound, rational financial decisions or is subject to undue influence.

“It was exhilarating to have a high-level discussion with top experts and key decision-makers in the field of aging,” Lichtenberg said. “The committee was extremely invested in this information and in understanding my perspective on the field.”

Lichtenberg has studied the problem of older adults’ vulnerability to financial exploitation and found that severe depression and low social-status fulfillment increased the likelihood of fraud by 226 percent. “Psychological vulnerability can seriously impact older adults’ decision-making,” he said.

One out of 20 older adults in the United States will be a victim of financial exploitation this year. Lichtenberg’s Financial Decision-Making Screening and Rating Scales are designed to profile an older adult’s vulnerability to exploitation and ability to make significant financial decisions, and assist a range of professionals who need to determine an older adult’s capacity to make independent financial decisions.

This is Lichtenberg’s second trip to Washington in recent months. In October, he briefed members of the U.S. Senate and House of Representatives about the susceptibility of older adults to financial exploitation and fraud.

The Institute of Gerontology researches the aging process, educates students in gerontology, and presents programs on aging issues relevant to professionals, caregivers and older adults in the community (iog.wayne.edu). The institute is part of the Division of Research at Wayne State University, one of the nation’s pre-eminent public research institutions in an urban setting. For more information about research at Wayne State University, visit research.wayne.edu.