One of the more charming YouTube videos to go viral recently is an interview 32-year-old filmmaker Jeremiah McDonald held with his 12-year-old self. Back in 1992, the precocious 12-year-old recorded himself in a video asking questions of his future self.
Twenty years later, an older McDonald, at one point cringing at his younger self, quips, “No wonder I’m single.” When his younger self asks why his future self is bothered, the response is: “Because I’m the result of every decision you make.”
This month’s cover story (“The Challenge of the Aging Brain”) by Michael Finke, a rising star in the world of academic finance, addresses the serious but not well known problem of how cognitive decline impacts financial decision making. Finke cites a study from Texas Tech, where he directs the personal financial planning program, which indicates that the ability to understand and apply financial concepts peaks in the early 50s and declines by about 2% per year after age 60.
This grim reality invites questions about what kind of conversation a person (or his financial advisor) might want to imagine between his (client’s) 70-year-old and 50-year-old selves.
A serene 70-year-old will commend you for putting in place a process that reduces the stress and uncertainty of decision-making later in life. He may thank you for supplementing Social Security with annuity income; he may tell you it was not as outlandish as thought at the time to go back to school or to start a freelance business that is keeping the 70-year-old self busy and fulfilled with work. He may thank you for finding a trusted financial advisor.