7 Moves To Keep Your Retirement Money Safe, According To Kevin Lum
Written by
Laura Beck
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Angela Corry
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Cognitive decline creates a dangerous trap for retirees. Financial decision-making ability deteriorates while confidence remains unchanged, leaving people vulnerable to mistakes and scams without realizing anything is wrong.
Kevin Lum, a certified financial planning professional, addressed this challenge in a recent YouTube video based 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 what to do with his money when his mind begins to fail. Research shows financial decision-making peaks at age 53.
“After that, mistakes start increasing and they get more costly over time,” Lum said in the video. A major study by Michael Finke found financial literacy declines about 2% per year after age 60.
The dangerous part is that confidence in financial decision-making ability doesn’t decline.
“You’re getting worse at making financial decisions and you have absolutely no idea it’s happening,” Lum said. One researcher called this a “toxic combination.”
The FBI’s Internet Crime Complaint Center reported Americans over 60 lost $4.9 billion to scams in 2024, and that figure only includes reported losses.
Lum outlined seven strategies to protect retirement money before cognitive decline sets in.
Build an Income Floor
Essential expenses including housing, food, utilities, insurance and healthcare should be covered by guaranteed income that requires no decisions. “For most people, Social Security is going to be the base,” Lum said.
Delaying Social Security increases the benefit up to age 70 and creates a higher inflation-adjusted income floor for life. Lum also mentioned annuities as an option, though he has “serious issues with building your entire retirement plan around some sort of annuity.”
His firm creates retirement paychecks for clients using software that calculates safe withdrawal rates.
“For the client all they know is that a paycheck shows up in their account each month,” he said.
Simplify Your Financial Life
Consolidate old 401(k)s, IRAs at different firms and scattered brokerage accounts.
“Fewer accounts means fewer statements. It means fewer passwords. It means fewer decisions and fewer opportunities for mistakes,” Lum said.
The principle is reducing the number of decisions future versions of yourself have to make.
Automate Everything
Every bill that can go on autopay should be on autopay.
“Direct deposit your Social Security. Automate your pension payments. Set up automatic RMDs at your custodian if that’s possible,” Lum said.
He and his wife automate house payments, utilities, credit card payments, cell phone bills, insurance and internet. The challenge is watching for fraud on automated accounts, but the simplification benefits outweigh the monitoring burden.
Put Legal Protections in Place
Get a durable financial power of attorney today, not later.
“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. This allows custodians to contact someone if they suspect exploitation or cognitive decline. Federal rules permit temporary holds on suspicious disbursements while they investigate.
Consider a revocable living trust for smooth transition of assets outside retirement accounts. Without planning, families may have to petition courts for conservatorship, which is slow and expensive.
Create a “When I Get Stupid File”
Lum credited this idea to Mandel’s book. One binder or secure digital vault should contain every account, income source, recurring bill, insurance policy, legal document and contact information for advisors. Update the file annually to keep it current.
Know the Warning Signs
Research from the National Institute on Aging shows financial red flags can appear five to seven years before a dementia diagnosis. Signs include unpaid bills, confusion about balances and duplicate purchases.
Tell family what to watch for and give them permission to speak up when something seems off.
“Watch for unusual withdrawals or new friends, particularly if it involves money,” Lum said.
Have a Plan With Your Financial Advisor
Ask advisors about their protocol if they notice something is wrong. Lum said his firm works to ensure clients have trusted contacts, updated beneficiaries, powers of attorney and revocable trusts on file.
An advisor provides oversight and another set of eyes watching accounts. “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 core message is simple: act now. The smartest retirement plan is the one that still works when you can’t think straight.
“Your confidence is not going to warn you. You will not feel yourself declining,” Lum said.
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