Lewis Mandell, Ph.D., is a financial economist with a research specialization in financial literacy and a teaching specialization in investments and valuation. Now retired, he held professorships at a number of leading universities during his 44-year career in the financial services industry. He is the author of What To Do When I Get Stupid: A Radically Safe Approach to a Difficult Financial Era (Point White Publishing, 2013).

Q: How did you come up with the title for your recent book?

A: A friend of mine, a 70-year-old retired pediatrician, asked me what he should do with his money because he was afraid of “getting stupid” and mismanaging his funds. It then occurred to me that age-related decrease in cognition was very important to the retirement process. In retrospect, half the people I talk to think it's a terrible title, but at least it gets people's attention.

Q: When does our ability to make good financial decisions begin to decline?

A: The best research that's available found a mean age of around 53. Things don't deteriorate all that rapidly after 53, but by age 70, things start to decay more quickly.

Q: What causes the decline?

A: Your analytical intelligence, which is the ability to solve numerical problems and that sort of thing, tends to peak around age 20. Experiential intelligence - based on your experience - keeps going up, pretty much through your whole life. But your experiential intelligence eventually becomes offset by the decrease in analytical intelligence. So we find that we peak in our mid-50s and begin to decline slowly at first and then more rapidly as we get older.

Q: Why do people wait so long to begin planning for retirement?

A: First, they're caught up in life. If you're in your 50s and have kids, chances are they're in college. So you're thinking about how to pay for their education, and because most people reach the peak of their career progression in their 50s, you have a lot more responsibilities. Life is just filled with problems that can be a greater concern than finances.

Q: In the book, you mention financial and investment abilities decline at different rates. Could you explain?

A: There are studies that show that your investment ability may peak as late as 70. The hypothesis is that people don't have investments to worry about until their kids are out of college, and it's only when they're approaching retirement that they finally have an opportunity to save, other than in their 401(k). So they may start reading about investments and the stock market a bit more than they did when they were younger and didn't have money to invest.

Q: Why is it so hard for older folks to recognize decline?

A: I think a lot of it is self-denial. Nobody wants to admit they're not as sharp as they used to be. We tend to focus on the bright spots when we think about how we're doing, and very few of us pay enough attention to ourselves to realize what's happening.

Q: So when's a good time to start planning for retirement?

A: It's really in two stages. When you first get your 401(k), you're planning for retirement, and it's really important to start saving early. Phase two is getting things lined up and making sure you'll have sufficient retirement income to meet your needs. That's something people often aren't interested in until they're in their mid to late 50s.

When they do begin planning, they often encounter a financial services industry that is out to scare the hell out of them. But for most people, retirement isn't really that scary if they estimate their numbers; most people are reasonably set as long as they think it through before they retire. If they take a few simple, logical steps, I think most people will be able to retire comfortably. And the earlier they start that process, the better.

Q: Is it true you advise eliminating long-term debts as early as possible in retirement?

A: Absolutely. I just worry about burn rate. If you don't have any debt, including mortgage debt, your burn rate is going to be far lower than if you still have big payments. Why not start out by seeing how you can reduce expenses while not taking a major hit to your quality of life and then see how much is supplied by Social Security and pensions. Then if there's a gap, consider buying a single-payment fixed annuity from USAA or some other trustworthy not-for-profit organization. If you still have a shortfall and own your house outright, I'm a big proponent of reverse mortgages. But only the ones offered through the government, through HUD [the U.S. Department of Housing and Urban Development].

Q: Can fixed annuities can protect you in the long term?

A: Most can. Many financial planners are opposed to them, because fixed annuities don't offer them a very generous commission. They also remove a lot of assets that many planners would love to manage. So they'll tell you that once you do it you can't change your mind. I view that as a positive, because I know I'm going to become more vulnerable, and if a smooth talker comes along and says he has a variable annuity that's so much better than what I have, a fixed annuity protects me.

Q: What should you watch out for with annuities?

A: Make sure it's from a very reliable seller. I'm very big on major not-for-profit organizations like USAA, which is a terrific one. They really have the best interests of their members in mind. For people who were teachers, TIAA-CREF [Teachers Insurance and Annuity Association - College Retirement Equities Fund] is a great organization. Vanguard is very trustworthy. Most important, go with someone who has a reputation for not screwing their customers. In my book, I recommend the website www.immediateannuities.com. You give them some basic information, and they compare several organizations so you can pick the one with the best deal.

These days, there are a lot of great resources available, and you have to ask yourself if you really need a financial advisor. There are easy things you can do to diminish the assets that need management, like buying an annuity or setting up a discount brokerage account and buying index exchange traded funds that are widely traded and don't cost much. There are a lot of people out there who want to manage your assets for you and charge a tidy sum to do it, but if you're a retiree, it's much better to be able to keep that money for a rainy day.