When planning for retirement, most people focus on saving enough money, managing investments, and creating reliable income. But there is another possibility worth considering: What happens if you eventually become unable to manage your finances on your own?
Cognitive decline can affect memory, judgment, reasoning, and the ability to handle increasingly complex financial decisions. The National Institute on Aging notes that money-management problems can sometimes be an early sign of dementia. Planning ahead can help protect your finances and give you greater control over your future.
Put Important Documents in Order
One of the most important steps is organizing your financial and legal documents while you are fully capable of making decisions. This may include your will, financial accounts, insurance policies, property records, and other important paperwork.
Consider working with an attorney to establish a durable financial power of attorney. This document can name someone you trust to make financial decisions on your behalf if you become unable to do so. Depending on your circumstances, a living trust may also be appropriate.
Choose Someone You Trust
Selecting a trusted person to help oversee your finances is an important part of planning. This might be a spouse, adult child, relative or another person you know well.
Talk openly about your wishes, financial priorities and the type of assistance you would want. You can also make sure this person knows where important documents and account information are kept.
Consider the Cost of Future Care
Financial planning should also account for the possibility that you may eventually need additional help with daily activities or long-term care. Home care, assisted living, and nursing care can create significant expenses, so consider how these costs could affect your retirement income and savings.
As your financial advisors, we can help you evaluate potential expenses and consider strategies for managing them as part of your broader retirement plan.
Protect Yourself From Financial Abuse
Cognitive decline can make individuals more vulnerable to scams and financial exploitation. Establishing safeguards early may help reduce that risk. Regularly reviewing accounts, limiting unnecessary access to financial information, and involving a trusted person when appropriate can provide additional protection.
Planning for cognitive decline is not an admission that it will happen. It is simply another form of retirement preparation. Let’s discuss this issue in more detail at your next appointment. By making important decisions while you can, you can help ensure your wishes are understood, and your finances are better protected if circumstances change.