Threat of Cognitive Decline & Your Retirement Plan

For years I’ve written and spoken about the challenges and opportunities of retirement and the actions required to increase your chances of success.  I’ve outlined how the general focus of retirement planning has shifted from money questions such as: “How much money will I need to retire comfortably?” “Will my money last long enough?” and “How much will I have to pass on to my heirs?” to a broader picture of life after work.

Recent thinking has shifted to non-monetary needs including the need to plan what we’ll do with our time, how best to maintain or improve health, and how to develop new social circles outside of work.   The importance of these things and more – a holistic approach – has become vital as the financial issues for one simple reason: We’re living longer!

But what about cognitive decline!  One of the biggest threats to a retirement plan isn’t a market crash or rising inflation, it’s dementia.  By 2050, more than 1.7 million Canadians are expected to be living with dementia, with an average of 685 individuals being diagnosed each day, according to the Alzheimer Society of Canada.

A recent survey conducted by Raymond James found that 63% of Canadians worry about how cognitive decline could affect their financial and personal future. 

Given the above statistics, as part of your retirement plan it is important to create a will.  Having a proper will goes a long way to eliminate guesswork as to your intentions.  Furthermore, a will may save money because without one, the provincial/state authorities are in control and that could mean unnecessary delays and extra costs.

 As part of your estate planning, give special consideration to naming an executor.  Your executor acts as your estate’s legal representative and is charged with distributing assets according to your wishes to your beneficiaries.

It’s important to appoint someone who has power of attorney.  Without a power of attorney, family members may need to apply to the courts for guardianship before they can make financial decisions on your behalf.  The process is typically expensive, emotionally difficult and lengthier than if a power of attorney had already been in place.

Without a power of attorney, it requires proving the person has lost capacity, often through formal assessment, which can be difficult if the person doesn’t think they have experienced cognitive decline and refuses to do the assessment.

One additional recommendation, draft a letter to accompany your will.  The letter should include the following:

  1. People to be notified at the time of your death
  2. Listing advanced funeral arrangements
  3. Location of personal papers
  4. Listing of bank accounts and bank locations
  5. Listing of credit cards
  6. Location of deed and mortgage papers
  7. Listing of insurance policies
  8. Listing of vehicles (including where the keys are)
  9. Income and property taxes paid and owing
  10. Investments including mutual funds, stocks and bonds
  11. Listing and location of valuables
  12. Trusts, loans, money owed to you
  13. Special survivor benefits (i.e. government pension, veterans pension, etc.)

Let one or two family members know where your will, etc. are stored and the name and address of your lawyer.

God forbid you are diagnosed with cognitive decline!  However, if you suffer this fate, with a will, appointment of an executor, someone with power of attorney, and letter to accompany your will, you can enter your second longest period of life much more assured your financial and personal future are protected.