Don’t shoot the messenger. I get it. No one wants to talk about it. And the fact that it needs to be talked about does not make it any easier. But a recent study by Finke, Howe, and Huston called, “Old Age and the Decline in Financial Literacy”, that provided a financial literacy test found that financial literacy tends to decline by 1% every year from the age of 60 on, but financial confidence remains the same. Meaning that you think you’re making the right decisions, but logically and mathematically, you’re not.
Steve Vernon, a research scholar at the Stanford Center on Longevity, I believe says it best: “It’s not that we’re losing all of our marbles, but we’re losing a marble or two over time. So, the question is, how do we plan for that?”
A recent Federal Reserve study found that only 25% of adults in the United States have appointed a financial advisor as power of attorney, 14% have made informal plans to have someone act on their behalf, and 46% have made no arrangements whatsoever. And a separate study found that only 18% of people over the age of 55 have a will or trust in place.
Let’s look at just a few simple steps you can take that could protect your loved ones in the case of severe mental decline:
- Get a will, or preferably, a trust put into place with advance directives. Nothing can cause more chaos in your family than not having your specific wishes in writing. And the only ones who win in this scenario are the attorneys. Pay the attorney to set up the trust, not to pick through every single asset you have (clothes, jewelry, cars, etc.), and drag the settlement of your estate out as long as possible. And obviously, to drag out important decisions that need to be made if you become cognitively incapacitated.
- Appoint a Power of Attorney (POA) to make decisions on your behalf if you become cognitively incapacitated. You’ll want someone to make both medical and financial decisions on your behalf. It may or may not be the same person who does both.
- Make sure your POA is someone that has a vested interest in your well-being and the well-being of the one you have left behind due to death or mental impairment. I am personally 1000% against handing over control of your finances to an advisor, or an attorney. Maybe, it’s because I read articles every day, literally, about advisors that had decision-making capabilities over their client’s money and did nothing but use it to enrich their own lifestyles. And it’s not just independent advisors. A lot of these scum bags worked for huge brokerage houses with very recognizable names. Please, appoint a family member, or a close friend, that you trust and has some financial faculties of their own to assist your family during what is guaranteed to be an emotional time.
- Have an “auto-pilot” plan. This is where the annuity comes in. An Atlas Annuity Strategy could set your spouse up to carry on and cover all your living expenses with no guesswork, no matter what happens to you. No matter if it’s death or mental decline, the Atlas Annuity Strategy could continue to pay your expenses without having to adjust anything. All of your other assets can be handle by your hand-picked POA, but your living expenses could continue without interruption.
Of course, depending on the size of your estate, there could be many more hurdles and options to take into consideration. But you can do this one very simple step and give yourself “sleep insurance” knowing that no matter what happens, your loved ones will be financially protected.
To see how I set up an Atlas Annuity Strategy “auto-pilot” program, click the “Schedule A Meeting” button to find a time to have a short conversation, or call me directly at 636.926.6500.
All the best,