One of the hard realities of life in our fallen world is aging.
Although we live in a culture that celebrates—and sometimes idolized—youthfulness, ironically, everyone is getting old. Some are just older than others.
The young may feel as though they will stay young forever, but they won't. And older people who have been blessed to retain some degree of youthful vitality will eventually lose it.
Aging presents us with a variety of potential difficulties in retirement stewardship. Most notably, it brings weakness—in both mind and body. Blogger Tim Challies described it this way:
As we age, we experience the sorrow of weakness…There are a few years of growth followed by many years of decline, a few years of strength followed by many years of weakness. For men and women alike, physical strength peaks in their 20s or 30s before settling into a long decline. Muscle mass, bone density, metabolism, and even the senses begin to deteriorate.
And if this inevitable physical decline won't be challenging enough, we may also experience diminished cognitive abilities. Even those who make it to the end without serious mental problems will experience some weakness in that area.
These certain weaknesses—especially mental decline—can hinder our ability to steward our God-given resources well. So, in this article, we will look at how they might impact us and what can we do to wisely plan for a worst-case scenario. To quote an old American Indian proverb, "Trust in God, but row away from the rocks."
When we become physically weak
As we grow older, we can expect to experience an increasing number of physical problems and ailments. The Bible (and life itself) teaches us that physical decline is inevitable (see Ecc.12:1-7).
Sure, there are things we can do to keep them at bay for a while (such as diet and exercise), but aging will eventually have its way.
Physical weakness presents difficulties because it affects our mobility and ability to take care of some basic needs and responsibilities; not to mention the suffering it can bring.
For example, my wife would prefer that I not climb up on our roof anymore, nor do I want to. It's not that I can't do it, but I am certainly not as sure-footed as I used to be, and a fall would be disastrous. But the leaves and pine needles keep falling (constantly, it seems) and need to be cleaned off. If I don't do it, I have to get someone to do it for me.
I recently had to replace a broken in-ground pop-up sprinkler in my yard. It's not a big job, so I did it myself, but I had to ice down a bad knee that evening. I could go on, but I think you get the picture.
Declining health can have a significant impact on our financial stewardship.
First, and perhaps foremost, is the time and complexity of dealing with medical bills and insurance (typically, Medicare). My wife and I are now on Medicare, and I am amazed at the volume of paperwork that gets generated (and the paper mail I receive) after a single doctor office visit.
The most severe health problems could render you completely disabled and unable to deal with even the most routine financial matters. Other than sudden death, that is a worst-case scenario.
When we become mentally weak
The concern here is that we might experience some form of cognitive impairment as we grow older. Alzheimer's is the most common—it is a type of dementia that compromises cognitive ability and especially memory.
We all hope to be of sound mind for as long as we live, but many will not. According to alzheimers.net, by the year 2030, there will be 8.4 million people over the age of 65 with Alzheimer's disease. That will amount to more than 10 percent of those over age 65 at that time. Plus, many will suffer from other forms of dementia.
When it comes to our finances, cognitive decline presents a significant challenge—possibly more so than many physical issues. Base on the above estimates, a large number of significantly impaired people will execute or attempt to make important financial transactions and decisions. And, sadly, many will have little or no oversight or assistance from anyone else.
Such a situation can make a family's financial status very precarious during a time of life when finances are so critical due to health care and long-term care costs. Here is a list of some of the things that can go wrong:
- We can be taken advantage of by the unethical or criminal actions of others. Hardly a day goes by that you don't hear about some new telemarketer or door-to-door scam perpetrated on the elderly. Here are just a few of the scams that are being carried out against older folks these days: IRS impersonation, Robocalls, sweepstakes and lottery scams, computer tech support impersonation, government grant scams, grandchild impersonation, etc. And, sadly, the elderly are sometimes defrauded and stolen from by family members as well.
- We start making hasty, ill-informed, or emotional decisions. If you are managing your investments, this can be especially dangerous. The elderly can feel compelled to make terrible decisions, especially when motivated by irrational or paranoid thoughts and fears.
- We start forgetting essential facts, dates, and obligations. Outstanding bills don't get paid or paid on-time. Forgetfulness can also cause life insurance or long-term policies to lapse, utilities to be cut off, or checking accounts to be overdrawn; the list goes on and on.
- We are more likely to fall prey to cyber threats. More older folks are using smartphones, computers, and the internet. But many of us are not very "savy" about their use. As our reasoning powers diminish, we become more prone to online privacy problems and identify theft, not to mention email scams.
- We make major life planning decisions suddenly and impulsively. Things like estate plans can be changed on a dime. Who hasn't heard the story of the wealthy widow who gets angry with her children and changes her will to leave everything to her pet? (Doesn't it seems like it's usually a cat? I'm not sure why—dogs need an inheritance too.)
- We become overly suspicions, and even paranoid, of others, including those who are trying to assist us. That may only happen in more extreme cases, but it's not that rare, especially with those who are suffering from dementia. The big problem with this is that we can become resistant to help from the very people whom God has put in our lives to help us.
- We become overly generous or stingy. This problem relates to nos. 2 and 5 above. It can involve giving away money or possessions that someone actually needs, or a pattern of stinginess and hoarding not previously observed. Have you heard the one about the man who died seemingly impoverished but his children found $100,000 in cash hidden somewhere?
- We misplace or lose important documents. We forget where we put things like insurance policies, loans, wills, etc. Or sometimes they are completely lost (accidentally thrown away or destroyed).
- We are unable to do necessary financial calculations. Everyday tasks like balancing a checkbook can get harder and harder. An unbalanced account can lead to bounced checks, which can lead to a pile of fees (not to mention disgruntled payees) and upset bankers.
- We just don't care anymore. To some extent, this is understandable. As we age, we realize more and more how much more important many things other than money are. But our financial needs and concerns continue for all of our lives and require our ongoing stewardship. If we take our eye off the ball, things can get away from us very quickly.
What can we do?
I manage most of my wife and my financial affairs, including investing our retirement savings, monthly withdrawals, etc. But I keep her in the loop, and we jointly make major financial decisions. She is interested, and wants to be involved, but leaves the day-to-day management up to me.
But the time may come when I am no longer able to do these things or to do them well. I will need to put more stuff on "autopilot" and seek the assistance of others, beginning with my wife if she is up to the task. If she isn't, that's where family and friends—and financial professionals—come in.
Like many seniors, I would prefer that my children or grandchildren didn't have to deal with issues involving our declining physical or mental health. But they may, and all we can do is plan accordingly.
In another article by Challies titled When My Children Grow Strong, and I Grow Weak, he contrasts the two extremes of independence and entitlement that we can be tempted toward during the later stages of life:
Somewhere between [the] extremes of proud independence and selfish entitlement, I think Christians can find a beautiful balance. We raise our children in the discipline and instruction of the Lord. We work hard and provide for them and ourselves to the best of our abilities. We discharge our responsibilities to our children. Then, as we grow older, we rely upon them so they can discharge their responsibilities to us. They make a return to us in time, in love, in care, and, if necessary, even in money. And if for some reason they are unable, God's family, the church, will joyfully step in to assume care. There's something beautiful about this when it's working right.
In his article, Tim assumes that a time will come when our capabilities will diminish such that we have to rely on others. In the above quote, he alluded to the role that both our biological and church families can have in helping us when the time comes.
Given the risks that physical and cognitive decline pose to our financial stewardship, what can we do to prepare beforehand to make it as easy as possible for others to step in if the need arises (Prov.22:3)? Fortunately, there are several things that can be done to help ensure that your finances continue to be stewarded well if reduced mental capacity becomes a reality:
- Simplify things. One thing I have done to help my wife (and children and others, if necessary) is to simplify our finances as much as possible. By that, I mean few accounts, and in my case, all are with the same financial services company (Fidelity), so they can be accessed in one place. Some will feel uneasy about that, which I understand. But no matter what, keep as few accounts (and investments) as possible, and things will be much easier if someone has to step in for you.
- Write things down. I think this is the most important. You need a personal financial letter with all the juicy details about your financial affairs, a written will, and other final documents. Make sure someone knows where they are and how to access them if you're unable to. (Store them securely in "the cloud" if you want to, but someone has to have your password.) I have prepared a detailed letter about our finances that I update at least once or twice a year. I titled it, A Letter from your Husband who is now in Heaven. The letter will provide my family with a lot of detailed information about our financial affairs if they need it.
- Put things on autopilot. I allude to this in my last article about annuities. Social Security and pensions "automatically" send you retirement paychecks. If you want that to be the case for at least some of your savings, you need an automated systematic withdrawal strategy. Or, you might need some kind of annuity (I'd recommend an inflation-adjusted SPIA). Other options you might consider are a single "fund of funds" (simplifies investing and withdrawals), and managed payout funds (these are offered by all of the big players: Fidelity, Vanguard, Schwab, etc.).
- Delay Social Security for as long as possible. The mention of Social Security may seem out of place here, but Social Security is automatic—the check reliably comes (or gets directly deposited) every month. The more of your income you can secure via Social Security, the better. Lots of husbands don't think about this when they decide to take benefits before their full-retirement-age (FRA). Their spouses will have to live with their decision for as long as they live (and, statistically, most will live longer than their husbands). Receiving a regular check is great, but getting a bigger one is even better.
- Build a family and church support network. Trusted family members and friends can assist in a variety of ways. They can handle bill payment and simple bank transactions. The easiest way to facilitate that is to designate a family member as a joint account holder. This approach does have some drawbacks. They could use the funds for their own purposes. Also, certain types of accounts (such as IRAs) don't allow it. At a minimum, married couples should have their bank accounts and non-retirement accounts set up as joint, and name each other as beneficiaries on their 401(k)s and IRAs.
- Assign power of attorney. This legal document gives a trusted representative broader legal power. A General Power of Attorney, for example, can be used by someone to assign a broad range of powers to act on their behalf with virtually all their assets. A Limited Power of Attorney, on the other hand, can be used to grant specific powers, or powers over only specific assets and accounts. (For example, giving someone power of attorney to sell a primary residence.)
- Get professional help. A trusted financial advisor, especially those with a fiduciary responsibility toward their clients, can be invaluable in this situation. He/she may be one of the first people to detect a level of cognitive incapacity and to take steps to help. Advisors can't assume that it's only a family problem—there may be no family involved. And even if there are, someone whose decision-making is seriously impaired may not permit a professional they are working with to talk to a family member until it's too late—after the money is all gone. Even though privacy is always a major concern, particularly in financial matters, one of the best ways to prevent that is to authorize the advisor to notify a "trusted person," who can be a family member or someone from their church family.
- Set up a Trust. Some may benefit from using a Revocable Living Trust as an overarching legal directive for the continued management of their accounts and financial matters in the event of physical and/or mental incapacity. These can be more complex and expensive than the other options, but because the Trust actually "owns" all accounts and assets (including real estate), it provides for a level of control beyond what a Power of Attorney provides.
Act now, before it's too late
No matter what approach you decide to take—some of these, or all of them—it's essential to put things in place before you become incapacitated and no longer able to act on your behalf. Things like joint ownership and power of attorney should be set up with your financial institutions before they are needed. Others, such as Revocable Living Trusts have to be legally established and funded well in advance. Absent those things, the only recourse is the mercy of the courts, which is a tedious and time-consuming process when time is of the essence.
Medicine has not, as yet, found a way to prevent (or cure) all physical and cognitive illnesses. In fact, the end of all illnesses won't happen until God brings about the restoration of all things at the end of the age (Isa.35:5-6; Rev.21:1-6). But, as Christians, we can pray for physical health and a sound mind throughout our lives (3Jn.1:2; 2Tim.1:7). We don't know how God will answer our prayers—it may be by providing others to assist us—so plan for that possibility; humbly solicit and accept the help of others while avoiding selfish entitlement or prideful independence.