Planning for Aging/Dementia

October 29th, 2013 by Potato

My mom and my aunts were quite concerned with my grandfather’s mental state as he aged. It was becoming clear that he was suffering from the onset of dementia and cognitive impairment (Alzheimer’s specifically), but nobody knew what to do. Most of the time he was fine: dementia isn’t a one-way slide into a mental fog, it’s got its good days and its bad. And living out in the country, just him and my grandmother, driving was an essential part of their lives. Yet clearly ensuring a 3,000 lbs guided missile was always safely operated was a priority for the safety of him and everyone else on the roads. Any discussion of selling the car or turning in his license was a major fight though, with nothing but hurt feelings all around as the girls found themselves up against an immovable object time and again, and not really being sure themselves how essential it was to “ground” him. Then one day while driving he merrily crossed to the other side of the road and sped along, completely oblivious to the fact that he was going the wrong way. Fortunately the lack of traffic on a PEI rural highway meant no one got hurt, and that incident galvanized my aunts and they made him give up his license. Since then, the issue of people being competent to drive has entered more prominently into the national consciousness, and Ontario for one changed its licensing so that seniors had to take regular renewal exams, and made it easier for physicians and family members to report a potentially dangerous driver.

Driving is so contentious because it’s so closely linked with a person’s sense of freedom and mobility; many even view it as a right. Yet it is also visible: you can tell when your parents are uncomfortable heading out at night or in the rain, and you might be in the car when you notice them run a red light, take long enough to get going at a green light that the queue behind them is honking angry, or cross over to drive on the left. Some new technologies like lane keep assist can help improve the margin of safety and keep them driving longer, but you know that one day the decision will have to be made.

Less discussed is what happens to a person’s finances. Even aside from being capable, do they have the interest in rebalancing funds in a passive portfolio? Are all the bills getting paid on time, or are some slipping through the cracks? It’s a much tougher nut to crack: we face significant societal taboos to not discuss finances or mental health, and unlike driving there are no innocent bystanders being run down nor are the problems visible. Also unlike driving, finances can be handled at your own pace, and you can wait until you’re having a good day to deal with them (and for the most complex investing decisions, one day per year may suffice).

Still, the major question is: when should you get help? A DIY approach saves fees and doesn’t require a ton of specialized knowledge, cat-like reflexes, or time invested. The right approach (keeping things simple, following evidence-based best approximations, controlling what you can and letting the market do the rest) can be successful and easy. But it still requires some attention, some decision-making, and some knowledge — and does leave you open for losses if mistakes are made. There will quite likely come a time when some help is needed.

I think a formal, painful process is the way to go. Decide, years in advance while tempers are cool and minds are sharp, what will be the criteria for needing help (family meeting, majority rules? Professional assessment*?). Identify what form that help will take (complete control, advice, double-checking) and who it will come from (relative/friend, professional advisory firm). Perhaps see a lawyer about a conditional power of attorney (IANAL). Yes, it will suck all the fun out of Christmas dinner this year, so maybe combine it with your other painful but necessary family talks that you’ve been putting off (organ donation: take ’em all; life support: trust the EEG and don’t save a vegetable; toilet paper: goes over the top).

While investing seems like the bigger risk — so unfamiliar and rarely encountered — regular monthly bills, credit cards, and chequing accounts can potentially be bigger sources of losses if ignored or mishandled. Systematic withdrawal plans can also simplify and remove execution risk on the investing side (as can automated bill payments on the household management side). Reducing leverage and transitioning to less-active styles are also good ideas (if you used those in the first place).

It’s also a helpful process to go through so you consider what will happen if you die. In that case I think it’s easier** — your non-DIY-investing spouse may need a plan or annuity to help them cope, but at least the situation is a little more cut and dry: you don’t start off arguing about whether or not you’re dead and capable of continuing to manage your affairs, and everyone will know to swoop in and offer to help in that case (and you’ll have a capable executor named to help out, right?).

Not that I’ve actually done any of that with my parents, but I keep meaning to.

* – Note that this is not likely to happen promptly (avoiding the doctor, visiting on a good day, reticence on the part of the clinician to diagnose cognitive impairments)
** – Yes it sounds wrong.

One Response to “Planning for Aging/Dementia”

  1. Canadian Personal Finance News | October 2013 | A Listly List Says:

    […] DIY Investing and When to Get Help | Blessed by the Potato […]