Protect your retirement from the risk of mental decline
Retirement – that magical time when we can finally live our lifelong dreams. Increased life expectancy means that many of us can now expect a longer retirement, but this comes at a cost: the increasing prevalence of age-related cognitive decline, which could leave us vulnerable to costly financial errors.
According to the Alzheimer’s Society7, there are almost 885,000 people living with dementia in the UK, and estimates suggest that between 5% and 20% of over-65s suffer from mild cognitive impairment (MCI), a condition in which someone has minor problems with cognition, such as memory or thought process.
Protecting your finances
Planning for the possibility of cognitive decline is an essential part of preparing for retirement. Although many people still have the capacity to live independently and make decisions for themselves, MCI has been linked in scientific studies to poorer financial capacity and an increased susceptibility to scams.
Getting the timing right
Over 80% of investors surveyed8 thought the ideal time to transfer financial control would be ‘sometime after they had begun to experience some cognitive decline but before they became completely incapable.’ Respondents thought there was a higher than one-in-three chance of a mistimed transfer, partly attributable to a reluctance to relinquish control, which exemplifies the need to start planning sooner rather than later, so that any future transfer takes place on your terms.
Opening up conversations
Although it may feel awkward, preparing for the possibility of cognitive decline requires careful planning, not only having legal documents in place but also starting conversations with your family and those you trust about money and your goals for the future, in advance of its possible onset. This means that everything is out in the open and close connections are more likely to notice if you begin making decisions about your money that appear to contradict your objectives.
We can assist you with planning and in starting these conversations with your family well in advance and help you better plan for the future, giving you a greater sense of ownership and control over your plans.
7Alzheimers Society, 2019, 8Vanguard. 2021
It is important to take professional advice before making any decision relating to your personal finances. Information within this newsletter is based on our current understanding of taxation and can be subject to change in future. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK; please ask for details. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor.
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