Most of us plan for entering retirement and look forward to those first 10-15 years of rest and respite from the decades of hard work. However, very few plan for what may go wrong later in life as our mental faculties and physical health deteriorate to a level where we can no longer cope by ourselves. Failure to plan can have severe consequences - not only for the person concerned but also for the loved ones who need to pick up the pieces.
Let me recount the story of someone I have known for over 30 years. He was a successful businessman and made a considerable sum of money, but never married. He enjoyed life, stayed fit, and sold his business when he was 67. He then worked part time until his mid -70s and during that period he travelled regularly. He had what many would regard as a perfect retirement - he had his health, ample wealth, and lots of friends.
However, almost imperceptibly, things started to go wrong once he was into his eighties. Neither I nor his family noticed the signs. Trips became less frequent, his friends no longer featured in his conversations, he visited us less regularly, he no longer talked about his sizeable investment portfolio and he forgot the occasional detail. “No worries” we all said - “just a natural part of growing old”. During this period, he had also sold his house in an upmarket suburb and had moved into one of the nicest retirement villages in New Zealand.
What none of us realised, (including my friend), was things were not going well at all. Alzheimer’s and dementia had been creeping up and had not been spotted. Within the space of six months, he went from being fit and alert, to being sedentary and not ‘with it’ at all. We tried to talk to him about this but he was in a state of denial. We then got a call from the retirement village to say that our friend needed to move to full time care. He kept forgetting to eat or wash, he was a menace with electrical appliances, and he was trying to give away his $40,000 car to the gardener at the retirement village. Suffice to say, we were stunned! What should we do?
The first thing was his personal care. There was no room in the onsite rest home facility at the retirement village for another three months, so 24-hour care was engaged at a cost of $3,500 per week.
The second call was to the lawyer to figure out what we could do. Fortunately, he had an Enduring Power of Attorney but that was with his sister who had also recently been diagnosed with dementia so that meant she could not act on his behalf. A new set of powers had to be established and this involved a family conference attended by lawyers then off to the court to get everything approved - an expensive and time consuming process.
Next came trying to sort out his assets. What a shambles they had become in just a few short years. His upmarket house had been sold by a real estate agent who clearly was not acting in his best interests. The house went for well below market value. His extensive investment portfolio of close to $2m had diminished substantially. No one had been looking after his share portfolio so he was in stocks which most people would have sold long ago; he was in investments which clearly he had purchased because of advertising – not because they were fundamentally good, and he had bonds which had matured and the money was just sitting in the bank earning no interest whatsoever. There had also been some unusual withdrawals from his account which when we investigated, we could confirm that he had signed for and approved. There was nothing tangible to show for the money withdrawn and after discussions with government agencies and health professionals, it was felt that he had probably given that money away to some random person he happened to like or feel sorry for. All up, we estimated that due to neglect, poor judgement and poor timing, his wealth had declined by close on $1m in the space of four years. In addition, it ended up taking 5 months to get into the rest home (that’s $3,500 per week of 24 hour care x 21 weeks = $73,500).
My friend is still alive, but his quality of life is far from ideal. We all hate going to visit him as he does not recognise us, he is frail, and the environment is not one which makes us feel comfortable. But we feel obliged to visit him as we collectively hold his Enduring Power of Attorney.
- Review your will regularly
- Put in place Enduring Powers of Attorney well before you need them and regularly review them to ensure the person you have appointed is still capable of undertaking the task
- Have open and frank discussions about aging and in particular what could happen as your physical and mental health declines.
- Seek professional advice regarding your investments - especially as you age.
- Build a support network around you.
Author: David Greenslade