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The Hidden Retirement Risk: What Happens When You Can No Longer Manage Your Money?
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You’ve planned for retirement – saved diligently, mapped out your Social Security strategy, and thought through market risks. But what happens if one day, you simply can’t manage your money anymore?
Nearly 30% of adults over 65 experience some level of diminished cognitive capacity, from mild impairment to dementia. Managing money is often one of the first skills to decline…yet many of us never plan for that possibility.
On a recent episode of the HerMoney Podcast, sponsored by LIMRA, we explored why cognitive decline may be one of the biggest blind spots in retirement planning, and what you can do now to protect your finances, your family, and your future self.
One key takeaway? If you live into your 90s, your children – who may be in their 60s or 70s by then – could face cognitive challenges of their own, and their ability to make health or financial decisions on your behalf may be at risk too. As Erin Gilmore Smith, Head of Estate Planning for Edelman Financial Engines, explains, that means your backup plan needs a backup plan.
"Some people will name their child, and then, behind their child, they're going to name a grandchild," she shares. "Sometimes that works really well, and the child can say, 'I'm feeling a little overwhelmed…can you step in and take over?'"
💡 More from LIMRA: Protect Your Retirement From Cognitive Decline: The Link Between Cognitive Health And Financial Security
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This Week In Your Wallet
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Looking to keep your brain sharp? The answer might be hiding in your daily routine. Research has long shown that education helps – each year of formal schooling is associated with a 7% lower risk of Alzheimer’s disease or other dementias. But, as The Washington Post reports, a growing body of evidence suggests your career may matter just as much. "Roles like managers, teachers, lawyers and doctors are considered high complexity jobs, while clerical, transportation and assembly line work have lower complexity," The Washington Post reports. "The findings are consistent with the idea that taking part in mentally stimulating activities throughout the lifespan can help preserve late-life brain health and boost cognitive reserve — the brain’s ability to cope with age- or disease-related changes." Not in a high complexity role? You can still build your cognitive reserve through reading, volunteering
and staying social.
Something sneaky is eating away at your budget: surcharges. From credit card fees at your favorite restaurant to ever-climbing baggage costs, they’re suddenly everywhere. And, as The Wall Street Journal reports, there’s a reason they keep multiplying – they work, thanks to something called the "lock-in effect." "By the time a surcharge appears at the end of a transaction, consumers have already committed to the purchase and are far less likely to abandon it than if they had seen the full price from the start," the WSJ notes. "That makes them mad. But it doesn't cause them to change their behavior." That said, there are steps you can take to avoid the surcharge squeeze. Ask about fees before you commit, not after. Use cash at restaurants that tack on a credit card surcharge. And, when a charge feels unjustified, it’s always worth asking (politely) if it can be waived – you’d be surprised
how often it works.
If investing feels like something "other people" do – for example, people who understand the markets, started earlier, or have more money to work with – this message is for you: It’s not too late, and it’s not as complicated as it seems. This week, HerMoney is highlighting how every woman can become an investor. As experts explain, it starts with a willingness to educate yourself. "To do it well requires discipline, recognition of what you know (and what you don't) and then acknowledgment of what you're willing to learn," says Heather Winston, CFP and an Assistant Vice President at Principal Financial Group. Read, research and be patient – even seasoned investors are always learning.
📈 Ready to start? Join InvestingFixx, HerMoney’s investing club just for women. We meet twice a month on Zoom and your first month is free! Learn more here.
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Things That Save The Planet
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Ask Jean
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Today’s question comes from Eileen. She writes: My home heating bill nearly decimated my budget this winter. I am looking ahead to next year and want to make improvements now that will help reduce my bill. Where should I start?
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New numbers show you aren’t alone – 1 in 3 households struggle to pay energy bills. The silver lining? There’s plenty you can do to cut costs.
First, before cold weather comes around again, consider some easy wins. There are things you can do that cost next to nothing and will make a real dent, including sealing leaks around windows and doors, installing a programmable thermostat, turning down your water heater a few degrees and staying on top of filter changes. These tips obviously also work if you’ll be firing up the AC this summer.
Then, think a bit bigger. If you’re ready to invest, these upgrades can pay off over time:
Get your HVAC tuned up: Annual maintenance improves efficiency and can catch small problems before they become expensive ones.
Upgrade your windows: If you live in an older home, drafty windows could be costing you more than you think. Energy-efficient updates can cut annual energy bills by over 30% – and replacing older windows may cost less than you expect.
Insulate: Experts say the right insulation can reduce energy costs by 30-50%, keeping warm air in during winter and hot air out during summer. Address areas of your home that aren’t insulated, or where the insulation isn’t as good as it should be – for example, your attic.
Upgrade your appliances: Energy-efficient models save money year-round and many qualify for rebates through your utility provider or state and federal programs.
Which brings me to my last point…don’t leave money on the table. Many of these improvements can come with incentives. Check with your utility provider, and look into state and federal programs before you spend a dime. Here’s a good place to start.
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Submit your questions to Jean here.
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We maintain a strict editorial policy and a judgment-free zone for our community. We strive to remain transparent in everything we do. Website posts and newsletters may contain advertisements, links and mentions of products from our partners. Learn more about how we make money.
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*This is a sponsored post
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