March 27, 2010
 By Bruce Cameron
Recently, I was speaking to a respected actuary about the problems associated with things such as deciding when to move into a retirement village and, even more importantly, into frail care.
Most people simply do not want to move into either, ever. And when they finally do, the move can be fairly traumatic.
One of the problems associated with holding on to the "family" home is that the pensioner occupants are often asset rich (in terms of the property) but cash-flow poor and are struggling to make ends meet.
The family home has, in any event, undergone a change of status. When the occupants pass on, it is more than likely that the property will be sold, because their children will by that stage have their own homes.
The shortage of cash and creaking joints often mean that the condition of the property deteriorates and reduces in value.
The other problem is that alterations, such as putting a bedroom/bathroom downstairs in a multi-floor house to accommodate less-mobile inhabitants, can detract further from the value of the property.
There are other important financial issues associated with getting older. The most important of them concerns investment-linked living annuities (Illas), where you are responsible for making decisions, at least once a year, on the composition of the underlying investments and on how much money you should withdraw as a pension.
Dealing with these issues can become more and more of a challenge as you age, particularly if you have any form of dementia. Among other things, you can become increasingly stubborn about taking sound advice, may make incorrect decisions and may even be exposed to fraud.
The actuary mentioned in passing that his father-in-law had told him that he was aware of these and other problems associated with ageing. His father-in-law's solution was to write himself a letter (see "Memo to me when I'm 75". The names have been changed.) I think this is a wonderful idea, and I have decided to do the same thing. There are a few things I will add to my letter to myself.
They include:
By 75 at the latest, switch Illa investments to a guaranteed, inflation-linked annuity with a guaranteed payment term of at least 10 years and then for life. The yield will be good, and my money will be safer, because I will no longer need to make investment and drawdown decisions. If I die before the 10 years are up, the guarantee will ensure some income flows to my heirs for the balance of those 10 years.
Tell my children to tell me if they believe I am suffering from dementia.
Accept that there will be times of loneliness, so don't talk endlessly to strangers. They will listen only out of politeness because they will not want to offend the elderly.
Always give grandchildren chocolate cake for breakfast.
Sell my motor vehicle or employ a driver as soon as I need assistance to stand up or I forget why I was out driving the car in the first place.
Don't scale down my medical scheme option or cancel my membership altogether to save money; rather do without somewhere else.
Memo to me when I'm 75
Letter from John to John
Written: age 60
Intended reading date: age 75+
1. Don't try to organise your children in their own homes; let them organise you.
2. If it doesn't matter, don't make an issue out of it.
3. Given your age, you probably will be forgetful. Write things down and don't repeat yourself.
4. Pursue photography, woodworking, birding and golfing interests to make yourself more socially interactive. Also try to be reasonably up to date with current affairs.
5. Your children have grown older and wiser as well. Don't reject their ideas. Respect their ideas, especially those from financially wise children. Their ideas will be more up to date than yours, and possibly more appropriate in the financial environment of the time.
6. Don't procrastinate when it comes to relocating to smaller, more appropriate accommodation as personal circumstances change. Avoid holding on to the family home when your needs reduce, even though the home may hold precious memories. If your children are urging you to move, comply.
7. Arrange latter retirement accommodation around retirement facilities with frail-care facilities, good access to medical attention and other services related to older people. Don't leave it too late.
8. Don't follow your children around, but, if they seem reasonably settled in one place, try to select a retirement facility near them. It will make it much easier for them, especially near the end.
9. Migrate your investments towards cash-related investments only as time progresses. Continue with independent, objective advice from a financial advice company.
10. Eliminate unnecessary investment clutter. (Consolidate relatively small investments that are disconnected from the main.)
11. Put arrangements in place to make sure Jill (spouse) can become the principal medical scheme member without undue difficulty.
12. Make sure Jill always has enough cash to survive for one year after your death.
13. Update your will regularly, especially the annexures that detail investments and relevant reference and contact numbers.
14. Keep important documents in a central place so that your heirs can easily access such information.
15. Look after yourself and always look presentable. Your children would like to be proud of you.
16. Prioritise appropriate and regular exercise, especially walking and swimming.
17. Prioritise brain stimulation, especially piano playing and crossword puzzles.
18. Maintain annual medical check-ups.
19. At the appropriate time (around age 75), sign a power of attorney in favour of Jill or John Jnr so that your personal affairs can be managed during times of frailty or illness. Brief them as to where everything can be found, especially your will and living will. Don't leave this too long.
20. Everything you say should add some value to the conversation. Rather keep quiet than say something for the sake of saying it.
21. If not being spoken to, don't insist on being part of the conversation.
22. Never embarrass your children or grandchildren. They will avoid you if you do. If they are too fat or too thin, it's their problem, not yours - don't comment.
23. Be ruthless about clutter. If you don't need it or use it, pass it on or throw it away.
  
 
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