“While most respondents had some planning in place, they were less likely to have had proactive conversations about care and the transfer of control of finances,” said Anna Madamba, a senior investment strategist in Vanguard Investment Strategy Group and the paper’s author. “Timing the transfer is key, as mistiming can have significant implications for financial well-being.”
The paper describes cognitive decline as a continuum from mild impairment to a diagnosis of dementia. The average perceived risk of decline shown in the survey roughly captures the actual risk of experiencing the most extreme form—the lifetime risk of dementia—but misses the large fraction of those at risk for milder forms.
“Investors in our survey, particularly women, underestimated the risk of cognitive decline,” Ms. Madamba said. “This is significant because financial repercussions can hit before symptoms become evident.”
Investors were asked how much they had planned for cognitive decline. Creating a living will or designating power of attorney were the most commonly accomplished tasks, completed by at least seven in ten investors. A minority had named a person to check mail or pay bills, prearranged care (anticipating the next steps in living arrangements or caregiving), or prepared guidelines for the transfer of financial control.