Financial wellness and planning

The costs of waiting to plan for cognitive decline

September 07, 2021

The costs of a mistimed transfer

The survey was conducted in 2020, and a total of 2,489 Vanguard investors, or 46% of those invited to participate, responded. Those surveyed were age 55 or older, with a median age of 74 and a median net worth of $1.6 million. The majority were married (or with a partner), had at least one living child, and were retired. Sixty-seven percent rated their health as either excellent or very good. Six in ten had been exposed to cognitive decline, reporting that someone close to them had suffered from it.

Figure 1. Planning varies widely by activity
This chart shows the percentage of those surveyed who have planned for specific activities related to cognitive decline. Most had written a will, asked someone to assume power of attorney, and consolidated accounts. But only a minority of investors had a revocable trust, purchased long-term care insurance, purchased annuities, assigned someone to check mail and pay bills, or prearranged care. Only 4% of those surveyed said they had developed guidelines for the transfer of control of financial assets, the lowest percentage of any task surveyed.
Figure 2. Many investors wait too long to transfer control of finances
More than nine in ten investors surveyed say they wouldn’t transfer control of their finances at the onset of cognitive decline. Instead, more than eight in ten say they would transfer further into decline but before complete incapacity, and nearly 10% wouldn’t make the transfer until after complete incapacity

Implications for investors, agents, and advisors

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