Paul Delean: Plan ahead for how to manage finances in your final years

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The good news is that average life expectancy in Canada has increased by six years since the 1950s.

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The downside is that those extra years can present financial and other challenges for many.

“As people live longer, an increasing — and significant — percentage of the population will suffer from disease longer as they age,” writes Ottawa-based author Marc Séguin, 62, in his self-published book Advocacy in Aging.

Drawing on experience in his own family, Séguin says preparing for a likely decline in ability can make things a lot easier and clearer for those in your circle who are – perhaps all of a sudden – tasked with overseeing your affairs.

It’s a conversation many are reluctant to start, he said in an interview.

“People don’t like to talk about death, illness, end of life and all that. But it’s important to start that conversation.”

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Where do you see yourself living as a senior and when? What if you run out of money? What role do you see for your children, if any, and how do they feel about it? What will your retirement budget be and how will it be funded? If you were off work tomorrow, how easily could the person in charge of your affairs identify and pull it all together? Have you ever delegated such a person? What is your current state of health and what medication are you taking? These are some of the issues that need to be addressed at an early stage of the dialogue.

Having a “transition team” on site and keeping them updated on any change in your desires or circumstances should smooth out some of the bumps in the final leg of the journey, said Séguin, who has now retired from a career launching startups and directed.

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While people routinely nominate a spouse or child as a power of attorney or trustee, these aren’t always the best decisions, he noted. It can be too stressful for an older spouse or too tiring for a child who may become uncomfortable with paperwork and administrative tasks. Given life expectancy, delegating a power of attorney might actually be more important than the will, Séguin said.

Financial planners should also be in the loop as investing becomes easier and safer over time. According to Séguin, too many pension plans assume fairly constant spending by seniors when the reality is that care and housing costs can suddenly increase at any time.

Those who manage their own pension funds, which many are having to do these days given the sharp decline in employers’ defined-benefit plans, also need to be cautious when attempting to hold onto the nest egg. Bad decisions late in life can have disastrous consequences.

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“Ideally, the individual would have the knowledge and skills to manage their own affairs throughout their lives,” Séguin said, “but unfortunately that’s not usually the case.”

Health care is another challenge. With so many Canadians now living without regular consultations with a GP, many health and behavior changes can go undetected until they reach a very advanced stage.

The older you get, the more likely you are to have medical conditions that can impair and hinder information processing and decision-making.

One more reason to plan for the last few years and to think about different scenarios at an early stage, said Séguin.

“When you are 55 or 60,” he writes, “it is imperative that you make or review your financial plan for your final years, whether you have significant wealth or not much at all.”

Séguin’s book is available at AdvocacyInAging.com.

The Montreal Gazette invites readers to questions about taxes, investments, and personal finance. If you have a question that you would like answered, please email Paul Delean at [email protected].