As you enter retirement, it’s worth making sure your financial and legal arrangements are built for the long haul. What feels manageable in your 60s can become difficult later, and the people who may need to step in for you will rely on the choices you make now. Taking some simple steps in advance to organise your financial and legal affairs can protect your independence, reduce stress, and make future decision-making far simpler.
Complexity can become a risk as you age. Multiple bank accounts, numerous investments, and complicated structures can be hard to manage later in life, and hard for someone else to step into if needed. We regularly see examples of people who’ve set up self-managed super funds while they’re working, but later want to wind them up. Sometimes it’s just the desire to spend more time doing the things they love rather than deal with the obligations of managing a fund, but sometimes it becomes necessary because of a change in health.
Where appropriate, consider gradually simplifying. This does not mean making poor financial choices. It means aiming for clarity. Fewer accounts, clear records, and well-documented decisions may make it easier for you now and safer for you later. Keeping a central record of accounts, policies, and key contacts can be extremely helpful.
Choosing trusted people and having honest conversations
When people start to lose capacity, they can become legally incapable of signing new documents like a will, power of attorney or advance care directive. At this point, a court or tribunal would appoint someone to make decisions for you. If you put your own arrangements in place early, you can choose who will act for you, rather than leaving it to others. It also gives you time to think carefully about who is suitable, and to talk with them about your expectations.
Choosing the person or team of people who’ll act on your behalf is a serious decision. You’re not just choosing someone you trust personally. You are choosing someone who can handle complexity, remain calm under pressure, and act in your interests - even if that’s difficult, or your interests and theirs don’t align.
Unfortunately for some older Australians, the person they appoint abuses that trust. Elder abuse most often happens within a family or domestic setting, with an older person’s adult child the most common perpetrator, and sons more likely to financially abuse parents than daughters[1]. This doesn’t mean every child will take financial advantage of their parent, or that you can’t trust your son to help with your finances. But it’s worth thinking about ensuring there’s an independent person in the process.
“What makes it a sensitive issue is that perpetrators of elder abuse are often those closest to the older person, most commonly adult children but also grandchildren, friends, neighbours and even carers", points out Australia’s former Age Discrimination Commissioner, the Hon Dr Kay Patterson AO.
“This can make reporting abuse very difficult or even unthinkable for the older person experiencing abuse."[2]
Once you have chosen your third-party person, talk to them. Explain how you want your money managed, what your priorities are, and what you would want to avoid. For example, you may want to prioritise staying in your own home as long as possible, and may want to accept some of the risks of doing so. You may be comfortable using savings to pay for care, and prefer to be looked after rather than taking risks.
These conversations can feel uncomfortable, but they’re one of the strongest protections you can put in place, both for yourself and your chosen person. In particular, making medical decisions for someone who can no longer make their own choices can be hard, even when you know what they want. But studies show that when the decision-maker is unclear about the patient’s wishes, it increases their regret, emotional distress and self-blame, along with the chance they’ll suffer from anxiety, depression and even PTSD.
Making sure you have the right legal documents prepared well in advance can provide peace of mind and help ensure your wishes are carried out. It’s important to seek legal advice, as the documents you need will vary depending on your personal situation.
In general terms, most Australians should consider having a will, nominate a beneficiary for their super, an enduring power of attorney, and an advance care directive (the form of these differs from state to state).
For more information on the type of documents you will need, see here.
[1] National Elder Abuse Prevalence Study Summary Report
[2] https://humanrights.gov.au/about-us/media-centre/media-releases/media-releases/new-campaign-seeks-reduce-abuse-older-australians