Editor's Letter: The Risk That Comes With Age

I've proclaimed our annual retirement issue the most important of the year in the past. It may not be as popular as our BIC Top 50 or our program manager rankings, but the topics covered are crucial. Indeed, the ultimate goal of most investing is a pleasant retirement.

This year, Associate Editor Margarida Correia writes on the issue of dementia and the associated risks (page 18). It may not be a topic of conversation in your life yet, particularly if a loved one does not suffer its cruel fate. It’s not an easy conversation for family members. And advisors can find themselves in a Catch-22 with conflicting desires to follow an elderly client’s stated wishes, and doing what’s truly in their best interests. This, in turn, can lead to privacy issues if the advisor feels the need to discuss the situation with the client’s family members.

These concerns will only grow in the coming years as baby boomers continue to retire and live longer.

Correia reports that for the group over the age of 80, four in 10 have dementia. Granted, this is the oldest group of people, but 40% is still a jaw-dropping number. Moreover, 70% of that over-80 crowd will have some level of cognitive impairment, which means that in a group of five elderly people, two will have dementia and another one or two will have some lesser level of cognitive impairment. This puts advisors in a position where they “face legal issues at every turn,” she reports. If that’s not terrifying enough, consider one more demographic trend. The over-80 group is among the fastest-growing, seeing increases of 16% to 30% in the past 10 years, depending on the exact age, according to U.S. Census numbers.

This is clearly an issue that you and your clients need to discuss if they’re to be truly prepared for the risks of retirement.

We have other retirement coverage this month, as well. Our main FrontLines story takes a hard look at the conventional wisdom that says health care costs in retirement will be ruinous, and explores less expensive options; our Portfolio section includes the top performing target-date funds geared to 60-year-old investors; and on our online page, we highlight slideshows and videos from our website that deal with retirement issues.

Medical advances and longer lifespans are positive developments in any society. But they bring a host of unfamiliar risks that your clients need help in managing.

Read more:

• Are Health Care Costs in Retirement Really So High?
• Dementia: The Growing Retirement Risk
• 10 Tips for Advising Clients About Medicare