Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

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Sandtrap
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Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by Sandtrap » Sun Nov 05, 2017 10:02 pm

Morningstar Article:

Making a Safety Net for Cognitive Decline
http://beta.morningstar.com/articles/83 ... cline.html
"For tens of millions of Americans living in and facing retirement, the subject of diminishing brain power may be one of society's last taboos. . . .Yet there's much you can do to protect yourself or a loved one, who, when facing cognitive decline, will become vulnerable to everyone from bill collectors to swindlers. Here are some steps you can take to provide a safety net for yourself or a loved one who may develop cognitive impairment."

This article from Morningstar encouraged me to further simplify my portfolio, solidify my IPS, and review my trust for any changes needed over time.

(Although DW reminds me often of cognitive decline, I haven't noticed. . . ) :shock:

What "actionable" steps have you taken, for yourself, for others?
Last edited by Sandtrap on Sun Nov 05, 2017 11:54 pm, edited 1 time in total.

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification? What measures have you taken?

Post by snarlyjack » Sun Nov 05, 2017 10:30 pm

Sandtrap,

This is a subject that is near & dear to my heart having taken
care of my dying Mom. (She had diabetes & dementia).

My Mom was obsessed with her checking account balance.
She checked the check book register balance 10 times a day.

Also, Keys. She always wanted to drive (escape) but she could
never get the key to start the car (thank God). She would have
been lost in 5 minutes. Opening up the front door was a challenge.

I would suggest to "simplify" everything (everything is a challenge).
Have a power of attorney (somebody that you really trust) to watch
over your affairs. Just simple transactions are a challenge.
I was lucky in that it was just me & my Mom, I watched over her.
I could not trust what she was saying or doing. She definitely needed help.
Make a plan for dementia...Her long term memory was good...her short
term memory was shot. Dementia is scary stuff...simplify everything.

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The Three-Fund Portfolio

Post by Taylor Larimore » Sun Nov 05, 2017 10:33 pm

What steps have you taken?
Sandtrap:

When we came to Vanguard in 1986, we owned 15 or 16 funds. Today I own 3.

Not only am I grateful that I have only three funds to maintain, but I know my caregivers, and heirs will also be grateful.

The Three-Fund Portfolio

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by tuningfork » Sun Nov 05, 2017 10:39 pm

What have I done? Simplification and automation. Simplify to three-fund portfolio. Reduce number of financial institutions and accounts. Put as many bills as possible on autopay. Ensure sufficient cashflow into checking account via automatic transfers to cover the bills. This is an ongoing process but I have made significant progress since starting to simplify about 4 years ago.

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by FrugalInvestor » Sun Nov 05, 2017 11:35 pm

1. I've simplified our portfolio to 2 primary funds, Total Stock Market and Total Bond Market, with a very small percentage in cash or cash equivalents.
2. All accounts are consolidated to absolute minimum number of firms where both my wife and I have authorization to manage all accounts.
3. Educated my wife in the basics of managing our accounts and the the purpose of each type - Taxable, tax advantaged, HSA, Roth IRA, etc. She understands that doing too much with investments is worse than doing too little and is very familiar with Jack's quote "don't just do something, stand there." She also understands basics and benefits of annuitization. She knows who to ask if she needs guidance. Most important, she's not gullible and knows that "if it sounds too good to be true it probably is."
4. We're in the process of interviewing accountants who we can transition our tax preparation to and who can advise annually on most tax efficient withdrawal strategy to produce necessary income. I'm willing to pay the additional annual cost now for this advice now to insure good continuing advice as we age.
5. Will consider annuitizing a appropriate portion of our investments early.
6. Have reviewed and updated revocable trust and all related documents (will, healthcare directives, financial POAs, etc.).
IGNORE the noise! | Our life is frittered away by detail... simplify, simplify. - Henry David Thoreau

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by carofe » Sun Nov 05, 2017 11:49 pm

Hmm, I'm only 35, and 5 years ago I had like six funds, now I only have two. I have learned to really appreciate and listen to Mr Bogle wisdom and thrive with simplicity. Simplicity helps to keep focus and contributes to the success of your financial plans in all seasons.
US Total Stock Market + Intermediate Term Bond. That's it.

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification? What measures have you taken?

Post by Sandtrap » Mon Nov 06, 2017 12:02 am

snarlyjack wrote:
Sun Nov 05, 2017 10:30 pm
Sandtrap,

This is a subject that is near & dear to my heart having taken
care of my dying Mom. (She had diabetes & dementia).

My Mom was obsessed with her checking account balance.
She checked the check book register balance 10 times a day.

Also, Keys. She always wanted to drive (escape) but she could
never get the key to start the car (thank God). She would have
been lost in 5 minutes. Opening up the front door was a challenge.

I would suggest to "simplify" everything (everything is a challenge).
Have a power of attorney (somebody that you really trust) to watch
over your affairs. Just simple transactions are a challenge.
I was lucky in that it was just me & my Mom, I watched over her.
I could not trust what she was saying or doing. She definitely needed help.
Make a plan for dementia...Her long term memory was good...her short
term memory was shot. Dementia is scary stuff...simplify everything.
Condolences.
Thanks for posting and sharing so others can learn and benefit.
DW and I are going thru and have gone thru similar situations. The Morningstar article brought to the forefront the various levels of unpreparedness and how much work it is to manage the most simple of financial and other matters that come with aging. The Boglehead path of simple elegance in investment finance was very evident in my FIL who passed recently, a WWII vet who was also a Boglehead. He was very very prepared. Yet,there was still so much to do.
Mahalo,
j :D

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by tc101 » Mon Nov 06, 2017 12:17 am

I've been talking about this on the forum for years, and there is a lot of denial. I agree that there is a feeling of taboo around it. I'm glad Morningstar is writing about it and that you started the discussion here.
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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by DrGoogle2017 » Mon Nov 06, 2017 12:46 am

I will move my husband’s retirement money to Consevative Lifetime Strategy and my retirement moneyto Moderate Lifetime Strategy. This is one reason, I have both Medicare part B and BCBS from the government. Try to ease the paperwork. Delay taking my SS at 70 will help mitigate any investment mistake.

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by Sheepdog » Mon Nov 06, 2017 1:36 am

I agree. I have 2 income producing mutual funds within both my and my wife's traditional and Roth IRAs and only a short term bond fund in a taxable account...not including 3 CDs and some I Bonds, so this simplicity puts me in decent shape in this regard. Plus everything financial wise is written down for spouse and heirs.

What is tough for seniors with cognitive decline (and for some without that decline) is navigating Medigap/Part D/Medicare Advantage plans annually. Because of their complexity, many, if not most, don't review them annually for lower cost and better benefits. It is a complicated procedure even if your mind is still functioning okay.
People should not say everything they think. They should think about everything they say.

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by snarlyjack » Mon Nov 06, 2017 6:13 am

The big problem with Dementia is, well, there is a number of problems.

My Mom qualified for assisted living. Problem #1 she didn't want to
go into a special home. #2 Where I live it cost between $6,000 -
$7,000. per month for assisted living. #3 We didn't have that kind
of money $72,000. per year.

So...what to do? Someone has to step up & really help out. In
our case that was me. I was 18, 19 & 20 years old. My Mom died
when I was twenty. Needless to say it was a hugh challenge. But
you gotta do what you gotta do.

We muddled our way through it. I did have her power of attorney.
So I was able to use it for banking & medical issues. Her funeral
cost $15,000 (plot, casket, funeral, etc). Then after the funeral I
had to take the power of attorney with the death certificate to transfer
the car & house titles. I learned a lot.

The good news is that's one of the reasons I became a Boglehead.
The whole cost of this is unreal and I know I need to save money
efficiently & to simplify my life. That's why I like dividends,
money coming in & simplify life (but that's another subject).

The bottom line is : You need a power of attorney, someone you
really trust (a child) and money. Then simplify everything to
the 9th degree. You also need a will!

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by nisiprius » Mon Nov 06, 2017 6:51 am

Literally since about 2006-2007, I have been taking steps in the direction of simplification and communication with my spouse. It's not one big thing, it's a lot of little things. I can't say yet how successful any of it has been. The chief ones include:

1) Reducing the number of firms and accounts that my spouse "needs to know about" and that I need to "remember." That was very slow for a number of reasons--closing a major brokerage or retirement account is a wrench. The goal is that my wife and I should know by heart and be able to name a) all the places that have our money (two brick-and-mortar banks, one Internet-only bank, one brokerage, Treasury Direct) and b) all the places that send us money or have policies that might send us money (two insurance companies with annuities and one insurance company with long-term-care insurance).

I ask my spouse to recite from memory the list of institutions about once a year. About once a year I noodge her to log in to her Vanguard account, which has transact rights on mine, and sell $100 worth of some mutual fund. Ditto Treasury Direct.

2) Being very, very resistant to opening new accounts for any reason--and resistant to "moving" an account. When you are sorting through someone else's financial papers, the statements from closed accounts and insurance policies cause you almost as much trouble as the accounts you didn't know existed. I am constantly tempted by news of CDs with higher rates than at any of the banks I currently have accounts at, and I resist, resist, resist.

3) Being very resistant to e-delivery of statements. I know I'm going to get beaten up on this by the millennials, but I continue to feel that paper statements that arrive in the mail are a very important safety net--and that state treasurers are going to get a windfall in about ten years as people who have "gone electronic" on their statements start to die off. (I also know it's a losing battle. Yes, I have an internet bank account at Capital One 360 that simply does not offer mailed paper statements, and it is only a matter of time when firms start to charge for mailed statements and I will have to make difficult decisions).

4) Completely liquidating about two dozen separate TIPS bonds and replacing them with a single TIPS mutual fund.

5) There's nothing I can do about the fact that due to their being no such thing as a "joint" 401(k) or rollover IRA, we currently have a total of three accounts at Vanguard (my rollover TIRA, my Roth, her Roth), but I try to re-use the same funds in all the accounts so that my wife is only going to see a small number of different fund names.
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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by nisiprius » Mon Nov 06, 2017 6:56 am

Pssst. "Apple, table, penny."

How many people know what I am talking about?

Zen question: is it really cheating to know the answer to a memory test by heart?
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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by RadAudit » Mon Nov 06, 2017 7:06 am

I concur with the idea of having a will, POA, etc.

All though it wasn't a case of cognitive decline - Dad used the wrong tax table for income taxes on a trust and it cost an extra $50 to set right - I got to be the trustee. After Dad died, I was absolutely amazed that so many in the family would have opinions about what Dad "really meant to say" when he was writing instructions to distribute income from the trust. (The instructions in the trust were clear.) Usually their interpretation meant more money for them than what the trust provided for them.

So, I am all for simplification. And, if you are establishing POAs, make sure the individual knows what you want to accomplish and has sufficient fortitude to follow your instructions.
Last edited by RadAudit on Mon Nov 06, 2017 12:25 pm, edited 1 time in total.
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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by Teague » Mon Nov 06, 2017 8:29 am

Planning for cognitive decline is quite prudent, of course, as it does happen to many as they age. But it is not inevitable for everyone.

My 97 year old mother and I have frequent conversations about finances, and estate planning, and she keeps me on my toes. Should I be investing in a Roth or traditional IRA, given my current and expected future marginal tax rates? She has strong and well thought-out opinions on this. What IRS forms need to be filed for an A/B trust where one spouse has predeceased the other? Just ask her - she completes them herself (though she does have a CPA check them over. Then she checks them again, to be sure the CPA is right, and has corrected the CPA more than once.) My brother pays a 1% AUM advisor to manage his assets, and she naturally thinks he is crazy to do this. Want to discuss pending tax legislation? Just call Mom, those topics are not forbidden in her forum! :happy

So, while it is prudent to plan for what may lie ahead, I might caution about dumbing-down one's finances unnecessarily. The trick of course is to know when and if the decline is happening, and how quickly it is progressing.
Semper Augustus

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by tibbitts » Mon Nov 06, 2017 8:36 am

All though it wasn't a case of cognitive decline - Dad use the wrong tax table for income taxes on a trust and it cost an extra $50 to set right - I got to be the trustee.
Most all of us have made multiple worse mistakes on equally simple(?) aspects of our taxes, and continue making similar mistakes regularly. Software has helped eliminate some mistakes, but I had software and still managed to cost myself that much (more in hassle) just last year. You seem to imply that that's cause for someone else needing to take over responsibilities?

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by Doc » Mon Nov 06, 2017 8:41 am

nisiprius wrote:
Mon Nov 06, 2017 6:51 am
4) Completely liquidating about two dozen separate TIPS bonds and replacing them with a single TIPS mutual fund.
What is your reasoning for choosing between a liquidating ladder and a fund?

I'm considering the same idea.
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by tadamsmar » Mon Nov 06, 2017 9:05 am

My wife and I have established full Agent Authorizations for each other's accounts at Vanguard. I think everyone should consider using Vanguard Agent Authorizations. We also have POAs.

My AA is fairly simple and my wife has a copy of the plan. Note that having taxable accounts with cap gains can make some simplifications expensive.

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by JCE66 » Mon Nov 06, 2017 9:59 am

Bogleheads....Here is a related question on cognitive decline. Have you considered writing a letter to your older self, while you still have your full faculties? Or maybe making a video file? And then giving that to your child (or executor) for safe-keeping. It seems to me that as one experiences cognitive decline, they either a) don't realize it, or b) deny it outright. Or is that just wishful thinking?

I have been strongly considering doing this, so that my 'younger self' could tell my 'older self' that the time has come to relinquish control to my sons. Maybe something along the lines of 'Hey, it is time. Cognitive decline has these symptoms and if your sons are playing this file to you, it is because you are showing these symptoms. So it is now time to hang it up and trust your children. You knew this day would come."

As an aside...What would your 'younger self' want to tell your 'older self'?

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by Teague » Mon Nov 06, 2017 10:23 am

JCE66 wrote:
Mon Nov 06, 2017 9:59 am
Bogleheads....Here is a related question on cognitive decline. Have you considered writing a letter to your older self, while you still have your full faculties? Or maybe making a video file? And then giving that to your child (or executor) for safe-keeping. It seems to me that as one experiences cognitive decline, they either a) don't realize it, or b) deny it outright. Or is that just wishful thinking?

I have been strongly considering doing this, so that my 'younger self' could tell my 'older self' that the time has come to relinquish control to my sons. Maybe something along the lines of 'Hey, it is time. Cognitive decline has these symptoms and if your sons are playing this file to you, it is because you are showing these symptoms. So it is now time to hang it up and trust your children. You knew this day would come."

As an aside...What would your 'younger self' want to tell your 'older self'?
I'd probably watch that video and say something like "I know much more now than back when I made that thing. And more than you traitors playing it for me! The whippersnapper who make that didn't have a clue. Now, get off my lawn!"
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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by Random Walker » Mon Nov 06, 2017 10:42 am

Cognitive decline and transfer of assets between generations may be another reason to use a trusted fiduciary financial advisor as well. Perhaps even a simple portfolio will become unmanageable with cognitive decline. 12 funds versus 3 funds may be nothing compared to maintaining appropriate mind control over the stomach even with a 2 fund portfolio.

Dave

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by Sandtrap » Mon Nov 06, 2017 11:12 am

Teague wrote:
Mon Nov 06, 2017 8:29 am
. . . . .
So, while it is prudent to plan for what may lie ahead, I might caution about dumbing-down one's finances unnecessarily. The trick of course is to know when and if the decline is happening, and how quickly it is progressing.
Well said and so so true.
I feel some cognitive decline progressing day by day though I'm not sure how fast it's taking place.
Walking into the kitchen and forgetting why I went there may be a sign of something. Why is my coffee cup in the refrigerator? Did I brush my teeth before bed. . . maybe I should do it again to be sure.

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by Johnsson » Mon Nov 06, 2017 11:25 am

Teague wrote:
Mon Nov 06, 2017 8:29 am
Planning for cognitive decline is quite prudent, of course, as it does happen to many as they age. But it is not inevitable for everyone.

My 97 year old mother and I have frequent conversations about finances, and estate planning, and she keeps me on my toes. Should I be investing in a Roth or traditional IRA, given my current and expected future marginal tax rates? She has strong and well thought-out opinions on this. What IRS forms need to be filed for an A/B trust where one spouse has predeceased the other? Just ask her - she completes them herself (though she does have a CPA check them over. Then she checks them again, to be sure the CPA is right, and has corrected the CPA more than once.) My brother pays a 1% AUM advisor to manage his assets, and she naturally thinks he is crazy to do this. Want to discuss pending tax legislation? Just call Mom, those topics are not forbidden in her forum! :happy

So, while it is prudent to plan for what may lie ahead, I might caution about dumbing-down one's finances unnecessarily. The trick of course is to know when and if the decline is happening, and how quickly it is progressing.
My mother is equally sharp at 87. Sometimes I wonder if I should volunteer to take over management of her accounts but have decided to wait until she asks (she knows I'm willing). She has too many accounts in too many places and should consolidate. I think keeping it all straight is probably helping keep her sharp.

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by nisiprius » Mon Nov 06, 2017 11:27 am

Doc wrote:
Mon Nov 06, 2017 8:41 am
nisiprius wrote:
Mon Nov 06, 2017 6:51 am
4) Completely liquidating about two dozen separate TIPS bonds and replacing them with a single TIPS mutual fund.
What is your reasoning for choosing between a liquidating ladder and a fund?

I'm considering the same idea.
Simplification, no more and no less. Simplification at the expense of optimization, and at the expense of ego.
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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by pkcrafter » Mon Nov 06, 2017 11:39 am

Well, this discussion certainly sets my mood for the day.
Where I live it cost between $6,000 - $7,000. per month for assisted living.
This is a big problem, what are Bogleheads doing about it?

Paul
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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by Mr. Digweed » Mon Nov 06, 2017 11:42 am

I wonder if everyone posting on this thread would care to reveal their age?

I'm 64. Feeling still spry.

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by delamer » Mon Nov 06, 2017 11:52 am

pkcrafter wrote:
Mon Nov 06, 2017 11:39 am
Well, this discussion certainly sets my mood for the day.
Where I live it cost between $6,000 - $7,000. per month for assisted living.
This is a big problem, what are Bogleheads doing about it?

Paul
Long Term Care policies and substantial savings even though we can cover all our expenses (including travel, home maintenance, new cars) in retirement with our Social Security and pension benefits.

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by fposte » Mon Nov 06, 2017 12:00 pm

Teague wrote:
Mon Nov 06, 2017 8:29 am
So, while it is prudent to plan for what may lie ahead, I might caution about dumbing-down one's finances unnecessarily. The trick of course is to know when and if the decline is happening, and how quickly it is progressing.
When it's your own, the impairment unfortunately impairs your ability to detect it. Since my considerations aren't family ones, current me is the one who has to take care of future me. I'm not at a financial knife edge, so simplifying my finances is likelier to assist my life than getting the last dime out of a CD rate or credit card cashback.

And, I mean, I'm on Bogleheads here. Simple portfolios are sufficient and effective. I'm going to take a few years in the simplification process to minimize tax hits, but simple is a fine goal even if I'm in tip-top mental shape until I'm 104.

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by FCM » Mon Nov 06, 2017 12:10 pm

nisiprius wrote:
Mon Nov 06, 2017 6:56 am
ssst. "Apple, table, penny."

How many people know what I am talking about?
How about remembering "apple, book, table" and "can you spell 'world' backwards?" These are the questions that my doctor asks me during my annual physical to check for mental decline. I'm 71 now and still manage the family investment portfolio of mutual funds in a passive manner. We have a trust in place whereby Vanguard would take over the management once I'm no longer able to do so.

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by 2015 » Mon Nov 06, 2017 12:12 pm

JCE66 wrote:
Mon Nov 06, 2017 9:59 am
Bogleheads....Here is a related question on cognitive decline. Have you considered writing a letter to your older self, while you still have your full faculties? Or maybe making a video file? And then giving that to your child (or executor) for safe-keeping. It seems to me that as one experiences cognitive decline, they either a) don't realize it, or b) deny it outright. Or is that just wishful thinking?

I have been strongly considering doing this, so that my 'younger self' could tell my 'older self' that the time has come to relinquish control to my sons. Maybe something along the lines of 'Hey, it is time. Cognitive decline has these symptoms and if your sons are playing this file to you, it is because you are showing these symptoms. So it is now time to hang it up and trust your children. You knew this day would come."

As an aside...What would your 'younger self' want to tell your 'older self'?
Incredibly, at age 20 I wrote to my "older" self at ages 30, 40, 50, 60, and beyond. It was actually exceptionally profound, particularly given how stupid I was at that age--and many decades beyond it. Good Lord, I couldn't be a day younger than a couple years ago. Life gets extraordinarily better the older I get.

As I've posted previously, once you get outside the fields of investing, economics, and finance, the more you find that everything circles back to the concept of simplicity. I just finished the outstanding book Scale which pointed out that nature and evolution expends the least amount of energy in reaching its goal. Even nature defaults to simplicity!

Last year, I read the slightly fluffy but useful book The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing. A key takeaway is that every single thing we own is the result of some life decision we made in the past. It's a good idea to regularly ask ourselves to what extent is the complexity in our lives the result of a past decision that no longer suits us.

I practice simplicity in all things: possessions, investments, health, physicality, identity. Just about everything I have is digitized, and paper has been banished from my house. Life can now be divided into two parts, basically, BD and AD--before digital and after digital. We have moved from the age of burdensome Ownership to freeing Access, and there's just no need to have all that clunky messy stuff hanging around anymore when it's so easy to access it, use it for what we need, and then move on and be done with it until the next time access is needed. Even the physical world has been impacted by digitization (e.g., I no longer own any musical equipment to play music as I can access to just about anything every recorded instantly via the web). Cognitive decline or no, with all this new freedom available to us, why live the burden of a messy, complicated financial life?

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by RadAudit » Mon Nov 06, 2017 12:29 pm

tibbitts wrote:
Mon Nov 06, 2017 8:36 am
All though it wasn't a case of cognitive decline - Dad use the wrong tax table for income taxes on a trust and it cost an extra $50 to set right - I got to be the trustee.
Most all of us have made multiple worse mistakes on equally simple(?) aspects of our taxes, and continue making similar mistakes regularly. Software has helped eliminate some mistakes, but I had software and still managed to cost myself that much (more in hassle) just last year. You seem to imply that that's cause for someone else needing to take over responsibilities?
Nothing sinister. I guess Dad figured that the beneficiaries would be receiving funds for the next 16 years (at that time) and because he was getting close to 70 it was time to simplify. And who else better to transfer it to than the guy whose kids were going to benefit from it for the last 8 years?
FI is the best revenge. LBYM. Invest the rest. Stay the course.

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Sheepdog
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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by Sheepdog » Mon Nov 06, 2017 12:38 pm

nisiprius wrote:
Mon Nov 06, 2017 6:51 am
3) Being very resistant to e-delivery of statements. I know I'm going to get beaten up on this by the millennials, but I continue to feel that paper statements that arrive in the mail are a very important safety net--and that state treasurers are going to get a windfall in about ten years as people who have "gone electronic" on their statements start to die off. (I also know it's a losing battle. Yes, I have an internet bank account at Capital One 360 that simply does not offer mailed paper statements, and it is only a matter of time when firms start to charge for mailed statements and I will have to make difficult decisions).
I agree with everything you wrote, but I wanted to single this statement. I will accept only paper statements and bills. Paper offers a trail after I have passed. My heirs would not see the electronic statements. My wife hates computers and smart phones. "Human touch is missing with those things." she says. Paper files will be extremely valuable. If I have to pay to get paper statements, I will, but only at a last resort. I did pay a fee with Pentagon Federal CU's credit cards until I quit using them for that reason.
I agree that state treasuries and maybe even the US Treasury and insurance companies will be getting free unclaimed dough.
Last edited by Sheepdog on Mon Nov 06, 2017 12:41 pm, edited 2 times in total.
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GerryL
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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by GerryL » Mon Nov 06, 2017 12:39 pm

JCE66 wrote:
Mon Nov 06, 2017 9:59 am
Bogleheads....Here is a related question on cognitive decline. Have you considered writing a letter to your older self, while you still have your full faculties? Or maybe making a video file? And then giving that to your child (or executor) for safe-keeping. It seems to me that as one experiences cognitive decline, they either a) don't realize it, or b) deny it outright. Or is that just wishful thinking?

I have been strongly considering doing this, so that my 'younger self' could tell my 'older self' that the time has come to relinquish control to my sons. Maybe something along the lines of 'Hey, it is time. Cognitive decline has these symptoms and if your sons are playing this file to you, it is because you are showing these symptoms. So it is now time to hang it up and trust your children. You knew this day would come."

As an aside...What would your 'younger self' want to tell your 'older self'?
When I was looking after my mother as she succumbed to dementia, I often thought about writing a letter to my older self, asking questions to try to encourage myself to stay socially engaged. I'm a bit of a hermit (a gregarious hermit) and I worry that my natural tendency to keep to myself could result in isolation at a time when I need the help of a community.

In the letter, to be opened on key birthdays, I would quiz myself about things like "When was the last time you went out with a group of people?" "How many different people have you spoken to in the past week?" and then encourage myself to raise the numbers.

Financially, I'm doing great. Investments are simplified. Health (at 69) is very good. My big concern is how to arrange financial and legal issues when I have no nearby relatives and a small social circle. There is nobody in sight who could handle these things for me. I dread the idea of trying to create a professional team to manage my affairs one day, but I know I will have to do it. Haven't started yet.

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Doc
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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by Doc » Mon Nov 06, 2017 12:41 pm

nisiprius wrote:
Mon Nov 06, 2017 11:27 am
Doc wrote:
Mon Nov 06, 2017 8:41 am
nisiprius wrote:
Mon Nov 06, 2017 6:51 am
4) Completely liquidating about two dozen separate TIPS bonds and replacing them with a single TIPS mutual fund.
What is your reasoning for choosing between a liquidating ladder and a fund?

I'm considering the same idea.
Simplification, no more and no less. Simplification at the expense of optimization, and at the expense of ego.
My thinking is that the ladder is simpler once it's set up. Just move the cash in the account to checking every April.
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by SimplicityNow » Mon Nov 06, 2017 2:08 pm

Going through the retirement process and having recently retired (last month :) ) gave me the impetus to begin to address this.

Although my genetics are good in this regard, (mom was 93 before she showed any signs of cognitive decline and died soon thereafter and dad is 95 and still sharp as a tack), you never know.

We updated our wills, had power of attorneys drawn up, health care proxies signed, etc.

My next major task is to continue simplifying our accounts. I have made a lot of headway but it is still a work in progress. My goal for the end of 2017/beginning of 2018 is to:

reduce my checking accounts from 2 to 1
roll over an IRA into an existing 403b
consolidate 2 existing retirement accounts into 1
sell existing individual stocks in taxable and use the proceeds to add to an existing stock fund
continue to educate my spouse on our finances

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by hoppy08520 » Mon Nov 06, 2017 2:15 pm

SimplicityNow wrote:
Mon Nov 06, 2017 2:08 pm
roll over an IRA into an existing 403b
I hate to advice against simplicity, but are you sure this 403(b) is a good one? Many 403(b) plans seem to be very high-fee plans.

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by Artsdoctor » Mon Nov 06, 2017 2:16 pm

nisiprius wrote:
Mon Nov 06, 2017 6:56 am
Pssst. "Apple, table, penny."

How many people know what I am talking about?

Zen question: is it really cheating to know the answer to a memory test by heart?
You're not really supposed to remember the three items after you leave the office. And you're not supposed to teach everyone the only three things they have to remember during a mental status exam! I'll have to come up with another three . . .

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by SimplicityNow » Mon Nov 06, 2017 2:22 pm

hoppy08520 wrote:
Mon Nov 06, 2017 2:15 pm
SimplicityNow wrote:
Mon Nov 06, 2017 2:08 pm
roll over an IRA into an existing 403b
I hate to advice against simplicity, but are you sure this 403(b) is a good one? Many 403(b) plans seem to be very high-fee plans.
It's a very good one. It offers many Vanguard Institutional index funds at very low costs.

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by beardsworth » Mon Nov 06, 2017 2:24 pm

nisiprius wrote: 3) Being very resistant to e-delivery of statements. I know I'm going to get beaten up on this by the millennials, but I continue to feel that paper statements that arrive in the mail are a very important safety net
sheepdog wrote: I will accept only paper statements and bills. Paper offers a trail after I have passed. My heirs would not see the electronic statements.
Even aside from the issue of whether certain financial institutions charge fees for paper statements by mail, we likewise resisted online statements for a long time.

But we were alarmed by the occasions, however rare, when someone else's postal mail got delivered to our address. And that naturally led to wondering whether any of our mail was similarly going astray, so that a less-than-honest person, or just a person who didn't notice that s/he wasn't the actual addressee on a piece of mail, could open and examine our private financial paperwork.

We now follow a middle ground: We receive statements online and save them on the computer, but we also print a paper copy of each for our "analogue" file cabinet. On the one hand, this means that we'd still be able to see documents if we were away for a long time. On the other, it leaves a physical paper trail at home.

Edit: I guess I need to make clear that whenever someone else's postal mail is delivered to us, we put it out for pickup again, with a note that our house isn't the right address. :)

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by nisiprius » Mon Nov 06, 2017 2:34 pm

Artsdoctor wrote:
Mon Nov 06, 2017 2:16 pm
nisiprius wrote:
Mon Nov 06, 2017 6:56 am
Pssst. "Apple, table, penny." How many people know what I am talking about?

Zen question: is it really cheating to know the answer to a memory test by heart?
You're not really supposed to remember the three items after you leave the office. And you're not supposed to teach everyone the only three things they have to remember during a mental status exam! I'll have to come up with another three . . .
I didn't try to learn them, but it's the same every year... and (astonishingly, and I don't know why) the same across providers. After a few times my wife and I compared notes, and the surprise of finding that it was the same helped make it even more memorable.

I've tried not to learn D E F P O T E C, either, but how many times can you read it aloud before it starts to sink in?
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by saltycaper » Mon Nov 06, 2017 2:47 pm

I think having two or three funds instead of five or seven or however many is unlikely to be helpful in the event of severe cognitive decline. If you can manage three funds, you can manage five. If you can't manage five, you probably can't manage three. Maybe one fund would be okay, but more likely, you need someone else to take over.
"I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said." --Alan Greenspan

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Doc
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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by Doc » Mon Nov 06, 2017 3:07 pm

nisiprius wrote:
Mon Nov 06, 2017 2:34 pm
Artsdoctor wrote:
Mon Nov 06, 2017 2:16 pm
nisiprius wrote:
Mon Nov 06, 2017 6:56 am
Pssst. "Apple, table, penny." How many people know what I am talking about?

Zen question: is it really cheating to know the answer to a memory test by heart?
You're not really supposed to remember the three items after you leave the office. And you're not supposed to teach everyone the only three things they have to remember during a mental status exam! I'll have to come up with another three . . .
I didn't try to learn them, but it's the same every year... and (astonishingly, and I don't know why) the same across providers. After a few times my wife and I compared notes, and the surprise of finding that it was the same helped make it even more memorable.

I've tried not to learn D E F P O T E C, either, but how many times can you read it aloud before it starts to sink in?
All right. My PCP has a different approach. Last year he had a resident do the initial workup. She had name from a south central Asia country that was a gazillion letters long. My question was "what was her name". (It was written on her lab coat.) I failed but we all had a good laugh.

(He did follow up with something more reasonable.)
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by SimpleGift » Mon Nov 06, 2017 3:48 pm

saltycaper wrote:
Mon Nov 06, 2017 2:47 pm
I think having two or three funds instead of five or seven or however many is unlikely to be helpful in the event of severe cognitive decline. If you can manage three funds, you can manage five. If you can't manage five, you probably can't manage three. Maybe one fund would be okay, but more likely, you need someone else to take over.
Agree with this. In retirement, it makes sense to try to reduce the number of checking and brokerage accounts, review and update one's wills, trusts, healthcare directives, financial POAs, and generally consolidate one's finances as much as possible. But whether one has 10 or 5 or 2 mutual funds doesn't seem very important.

In our case, both my spouse and I have our own separate, all-taxable portfolios, which were invested as lump-sums in the early 1990s (from the sale of a business) — so all of our equity mutual funds are now highly-appreciated by this point, and it wouldn't make sense, tax-wise, for us to sell any funds in the interest of simplification.

Since both of us have had our own portfolios for years, I'm fortunate that she is as up-to-speed and expert with portfolio management as anyone I know. I once suggested to her that perhaps we should think about reducing the number of funds in our portfolios, and her response was, "Why bother, it's just a few extra lines on the account statements."
Cordially, Todd

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by sambb » Mon Nov 06, 2017 3:54 pm

I think the 3 fund is not really that simple, maybe one fund is better. Nevertheless, the financial issue is not how one invests, but rather, being taken advantage of by relatives or others who cause you to change or sign over things, change beneficiaries, spend your money, etc.

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by likegarden » Mon Nov 06, 2017 4:05 pm

Simplification is important as you age, I will be 78 soon, wife is 5 years younger. In my family, Alzheimer was never heard of, all died after a few days to weeks in a hospital, so I might be OK. My father was an accountant, he was sharp until his end at age of 87. I am an engineer, son is an engineer, etc. So we all might stay sharp. We have long term care insurance, but LTC costs are increasing much faster than general inflation and income. So 10 years from now there might be a large gap. That's why we have now a trust and paid already towards the education of our only grandchild. You need to protect assets for your family.

Our portfolio is a few CDs and mostly 2 index funds at Vanguard, have only one bank and one credit card account. Our health insurance is Medicare Advantage HMO, so we do not have to fight with doctors and hospitals about paying bills. We have wills and other documents.

Simplification is also needed around the house, like having newer cars to avoid the troubles of repairs, and repairing or replacing things immediately when needed. I have written up maintenance procedures for around the house and tell my wife and son what I am doing and why. Simplify your landscape also, so a lawn mowing and leaf blowing landscaper can not do much damage. Simplification is also needed for your saved old stuff. Nobody ever could take his/her old stuff with them at the end, except the pharaohs.

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by Sandtrap » Mon Nov 06, 2017 4:36 pm

pkcrafter wrote:
Mon Nov 06, 2017 11:39 am
Well, this discussion certainly sets my mood for the day.
Where I live it cost between $6,000 - $7,000. per month for assisted living.
This is a big problem, what are Bogleheads doing about it?

Paul
MIL with dementia at 94 has in home care 24/7. $7-9000/Month. Fortunately her deceased spouse was a Boglehead and planned accordingly.
Hopefully a Boglehead "monster portfolio" plus a frugal lifestyle will take care of the inevitable decline and expenses.
Plan for the worse. . . hope for the best.

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by Broken Man 1999 » Mon Nov 06, 2017 5:00 pm

saltycaper wrote:
Mon Nov 06, 2017 2:47 pm
I think having two or three funds instead of five or seven or however many is unlikely to be helpful in the event of severe cognitive decline. If you can manage three funds, you can manage five. If you can't manage five, you probably can't manage three. Maybe one fund would be okay, but more likely, you need someone else to take over.
Yes, I believe that also. Of course the fewer funds to manage will certainly help the person you have lined up to help you.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by tadamsmar » Mon Nov 06, 2017 5:46 pm

I don't understand this reverence for the 3 fund portfolio.

When my almost 90 year old MIL realized that her investment advisor was lying to her about her annuity to fund his boat, I took over and arranged to put her in the Vanguard Target Retirement Fund Income. It was a no brainer. I set up Agent Authorization for myself and my wife so either of us could manage her income stream.

This was a simple, good plan.
Last edited by tadamsmar on Mon Nov 06, 2017 5:58 pm, edited 1 time in total.

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by SimplicityNow » Mon Nov 06, 2017 5:51 pm

"Everything should be made as simple as possible, but not simpler"

attributed to Albert Einstein

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Re: Morningstar: Cognitive decline in aging. A strong case for portfolio simplification?

Post by Sandtrap » Mon Nov 06, 2017 6:12 pm

tadamsmar wrote:
Mon Nov 06, 2017 5:46 pm
I don't understand this reverence for the 3 fund portfolio.

When my almost 90 year old MIL realized that her investment advisor was lying to her about her annuity to fund his boat, I took over and arranged to put her in the Vanguard Target Retirement Fund Income. It was a no brainer. I set up Agent Authorization for myself and my wife so either of us could manage her income stream.

This was a simple, good plan.
+1
Stages of self-management. Right remedy at the right time. :D

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