Understanding the Financial Toll of Alzheimer’s Disease and Proactive Steps to Protect Your Finances

Alzheimer’s disease is not only a devastating diagnosis for millions of individuals and families worldwide but also a significant financial burden. In 2020, an estimated 5.8 million Americans aged 65 and older were living with Alzheimer’s, a number projected to nearly triple to 14 million by 2060. The financial impact is equally staggering, with direct costs totaling an estimated $305 billion in 2020. As Alzheimer’s cases rise, so do these costs, expected to reach $777 billion by 2050.

Facing an Alzheimer’s diagnosis can be overwhelming, but taking proactive steps to protect your finances is crucial. Here are some essential measures you can take:

1. Create a Power of Attorney: A power of attorney is a legal document that allows you to appoint someone you trust to manage your financial affairs when you can no longer do so. This person, known as your agent, will make financial decisions, pay bills, manage investments, and handle other monetary matters. There are different types of power of attorney, such as Durable Power of Attorney, which remains in effect even if you become incapacitated, and Springing Power of Attorney, which only goes into effect upon a specific event, such as a medical determination of incapacity.

2. Establish a Living Trust: A living trust is a legal arrangement that allows you to transfer ownership of your assets to the trust while maintaining control over them during your lifetime. Upon your death or incapacitation, the assets in the trust are managed by a designated trustee according to your predetermined wishes. This helps avoid probate, maintain privacy, and ensure seamless asset management.

3. Update Beneficiary Designations: Reviewing and updating your beneficiary designations on financial accounts such as 401(k)s, IRAs, life insurance policies, and annuities is essential. These designations determine who will receive the assets in these accounts upon your death, regardless of what your will or trust may stipulate. Ensuring your beneficiary designations align with your wishes can provide for your loved ones and minimize potential disputes.

4. Consider Long-Term Care Insurance and Annuities: Long-term care insurance can cover the costs of extended care, such as in-home assistance, adult day care, assisted living, and nursing home care. By purchasing a long-term care policy while you are still healthy, you can ensure access to quality care without depleting your savings. Annuities, which provide a guaranteed income stream, can also help cover living expenses and care costs, offering invaluable security and support.

5. Organize and Simplify Your Financial Accounts: Managing multiple financial accounts can become increasingly challenging as Alzheimer’s progresses. Creating a comprehensive inventory of all your financial accounts and simplifying your financial landscape by consolidating accounts where possible can reduce confusion and minimize the risk of errors. Setting up automatic bill payments and direct deposits for regular expenses and income sources can also ensure that your financial obligations are met consistently.

Taking these proactive steps can give you and your family greater security, peace of mind, and the ability to focus on what matters most during this challenging time. While no one can fully prepare for the challenges of Alzheimer’s, having a comprehensive financial protection plan in place can make a significant difference. By addressing these critical areas, you can safeguard your finances and ensure your wishes are fulfilled, providing support and relief for your loved ones.

To learn more about these essential steps and how to protect your finances in the face of Alzheimer’s, read our new white paper, “Protecting Your Finances in the Face of Alzheimer’s: Essential Steps to Take Now,” from Oceanview Life and Annuity Company. Access the white paper here.