Annuities as protection against declining mental capacity, elder abuse

[cannotWAIT]

My biggest concern about old age is being able to manage my finances, including avoiding financial abuse by caregivers. I don't have kids or extended family, my partner is much older, I have a lot of longevity AND a lot of dementia on one side of my family, and frankly I'm only in a halfway decent financial position due to prudence, not to being any kind of financial genius. With all of that in mind, it seems to me that at a certain point it is going to make a lot of sense to convert almost everything to a SPIA with an inflation rider. It seems like the best solution for longevity risk and dementia risk, and to protect to a certain extent against abuse.

I would love to get your thoughts on any and all aspects of this, including other ways to get the same benefit without the downsides.

[mistymoney]

with the spia plus soci sec and any pension = the price of a nice memory care facility?

Who will do the paying of the bills? someone will need access. I don't see how to do this 100% without at least an attorney or someone involved as a POA.

[cannotWAIT]

Yes, my POA will step in, but for most people there is a period of many years where you clearly still have capacity and can manage your day to day affairs, but your judgement is gradually declining and you're not up to making complicated financial decisions. That's the part I'm trying to plan for.

[Freedomin5]

Yes. SIL has a severe mental illness. We are trying to convince MIL (who is in her 80s) to use the money earmarked for SIL’s inheritance to get an annuity for SIL to ensure that SIL is cared for and doesn’t blow her inheritance should anything happen to MIL. SIL has a track record of blowing through large sums of money and being taken advantage of financially. And she doesn’t listen to her siblings when they try to help.

I’m also considering converting a portion of our investments into an annuity to create a steady income stream. DH and I won’t get much of a government pension since we spent the majority of our working years overseas.

[Tigerpine]

If you can find someone you trust as trustee, placing money in a trust is a possible option.

[Dicey]

Another option could be a Continuing Care Community. They're spendy as hell, but they're typically really nice and offer huge social benefits. Once you're in, all your bills are paid automatically. Er - you pay them and everything is included. There's one planned in our community and we are seriously considering it.

https://www.aarp.org/caregiving/basics/info-2017/continuing-care-retirement-communities.html

https://www.cdss.ca.gov/continuing-care-communities

[GilesMM]

SPIAs can be a great deal as long as you wait to buy them until you are 70 or 80.  The terms then are fabulous and the inflation risk is reduced.

[Freedomin5]

Or you can buy a deferred annuity now, while you’re still cognitively intact, with a deferred withdrawal starting when you’re 70 or 80 or whenever.

[GilesMM]

Or you can buy a deferred annuity now, while you’re still cognitively intact, with a deferred withdrawal starting when you’re 70 or 80 or whenever.

Yes, an SPDA is an option but you give up liquidity and upside investment gains in return between when you part with your cash and when the withdrawal begins, assuming you even live until then it begins.