For sanity’s sake, write a letter to the future you

ack in 2010 I wrote a column about a memo a 60-year-old had written to himself to be read when he was 75, reminding him of the things that he should do at that age.

Since then I have been asked on numerous occasions about that column and for copies of it.

I also recently decided that when I reached compulsory retirement age to have a look at the column in my own interest and that of my family.

As a consequence, I decided to update the column and publish it again. Here goes.

The original column was written after I had spoken to a respected actuary about the problems associated with things such as deciding when to move into a retirement village and, even more importantly, into frail care.

Most people simply do not want to move into either. And when they do, the move can be fairly traumatic.

One of the problems associated with holding on to the “family” home is that the pensioner occupants are often asset rich (in terms of the property) but cash-flow poor and struggle to make ends meet.

The family home has, in any event, undergone a change of status. When the occupants pass on, it is more than likely that the property will be sold, because their children will, by that stage, have their own homes.

Creaking joints and the shortage of cash often mean that the condition of the property deteriorates and it declines in value.

The other problem is that alterations to accommodate less-mobile inhabitants, such as putting a bedroom or bathroom downstairs in a multi-floor house, can detract further from the value of the property.

There are other important financial issues associated with getting older. The most important of these concerns investment- linked living annuities ( illas), where you are responsible for making decisions, at least once a year, on the composition of the underlying investments and on how much money you should withdraw as a pension.

Dealing with these issues can become more and more of a challenge as you age, particularly if you have any form of dementia. Among other things, you can become increasingly stubborn about taking sound advice, may make incorrect decisions and may even be exposed to fraud.

The actuary mentioned in passing that his father-in-law had told him that he was aware of these and other problems associated with ageing. His

Bfather-in-law’s solution was to write himself a letter (see “Memo to me when I'm 75”. The names have been changed.) I think this is a wonderful idea, and I have decided to do the same thing.

There are a few things I will add to my letter to myself. They include:

◆ By 75 at the latest, switch a sufficient amount from illa investments to a guaranteed, inflation-linked annuity that will provide the minimum income flow I require. If estate planning is important, then:

❑ Leave the balance of any capital in the illa and reduce the drawdown rate to the minimum ( currently 2.5 percent of the capital value); and

❑ Consider a guaranteed payment term of at least 10 years and then for life for the guaranteed annuity. The yield will be good, and your money will be safer, because you will no longer need to make investment and drawdown decisions. If I die before the 10 years are up, the guarantee will ensure some income flows to my heirs for the balance of those 10 years.

◆ Tell my children to tell me if they believe I am suffering from dementia.

◆ Accept that there will be times of loneliness, so don’t talk endlessly to strangers. They will listen only out of politeness.

◆ Always give my grandchildren chocolate cake for breakfast.

◆ Sell my motor vehicle or employ a driver as soon as I need assistance to stand up or if I forget why I was out driving in the first place.

◆ Don’t scale down my medical scheme option or cancel my membership altogether to save money. And ensure that someone can make the right medical scheme option choices when I can no longer do so.

I am sure there are other things you can think of for your personal memo to yourself. What we need to do is to accept the frailties of older age.