This column was prompted by a call to a radio program from a man who explained that he is fairly well financially-situated as he enters retirement, but was worried about the fact that he has no children, no close family, and no trusted friends to rely upon as he grows older.

It’s a problem that has suddenly risen to the American consciousness, ever since the Surgeon General announced last year that “Americans are more lonely and socially disconnected than ever, and it’s a serious threat to their physical and mental health that demands urgent policy action.”

In hindsight, the recognition of loneliness as not only a social but a health and financial issue might be as significant as the Surgeon General’s report that smoking is hazardous to your health was 60 years ago. As the American population ages, this issue will inevitably grow.

The latest statistics from PRB.org, based on the Census figures, show the number of Americans ages 65 and older is projected to increase from 58 million in 2022 to 82 million by 2050 (a 47% increase), and the 65-and-older age group’s share of the total population is projected to rise from 17% to 23%.

The impact of aging falls disproportionately – but certainly not exclusively — on women, since they actuarily live longer. More older women are living alone, according to this report. Over one-fourth (27%) of women ages 65 to 74 lived alone in 2023. This share jumped to 39% among women ages 75 to 84, and to 50% among women ages 85 and older.

The Financial Impact
The societal impact of aging will inevitably impact our economy. But the focus of this column is the impact on personal finances. As the caller explained, he wasn’t so much worried about living longer and running out of money. He was concerned about what would happen to him if he could no longer make health and financial decisions for himself.

Basically, who could he – or you – trust to act in your best interests if you cannot do so yourself?

Financial planners will advise you to create a healthcare power of attorney, along with a “springing” business power of attorney to go into effect if you cannot act for yourself. Or they will correctly suggest that you create a Revocable Living Trust, and retitle your assets into the trust. Then if you are incapacitated by illness (think stroke or dementia) the successor trustee you have named can handle your finances without a court order.

It’s great advice – but it leaves that basic question: WHO do you name as the trusted person to carry out your written wishes?
If you have no family, or no trusted children, this is a daunting question. Your good friends are aging along with you, and may not be in a position to help. Your estate planning attorney is likely not willing to take on the task. And that’s where having a FIDUCIARY, fee-only financial advisor may bring some help.

Most advisors have relationships with independent trust companies, who will handle the tasks of distributing your estate, dealing with tax forms, and paying named beneficiaries. The advisor continues to manage the investments, but the trust company can handle the legalities.
This combined approach using an advisor and trust company has great benefits over naming your local bank as trustee for your estate. That bank may be purchased, or the individual you enjoyed meeting may find another job. Then you’ll be left without a personal relationship at the trustee.

The Personal Side
If you set up all this documentation, there is likely still a gap on the personal side. Who do you call at 3 am – after you call 911 to be taken to the hospital? What good friend will be your advocate (and have your healthcare power) if you are unable to speak for yourself? Who will feed the cat?

These are serious and troublesome questions. The obvious answer is that you must make an effort to have younger friends. Of course, you need to avoid “stranger danger” – a reason that so many elderly are ripped off in romance scams, and other traps.

While you are able and competent, you must create relationships with nieces and nephews, or adult children of your friends. Be very careful who you trust, but build these connections while you are able to judge. Aging is tough, but it’s better than the alternative.
And that’s The Savage Truth.