Do not go unprepared into that good night

We all know that Americans are living longer than earlier generations. Sometimes, it seems that the demographic gray wave evokes fears of a society crowded with the elderly people -- ''sans teeth, sans eyes, sans taste, sans everything.''

Despite the popularity of that bleak phrase in commentaries on aging, even Shakespeare immediately disavowed the description. Right after the melancholy Jacques finishes the dismal conclusion to his soliloquy on the Seven Stages of Man in "As You Like It,'' Adam walks on stage, and he's an octogenarian. Adam had earlier described himself as "string and lusty" and he's in the employ of his much younger master.

Aging boomers are not only enjoying a longer average life expectancy, but they're better educated and healthier than their peers in the past. Retirement planning now focuses on ways for workers and entrepreneurs to keep earning an income on the job well into the traditional retirement years. It's a realistic expectation for many people that increasingly associate aging with Adam than with the conventional despair of Jacques. The term "retirement" will likely get a new label, perhaps "job-tirement" or "work-tirement."

Still, our faculties do eventually deteriorate even if it's typically later in life. It gets harder to deal with the complexities of modern finance. "Keep it simple" is a mantra of these columns, but it isn't easy in a financial universe with Byzantine rules about IRA and 401(k) withdrawals, let alone figuring out how much you can safely take out.

It's critical for an aging population to get its financial affairs in order while still mentally spry. "About half the population in their 80s suffers from significant cognitive impairment, effectively rendering them incapable of making important financial choices," according to Robert Laibson, economist at Harvard University, in his paper "The Age of Reason.'' (You can look at his fascinating slides on his website at Harvard University.)

It's vital that older people get their wills updated. They should establish a durable power of attorney and set up a living revocable trust if it makes sense for their finances. Perhaps most important, they should think through and establish their advanced medical directives.

A well-crafted, well-thought-out estate plan that anticipates some form of cognitive decline late in life is a foundation for ensuring that your a financial plan is solid, durable, and reflects your values and not someone else's. The advantage of starting the conversation early is that there is less pressure on everyone and more time to get comfortable with the topic. "Estate planning is not just tax planning or bequest planning," says Laibson. "Planning for cognitive decline is just as important."

I would also recommend talking with family, friends or advisers about ways to avoid getting scammed when you're much older. The elderly are particularly vulnerable to financial abuse and fraud. It's stunning how many scams are run these days, everything from telemarketing fraud to mortgage refinancing scams. There is no good hard data, but a number of thoughtful estimates coalesce around a third of all victims of fraud schemes are seniors -- a large number considering that seniors make up about 15 percent of the population.

Chris Farrell is economics editor for "Marketplace Money." Send your questions to cfarrell@mpr.org.

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