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Monday, January 26, 2009

An Appeal From A Reader

This is a first for me, but this gentleman asked for advice from the readers here. I do have his name, but for blogging purposes let us call him "Worried Son". His problem in his own words:
My mother is 80 years old and has Alzheimers, I now have full legal responsibility for her financial affairs. She has some assets saved over a lifetime of frugal living, we are the archetypal "working class" family. We live in Canada, but are originally from England. Despite what your politicians expound about public health care, the reality is not great, we have so far avoided it by using her resources, but to continue to do so is going to cost some serious money and extra caution in how her resources are managed.

Here is the question, my mother has a bank account in England to which her pension money is deposited, over time the account has accumulated 60,000 pounds sterling this is being depleted gradually, I am very concerned about sterlings trajectory in relation to other currencies.

Where and in what currency(ies) or assets (in your readers opinion) should we deposit this money? The goal is to preserve the value of the asset against Canadian dollars. In the last few months the pound has dropped in value from approx Can$2 to the pound to Can $1.75 to the pound (so we have already lost 12% of the savings we cannot afford to continue this).
He adds:
I understand that your blog is not intended for giving financial advice, nevertheless I have a money-related problem that I would like to put before you and your very smart readership, in the hope that I could find some guidance in how to proceed. I am an adult and understand that should you extend that courtesy I am fully responsible for whatever decision I finally make.
I only have one chance to do this right and would very much appreciate the opportunity to tap your readers experience.
What's your best advice? His (mother's) exposure to the British pound will continue through the pension (see currency comparison here) but the accumulated savings need to be protected as far as possible. I do have some thoughts on this one, but my first thoughts may not be right.

The first goal has got to be to put a floor under the losses. The second is to try to preserve as much financial margin as possible. Maintaining constant liquidity will be important since a significant draw on assets could come at any time.

I do have more questions for this gentleman. Is his mother now in a managed care setting or at home with a caregiver? Does she have any other health problems? How long ago was she diagnosed with Alzheimer's?

In the US, the expected years of life for an 80 year old female are 9, which gives you a reasonable tail of 3 years on either side. So 6 to 12 years of additional life for which to provide. Depending on her current overall health, level of function and age at diagnosis, that range might be shortened by 2 1/2 to 5 years. Here is an article which describes some of the factors affecting life expectancy. Quality of care in the mid stages of disease has a huge effect on life expectancy.

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