Taking de-cluttering to the next level is “dostanding.” It’s the process of getting rid of the extra stuff in your life as you age, and that’s what folks do in Sweden. A new book, The Gentle Art of Swedish Death Cleaning by Margareta Magnusson, explains this process in detail. But Americans need to do more than get rid of stuff.
Santa Fe New Mexican’s recent article, “How to ‘death clean’ your finances,” says the focus of dostanding is on jettisoning junk. However, most senior’s finances could also use a good death cleaning. Simplifying and organizing our financial lives can make things easier for us while we’re alive and for our family after we’re gone.
This task becomes more pressing when we’re in our 50s. Our financial decision-making abilities generally peak around age 53, researchers say, while rates of cognitive decline and dementia start to increase at age 60. As we get older, we may become more vulnerable to fraud, scams, unethical advisers and bad judgment. Here are some steps you can take:
Consolidate financial accounts. Fewer accounts are easier to watch for suspicious transactions and overlapping investments. You also may save on account fees. See if your employer will let you transfer old 401(k) and IRA accounts into its plan or consolidate them into one IRA. Think about exchanging individual stocks and bonds for professionally managed mutual funds or exchange-traded funds (investigate prior to selling any investments held outside of retirement funds). Move scattered bank accounts into one account, but note that FDIC insurance is generally limited to $250,000 per depositor per institution.
Automate payments. Memory lapses can cause missed payments, late fees, and credit score damage. This can drive up the cost of borrowing and insurance. Set up regular recurring payments in your bank’s bill payment system, have bills charged to a credit card and set up an automatic payment, so the card balance is paid in full each month.
Scale back on credit cards. Keep just two credit cards: one for everyday purchases and another for automatic bill payments. Closing accounts may hurt credit scores, so wait until you’re sure you won’t need to apply for a loan before you start cutting down on the plastic.
Assign a watchdog. Identify the person you want to make decisions for you, if you’re incapacitated. Ask your attorney to create two durable powers of attorney — one for finances and another for health care. You don’t have to designate the same person for both, but name backups if your first choice can’t serve. Consider naming someone younger, because someone your age or older could become impaired at the same time you do. Discuss where your agent can find the information and access.
Your emergency file. Create “in case of emergency” files that your trusted agent or heirs will need. The file can include the following:
- Estate planning documents, such as your will, trust, healthcare directives, powers of attorney, and living will;
- Birth, death and marriage certificates;
- Military records;
- Social Security cards;
- Car titles, property deeds and other ownership documents;
- Insurance policies;
- A list of your financial accounts;
- Contact info for your attorney, CPA, financial adviser, and insurance agent; and
- Photocopies of passports, driver’s licenses, and credit cards.
Rather than place all of these materials in a safe deposit box, consider a fireproof safe or a locked file cabinet. Safe deposit boxes are not always accessible when you need to get to them, and if the bank does not recognize a power of attorney, there may be a delay in gaining access. Make sure to share the combination or key (or their location) with a trusted person. In this digital age, you should also scan important papers and keep them in an encrypted location in the cloud. Your attorney, CPA or financial advisor may offer secure online portals for this purpose.
Reference: Santa Fe New Mexican (December 18, 2017) “How to ‘death clean’ your finances”