Latest news with #PensionBee
Yahoo
14 hours ago
- Business
- Yahoo
PensionBee Analysis Finds Left-Behind 401ks May Cost Americans $90,000 by Retirement
Job hopping early in your career can leave you vulnerable to predatory Safe Harbor IRAs, according to new research by online retirement provider PensionBee. NEW YORK, June 03, 2025--(BUSINESS WIRE)--In today's dynamic job market, frequent career moves are common, especially among younger professionals. However, this trend has led to a growing issue: abandoned 401(k) accounts. Recent estimates indicate that over 29 million forgotten 401(k) accounts exist in the U.S. To make matters worse, when employees leave behind small 401(k) balances - under $7,000 - employers can transfer these funds into Safe Harbor IRAs without the employee's consent to help manage high volumes of inactive accounts. PensionBee examined the impact of this common administrative practice, revealing the stark return differential between Safe Harbor IRAs and traditional retirement accounts. Americans who leave behind just a handful of accounts early in their careers can lose out on over $90,000 by the time they retire. The Three-Fold Problem Safe Harbors IRAs are designed to preserve rather than grow capital. Previous market analysis by PensionBee found that combined high fees and low returns of many mainstream providers work against this goal, and may even deplete forgotten retirement accounts to $0. The problem is threefold: First, mandated ultra-conservative investments. Regulations require Safe Harbor IRAs to use low-risk investments, usually offering far below standard retirement portfolio returns, often below the rate of inflation. Many Safe Harbor IRA providers use bank deposits with very low interest rates, sometimes as low as 0.5%. Second, many providers charge excessive fees that devour returns. Unlike 401(k) plans, which have an average fee of approximately 0.85%, Safe Harbor IRAs charge seemingly small monthly fees ($1-$5) that quickly accumulate. One provider charges $5.67 monthly plus 0.5% annually—on a $3,500 account, that's $85.54 yearly (2.4%) before additional withdrawal fees of $75 per transaction. These fees often exceed any earnings and actively deplete principal. Third, interest skimming. Certain providers have been known to pay less than 1% interest while prevailing rates exceed 4%, taking substantial portions of investment returns as a "bank servicing fee." The Generational Toll Younger workers face a perfect storm. Not only do Gen Zers change jobs often, but they are also opening retirement accounts earlier than ever before. The average Gen Zer starts saving for retirement at age 22, compared with Millennials, who began at 27, Gen X, whose average age was 31, and Boomers, who didn't start until the age of 37. The combination of changing jobs more frequently and opening retirement accounts earlier than their predecessors creates a dangerous vulnerability. Gen Z is more likely to accumulate multiple small 401(k) accounts that are prime targets for automatic transfers to Safe Harbor IRAs, which were never meant to be long-term investing vehicles. Our system quietly undermines their early start through these forced transfers to low-yield investments. The lack of transparency compounds the problem. This isn't merely a different default option; it's a fundamentally different investment approach with dramatically reduced growth potential. The Compounding Problem PensionBee's latest research compared growth trajectories of Safe Harbor IRAs (~2% returns) and 401(k) investments (~5% returns), to model the difference in returns between employees whose small balances are forced into low-yielding accounts and those who are not. The findings suggest that automatic rollovers into Safe Harbor IRAs with low-yielding accounts harm former employees and can lead to an exponential difference in returns across several accounts. For illustrative purposes, the analysis looks at a typical worker who: Job hops between the ages of 20 and 30, leaving behind a 401(k) every two years (five total) Has a starting salary of $50,000 that grows 10% with each new job Retirement balances are calculated as 3% of that salary annually, with 50% employer match vested PensionBee's analysis shows that a typical 20-year-old worker who leaves behind a $4,500 retirement account will see it grow to just $5,507 by retirement age if left in a typical Safe Harbor IRA. Had that same amount been rolled over to a traditional 401(k) earning 5%, it would grow to $25,856, a difference of over $20,000 from a single account. The impact compounds dramatically with multiple job changes. Someone who switches jobs every two years in their 20s and rolls over their accounts each time saves over $90,000 more by retirement than someone who leaves them in Safe Harbor IRAs. This difference exceeds the median American retirement savings of $87,000. How to Protect Your Retirement Savings Check Account Size: Know your balance when leaving a job, as accounts under $7,000 may be automatically transferred to Safe Harbor IRAs. If your account is under $1,000, it may be cashed out automatically, triggering taxes and penalties. Know Your Options: You generally have four choices for your retirement account when switching jobs: keep it with your former employer, transfer it to an IRA, move it to your new employer's plan, or cash out, potentially triggering penalties and taxes. Update Contact Information: Ensure all retirement account providers have your current contact information to prevent account transfers without your knowledge. Take Timely Action: Make decisions about your retirement funds within 30 days of leaving a job to prevent automatic transfers. Bottom Line The silent drain of retirement savings through inadequate Safe Harbor IRAs remains largely invisible to millions of Americans who switch jobs regularly. Most job-hoppers assume their retirement accounts are safe, even if unaccounted for. Instead, forgotten accounts may be eroded by excessive fees and low returns, potentially costing thousands in retirement savings. "Safe Harbor IRAs represent a critical blind spot in America's retirement system," notes Romi Savova, CEO of PensionBee. "The lack of transparency in these accounts is particularly troubling, as most assume that the money they put towards their retirement will remain theirs. The difference between investment defaults matters enormously." Savova emphasizes that "these seemingly small default decisions have profound long-term consequences for savers. Greater transparency around default investment strategies would empower consumers to make informed choices about their financial future." About PensionBee PensionBee is a leading online retirement provider, helping people easily consolidate, manage, and grow their retirement savings. The company manages approximately $8 billion in assets and serves over 275,000 customers globally, with a focus on simplicity, transparency, and accessibility. Notes The information provided in this announcement, including any projections for investment returns and future performance, is for informational and educational purposes only and should not be considered investment advice. Past performance is not indicative of future results. All investments carry risk, including the potential loss of principal. PensionBee is not liable for any losses or damages arising from the use of this information. Projections and forecasts are based on assumptions and current market conditions, which are subject to change. PensionBee Inc. is registered with the Securities and Exchange Commission as an investment adviser. We do not provide in-person advice. PensionBee Inc (Delaware Registration Number SR20241105406 ) is located on 85 Broad Street, New York, New York, 10004. View source version on Contacts Adela Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Wire
15 hours ago
- Business
- Business Wire
PensionBee Analysis Finds Left-Behind 401ks May Cost Americans $90,000 by Retirement
NEW YORK--(BUSINESS WIRE)--In today's dynamic job market, frequent career moves are common, especially among younger professionals. However, this trend has led to a growing issue: abandoned 401(k) accounts. Recent estimates indicate that over 29 million forgotten 401(k) accounts exist in the U.S. This isn't merely a different default option; it's a fundamentally different investment approach with dramatically reduced growth potential. Share To make matters worse, when employees leave behind small 401(k) balances - under $7,000 - employers can transfer these funds into Safe Harbor IRAs without the employee's consent to help manage high volumes of inactive accounts. PensionBee examined the impact of this common administrative practice, revealing the stark return differential between Safe Harbor IRAs and traditional retirement accounts. Americans who leave behind just a handful of accounts early in their careers can lose out on over $90,000 by the time they retire. The Three-Fold Problem Safe Harbors IRAs are designed to preserve rather than grow capital. Previous market analysis by PensionBee found that combined high fees and low returns of many mainstream providers work against this goal, and may even deplete forgotten retirement accounts to $0. The problem is threefold: First, mandated ultra-conservative investments. Regulations require Safe Harbor IRAs to use low-risk investments, usually offering far below standard retirement portfolio returns, often below the rate of inflation. Many Safe Harbor IRA providers use bank deposits with very low interest rates, sometimes as low as 0.5%. Second, many providers charge excessive fees that devour returns. Unlike 401(k) plans, which have an average fee of approximately 0.85%, Safe Harbor IRAs charge seemingly small monthly fees ($1-$5) that quickly accumulate. One provider charges $5.67 monthly plus 0.5% annually—on a $3,500 account, that's $85.54 yearly (2.4%) before additional withdrawal fees of $75 per transaction. These fees often exceed any earnings and actively deplete principal. Third, interest skimming. Certain providers have been known to pay less than 1% interest while prevailing rates exceed 4%, taking substantial portions of investment returns as a 'bank servicing fee.' The Generational Toll Younger workers face a perfect storm. Not only do Gen Zers change jobs often, but they are also opening retirement accounts earlier than ever before. The average Gen Zer starts saving for retirement at age 22, compared with Millennials, who began at 27, Gen X, whose average age was 31, and Boomers, who didn't start until the age of 37. The combination of changing jobs more frequently and opening retirement accounts earlier than their predecessors creates a dangerous vulnerability. Gen Z is more likely to accumulate multiple small 401(k) accounts that are prime targets for automatic transfers to Safe Harbor IRAs, which were never meant to be long-term investing vehicles. Our system quietly undermines their early start through these forced transfers to low-yield investments. The lack of transparency compounds the problem. This isn't merely a different default option; it's a fundamentally different investment approach with dramatically reduced growth potential. The Compounding Problem PensionBee's latest research compared growth trajectories of Safe Harbor IRAs (~2% returns) and 401(k) investments (~5% returns), to model the difference in returns between employees whose small balances are forced into low-yielding accounts and those who are not. The findings suggest that automatic rollovers into Safe Harbor IRAs with low-yielding accounts harm former employees and can lead to an exponential difference in returns across several accounts. For illustrative purposes, the analysis looks at a typical worker who: Job hops between the ages of 20 and 30, leaving behind a 401(k) every two years (five total) Has a starting salary of $50,000 that grows 10% with each new job Retirement balances are calculated as 3% of that salary annually, with 50% employer match vested PensionBee's analysis shows that a typical 20-year-old worker who leaves behind a $4,500 retirement account will see it grow to just $5,507 by retirement age if left in a typical Safe Harbor IRA. Had that same amount been rolled over to a traditional 401(k) earning 5%, it would grow to $25,856, a difference of over $20,000 from a single account. The impact compounds dramatically with multiple job changes. Someone who switches jobs every two years in their 20s and rolls over their accounts each time saves over $90,000 more by retirement than someone who leaves them in Safe Harbor IRAs. This difference exceeds the median American retirement savings of $87,000. How to Protect Your Retirement Savings Check Account Size: Know your balance when leaving a job, as accounts under $7,000 may be automatically transferred to Safe Harbor IRAs. If your account is under $1,000, it may be cashed out automatically, triggering taxes and penalties. Know Your Options: You generally have four choices for your retirement account when switching jobs: keep it with your former employer, transfer it to an IRA, move it to your new employer's plan, or cash out, potentially triggering penalties and taxes. Update Contact Information: Ensure all retirement account providers have your current contact information to prevent account transfers without your knowledge. Take Timely Action: Make decisions about your retirement funds within 30 days of leaving a job to prevent automatic transfers. Bottom Line The silent drain of retirement savings through inadequate Safe Harbor IRAs remains largely invisible to millions of Americans who switch jobs regularly. Most job-hoppers assume their retirement accounts are safe, even if unaccounted for. Instead, forgotten accounts may be eroded by excessive fees and low returns, potentially costing thousands in retirement savings. "Safe Harbor IRAs represent a critical blind spot in America's retirement system," notes Romi Savova, CEO of PensionBee. "The lack of transparency in these accounts is particularly troubling, as most assume that the money they put towards their retirement will remain theirs. The difference between investment defaults matters enormously." Savova emphasizes that "these seemingly small default decisions have profound long-term consequences for savers. Greater transparency around default investment strategies would empower consumers to make informed choices about their financial future." About PensionBee PensionBee is a leading online retirement provider, helping people easily consolidate, manage, and grow their retirement savings. The company manages approximately $8 billion in assets and serves over 275,000 customers globally, with a focus on simplicity, transparency, and accessibility. Notes The information provided in this announcement, including any projections for investment returns and future performance, is for informational and educational purposes only and should not be considered investment advice. Past performance is not indicative of future results. All investments carry risk, including the potential loss of principal. PensionBee is not liable for any losses or damages arising from the use of this information. Projections and forecasts are based on assumptions and current market conditions, which are subject to change.
Yahoo
a day ago
- Business
- Yahoo
Delaying Your 401(k) Rollover Could Cost You $76K, Study Finds
Even though much of the financial world is now digitized, rolling over your 401(k) still often involves a more complicated process that can't be done online. Many plans require you to transfer funds via mail, which can lead to delays in getting your funds invested into your new account. Find Out: Read Next: While you might not think too much about the consequences of this lag time, it can lead to thousands of dollars in lost retirement savings, according to a new study conducted by PensionBee. Here's a look at how much you stand to lose due to delays in a 401(k) rollover. Putting off rolling over your funds and mail delays that are out of your control can have serious financial consequences, especially when you take a long-term view. According to the PensionBee study, even brief two- to eight-week market absences during rollovers can cost savers tens of thousands of dollars, particularly during periods of market volatility. The study found that for savers with a $100,000 401(k) balance, an eight-week processing delay could mean $76,000 in lost returns over 30 years. A $50,000 balance could experience a $38,442 loss due to an eight-week processing delay, and a $10,000 balance could experience a $7,688 loss. Even shorter-term delays can lead to significant losses — a two-week rollover delay could compound to a $37,512 loss over 30 years if you're starting with a $100,000 balance. Be Aware: As these figures show, delaying your 401(k) rollover can have significant financial consequences. But the risks of delaying a rollover go beyond lost returns. 'Everyone thinks they'd never forget a retirement account, but there are 30 million unclaimed accounts that tell us otherwise,' said Romi Savova, founder and CEO of PensionBee. 'For job-changers, each position can become another account left behind. The average person switches jobs 12 times, so the sheer volume of personal admin can be very difficult to manage.' Forgetting to roll over old accounts can make you subject to fees that can eat away at your savings. 'People are often unaware that there are fees associated with retirement accounts,' Savova said. 'While your employer may cover some or all of your fee burden while you're employed, that responsibility can shift entirely onto former employees, often with minimal notice.' If you have a 401(k) account with a balance of $7,000 or less, these fees can eliminate your entire savings. 'Employers can automatically force out small balances into poorly performing Safe Harbor IRAs, which can deplete balances entirely,' Savova said. 'These bad defaults are marked by high fees and low returns, often below 2%. If you don't act fast and have an account under $1,000, your employer may cash it out automatically, leaving you to foot the associated fees and tax penalties.' Rolling over a 401(k) can be a complicated task, but it's important to tackle it sooner rather than later. 'While the system needs to change, consumers can immediately take several steps to minimize downsides,' Savova said. 'First, take an active role in the process. Rolling over a 401(k) is a multistep process, and delays at any point can be costly. When it comes to retirement, time in the market is more important than timing the market — even a few weeks or months out can mean thousands lost over a lifetime.' If you're rolling a 401(k) balance from a former employer into a new 401(k), you may not have a lot of choices, but if you choose to roll into an IRA, make sure you are choosing your provider wisely. If possible, find a provider that offers digital-first solutions with automated tracking. 'The best providers will offer digital rollover solutions, avoiding checks in the mail, and excellent customer support when speaking with your old provider is inevitable,' Savova said. 'Customer-focused providers handle the paperwork burden, proactively follow up with your previous plan administrator and keep you updated throughout the process.' Also, pay attention to more than just fees when choosing a provider. 'While high fees over 1% should generally be avoided, also consider the customer support model and technological capabilities,' Savova said. 'The right provider becomes a partner in your retirement journey, not just a place to store your money.' More From GOBankingRates 7 Tax Loopholes the Rich Use To Pay Less and Build More Wealth This article originally appeared on Delaying Your 401(k) Rollover Could Cost You $76K, Study Finds
Yahoo
3 days ago
- Business
- Yahoo
Delaying Your 401(k) Rollover Could Cost You $76K, Study Finds
Even though much of the financial world is now digitized, rolling over your 401(k) still often involves a more complicated process that can't be done online. Many plans require you to transfer funds via mail, which can lead to delays in getting your funds invested into your new account. Find Out: Read Next: While you might not think too much about the consequences of this lag time, it can lead to thousands of dollars in lost retirement savings, according to a new study conducted by PensionBee. Here's a look at how much you stand to lose due to delays in a 401(k) rollover. Putting off rolling over your funds and mail delays that are out of your control can have serious financial consequences, especially when you take a long-term view. According to the PensionBee study, even brief two- to eight-week market absences during rollovers can cost savers tens of thousands of dollars, particularly during periods of market volatility. The study found that for savers with a $100,000 401(k) balance, an eight-week processing delay could mean $76,000 in lost returns over 30 years. A $50,000 balance could experience a $38,442 loss due to an eight-week processing delay, and a $10,000 balance could experience a $7,688 loss. Even shorter-term delays can lead to significant losses — a two-week rollover delay could compound to a $37,512 loss over 30 years if you're starting with a $100,000 balance. Be Aware: As these figures show, delaying your 401(k) rollover can have significant financial consequences. But the risks of delaying a rollover go beyond lost returns. 'Everyone thinks they'd never forget a retirement account, but there are 30 million unclaimed accounts that tell us otherwise,' said Romi Savova, founder and CEO of PensionBee. 'For job-changers, each position can become another account left behind. The average person switches jobs 12 times, so the sheer volume of personal admin can be very difficult to manage.' Forgetting to roll over old accounts can make you subject to fees that can eat away at your savings. 'People are often unaware that there are fees associated with retirement accounts,' Savova said. 'While your employer may cover some or all of your fee burden while you're employed, that responsibility can shift entirely onto former employees, often with minimal notice.' If you have a 401(k) account with a balance of $7,000 or less, these fees can eliminate your entire savings. 'Employers can automatically force out small balances into poorly performing Safe Harbor IRAs, which can deplete balances entirely,' Savova said. 'These bad defaults are marked by high fees and low returns, often below 2%. If you don't act fast and have an account under $1,000, your employer may cash it out automatically, leaving you to foot the associated fees and tax penalties.' Rolling over a 401(k) can be a complicated task, but it's important to tackle it sooner rather than later. 'While the system needs to change, consumers can immediately take several steps to minimize downsides,' Savova said. 'First, take an active role in the process. Rolling over a 401(k) is a multistep process, and delays at any point can be costly. When it comes to retirement, time in the market is more important than timing the market — even a few weeks or months out can mean thousands lost over a lifetime.' If you're rolling a 401(k) balance from a former employer into a new 401(k), you may not have a lot of choices, but if you choose to roll into an IRA, make sure you are choosing your provider wisely. If possible, find a provider that offers digital-first solutions with automated tracking. 'The best providers will offer digital rollover solutions, avoiding checks in the mail, and excellent customer support when speaking with your old provider is inevitable,' Savova said. 'Customer-focused providers handle the paperwork burden, proactively follow up with your previous plan administrator and keep you updated throughout the process.' Also, pay attention to more than just fees when choosing a provider. 'While high fees over 1% should generally be avoided, also consider the customer support model and technological capabilities,' Savova said. 'The right provider becomes a partner in your retirement journey, not just a place to store your money.' More From GOBankingRates I'm a Retired Boomer: 6 Bills I Canceled This Year That Were a Waste of Money This article originally appeared on Delaying Your 401(k) Rollover Could Cost You $76K, Study Finds Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Times
3 days ago
- Business
- Times
Why a mid-retirement MoT can keep you on track
You get your car checked every year, and even the boiler gets a regular service — but when was the last time you gave yourself a money MoT? People are living longer than ever, and while this is a welcome development, it also presents a significant financial challenge: ensuring your pension pot can comfortably last the distance. For many people in their seventies, a mid-retirement MoT has become an essential part of managing their finances. By this stage, people tend to have settled into retirement and have a clear picture of their lifestyle and outgoings. This makes it easier to work out a sustainable rate at which to take money from their pension pot. Only 48 per cent of people aged between 65 and 75 are confident their savings will last their lifetime, according to a report by the insurance company Aviva and the charity Age UK. That's despite the fact that many people underestimate how long they will live. Many people assume that their spending patterns will be consistent through retirement, the survey of 1,000 people found. That's wrong — it is usually 'U-shaped', say experts, with higher initial outgoings, a potential decline in the middle years, and then a resurgence in later life, particularly if there are care costs. Romi Savova from the pension firm PensionBee said: 'Just as regular pension check-ins are essential before retirement, it is important to assess your income and spending once you're in retirement, and especially around the halfway point. 'A mid-retirement MoT is a good way to make sure your savings remain on track, particularly as your lifestyle, spending and health needs may have changed over time.' John Ford has planned meticulously. Ford, 73, has an inflation-linked defined benefit pension — which pays a guaranteed income — and a state pension, which together give him an annual income of about £36,000. He also has £340,000 in a defined contribution (DC) pension — which gives him a retirement income based on how well his investments perform — which he has barely touched. 'I am keeping it for emergencies and future medical bills,' Ford said. 'Last year I paid about £7,000 to remove cataracts at a private clinic as I didn't want to wait for a slot on the NHS. I also need some money to make some repairs to my property near Bristol.' Ford retired from his job as a surveyor in the construction industry in 2017, when he was 65. His wife, Carole, 70, retired four years ago and gets a state pension plus a small defined benefit pension, giving her an annual income of about £15,800. • Flip-flopping is chipping away at our faith in pensions Ford said: 'Luckily we have enough to live a decent lifestyle and our spending has not really changed much since we retired. However, we know we may need money later in life for care bills, which is what the DC pot is for.' Reviewing your finances once a year can help you to identify whether you need to rebalance your investments or make any adjustments to the amount that you are withdrawing, and to check that you are on track with your financial goals. Lucie Spencer from the wealth manager Evelyn Partners said: 'The early years of retirement are usually where most of the non-essential spending happens. For many people this is the first time they have had a substantial pot of money and total freedom to spend it as they wish. 'However, many do not plan for their later years. What will happen if they go into a care home or need support at home? Who will pay the bills if all their funds are spent? Will the state pension be enough to live on if they've exhausted all their savings? Such questions tend to become more pressing from the mid-seventies.' Withdrawing money from your pension is a fine balance — it needs to be enough to provide the lifestyle you want, without depleting your pot so fast that it runs out. A common guideline suggested by experts is to withdraw money at a rate of 4 per cent of the value of your pot per year. The idea is that since the rest is still invested, it should be able to replenish itself in time for the next withdrawal. Fidelity International, the wealth manager, analysed what happened to a £100,000 pension pot after ten years of withdrawals starting at 4 per cent a year and rising by 2 per cent each year to factor in inflation. Its analysis looked at withdrawals starting each year from 1994 to 2014 to see how much the pot would be worth after a decade. Based on a typical portfolio of 60 per cent global shares and 40 per cent in bonds, there were only three years (1999, 2000, and 2001) in which someone could have started taking annual income and been left with a pot worth less after a decade — in all other years the pot's value would have increased, even after ten years of withdrawals. For example, if someone had started making withdrawals of 4 per cent a year in January 2014, the value of their £100,000 pot would have grown to about £154,000 by January 2024. However, if they had started withdrawing in January 2000, the value of their pot would have fallen to £81,319 by January 2010, according to Fidelity's analysis. • Are you on track for your dream retirement? It is important to bear in mind that managing withdrawals can become problematic at times of stock market turmoil. When the market falls, so too does the value of your pot, as many savers experienced during the recent Trump tariff upheaval. Spencer said it was best to avoid withdrawing money at such times as it could mean locking in losses, and make it harder for the value of your pot to recover: 'During retirement if you are drawing down on your pension after a market shock, you could be selling investments at impaired values and that can deliver a serious blow to the longevity of your pot.' It is recommended that you have about a year's worth of spending, including bills, saved in cash which you can use instead during such times, allowing your investments to recover. An alternative to leaving your pot invested is to use some or all of it to buy an annuity, which provides a guaranteed income for life in exchange for a lump sum. Tom Selby from the investment platform AJ Bell said: 'Once you reach your seventies, you may start to consider whether drawdown is still the right option, or if using some of your fund for an annuity could be a good choice.' Life expectancy directly affects annuity rates — the longer you are expected to live, the lower the rate, because the income will have to paid out for a longer period. This means that if you buy an annuity later in life, you could get a higher income. A healthy 75-year-old with a £100,000 lump sum could secure an income of about £10,129 a year, according to the pension firm Just Group. That is about 30 per cent more than the £7,813 a 65-year-old is likely to get. Disclosing health or lifestyle factors that might reduce life expectancy, such as smoking or diabetes, could also mean you get a better rate. Shopping around for the best deal is always advised. Annuities do have drawbacks. The level of income is fixed so you may find it is not enough if your circumstances change, such as needing more money for care costs. You also forgo potential long-term investment growth, and unless you choose a policy that pays out to a surviving spouse, the income dies with you. A concern for older people in retirement is cognitive decline and the associated anxiety with technology, digital accounts, and a general loss of confidence in managing money, especially investments. It is important to arrange for someone to manage your money if you aren't able to do it yourself. 'I recommend all clients have a power of attorney in place in case they do start to lose mental capacity,' Spencer said. • Do I need to update my power of attorney? A lasting power of attorney is an official document that gives someone the authority to manage your financial and medical interests if you are no longer capable. There are two types of power of attorney — ordinary and lasting. The first is used as a temporary measure, for example if you are overseas and cannot do it yourself. The lasting power of attorney comes in two forms — health and welfare, and property and finance. One allows someone to make medical decisions on your behalf, while the other covers your money. It is usually advisable to have both. You can apply for both at the same time and must have them in place while you still have the mental capacity to give someone the authority to act for you. The forms can be downloaded from and each costs £82. You get a 50 per cent discount if your pre-tax income is less than £12,000 a year.
