Retirement, aged care and capacity: managing money through the last twenty years, and deciding while you can

• A power of attorney can only be signed by a person who still has the capacity to understand it; once capacity is lost, the family needs a court or tribunal order instead, in every one of the seven countries.

• Australia's Aged Care Act 2024 took effect on 1 November 2025 with a new means test, a lifetime cap on non-clinical care contributions of A$130,000 or four years, and a provider retention of 2% a year of the refundable deposit for up to five years; England's £86,000 care cap was cancelled in July 2024 and the capital thresholds stay at £23,250 and £14,250; US Medicaid applies a sixty-month look-back to gifts.

• UK pensions come inside inheritance tax from April 2027; Australian super paid to non-dependants is taxed at 17% on the taxable component; most US inherited retirement accounts must be emptied within ten years.

Accumulation ends at retirement. Decumulation is the fifteen or twenty years of living off what was built: pensions, super, savings, the home. Then, for most people, a shorter phase in which someone else makes the decisions: care, capacity, the estate. Financial planning is excellent at the first phase, competent at the second, and largely silent on the third, because the third is not a money problem. It is a judgement problem, and the judgement is the one thing the plan cannot supply.

Draw the taxable and the guaranteed in the right order, keep enough certainty to sleep, and decide early what the home is for. The sequencing question, which pot to draw first, is the same in every country and has different answers.

In Australia, super in pension phase is tax-free after sixty on balances up to the A$2 million transfer balance cap (from July 2025), so it is drawn first and the taxable investments outside super are held or given; the proposed 15% tax on earnings above A$3 million changes the arithmetic for the largest balances. In the United States the conventional order is taxable accounts first, then traditional IRAs, then Roth, with Roth conversions in the low-income years between retirement and the required minimum distributions that begin at seventy-three (seventy-five from 2033); a couple who converts steadily through their sixties hands their children a tax-free account instead of a ten-year tax bill. In the United Kingdom the 2027 change reverses the old advice to leave the pension until last: from April 2027 an untouched pension is a taxable estate asset, so the drawdown plan now spends the pension and preserves ISAs and property, with the 25% tax-free lump sum (capped at £268,275) taken with a plan rather than by default. In Canada the RRIF's minimum withdrawals begin the year after it is opened and rise with age, and the plan is about which spouse's account to draw and whether to split pension income. An annuity buys certainty at a price; drawdown keeps control at a risk; most retirees want a floor of guaranteed income (state pension, annuity, defined benefit) covering the fixed costs and drawdown above it.

The home is the last asset and the largest: whether it funds care, passes to children, or is sold to release cash is a decision that should be made, not defaulted into. Downsizer contributions to super in Australia (A$300,000 each from the sale of a home owned ten years), equity release in the United Kingdom (with its compounding interest), and the reverse mortgage in the United States all turn the home into income; each has a cost that the children discover later.

It passes by nomination, outside the will, and is taxed differently in each country. The UK change in 2027, the Australian death-benefit tax on non-dependants, and the US ten-year rule are the three traps families most often walk into; Pension and super death benefits sets out all three with the nominations that decide them.

The Australian retirement village is a separate thing from aged care and the contract is where families get hurt: deferred management fees of 20 to 35 percent of the entry or exit price, refurbishment charges, and a refund that may wait until the unit resells. Aged care and retirement living works the examples.

Capacity is the legal ability to make a particular decision at the time it is made: understand the information, weigh it, and communicate a choice. It is decision-specific: a person can lose the capacity to manage investments and keep the capacity to decide where they live. It is usually lost gradually, and dementia is the common cause: the diagnosis often comes years after the decline began, and the documents that need capacity are often left until after it. About one in ten people over sixty-five and a third over eighty-five live with dementia, which means a couple in their eighties has better than even odds that one of them will need the document. Each country has a capacity instrument, signed while capacity is present, that keeps working after it is gone: the durable, lasting or enduring power of attorney, and its health equivalent. Without one, the family applies to a court or tribunal for guardianship, which is slower, public and not the person's choice. Capacity, dementia and the power of attorney has the country table.

Most financial abuse of older people is by family, and most of it starts with the power of attorney: the son who "borrows", the daughter who moves in and moves the accounts. Australian and UK studies put the prevalence of financial abuse at around one in twenty older people, and the abuser is an adult child in most reported cases. The protections are ordinary: two attorneys acting together for large decisions, a requirement to keep accounts, a trusted third person who can see the statements, a bank told who holds the authority, and a clause forbidding gifts above a stated amount. The person choosing an attorney should choose for honesty first and competence second, and should say why, in writing, so that the choice cannot be quietly reversed.

Where you want to live when you cannot choose. What a good day looks like. Who decides, and who they should listen to. What you would refuse. Which possessions should go where, and why. Whether the business should be sold or kept. None of these is a financial decision, and every one of them will be made by somebody. The plan can name who decides. It cannot say what you would have decided, unless you said it while you still could, in a form the family can return to.

1. Sign the capacity documents your country uses, for money and for health, now.

2. Check every pension, super and policy nomination against the will.

3. Decide what the home is for and write it down.

4. Choose an attorney for honesty, add a second for large decisions, and tell the bank.

5. Set the drawdown order with an adviser under this year's rules, and revisit it when the rules change.

6. Say what a good day looks like and who should be listened to, in a form that lasts.