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If his own family won't go in the boat with him then there's clearly a problem. He has a responsibility to be a safe boat operator, and if you think he isn't safe then either make sure he has a set of reliable eyes and ears on the boat with him or curtail the boating.
I cannot imagine what can be done by this. Were I his wife I would refuse to go. If he wishes to risk his own life then, that is perhaps not a terrible way to go. As you say, your concern is for others. I think that you are right.
I would speak honestly with him. I tell you this as someone who had no idea, living across the state, that my brother already knew "something was wrong" prior to his diagnosis with probable early Lewy's Dementia. He ended up having smashed up both a huge debris collector, a huge palm tree, his own truck and his head. Happily no one but he himself was hurt, but he lay bleeding in the arms of his neighbor saying "I knew something was wrong. I knew". He was so thankful, the remainder of his life, that he didn't injure anyone.
It would be a good idea to have a family member ride in the boat with him to assess how well he does drive and how well he can see other boaters, swimmers and can he see well enough to dock the boat and properly secure it.
I would probably discourage it until someone has assessed how well he does.
And why did he give up driving 2 years ago? Was it because he felt unsafe driving? If so you might point out that during the summer, on a lake there is more dangerous traffic on the lake than on the road.
Drunk drivers
Fast boats with people that are busy partying with friends
Teens with their friends skiing or other water sports.
No lanes to keep people out of the way of other boaters.
I would encourage him NOT to drive the boat or at least until someone can evaluate how well he does. (AND not say anything until they have reached the house and he has docked the boat. Take the trip just like someone evaluating any driver) Also evaluate how well they can get in and out of the boat, can they do it safely?
IF he does give up driving the boat will they be able to go to the vacation home? Would someone deliver groceries, check up on them, pick them up for a trip to town, pick them up for just a nice drive around the lake? If not maybe that is what he is fearing, that the vacation home will be more of a confinement than a pleasurable time.
With macular degeneration, he has lost his central vision and only has peripheral vision. People lose their peripheral vision as they age anyway, so his vision is seriously compromised all the way around. Deafness is also an enormous problem.
There's no getting around it -- he shouldn't be driving any motorized vehicle. If he killed anyone, it would be horrific.