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There are some staggering statistics regarding the aging of the U.S. population and those data points are highly relevant to advisors. Consider the following courtesy of AARP. Every day in this country, 10,000 people turn 65 years old and the number of folks 65 and older could swell to 88 million by 2050, representing approximately 20% of the U.S. population.
Combine that with advancements in medical technology and the stage is set for longer lifespans. In theory, living longer is a positive, but it also introduces concerns about clients outliving savings and other retirement-readiness issues. Then there’s the issue of long-term care – a conversation advisors should be proactive in terms of initiating with clients.
As is the case with nearly everything involving healthcare in this country, long-term care costs are alarmingly high. According to an April 2023 report by Morningstar, the cost for 40-hour per week in-home care is $62,000 and if someone requires a nursing home, those costs can reach $100,000 on an annual basis.
That confirms the need for advisors to be on the ball when it comes to long-term care conversations because the fact is many clients aren’t thinking about this issue.
Long-Term Care Planning Is Essential
In many cases, it’s likely that clients are working with advisors on issues they view as more important than long-term care. Those can and do include retirement planning, saving for college and broader portfolio building. Data confirm long-term care isn’t front of mind for most clients.
“A recent LTC survey by Nationwide found that just 36% of clients age 28+ and with $75K+ household income working with a financial professional have talked about long-term care with a professional,” according to Nationwide. “Clients seem to be waiting for someone else to approach the subject; the most common reason clients gave for not discussing LTC costs with their financial professional is that it hasn’t been brought up as a planning topic.”
One long-term care subject in which advisors can pleasantly surprise clients is dispelling notions about the costs of insurance. Most clients believe long-term care insurance is prohibitively expensive, but the reality is different.
“When asked to estimate the monthly price of a LTC policy for a 50-year-old male with specific coverage, just 15% selected the range of $100- $150/month, which is more reflective of the actual monthly premium for long-term care coverage for this individual and scenario. Importantly, 56% estimated the premium cost would be over $150 per month, which includes 20% who guessed the premium cost would be over $500 per month, almost four times the actual cost of coverage,” adds Nationwide.
Nationwide points out that when clients learn LTC insurance is actually affordable, they’re more inclined to buy it.
Alleviating Burdens
Alone, helping clients realize LTC insurance is more cost-effective than they thought is a win for both advisors and clients. More wins can be attained by helping clients see the value in embracing LTC insurance as an avenue for avoiding burdens – something they fear in old age.
As noted in the Nationwide survey, more than half of those polled are worried about becoming financial or physical burdens to loved ones. Forty percent want to avoid being emotional burdens. Point is no one wants to be a burden and advisors can help clients avoid that scenario.
“Despite the challenges of caregiving (financial and otherwise), most people would still choose to be a caregiver for a loved one, even if it’s difficult. Sharing this information with your clients could open a valuable discussion about their LTC preferences, who will provide that care, the costs involved, and potential LTC insurance solutions,” concludes Nationwide.
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