How to Discuss Long-Term Care Planning with Your Clients
Some of the most difficult conversations you will have with your clients are around aging and the need to prepare for the possibility that they may need some type of long-term care in the future. Many clients assume family members will care for them in their home if they become sick or need assistance with daily activities. The reality though is that 70% of people turning 65 will need some form of long-term care during their lives, according to the U.S. Department of Health and Human Services. Women tend to need care longer with an average of 3.7 years versus men who need care on average for 2.2 years.
In addition, long-term care can be costly. The cost of care in an assisted living facility in 2016 on average was $3,628 a month, while the cost for a semi-private room in a nursing home was $6,844 a month, according to the U.S. Department of Health and Human Services.
So, while many people would prefer to deny that they may at some point need long-term care, it clearly is critical for clients nearing retirement to have a plan in place in the event of serious illness or incapacity. Let’s look at some ways you can approach having this conversation with your clients and some things they may need to consider as part of the planning process.
Start with Your Clients’ Goals for Retirement
How does your client envision their retirement? As you talk about your clients’ plans for retirement, a natural area of discussion is being prepared for the unexpected. What happens if your client or their spouse becomes ill and needs special care? What if your client or their spouse dies unexpectedly, leaving one of them in their home alone? Do they have any adult children who are disabled and rely on them for support? How will they pay for the cost of long-term care when the need arises? Framing the long-term care discussion around your clients’ retirement goals can help illustrate how – without proper planning – their wishes can easily be derailed in the likely scenario that they need some form of long-term care services.
Encourage Your Clients to be Proactive
The best time for your clients to make decisions about long-term care is when they are young and healthy enough to do it. Early planning also allows them to ensure they can afford quality care and financial security for a spouse or loved ones by protecting their retirement savings. Besides determining the right type of long-term care plan, clients may also want to tour facilities and make decisions about where they may want to get care if they need it. Many senior care facilities offer several living options that would allow an individual to start out in independent living and move to assisted living or even memory care if they need greater care as they age. Choosing a facility before a medical crisis happens allows your clients to make thoughtful and careful planning decisions, understand potential costs and share their wishes with family members.
Discuss the Cost of Long-Term Care
The cost of long-term care varies based on the type of facility and the level of care needed, as well as where you client plans to live upon retirement. Care in certain geographic regions will cost more than in other areas.
On average, Americans turning 65 will incur $138,000 in long-term care costs, according to the U.S. Department of Health and Human Services. Families will usually pay about half of the cost themselves out of pocket and cover the rest with public programs or private insurance.
Explore a Longevity Plan
Advancements in medicine and technology mean that most people are living longer. The typical retirement plan is based on the assumption that people, on average, need to have funding for expenses for about 15 years. Talking to your clients about longevity planning helps them be prepared in the event that they live to an advanced age, so they don’t deplete their retirement savings. While you can’t predict what will happen, looking at a client’s overall health, family health history, financial status and their spouse’s age and health are also helpful to consider as part of the conversation. Exploring this topic may help your clients see that the use of long-term care insurance can be a helpful tool to extend their retirement savings.
Include Family in the Plan
Some clients make assumptions that their family will care for them in their old age but haven’t really consulted with their family members. Often family members have different expectations on the subject than they do. And even if they are willing to help, the reality is that it can put an enormous physical, emotional, and financial strain on the caregiver. Most clients don’t want to be a burden to their children or grandchildren so involving family early in the conversation can be helpful to shape a long-term care plan that works for everyone, while also ensuring adult children understand their parents’ wishes in the event of illness or mental decline.
When talking to your clients about long-term care planning, keep in mind that the primary goal is planning for quality of life for the client, their spouse and loved ones in the future. It’s important to approach the conversation with empathy and understanding, rather than focusing only on the financial aspects of planning. You may also need to be persistent and have the conversation with your clients over time to help them find the right solutions so they can feel confident that they are prepared for the future.
For more information about Momentum Independent Network, contact Brian Neil at Brian.Neil@hilltopsecurities.com or 214-953-4190.
The paper/commentary was prepared by Momentum Independent Network (MIN). It is intended for informational purposes only and does not constitute legal or investment advice. The statements within constitute the views of MIN as of the date of the document and may differ from the views of other divisions/departments of affiliate Hilltop Securities Inc. In addition, the views are subject to change without notice.
Momentum Independent Network Inc. is a registered broker-dealer and registered investment adviser that does not provide tax or legal advice. MIN and HilltopSecurities are wholly owned subsidiaries of Hilltop Holdings, Inc. (NYSE: HTH) located at 717 N. Harwood St., Suite 3400, Dallas, TX 75201 (214) 859-1800, 833-4HILLTOP. Member FINRA/SIPC
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