The Real Cost of Long-Term Care for Aging Clients

The Real Cost of Long-Term Care for Aging Clients

Are you doing retirement planning with your clients? Do you understand the real dollars involved in long term care?
 

It goes way beyond out of pocket medical expenses for Medicare premiums, supplemental insurance and medicines. You need to help them free up enough to pay for it.

We are indeed living longer now due to advances in medicine and technology but what is the condition we’re in with longevity? It’s not true that we’re living healthier than the prior generation.

No one wants to talk about the reality that things like obesity, in 30-35% of Boomers are going to affect whether they need to pay for lots of things Medicare does not cover. Obesity is frequently associated with significantly greater risk for heart disease, strokes and diabetes. Boomers have the highest rates of obesity of any age group in the U.S. If you want to pick conditions that are most likely to result in the need for long term care, all of these are among them.

Retirement planning can be very tricky when it comes to considering the cost of long term care. Most people don’t want to have a conversation about what would happen if they became disabled. Most would rather change the subject quickly if the issue of possible diminished capacity is raised. “That’s on going to happen to me!” is the expected response. But the risk is real, and there are plenty of statistics to support an analysis of what it costs to care for a person with disabling health conditions.

According to the Genworth Cost of Care Survey, which comes out annually, 70% of people over the age of 65 will need some kind of long term support as they age. At AgingInvestor.com, we recommend that every financial professional have the latest study on hand and that you share it with your clients when you do retirement planning. Chances are they are not as healthy as their parents were. And what kind of care will they need?

Most people want to stay at home as they age. Many will use home care services to be able to stay at home. Here’s an example. My now 94 year old mother in law, Alice, had numerous hospitalizations for a couple of months, for blood pressure issues, the flu and other problems. She simply wasn’t safe living independently in her apartment as she recovered. A home care worker came in every day for a cost of $25 per hour, initially for 12 hours a day. That cost is not paid by Medicare.

She’s a good example of how we can need care with advanced age even if we do things right. She has always taken good care of herself, doesn’t smoke, doesn’t abuse alcohol, exercises regularly and keeps her weight in normal range. And yet, after illness she needed 24/7 care. The overall out of pocket costs associated with that bout of illness approached $10,000. She’s fairly tough and did recover fully. However at her age that is not what usually happens. Home care could be needed indefinitely at a cost even part-time of at least $20,000 per year.

The extra $20,000 a year any less resilient elder could need is for someone who has neither heart disease nor diabetes. Chronic illnesses put a person at even greater risk of needing expensive care. Full time around the clock help can run $250,000 per year and up, depending on geographic area market rates.

Here’s the takeaway: Expect that anyone who reaches the age of 80 is much more likely than not to need cash to pay for help of some kind. If your client is overweight or obese, the risk is very high. Ditto if your client smokes. Be sure to plan for making cash available to cover your client’s likely needs in his later years. Most of what is usually required is not covered by either Medicare nor supplemental “Medigap” insurance.

Carolyn Rosenblatt
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Carolyn Rosenblatt is an R.N. with 10 years of nursing and a lawyer with 27 years of legal practice. She has extensive experience working with both healthcare and legal i ... Click for full bio

Most Read IRIS Articles of the Week (February 20-24)

Most Read IRIS Articles of the Week (February 20-24)

Here’s a look at the Top 11 Most Viewed Articles of the Week on IRIS.xyz, February 20-24, 2017 


Click the headline to read the full article.


Enjoy!



1. Cyborgs Are the Future for Advisors


Becoming cyborgs is the way to go for financial advisers…blending robotics and humans into one organism. You see, I am convinced that robo-advice models will succeed and prosper. — Tony Vidler

2. Building a Better Index With Strategic Beta


With the global economy warming up, but political uncertainty remaining a constant, it’s more important than ever for investors to position their global portfolios to navigate long-term market volatility. That’s where the power of diversification comes in ... — Yazann Romahi

3. Reinvigorate Your Financial Life With Laser Focus on Market Risk and Shortfall Risk


The financial world is noisy and it’s easy to become distracted from your most important long-term goals. One way to cut through the noise is to focus on just the two factors that ultimately determine your approach to everything else in your financial life; namely, Market Risk and Shortfall Risk. — James E. Wilson

4. When it Comes to Your Money, Does the Truth Hurt?


It’s important to admit the truth behind our actions in order to rectify past and future mistakes or regrets. Living in denial only perpetuates making decisions that could potentially lead to financial disaster. — Michael Kay

5. A Skill for Advisors to Master to Keep Clients for Life


There's one key approach that makes you invaluable to your clients so they want to stay with you for the long-term. You have to genuinely be interested in people. — Paul Kingsman

6. Relationships & Money: 6 Stories to Share With Your New Partner


When you start dating, you usually start off sharing stories. Tales of your childhood, your previous relationships and your college days. Those stories help explain to your partner who you are and how you act. — Mary Beth Storjohann

7. Great Leaders Don't Talk About Revenue


It runs counter-intuitive to what we have been led to believe business is all about: make more money and everybody wins, surely? Talk about revenue so that everyone knows what’s important. What’s the problem? — Barry Chandler

8. Trump's Tax Proposals Could Cost You (and What to do About It)


In the wake of President Donald Trump’s stunning upset victory, however, muni investors were forced to readjust their expectations of fiscal policy going forward. Because Trump had campaigned on deep cuts to corporate and personal income taxes, equities soared while munis sold off, ending a near-record 54 weeks of net inflows. — Frank Holmes

9. Sometimes Doing What’s Best for Customers Isn’t Always Going to Make Them Happy


What does it mean to be a customer-centric company? That seems to be the question of the week. It started off with one of our subscribers emailing in the question, followed by two reporters wanting my take on this now-popular phrase for their interviews. — Paul Laughlin

10. Why We Solve the Wrong Problems


Everywhere I look I see organizations and people investing heavily in new initiatives, transformation, and change programs. And in almost every case the goals will never be met. One of the most crucial causes of the failure? The right questions were never asked at the outset. — Paul Taylor

11. Private Equity Head Tapped to “Fix” US Intelligence Apparatus. Why?


Why should we think the head of a private equity company could effectively “fix” US Intelligence? It is not apparent that this individual is even remotely qualified to fix the US intelligence apparatus. — Kathleen McBride​​​​​​​

Douglas Heikkinen
Perspective
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IRIS Founder and Producer of Perspective—a personal look at the industry, and notables who share what they’ve learned, regretted, won, lost and what continues to ... Click for full bio