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Reality: Anticipate the need for extended care later in life!
In a recent survey of clients who utilize the services of a financial adviser, responses show a strong fear that they will run out of money during their retirement. TASK ONE for financial advisers is to make sure that does not happen. This is a key reason for people to engage a financial adviser. They fear a change in lifestyle at a time in their life when change is hard to accept. They fear the drain of their bank accounts will have a major impact on their families, as well as a loss their sense of security. A major component of this fear is concern that they will not have enough money for future health care costs.
Recent statistics suggest these fears of retirees are well founded. It is no surprise that the health care needs of those over age 65 are dramatically higher than other age groups. Statistics show that the average 65 year old married couple should expect to pay $200,000 to $330,000 in out-of-pocket medical expenses during the remainder of their lives. Other national statistics show that at age 65, Americans have a 50% chance of living to age 92. The good news is we can expect to live a long life. The bad news is that with long life comes issues of mobility, cognitive issues, and other chronic health problems that over time will require continuing care, either from family or paid care givers. The need for extended care of people over age 65 is 2 in 3. One-third of us will leave this life fairly quickly. Two-thirds will linger, and require some kind of on-going assistance. The average length of time that care will be required is 3.8 years, at various levels of care and various levels of cost. Most people fear they will not have enough money to pay for it.
None of us is “average.” We can not project what any of us will require later in life. But the bottom line for all of us is that without some kind of plan, MOST of us, in fact, risk outliving our money. So, what is the solution for this very real problem? Extended needed care is financed from four sources: 1) government programs; 2) personal savings; 3) family members and their resources; and 4) a long term care plan funded with insurance. Each solution has its own set of issues, and often the ultimate solution may be a combination of some or all of these options. One thing is clear, however. The most convenient and least expensive is to create a plan funded by insurance. It costs pennies on the dollar, and provides for professional care in the most appropriate environment. Long term care insurance is actually a total delivery system for care.
The statistical need for extended care, and the cost of that care are only one part of this huge problem facing retirees and those planning to retire in the future. The “Rest of the Story” next time.
