When discussing long-term care with your clients, there is much to consider. Where do you even start? For your convenience, here are a couple of talking points to get the ball rolling.
The Chances of Needing LTC are High
In studies done by the U.S. Department of Health and Human Services, results indicate around 70% of Americans will need long-term care at some point in their lives. The average life expectancy age is increasing, yet the retirement age is not. That means we’re living in retirement a lot longer nowadays. While most of your clients have saved or are saving for retirement, they are not efficiently saving for potential long-term care costs.
Speaking of costs…
Long-Term Care Costs are Expensive
Based on a survey done by Mutual of Omaha, just one year of in-home care can cost between $35,000 and $40,000. That could be the same amount being paid out during retirement, leaving nothing leftover for the monthly bills. Even worse, one year in a nursing home can cost approximately $76,000!
But there must be other ways to pay for it, right?
Medicare and Medicaid Don’t Sufficiently Cover Long-Term Care
Regrettably, Medicare only covers a small portion of care. In fact, Medicare is designed to cover only short-term recovery or rehabilitation expenses.
Medicaid is a program for individuals with lower incomes. While it does offer some coverage for long-term care, the ceiling to qualify is very low. This means your client would have to essentially spend all of their lifelong-saved assets to get under the level of qualification. They then would have nothing left to give to their family after their passing.
You don’t have to be a financial advisor to realize that suggesting your client spends all of their hard-earned dollars is not wise.
But your clients don’t need Medicare or Medicaid. Their family will take care of them, right?
Caring For Family Members is Extremely Difficult
Ask your client who in their family plans to take care of them.
Is it their spouse?
In most cases, one’s spouse is of a similar age. If 80-year-old Joe needs help completing activities of daily living such as eating and bathing, can his wife, 78-year-old Martha, physically help him do this? It’s going to be quite the challenge.
Is it their children?
Typically, children will be in their 40s, 50s, or 60s. They’re putting their own children through college. They’re welcoming their own grandchildren. They might even be unhealthy themselves. Perhaps they make only enough to support themselves. Besides, taking care of someone else can be a full-time job. Can your client’s children afford to step away from their own job, from providing for their spouse and children, to take care of mom and pop?
Siblings will be around the same age. Grandchildren have their own families, careers, or are in college. The point is, it’s very difficult to rely on family members.
And that’s not to mention the emotional stress of taking care of a loved one.
But how can your client afford professional long-term care?
Start Planning Now
No one can accurately foresee if they’ll ever use long-term care. No one can fully predict the “who” (will take care of them), “where” (they will live), “what” (kind of care), or “why” (they need care) of long-term care. Luckily, individuals can easily take care of the “how” (will they afford it). The last thing anyone wants is to be caught off guard, without adequate funds and in need of the service. And by planning early, your clients will gain the flexibility to make their own choices when it comes to the who, where and what mentioned above.
Just like life insurance, the premiums for an individual who starts at 30 are lower than they will be for the individual who starts at 60. And just like life insurance, the cost of insurance is dependent on age and health.
We all hope to be in the 30 percent that never needs long-term care. But with the chances being what they are and the costs being so high, it’s best to prepare. Without long-term care insurance to pay for related expenses, your clients will have to use up their retirement funds and savings or sell stocks and property just to manage.
Purchasing long-term care insurance, for the just in case, keeps that hard-earned legacy alive and well, even after their gone.