Financial advisors know the drill: advances in healthcare and a trend towards healthier living mean that young Americans can expect to live longer lives.
Meanwhile, a majority of younger working people are ignoring the fact that skyrocketing healthcare costs combined with long life means they need to plan for long-term care. How should an advisory respond in order to best serve its clients?
For a senior couple, the estimated cost of medication alone exceeds a quarter of a million dollars over their expected lifetimes. The enormity of this amount – and medication is only the most basic of expenses – is perhaps intimidating for clients. Head-in-the-sand is a common investor response and it’s up to you to help your clients see the light.
Here’s a few steps that can help you evaluate what your customers need. First, find out how much their company-based pension will contribute to healthcare costs. Some people have strong benefits, while others may face high deductibles. Health savings accounts, or HSAs, offer tax benefits and a good degree of flexibility for people in the latter category. HSAs are particularly useful for older workers who need to make up for lost time in planning for post-retirement medical expenses.
You and your customers need to understand exactly how much they’ll be getting from Medicare. Many people are too sanguine on the matter of how much the government will cover and they may be surprised at the size of the deductible they’ll have to cover. Examine this question carefully and make sure your clients understand the true situation.
The final step is to add up your clients’ combined benefits to determine how much they’ll need to provide for themselves. This may be a painful conversation but it’s one that no responsible financial advisor can allow a client to avoid.
For more information, please read:
Making Health Care a Permanent Part of Your Clients’ Plans | Wealth Management