After decades of saving for retirement, clients expect security from their comprehensive financial planning.  Yet most plans still ignore the single risk most likely to disrupt that security — the loss of independence or cognitive decline creating the need for Medicare-excluded Long-Term Care (LTC).  Unfortunately, the advisory community has been conditioned to treat this care as something clients will simply pay for if it happens, and that's not planning.

That's a default.  

Even for clients already in their 70s or beyond, planning is not "too late." Today's asset-based strategies allow advisors to reposition existing assets — often using dollars already being distributed — to create a defined pool for care without introducing ongoing premium risk.

Turning Existing Assets Into A Purposeful Strategy

This is not about buying another product, but a reallocation of part of the balance sheet to address an unfunded liability.  From a funding standpoint, one of the most effective ways to think of this is much like a Roth IRA conversion.  When the plan is to intentionally move dollars from a tax-deferred bucket, with future uncertainty, into a structure designed to create long-term certainty, it's treated as a logical financial strategy. 

The loss of independence or cognitive decline requiring LTC is not an accumulation problem; it's a volatility event.  As such, repositioning a portion of a client's IRA assets converts exposed, fully taxable dollars into a dedicated, yet leveraged, LTC benefit.  Like the traditional Roth IRA, (1) the distributions are tax-free when those dollars are used to pay for LTC expenses,  and (2) if care is never required, those dollars pass to the beneficiary tax-free.

At the end of the day, if the recommendation for a client would be a Roth conversion for tax diversification, this is the same tactical planning applied to healthcare risk diversification.

Why This Matters for Clients Already Taking RMDs

Required Minimum Distributions are already forced taxable income.  Period.  By redirecting those dollars, and making them work harder rather than just becoming cash flow or accumulating without purpose, they will:

• Create a defined pool specifically for future care

• Transfer risk, cap exposure, and replace an open-ended liability

• Provide tax-free LTC benefits if care is needed

• Return value to heirs if it is not

In other words, the client isn't adding a new expense, but repurposing an existing distribution.

The Planning Shift

As the Silver Tsunami continues reshaping financial planning in America, the key distinction to communicate to clients is that they're not just buying insurance, but rather they're being encouraged to proactively reallocate assets to solve a specific balance-sheet risk — the unfunded care liability — in a controlled and predictable way.  As longevity continues to reshape retirement, integrating a strategy for care is no longer optional. It is part of completing the financial plan that clients believe they already have.

Every client needs a plan to effectively mitigate the risk of lost independence or cognitive decline.

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