When "The Silver Tsunami" arrives, every Baby Boomer will soon be over age 65, and most will experience the need for Long-Term Care (LTC) throughout retirement.....Expenses that are excluded by Medicare, Medicare Supplements, and Health Insurance.  Less than 20% of them have addressed this planning need¹, so, by default, it will be necessary for the other 80% plus to tap their hard-earned assets or investment accounts to pay for these expenses.  

Statistically, most of your clients fall into the "failed to plan" category, so you may want to encourage them to question the wisdom of self-funding these expenses, as tapping into their assets or investments to pay these expenses may have severe unintended consequences.  

To put things in the proper perspective, let's compare two Boomer couples retiring today:  Mr. & Mrs. Saver have chosen to use their personal assets to self-fund their future healthcare expenses not covered by Medicare, and Mr. & Mrs. Planner are proactive and have LTC as a component in their comprehensive financial planning.  

The Consequences of LTC and market corrections.....

Let's fast-forward twenty years to when both of our couples experience a need for LTC because, depending on the setting, this care could cost more than $12,000 per month.  Now, let's make the hypothetical crisis worse and have the LTC need occur during a market correction of more than 20% which has occurred FOURTEEN times since 1929.  

Mr. Saver had a one-year stay in a nursing home before passing away, but since they did not have an LTC Plan, the Savers must withdraw $144,000 from their retirement accounts to pay for the required care.   In doing so, here are some of the consequences.....



• First, the assets used for LTC needs will NEVER participate in a market recovery.  

• Second, in the “whoops, I never thought about that” category, the unexpected retirement plan distributions dramatically increased the couple’s taxable income, and depending on the actual 12-month LTC need, that income increase could result in a TWO-YEAR tax burden!!

• Third, there is the potential increase in their Medicare premiums due to an increased Modified Adjusted Gross Income and the resulting impact from IRMAA or the Income-Related Month Adjustment Amount.

• Finally, and maybe most importantly, by depleting those assets, Mrs. Saver may have difficulty maintaining her retirement income, quality of life, or paying for her own future Healthcare In Retirement needs.

The Benefits of Proper Planning.....

Now, let's look at the second couple, whose LTC plan almost entirely covers Mr. Planner's healthcare expenses.   After his passing, Mrs. Planner meets with her advisors, where she is pleased to learn that the LTC need has not (1) adversely impacted their retirement income planning, (2) created any unexpected tax ramifications, and (3) all of their accounts recovered nicely as the market rebounded over time.  While it was still a difficult time for her and her family, it's easy to see how vital planning ahead actually was and how things aren’t nearly as bad as they could have been..... 

So, now for the crucial question:  Which couple better represents how your clients are positioned today, and wouldn't they likely benefit from implementing an LTC Plan?  Market corrections and taxes make a terrible situation even worse!

If you're not discussing the benefits of implementing Long-Term Care Planning for clients when the market is at or near all-time highs, hopefully, this explains why you might consider it.....

¹ Based on surveys conducted by OneAmerica and Hanover Research (March 2022) and Nationwide Retirement Institute and LIMRA (May 2023)

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