Regardless of your client's age, planning for retirement has never been more important. Corporate pensions and Social Security were once the staples of retirement planning; however, today, the responsibility for retirement preparation has shifted to the individual.  Your clients save diligently during their working years to generate income for retirement, yet most fail to recognize how even basic healthcare expenses may impact their retirement income planning. 

According to the Fidelity Investments Retiree Health Care Cost Estimate, "an average retired couple age 65 in 2025 may need approximately $345,000 saved (after tax) to cover health care expenses in retirement." Even worse is the reality that the estimate excludes the health-related expenses for Long-Term Care.  So, given the fact that most retirees will require some form of Long-Term Care during retirement, the need for planning couldn't be clearer......

What is Long-Term Care Planning?

When discussing potential Long-Term Care needs, it’s important to first understand how and where care can and will be provided.  These Long-Term Care services range from basic care in the home to full-scale custodial care in a nursing home setting.   The majority of Long-Term Care services provide assistance with “Activities of Daily Living” (ADL), such as dressing, bathing, eating, transferring, and toileting. 

Those who have difficulty performing two or more of these ADLs, due to physical limitations, cognitive impairment, or both, are generally considered to be in need of custodial or Long-Term Care.  Since Medicare will generally not cover these expenses, you should help your client understand why it's important to plan for future Long-Term Care needs, as there are only four ways your clients can receive or pay for this type of care:  Go it alone with Self-Funding, rely on friends and family, rely on government assistance, or risk mitigation using insurance.

Long-Term Care Planning Solutions To Consider.....

There are many ways to customize Long-Term Care planning, and a “cookie-cutter” approach won't work with the evolution and AI-driven state of financial planning.   With that in mind, Long-Term Plan designs should consider the following key factors:

• Quantifying future Long-Term Care needs using a tool like the HALO Assessment
• Preferred care location or delivery.
• Age, physical health, and financial situation.
• Retirement income and expenses.
• Current assets and how/where those assets are positioned.
• Tax consequences of the LTC funding source.
• Existing financial, estate, and legacy planning.
• Special needs for business owners, women, same-sex couples, etc.

The video below explains a popular way to implement a client's Long-Term Care Plan with retirement dollars.....