The cost of care

Opinion

I learned the value of an active lifestyle young. Decades after winning gold and bronze medals in the 1976 Olympics, I continue to put in my laps and weight-train religiously.

My husband and I are committed to staying fit for life and equally determined to keep the things we cherish for as long as we can. Rather than be burdened with fear of what tomorrow may or may not bring, we grabbed the bull by the horns and planned for future long-term care costs over a decade ago. Now, we live knowing that we can continue to enjoy the things we value the most without worry or regret. 

This year marks the tenth anniversary of Genworth Financial's Cost of Care survey and it's a great time to discuss long-term care in all its forms with your clients. By minimizing their risk, you can help them prepare to meet the challenges of tomorrow before the task becomes too monumental to achieve.

Here's how.

Get to know what your clients value.

I was a spindly kid from Wisconsin…coached primarily by my parents in a lake…on a team made up almost entirely of my six siblings and myself.

But I had a dream to swim in the Olympic pool one day and compete for gold. When the world echoed a resounding no, I leveraged coaches and mentors who understood my goals and were equally as passionate about them. That's how I eventually made it to the Olympic podium. Your clients' goals are no less significant and it's up to you to understand what it is they value so you can help them plan accordingly.

Maybe Ms. Moreno would like to take the rewarding job offer that comes with a pay cut. Now that they're retired, the Bradleys would like to open that business they've been talking about for years. And the Browns would love to buy a vacation home on the Gulf Coast to enjoy with their growing family.

No two clients are the same, so determine what they each value in their lives now and what they want for their futures. Then align those priorities with their financial action plan.

Discover the cost of care, to best prepare.

I can't count the number of times my eyeballs nearly popped out of my head during my swim career when I learned of new records posted by my competition.

Seeing how high the bar had been raised became part and parcel to my training regimen, giving me incentive to train harder and smarter.

The 2013 Cost of Care survey lets your clients see exactly what they're up against so that they, too, can prepare to meet the challenges.

Using this simple map, the Cost of Care survey shows a state-by-state comparison of long-term care costs. It's become one of the most powerful tools in the shed of advisors I work with, ensuring their clients understand the costs facing them and their loved ones.

It also offers year over year increases so that they can plan even better for tomorrow. When my father required care 32 years ago, typical costs were in the $18 per day range. Today, my mother's care is $282 per day. Get to know what care costs are for your clients so that they can plan ahead accordingly... it's never too early.

Give your clients options that suit their needs.

This is where understanding your client's values ties back into their planning.

If your clients' savings were to be entirely eaten away by care services twenty years from now, how would that impact your advice to them today?

Would they be able to purchase that vacation home on the coast or accept the lower paying job that they find more rewarding? Would they jump at the chance to purchase an LTCI policy?

“Wendy,” I hear a few of you mumbling, “I don't have a crystal ball.”

I'm not a gambler, but I'll happily wager that you aren't either. So let's take a look at the numbers: 70 percent of Americans over the age of 65 will requires some form of long-term care, and the average duration of care is a whopping 3 years.

Adult day centers typically cost someone -- your client, their widowed spouse, their kids -- $65 a day.

The average home health aide charges $19 per hour (with 3-hour minimums).

Nursing facilities, which 40 percent of Americans over the age of 65 will require, average $83,950 a year. (The average is much higher in some locations, mind you.)

When your clients see these numbers staring them and their loved ones in the face, LTC insurance makes just as much sense as home and health insurance does.

Ask your clients directly whether they are comfortable assuming all of the risk of these costs and paying out of pocket.

Even the wealthiest clients I've worked with generally aren't keen on seeing their hard-earned assets go towards expenses they can offset today.

Are your clients' families willing and able to help meet those needs for them? What happens to a widowed spouse if the savings have already been exhausted? Will all of their assets be liquidated so that Medicaid can tell them, or their widow, where they will live?

Ensure that each and every one of your clients fully appreciates the risks involved with assuming financial responsibility for their future long-term care needs.

Regardless of their net worth, I guarantee you that your clients who understand the costs and probability of LTC will be interested in discovering how to retain what it is they value most.

Until next time, keep on moving!

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