Protect and Serve: What Advisors Should Know about Women and Long-Term Care

Long-term care cost inflation is creating new challenges for financial professionals and their clients, as uncertainty about equities, a soft housing market and rising health care costs have stunted the growth of many retirement portfolios. Advisors today are facing a common conflict: How to help clients re-adjust expectations for retirement.

According to Genworth’s most recent Cost of Care Survey, the cost to receive care in an assisted living facility or nursing home continued to increase over the past year. Nationally, the median annual cost of care in an assisted living facility has reached $39,135, an increase of 2.4 percent from 2010. The comparable cost for a private nursing home room has risen to $77,745, up 3.4 percent during the same period.

This presents a great opportunity for advisors to educate and plan with each and every client to address the two very real risks to one’s retirement portfolio:

1. Consequences of an unexpected health event
2. Consequences of outliving their income

Conversations with your clients about wealth protection are, therefore, a must. This is especially true when it comes to your female clients. Women are less likely to have retirement plans because many work in part-time jobs or for employers that don’t offer retirement benefits. In addition, they are less likely to participate in 401(k) plans because of lower compensation. Because of this, women must be prepared to address the rising cost of care and understand the benefits of a long-term care insurance policy.

Women and long-term care

Women are impacted by long-term care on two fronts: as the primary caregiver and as a recipient. Financial decisions about long-term care, whether on behalf of a family member or for themselves, have therefore become a women’s issue. Since the majority of caregivers are women, the sense of urgency about the need to prepare for their own future long-term care is often more heightened. For them, the peace of mind that comes with knowing a long-term care plan is in place is often a more important financial goal than accumulating great wealth.

Why is it imperative to include women in conversations around long-term care? Consider this:

• Life expectancy: At age 65, average life expectancy is 20 years for women, compared to 17 years for men, according to a report by The Society of Actuaries. Women, then, are likely to require assistance from a care facility or caregiver for a longer period of their life.
• Loss of spouse: 85 percent of women over age 85 are widows, compared to 45 percent of men.
• Discussing LTC: According to a Genworth survey, women are far more likely than men to be concerned about upsetting family members when talking about their own long-term care. In fact, when asked to identify the biggest barrier in discussing long-term care, 72 percent of women said they were most concerned about upsetting family members, compared to 57 percent of men. This shows that many women will not initiate conversations around long term care, placing a greater need on advisors to start the discussion.

Initiating the conversation

To initiate the long-term care planning conversation with your clients — and encourage them to have it with their loved ones — these tips are a good starting point.

• Be straightforward and don’t take family members by surprise. Tell your family that you have something important you want to talk about and do it in a comfortable, pleasant setting.
• Reference examples. Sharing recent articles and data about long-term care, or sharing an anecdote about a friend or colleague with a similar background, will make the issue more relatable.
• Lay the groundwork for thinking about future care. Ask questions about the potential gameplan for care if the person was hurt at work or became ill. Be specific on what their wishes would be if they ever did need short- or long-term care.
• Create a written strategy. Financial planning, estate planning and long-term care planning are all connected. It’s important to write down specific needs and desires so that everyone involved knows what is expected both now and in the future.

Fulfilling your role as the trusted advisor

According to a Genworth survey, 78 percent of men and women say they would find it helpful to talk to a financial professional about long-term care. However, only 16 percent have had a conversation with a financial professional about it. Among the topics clients would like to discuss:

• Identifying residential care options
• Help understanding how to talk with family about LTC topics
• Finding helpful community support services
• Coping with the emotional strain of caregiving

It is also important to communicate to your clients that planning for a potential long-term care event is not just an elderly issue. Medical science is advanced, and although I’m healthy today, it doesn’t mean I am immune to cancer, other diseases or an accident. My husband and I bought our policy when I was 42 as part of our plan to help protect our businesses and minimize the burden on our three children to cover costs and caregiving.