Half of affluent pre-retirees say they are “terrified” of the effect health care costs will have on their retirement plans, according to a report released Monday by Nationwide Financial. Three-quarters of respondents said health care costs “going out of control” was their top retirement fear.
In spite of those fears, 38% of affluent pre-retirees still haven’t spoken with a financial advisor about their retirement, and those who haven’t aren’t talking about health care costs. Just 20% have discussed health care costs that won’t be covered by Medicare.
Part of the problem, according to the survey, is that pre-retirees don’t think advisors are qualified to speak about health care costs. Almost 60% said they believe most advisors aren’t able to speak about the cost of health care with their clients, even though two-thirds of clients who have spoken with their advisors say they’ve been very helpful.
One factor in clients’ apparent lack of confidence is simply the lack of dialogue between advisors and clients.
“Only 62% [of pre-retirees] have talked to an advisor about their retirement plan,” John Carter, president of Nationwide Financial, told AdvisorOne, “but of those, just one in five have discussed health care costs.” He noted that 43% said they were going to talk to “a” financial advisor, not necessarily the advisor they’ve been working with.
“This is a wake-up call for advisors to be proactive about education,” Carter said.
Furthermore, 12% of pre-retirees say they plan to switch advisors, but of those, 54% say they wouldn’t if their current advisor could help them plan for health care coverage in retirement.