Various surveys of estate planners and their clients are conducted on either an annual or an ad hoc basis. While they reveal a lot about the nature of financial decisions, one thing they consistently show is that people facing retirement are primarily concerned about health care — both its costs and its effects.
In fact, for many people, being able to pay for health care in their old age is virtually synonymous with saving for retirement. According to the latest annual Merrill Lynch wealth survey, 74 percent of those surveyed say they are worried about having enough money to retire on, while an almost identical number, 73 percent, say they’re concerned about having enough money to pay for their health care costs in retirement.
These concerns don’t disappear just because people are wealthy. Spectrem’s Millionaire Corner surveyed strictly millionaires and found that more than half of them — 52 percent — said they were worried about spending their last years in a care facility. Nearly as many said they were worried about needing someone to take care of them in their old age.
The Merrill Lynch survey broke down answers between people who earned more than $250,000 a year and those earning less than that. Those with more assets actually worried more about paying for the health care in retirement than the less affluent did. While only 37 percent of the lower earners said health care expenses were their prime worry in retirement, 52 percent of the top earners cited them as a primary concern.
When asked what their biggest concern was in regards to living a long life, the most frequently cited answer, given by 72 percent of the respondents, was having serious health problems. When asked what they most wanted beyond core advice from their financial advisor, 75 percent said help with sorting through health care and long-term care options. Clearly, health is the biggest worry that everyone, rich or poor, has in their golden years.
But their health concerns extend beyond their own well-being. Another recent survey, conducted by the National Endowment for Financial Education, found that 70 percent of adults said they found it difficult to talk to their family members about who will be entrusted with making decisions for incapacitated or aged relatives.
People who have worked with elderly relatives have firsthand experience with just the kind of problems that can befall the aged. The NEFE survey found that those who have family members suffering from some type of mental decline report the following problems:
- 47 percent have either paid bills late or not at all.
- 36 percent have experienced difficulty calculating simple math problems.
- 35 percent report making irrational purchases.
- 21 percent said they had depleted their savings accounts.
Clearly, the closer someone has been to the financial and health problems of the elderly, the more concern they will have about providing for themselves and protecting their health in their own retirement years. That’s one more reason to learn everything you can about your clients’ family situations; they have a way of inflecting their own situations.
People also increasingly expect to have to help support other family members. The Merrill Lynch survey found four primary areas in which the respondents think they’ll have obligations:
- 43 percent expect to provide direct financial support to a family member.
- 38 percent expect to provide a place for a family member to live, or help pay for one.
- 30 percent expect to help pay education expenses for a family member.
- 25 percent expect to help with a family member’s healthcare or long-term care.
All these concerns about health care seem to have overtaken legacy issues as an issue for people moving into their retirement years. When Merrill Lynch asked what the respondents felt were the most important things to pass on to future generations, 74 percent said their priorities were values and life lessons, the most popular answer. By contrast, only 32 percent said their top concern was passing on money and financial assets.
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