Pandemic Is a Wake-Up Call to Address Health Care in Financial Plans
Advisors can use technology to help clients map out how to cover health care costs today, in the near future and during retirement.
As a nation, we owe a collective debt of gratitude to the doctors, nurses, hospital support staff and first responders who are risking their own lives to help those who have contracted COVID-19.
With more than 1 million confirmed cases in the U.S. and more than 80,000 deaths due to complications of coronavirus, Americans are experiencing in a big way that nothing can be taken for granted.
Over the past year, the high cost of health care has prevented nearly one-third (32%) of American families from seeking medical treatment — including doctor visits, medications, vaccinations, annual exams and vision checks — according to a Bankrate survey published on March 12. Even before the COVID-19 pandemic, unexpected medical bills could decimate a family’s financial situation and place other goals in the back seat.
Financial advisors can take the lead in helping Americans ensure they have enough set aside to meet emergency health care expenses for themselves and members of their families, especially during periods of extreme uncertainty and volatility like this one.
Advisors can utilize modern financial planning technology solutions to work with clients to estimate how much money they would need to cover potential health care expenses (for themselves and their family members) today, in the near future and during retirement. Some of the planning tools presently available to advisors enable self-directed workflows where clients can securely input personal and health data, and then view an estimate of their likely health care costs across different phases of their lives. This can be achieved through technology system integration with providers of health care industry data.
In addition, if advisors harness financial planning tools that allow them to run unlimited scenarios, they can show clients the impact a health care emergency would have on their financial well-being given various circumstances and investment strategies — and begin planning ahead to make sure they have enough set aside for medical expenses going forward.
The high cost of health care and long-term care has become a major concern of investors saving for retirement. Fidelity’s 2019 Retiree Health Care Cost Estimate reported that a 65-year-old couple retiring last year would likely have to spend $285,000 in health care and medical expenses over the length of their retirement. Unmarried male retirees can expect to spend $135,000 on health care throughout retirement, and the estimated amount is higher for single women — who will likely spend $150,000 on health care and medical expenses during retirement.
This is why financial planning applications that incorporate health care cost estimates are vital resources for advisors and their clients.
Furthermore, at a time when many American families are struggling to pay monthly bills, advisors can utilize modern financial planning solutions to help clients budget for emergency health care expenses. According to a recent survey by the National Endowment for Financial Education, 88% of Americans admit that the COVID-19 pandemic has caused them to stress about personal finances, with 41% concerned that they do not have enough in emergency savings. Specifically, 28% of Americans are worried about paying rent or mortgages, as well as utilities, during this time, and 19% are stressed about paying health care expenses.
Advisors can utilize financial planning applications available in today’s marketplace to help clients budget for monthly expenses and health care bills for as long as the COVID-19 pandemic lasts, and beyond. They can also demonstrate value for investors by showing how their stimulus checks can be used to pay off monthly bills or medical expenses.
Proactively working with clients to allocate savings for health care in financial plans is more important than ever. Luckily for advisors, financial planning solutions that can incorporate medical cost estimates into plans have been developed, and can be readily harnessed for use with clients.