Millennials Are Asking About Long-Term Care
Once, most LTC clients were boomers. Now, the author is helping clients born after 1980.
You’d think that after almost two decades working with clients, I’d have seen it all. Then my phone rang.
Until that moment, I’d never had millennial clients bring up the topic of long-term care planning on their own.
It was always me — the advisor — introducing the important role long-term care planning plays in helping protect carefully-planned retirement savings.
Then, the COVID-19 pandemic led a growing number of my millennial clients to engage in estate planning ,and, after holding those conversations, to think about and ask about long-term care.
The Will
When I picked up the phone, I was talking to an engineer and an educator with two young children for whom, like so many clients, the pandemic was a wake-up call.
They’d recently started working with an estate attorney on a trust and a will. While discussing their concerns for the future, the risks of an untimely death or a long-term care scenario came up.
The clients didn’t know what the solution was, but they knew they didn’t want long-term care costs to decimate the retirement for which they were saving so diligently or derail the goal of leaving something to their kids.
The engineer and the educator were the first, but certainly not my only, millennial clients whose interest in long-term care costs and planning was piqued by an estate planning conversation.
So how do we talk about planning for something that’s decades away and, hopefully, will never happen?
Cost Realism
Definitions differ, but the Pew Research Center defines a “millennial” as someone born from 1981 through 1996.
Millennial clients want to know they can protect their retirement savings while maintaining their lifestyle and understanding exactly what long-term care costs is an important first step.
According to Skilled Nursing News, the cost of long-term care has increased at a rate higher than inflation since 2004, and those costs don’t appear to be leveling off.
A quick look at Northwestern Mutual’s Cost of Care Calculator shows that the average cost of a home health aide today is $27 per hour, which is projected to rise to $49 per hour by 2042 (assuming care costs increase at a typical rate of 3% per year).
Paying for a long-term care event out of pocket is out of reach for most people, and should care needs arise unexpectedly, that means tapping into retirement savings or liquidating assets they’d planned to keep or pass along to loved ones.
Neither of those options is easy or appealing.
The good news is millennial clients have more options than older generations did for managing long-term care risk.
Awareness, time to plan, and the emergence of newer solutions let millennials consider risk protection approaches that also have a level of flexibility that they have come expect in other areas of their lives.
The Odds
We know death and taxes are certain, and advisors are accustomed to helping clients plan for both.
But younger clients are not always as convinced about the likelihood they will need long-term care.
While this is starting to change, both as a result of the pandemic and as millennials care for their own aging parents, it’s our job to help our clients rethink that assumption — regardless of their age.
The 2021 Planning & Progress Study by Northwestern Mutual revealed 46% of millennials have or were currently providing care for someone.
We have to recognize the reality of the situation: a person turning 65 today has a nearly 70% chance of needing long-term care, according to the U.S. government.
For the majority of people, it’s not a question of “if” but a question of “when” the need for care will affect them or their loved ones.
Lightening the Load
Another client called me after his father-in-law was diagnosed with early-onset Alzheimer’s disease.
His mother-in-law had passed, so care responsibilities fell to his wife, who was also raising their children.
The couple hadn’t considered their own needs for long-term care planning — after all, they were in good health.
But seeing a parent fall ill suddenly, and earlier than expected, put the need to protect themselves against future care costs into sharp focus.
Long-term care planning can help with the cost of covering physical needs, from helping with some daily tasks to more demanding medical work.
And of course, it’s a form of financial preparedness.
But most clients don’t realize it can help lighten the emotional load, too.
No one wants to feel like they are a burden on their children or becoming another issue for a busy family to manage.
One thing I have certainly seen in the 20 years I have been doing this: Long-term care planning can help provide additional options for your clients’ families.
In my experience, having a plan for potential long term caregiving needs can create more freedom and choices.
The pandemic opened our eyes to the demands of caregiving and the fragility of the care system.
Regardless of the age of your clients, it’s a good idea to start the conversation about long-term care costs and planning.
Expect the unexpected. Or at least plan for it.
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