By Carla Urbaszewski
Longer lives and a higher rate of disability make it a top concern
Planning for care later in life is of utmost concern for many American women, and it’s one they should address sooner rather than later. With longer lives, higher rates of disability and chronic health problems, and lower average incomes than men, many women will have a need for long-term care services and a solid plan to pay for them. As a financial professional, it’s crucial to understand how to have conversations about long-term care coverage and planning with your female clients.
The need for long-term care
Women have a longer life expectancy than men, outliving them by about seven years on average.1 Since women live longer, they are more likely to need long-term care and pay more in long-term care expenses.2 Some eye-opening statistics drive home how much this reality might weigh on the minds of your clients:
- More than 70% of nursing home residents are women.3
- Among people age 75 or older, women are 60% more likely than men to need help with one or more activities of daily living, such as eating, bathing, dressing, or getting around inside the home.4
- One in nine women age 75 or older, and one in five age 85 or older, needs assistance with daily activities.4
- Almost two-thirds of Americans living with Alzheimer’s are women.5
Older women struggle to pay for long-term care
Your female clients face unique challenges, and they may be at a financial disadvantage in retirement compared to men. For example, many women work fewer years because of child rearing or caregiving, and they are more likely than men to have worked part-time. They also face the gender pay gap — earning only 82% of what men earn.6
These challenges all add up to less earnings which means women typically will have less savings to help cover long-term care expenses. And long-term care services can be costly. In 2020, the average annual cost of a private room in a nursing home was $105,852; for a shared room, almost $93,072.7 Plus, costs for home care average nearly $24 per hour.7
Talking to your female clients about long-term care
Despite these challenges, women can take proactive steps with their financial professionals to overcome obstacles presented by long-term care. You should work with your female clients and help them think about their preferences and financial circumstances for long-term care. These considerations include:
- The likelihood that they’ll need long-term care
- The average cost of care in their geographical area and for how long it will be needed
- If they would like to receive home health care or receive care in a facility
- The impacts of inflation
After having this discussion, you should be help them better understand the options available to them that can help them cover long-term care expenses. These options include:
- Long-term care insurance
- Hybrid life insurance or annuity with LTC rider
There are issues and expenses associated with each of these options that should be considered during the planning process. For example, Medicare requires inpatient care and availability of a Medicare bed. Meanwhile, Medicaid requires spending down an estate to qualify. Medicaid may not be available to pay for all types of care and for all facilities. For those who are thinking about self-funding, they need to consider that care costs could reach $100,000+ a year. Any length of care needed will likely adversely affect their retirement plan.
There are medical qualifications for long-term care insurance and age affects the cost of long-term care insurance—the younger and healthier the insured, the lower the premium. There are also products that offer simplified underwriting such as a LTC insurance benefit that is combined with an annuity or life insurance policy. These products can increase flexibility and allow you to pass on unused funds through a death benefit and maintain flexibility in the event you don’t need the long-term care.
Valuable long-term care tools
Long-term care can be a difficult subject to talk about but discussing these options and “what if” scenarios with your clients is important, especially since procrastinating could mean fewer options are available to them. Discussing long-term care early, especially as it relates to your clients’ needs, expectations, and concerns, will leave you both better prepared. When you’re having these conversations with your clients, it might be beneficial to use a tool such as a long-term care benefits calculator to walk them through these situations and explain the options available.