4 ways to talk to your clients about long-term care
The U.S. Department of Health and Human Services (HHS) estimates that 70% of people turning 65 can expect to use some form of long-term care during their lifetimes.1 Yet despite the need, your clients may be unsure of their ability to afford long-term care, and it could impact their retirement planning. November is National Long-Term Care Awareness Month, it may now be an ideal time to have conversations with your clients about their long-term care plans and to show them how they can accumulate more money for the associated expenses.
The state of long-term care planning
Long-term care can encompass a wide range of services, but typically it refers to services designed to meet a person’s health or personal care needs over a substantial period, with the goal of helping them live independently and safely. Services can be home-based, and often help with activities of daily living but can include part-time medical services, if necessary.
The best time to have a conversation about long-term care is before it becomes urgent.
Despite the need for long-term care among those over 65, there is considerable uncertainty surrounding the subject. According to a recent AARP survey,2 approximately 46% of people 50 or older incorrectly believe that Medicare covers long-term care expenses. Furthermore, even though almost 70% of respondents say they believe they’ll require long-term care, less than 30% have given it a lot of thought. In other words, they know they need it, but are unsure of how to pay for it and have not done much planning for it.
“There’s awareness, but it hasn’t necessarily resulted in more coverage,” says Patrick Scanlon, Vice President, Global Atlantic Consulting. “And the reason is many financial professionals are reactive in nature to these types of needs. Often they’re waiting for clients to come to them. We believe it’s really about being proactive.”
And the costs of long-term can certainly add up. HHS estimates that health aides can cost about $20.50 per hour, and a month of care in an assisted living facility can be more than $3,600.3 Sam Brooks, the Director of Public Policy at the National Consumer Voice for Quality Long-Term Care, points out that many people may avoid making plans to pay for long-term care, which could have a serious impact on their ability to comfortably retire.
“I think it’s a hard issue. Not a lot of people plan for it, by the time they have it might be too late,” Brooks says. “You can end up really depleting your retirement and that could affect you, a spouse, and your loved ones.”
How to have the long-term care conversation
Talking about long-term care planning can be difficult. It’s an emotionally fraught subject matter and it may be tough for your clients to plan for a time when they’re not as independent as they are now. However, despite the nature of the conversation, it’s still an essential part of retirement planning. As their financial professional, it’s up to you to bring a steady hand to the discussion; you need to take an objective approach to talking about a tough subject. After all, it’s just as much of a financial hurdle as it is a mental and physical one. If you’re unsure how to best broach the subject, here are a few tips:
The best time to have a conversation about long-term care is before it becomes urgent. You should consider working the topic into conversation early on in your relationship with your clients. It also doesn’t have be colored with a negative connotation, you can ask them questions to gauge how much they know about the topic and learn about their ideal aging scenario.
“What’s important is to talk about how you envision spending your retirement – there’s more options today even today 10 or 20 years ago,” Brooks recommends. “Talk about how they may see themselves should they need care. Frame it as: ‘We need to make sure you’re protecting your care, protecting your assets.’”
Dispel any myths
One of the most common misunderstandings of long-term care is that it is exclusively delivered in nursing homes. In fact, only about 2% of people who receive long-term care do so in nursing home,4 and Scanlon says that’s largely due to a lack of planning. So, it’s often crucial to have an early conversation.
“The majority of long-term care is taking place in your home or a friend’s home,” Scanlon says. “The idea of long-term care planning is having a funding source to keep that control – if you want to stay in that home. It’s scary to think about your own mortality – but what’s even scarier is losing that control. Long-term care planning can help keep some of that control and maintaining some of that lifestyle.”
Put the power in the hands of your clients
Understand that this might be difficult for some people to talk about — nobody likes discussing their mortality. At the same time, you should lay out clearly that these are important choices to make. Brooks recommends framing it in a more positive way can pay off.
“There are situations where they receive quality care and maintain independence,” he says. “By empowering folks to make these decisions you’re really putting yourself ahead of the game. Empowering conversations rather than focusing on the negativities: “You’re making decisions not only for yourself but for your family.’”
Scanlon agrees, saying that it is often the simple act of asking your clients can make a huge difference.
“Don’t assume anything, don’t assume your clients understand long-term care in general,” he says. “Never lead with the solution, make sure your clients understand the challenge. Ask them what they know about it and how they want their situation to be the same or different.”
Don’t forget the finances
Make sure you’re prepared to answer any questions they have about how much long-term care may cost, after all, you are one of the people they trust most for financial guidance.
“Financial planners need to make them aware – the availability of high-quality care is going to be costly – you can go through $1 million very quickly.” Brooks says. “By planning now, it makes it less likely that you have to make uncomfortable choices or be forced into tough decisions later down the road.”
This discussion is also essential because financial professionals need to know whether the assets their clients hold with them are part of the funding source. Once that is established, then you can talk about the logistics of the solutions.
Starting the conversation about long-term care is often just the first step. As a financial professional, you should come prepared with concrete steps for your clients to take so they’re ready to cover the costs of care if they eventually have. There are many helpful long-term care resources available to you. For example, you can show your clients how to pay for their long-term care expenses by demonstrating how certain annuity products5 can be customized to meet their needs.