By Chris Orestis
Your clients are living longer and, for many of them, that’s a very good thing. It can mean more time with the grandchildren, more time to travel to those places they didn’t see when they were younger and more time to trying to leave a mark on the world.
But, there’s another side to longer life expectancy; the inevitable decline in health your clients probably believed would never happen to them.
For at least 70 percent of Americans, it’s the painful reality that longer life eventually leads to long-term care for themselves, a spouse or another family member. It’s the part of life that your clients likely are the most unprepared for. A recent survey by The Nationwide Retirement Institute showed respondents underestimated the cost of long-term care by more than half of the real cost for a nursing home stay (the survey also showed that 61 percent of older Americans would rather die that live in a nursing home).
This makes it critical that you talk to your clients about the financial and emotion issues around this subject. Here are three aspects of long-term care that can help your clients think about when they and their loved ones might need it and what to do about when they do:
- Recognizing the need for care: The first step in providing long-term care is identifying that a loved one needs it. As an outsider, it can seem very obvious, but for those who live with it, it can happen so slowly and insidiously that it becomes a part of everyday living. Some of the telltale signs can be easy to spot like cognitive impairment that leads to confusion or extreme forgetfulness (forgetting their keys is not usually an indication). Some of the less obvious signs can be changes in behavior, like a house that is not as tidy or organized as it once was, or has objects in odd places. Other indications that the loved one needs care include physical deterioration, such as marked weakness, loss of strength and stamina, difficulty balancing or drastic weight loss. Often, you can play a key role in giving them permission to get some help.
- When you need it, the right kind of care: When most clients think of long-term, they immediately think of nursing care in a facility with full-time staff. But, just as health tends to decline in stages, there are four types of long-term care:
- Home health care allows someone to remain in their own home while receiving care by licensed or unlicensed workers, as well as designated family members.
- Assisted living is housing for someone unable to live independently, but who just needs mid-level custodial care, medication support, lifestyle activities, transportation and meals.
- Nursing homes are for those who need higher-level skilled care.
- Finally, hospice care is for people in the final six months of life.
- How to pay for it: Here’s the traditional way you will be asked to offer your expertise, and, truth be told, it’s not any easier than the other two discussions. Most people are aware that long-term care is expensive, but, as the survey showed, few know just how costly and devastating it can be to a family’s finances. That average cost of a private room in a nursing home care for an individual in the U.S.? While, most respondents to the Nationwide survey put it at $36,400 a year, insurance provider Genworth said it was more than $97,000 for a year’s care. For a retiree relying on Social Security and savings of $163,577 – the median amount those over age 56 have saved, according to the Economic Policy Institute – it’s no wonder they wishfully guessed so low. Still, if you have a client facing the need for long-term care for themselves or a loved one, there are options to pay for it that they may not have thought about that can include using alternative sources of cash such as reverse mortgages, exchanging a life insurance policy for a tax-free long term care benefit account, cash or a lifetime income annuity. For most the last resort will be Medicaid. That public program generally provides bare-minimum resources for these services, leading to even more stress on their families.
No client wants to be a burden on their families, and yet too often families think of the issue as an overwhelming one they are afraid to ponder. You can play a crucial role to help get them out ahead of this issue before it’s too late. Decisions made ahead of time in this area can be the most important ones you help them make to avoid financial impacts that can last a lifetime.