Why your clients should be planning for healthcare costs in retirement

By Adam Rex

Retirement planning is a highly personal experience. We ask clients to consider their goals, values and family as they dream of what they want life after their career to look like.

While some of the planning is exciting, like thinking of trips they can take or spending extra time with family, some planning requires exploring the what-ifs of retirement. One consideration I focus on with clients is medical needs.

My goal is to ensure clients understand how they will be able to afford both extensive care and routine doctor visits through the remainder of their lives. Solutions like long-term care (LTC) insurance, retirement investments and life insurance can all help mitigate risks from medical costs in retirement.

Three LTC options

As you establish your client’s anticipated needs, there are three options available to help them prepare:

1. “Self-Insure”: clients can build up additional retirement savings or other investments as needed for both long-term and acute medical needs. This approach allows clients to maintain control over their assets but carries the risk of market downturns affecting their savings.

2. Transfer Risk: In many cases, policies like life insurance, annuities or long-term care insurance will provide security in cases of long-term medical needs if the client has the funds available to cover premium costs. LTC specifically provides the policy holder assistance when seeking care like nursing homes, memory facilities and more. This is an option I often favor to prepare clients for any form of extended care in retirement.

3. Medicare, Medicaid and other programs: In some cases, the client either is focused on other priorities or lacks the capital to cover costs and will need to review options from government assistance programs.

Understand the whole picture

For any of these options to be effective, the client needs to understand their benefits and drawbacks. Explaining the solutions in easily understandable terms is especially necessary before presenting your recommendations.

As you build trust with your clients, perform risk assessments as it pertains to their experiences with insurance and their overall health. These types of questions may be uncomfortable, and clients are less inclined to discuss negative what-ifs like what could happen if they develop a terminal or chronic illness.

Leverage emotional intelligence to kindly guide your client through these difficult questions and remind them this conversation will benefit them in the long run. For example, a client may want to pursue long-term care insurance to cover care facility costs later in life, but a chronic health condition could prevent them from being approved for a policy.

It’s important to understand these details to provide customized advice that empowers your clients to feel in charge of their future. Being denied a policy cannot always be prevented, but the trust between you and your client will help them feel valued.

Take time in your retirement planning to illustrate why a plan for medical expenses, especially long-term care, is important to have. People come to you for advice on the things they can’t get from ChatGPT – a person who will listen to their story and guide them down the best path for them. Helping clients understand the ins and outs of long-term care and why it matters to them provides a sense of security for the client and shows why they are able to put their trust in you.

About the Author
Adam T. Rex, CFP®, AIF ®, is a 15-year qualifying MDRT member with two Top of the Table honors. Adam graduated from James Madison University with a BBA in Information Systems, then worked for Ernst & Young outside of Washington, D.C., before joining his family’s business in 2008. Adam is a member of the Financial Services Institute and a former member of the executive board for the United Way’s Young Leaders Society. In addition, Adam serves in several philanthropic and church-based organizations.