Traditionally, advisors have been conscientious in helping clients prepare financially for anticipated major life events, such as the various considerations in retirement planning, or perhaps options for meeting educational objectives for children or grandchildren.
In general, however, our profession hasn’t devoted equal attention to planning and preparing clients for the inevitable process of aging.
This is true despite the fact that consequences of potential future health problems ranks highly among concerns for those planning retirement.
By far, the number one question for clients facing retirement is “Will I have enough money to do the things I want throughout my retirement?” A close second is “How do I prepare for potential health care issues and their attendant financial considerations?”
As a profession, we advisors have been able to use many different tools to help address that first concern. But clients tell us that we haven’t done as good a job addressing concerns over health care issues.
When we do retirement planning, we often factor in annual cost-of-living increases in the 2 ½-to-3% range. But consider this rather astounding statistic: In the United States, medical costs have increased on average 7.76 percent annually since the 1970s1. That’s more than double our annual cost-of-living projections, and it underscores the urgency in doing a better job in helping clients prepare for future health issues.
As advisors, we are developing tools to assist us in helping clients manage this situation proactively. And that may mean involving other professionals as well as clients’ family members in creating a sound financial strategy to cope with future potential health issues -- just as we do with other areas of financial planning. My next blog will begin to describe the process for doing so.
1 Centers for Medicare & Medicaid Services, National Health Expenditure Data