According to the Urban Institute, the population of Americans age 65 and older is on track to increase nearly 50% in the next 15 years, to more than 80 million. That means demand for long-term care will almost certainly rise, too, and it won’t come cheap. Advisors who fail to account for the potential drain on retirement outcomes are distorting their projections, experts warn, and setting their clients up for failure.
Yet how can advisors better prepare retirees for such an overwhelming liability?
“Planning for retirement must include consideration of long-term-care expenses, with enough earmarked to cover at least one spouse for no less than $300,000 to $450,000,” said Amy Arnett, vice president of insurance solutions at DPL Financial Partners in Louisville, Ky.
Even if clients can’t afford to set aside that much, a separate long-term-care allocation will only strengthen a retirement plan and protect other sources of retirement income from being tapped to cover ill health, she said. “Some people think their family members will be able to step in, but, depending on the situation, care needs can quickly overwhelm what a family is able to provide—physically, emotionally and financially,” she said.