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Financial advisors: Your clients have anxiety around healthcare costs in retirement

 

How expensive can healthcare really be in retirement?

How expensive can healthcare really be in retirement? These sentiments are reflected in other surveys as well. According to a 2014 Merrill Lynch study, Health and Retirement: Planning for the Great Unknown, 41 percent of Americans pinpoint future healthcare costs as their greatest financial concern.

Surprisingly, that number jumps to 54 percent and 60 percent for pre-retirees with over $250K and $5 million, respectively. Despite these worries, only 15 percent of pre-retirees have planned for these expenses.

Why are these pre-retirees so worried? How expensive can healthcare really be in retirement? Many studies attempt to estimate how much retirees can expect to spend, and they estimate healthcare could cost between $200K and $700K per couple. No matter how you cut it, healthcare is material to the financial well-being of most Americans.


Financial advisors are taking action. Because healthcare is becoming more and more material to the financial health of their clients, some are even adding comprehensive healthcare guidance to their financial planning process. Based on Bernard's conversations with hundreds of advisors across the country in 2017, we’ve found that they address healthcare planning in one or more of the following six ways.

1. Help clients estimate expected costs. Much of the fear around healthcare costs in retirement stems from not knowing what to expect, so giving clients some insight around this can help them better plan for retirement. Mark G. Smith, president of Vision Wealth Planning in Virginia, states that, “The absolute most important issue is making sure future retirees have a handle on estimates of how much healthcare will cost.”

2. Refer to insurance salesperson. Fewer and fewer people are raising their hands to help people find the right health insurance. However, some advisors still have a trusted agent to which they refer clients.

3. Set up formal partnership with a health insurance sales organization. In June of this year, Raymond James announced that they will refer their over-65 clients to HPOne, a Connecticut-based Medicare brokerage. HPOne advisors help clients by answering Medicare questions, and they get paid when they sell a Medicare insurance policy.

4. Develop competency in-house. Many financial advisors also have health insurance licenses, and some feel confident in providing this type of advice to their clients. Some firms even hire insurance agents to do this work full time.

5. Add a healthcare extension. Some financial advisors are hiring a health insurance advisory firm, like Bernard Health, on behalf of their clients to provide noncommissioned healthcare planning advice. Though this option costs money, advisors see a healthcare extension as not only a way to provide current clients with the advice they need, but also as a way to win new business.

6. Do nothing. Many financial advisors have built a successful business around growing their clients' wealth and they don’t want to rock the boat. Like healthcare, housing costs are also on the rise, and yet most financial advisors don’t provide their clients with real estate advice. Why is healthcare any different?

If you’d like to see if a healthcare extension is a good fit for your firm, click the link below.

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