Discussing the “Health Care Costs in
Retirement” Dilemma
By John Carter
Having discussions about health care costs in retirement is fast be- coming a critical part of the retirement advisory profession. And it should be. In a new Nationwide Financial survey, nearly three
in four advisors say many of their clients don’t seem to realize how crucial it is to plan for health care costs in retirement and nearly half don’t
have a plan to pay for those costs.
According to our Harris Interactive survey of 501 financial advisors, 58 percent of advisors say their clients really want to talk about
their health care costs in retirement. But what about the 40 percent
of advisors that say their clients are only “somewhat interested” in
discussing the subject?
Many advisors take a passive role with clients reluctant to have a
conversation around health care costs. Most say they remind them of
the importance of the discussion before switching topics and 37 per-
cent say they try to urge them to have the discussion before switching
topics. But only four percent insist on having “the talk.”
More than half of advisors we surveyed admit it is “challenging” to
“very challenging” to discuss information about their clients’ health.
This may be because discussing health care costs in retirement with
clients is new territory for many financial advisors and too few say
they have the knowledge and resources to do it well.
However, 80 percent of financial advisors say they know if they can
have more informed discussions, their clients will stay with them.
Take the initiative
Retirees today face what may seem to be insurmountable challenges in paying for their future out-of-pocket health care costs. Nearly
half the people in a Nationwide Financial consumer poll earlier this
year, told us they are “terrified” of what heath care costs will do to
their retirement plans. And what do people do when they are terrified?
They freeze. They don’t do anything.
It’s no wonder why people are scared. Out-of-pocket health care
costs for the average 65-year-old couple can reach $240,000 over 20
years of retirement. 1 And that doesn’t even account for long term care.
People living to age 65 have a 70 percent chance of needing some
type of long term care in their lifetime. 2 The average cost per year
for a nursing home is projected to be $265,000 by 2030—and that’s
not even for a private room. 3
That’s why it’s important for advisors to take the initiative and
bring up the topic of health care costs in retirement with reluctant
clients. An aging nation needs our help understanding how out-of-pocket health care costs—including long term care—will affect their
retirement. If plans are not made now, what’s coming is a crisis for
many Americans.
One of the problems that may be keeping advisors from having
these discussions is that 43 percent say they do not have the proper
solutions or proper tools they need to estimate health care costs in
retirement. Often, advisors will use their client’s assumptions of their
future health care costs to develop a retirement income plan. However,
four in five clients underestimate their health care costs.
The good news is that advisors are seeking the knowledge and
resources to better help their clients plan for health care costs in retirement. To help simplify this complicated issue and encourage these
discussions, Nationwide Financial launched the Personal Health Care
Assessment program to help advisors estimate their clients’ health
care expenses in retirement.
The program uses proprietary health risk analysis and up-to-date
actuarial cost data such as personal health and lifestyle information,
health care costs, actuarial data and medical coverage to provide a
meaningful, personalized cost estimate that will help clients plan for
medical expenses.
It’s much easier to have these difficult conversations when, instead
of guessing, advisors can use a tool to provide a fact-based cost estimate based on their clients’ health risk and lifestyle and build a
plan from there.
if you don’t, Another will
Bringing up the subject of health care costs in retirement may be
difficult but may be one of the most important discussions clients will
ever have with their financial professional.
While many clients avoid the subject like a contagious disease,
advisors who shy away from the subject are doing a disservice for
their clients. In fact, 49 percent of the advisors we surveyed believe
they could be liable for not properly preparing their clients for the
costs of health care in retirement.
Advisors face the risk of losing customers if they aren’t able to talk
about future health care costs with their clients. But this should also
be seen as an opportunity to take advantage of this growing trend
and help your customers better prepare for retirement. With careful
thought put into the approach and proposed solutions, an outcome can
be had that will leave your clients feeling good about their retirement
plan and about your expertise and professionalism. •
The views and opinions expressed here are those of the writer and do not necessarily
represent the opinions of Nationwide.
LTCI’s Revolutionary Evolution, Nov. 1, 2011, Life Insurance Selling 1.
Fidelity Investments, “The Increasing Cost of Health Care Upon Retirement,” 2012 2.
Life and Health Advisor, “Don’t Let Your Clients Get Blindsided By Unexpected LTC Costs,” 2010 3.
John Carter is President of Distributions and Sales at Nationawide Financial
NFM-11075AO
