6 Tips to Kickstart Succession Planning with Your Business Owner Clients
Here are 6 tips you can share with your business owner clients to help kickstart their succession planning.
Long-term Care (LTC) is a need that will affect the majority of Americans aged 65 and older. However, long-term care is not just a story that affects retirees in general – it is the story of a double-edged sword that affects women specifically.
Twelve years ago, I wrote an article about the challenges that women face with regard to long-term care. However, over the last decade there has been more focus on helping women specifically with their financial goals – so I thought it might be time to look back and see what has changed regarding the state of long-term care, and any changes that could affect women planning for and living in retirement.
The average age to begin caregiving responsibilities has gotten younger in the past decade and is now 47 years old1, an age in which people are still working. There is a unique opportunity for financial professionals to help women who foresee the potential of being a caregiver in the future – and with advanced thought and planning, help them ease financial challenges they may face as caregivers.
Twelve years ago, Family Caregiver Alliance reported that 75% or more of caregivers were women, and women continue to be the majority of non-paid caregivers – primarily to spouses and parents. Today, men are more involved with caregiving and now comprise 39% of caregivers1. However, men are more likely to help with tasks such as paying bills and taking their loved ones to the doctor, while women caregivers are still more likely to be faced with providing the more difficult tasks such as personal care. It is interesting to note that men are more likely to be a caregiver if younger. Men between ages 18 to 49 comprise 42% of adult caregivers, while men between ages 50 to 64 only comprise 35% of caregivers1.
Twelve years ago, it was estimated that the cost of balancing work with caregiving could cost a woman an average of $565,000 over her lifetime in lost wages, Social Security, and pension benefits2. Today, that figure is around $324,000, which is still a substantial financial loss3.
A few explanations for the reduction in the loss of income could be that:1
However, despite many of the above improvements, some employees are hesitant to disclose caregiver status to their supervisor unless it would result in qualifying for caregiver benefits. Top reasons not to disclose caregiving status were
It is also interesting to note that benefits that could be of help to caregivers were likely more available to men, younger employees, and persons of higher education and income4.
Caregiving is a major challenge for many Americans, which has resulted in more studies designed to understand the effects of and changes in caregiving. In addition, there is more support available than 12 years ago to help caregivers handle their challenges, including online help that is far more advanced than it was in the past. For example:
However, some online opportunities available to caregivers are also being missed or not utilized
Another change we have seen over the last 12 years is that people receiving home-based care from a loved one are now more likely to be living in the same home as their caregiver1.
But then some things don’t change. Men continue to be more likely to receive care at home – primarily because their spouse is there to help care for them11. That old adage “men die married” still holds true for the majority of men11. One reason that women represent over 70% of residents in facilities may be that their husbands have passed away – most of whom received care at home – leaving the widowed women without a spouse to care for them11. Some women will choose to receive home-based care from family or a home health care service, while those with means may choose facility care offering more socialization such as a CCRC (continuing care retirement community). Other women may have no choice – nursing home care being their only alternative due to health reasons or reliance on Medicaid.
For years, LTC insurance companies have reported that just over 50% of claims began with home health care5. However, the pandemic has negatively impacted the occupancy of assisted living facilities, memory care facilities, and nursing homes while the demand for home health care has risen sharply.6 It will be interesting to see if in-home care reverts back to the old percentages if and when the pandemic-based risks and fears of facility care are eradicated.
There are more choices for care services than there were twelve years ago. More assisted living facilities, continuing care retirement communities (CCRC), and even alternative care services exist now, providing choices for more customized care.
For example: A individual or couple might want to size down and move into the independent living section of a CCRC where they can enjoy socialization, activities, and no more upkeep of a home. But should a need for help with their care arise, they may be able to contract with the CCRC directly for needed care services to be provided in their living unit, which in turn may allow them to remain in their current living situation longer, and delay or avoid going to assisted living.
The expansion of cash indemnity policies, where the insurance company places no restrictions on how LTC benefits are spent, have expanded the opportunity to use LTC benefits for alternative care services and has also made family care a more palatable option.
The last twelve years have seen many positive changes in the LTC industry that have been helpful to women, but in the end, it is still a double-edged sword women should plan for – both as a caregiver and as the cared-for.
While the last 12 years have continued to see a downward shift in traditional LTC sales and the number of insurance companies selling traditional LTC products, there are also more choices than ever before to help clients find the right LTC funding solution. More companies are offering linked benefit LTC policies (also known as “hybrid” or “asset based”), which offers many of the popular features of traditional LTC policies, but with premium protection and guarantees. LTC riders on life insurance are also now abundant, allowing people to plan for the life insurance needs they have now with a policy that can transition later to LTC coverage to help pay for future LTC needs.
Long-term care protection is something everyone should consider, and it is especially important for a couple to understand that coverage for the husband is just as important as for the wife. LTC benefits received from a policy on the husband can be used to pay for the heavy physical caregiving a husband may need. This can help preserve the health and well-being of the wife, leaving her in a better place to attend to other caregiving tasks for her husband as well as remain engaged with family and friends.
As America continues to age, the challenges of long-term care will become more critical than ever before. By helping clients now in planning for a potential LTC event and how to help pay for it, financial professionals can help ease the physical, financial, and emotional stress faced by caregivers and care recipients – both more likely to be women.
2020 Report, Caregiving in the U.S. – AARP and National Alliance for Caregiving
American Association for Long-term Care Insurance (AALTCI) 2009
Manhattan Institute – “Taking the Strain Off Medicaid’s Long-Term Care Program”, Chris Pope September 10, 2020
Rosalyn Carter Institute for Caregivers – “Working While Caring: A National Survey of Caregiver Stress in the U.S. Workforce” – September 28, 2021
Jesse Slome, American Association of Long Term Care Insurance Study, AALTCI – November 2020
McKnights Senior Living – January 8, 2021, “Pandemic drives senior living occupancy to record lows”
Family Caregiver Alliance: “Caregiver Statistics: Demographics”- April 17, 2019
“Medicare and You, 2019” – U.S. Department of Health and Human Services
2010 U.S Census Report
American Association for Long-term Care Insurance, AALTCI January 2019
American Association for Long-term Care Insurance, AALTCI, “Long Term Care – Important Information for Women”, 2022