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Three steps to a better health care planning conversation

JUL. 31, 2019

Change is stressful. That’s true throughout life as we move from one phase to the next. We’ll often feel the apprehension build even as we’re preparing for a transition, and retirement is no exception. That was confirmed by the 2019 Health Care Consumer Survey conducted by the Nationwide Retirement Institute®. It showed future retirees are much more likely to feel stressed about retirement-related issues. And their top concern: health care costs. 76% of future retirees are somewhat or very concerned about health care costs, but most of them aren’t even planning to talk to their financial advisor about health care. So set yourself apart — and reduce your clients’ stress — by bringing it up yourself. These three steps should make it easier.

Step 1: Prepare yourself ahead of time

13% of future retirees said they don’t think financial advisors know enough about health care costs in retirement. Knowing that perception is out there, it’s best to make sure you’re prepared before you talk to your clients, so check out the resources we developed for you. You’re likely to find what you need, whether you want to brush up on health care basics or dive deeper into health savings accounts or Medicare.

Step 2: Start the conversation with empathy

Most of your clients probably won’t bring up health care costs with you, so you’ll need to start the conversation. When the time is right, make sure you do it with grace and understanding. Future retirees who haven’t spoken to a financial advisor about health care issues cite some reasons that underscore why empathy is so important:

  • Prefer to discuss with my spouse (21%) or children (5%)
  • It’s a personal issue (19%)
  • Don’t want financial advisor to know about my health issues (12%)

Step 3: Provide real cost estimates

While certain aspects of retirement planning, such as investing, income and taxes, are somewhat familiar to many people, potential health care costs are more of a mystery. 47% of the future retirees we surveyed couldn’t even estimate what their annual health care costs would be in retirement. 36% estimated between $1,000 and $5,000 annually. And $7,000 was the average estimate we received. But the average for annual health care costs is actually $10,739.1 Now, underestimating by 30% to 40% for one year is a problem, but it’s compounded when you consider the decades in retirement that many people may now see. That’s why it’s critical for you to request a health care cost assessment for your clients.

Of course, you’re not dealing with health care costs in a vacuum, so make sure to consider whether the strategy you discuss with your clients is likely to work well within a holistic retirement income plan.

  • 1

    Source: National Health Expenditures Summary Including Share of GDP, CY 1960 – 2017.

    This survey was conducted online from March 25 to April 10, 2019 to a targeted subset of the U.S. population:

    1,462 U.S. adults age 50 or older with investable assets of $50,000 or more and 516 U.S. adults age 50 or older who are caregivers. Caregiver was defined as those who have ever or are now providing paid or unpaid long-term care to a friend or family member, not through an agency, business, or nongovernmental organization. Qualified caregivers did NOT have to have investable assets of $50,000 or more. Research participants were drawn from approved research panel partners. Results are weighted to the U.S. General Online Population of adults by age by gender, race/ethnicity, education, region, household income, marital status, size of household income, retirement status, assets, and propensity to be online. Because the sample is based on those who were invited to participate in research panels (and not random), we cannot calculate estimates of theoretical sampling error.

    This information is general in nature and is not intended to be tax, legal, accounting or other professional advice. The information provided is based on current laws, which are subject to change at any time, and has not been endorsed by any government agency.

    NFM-18584AO 06/19