The rising cost of health care is top of mind for many Americans today. In fact, studies have shown the vast majority are very concerned—if not fearful—of it.
Yet, most people hesitate to talk with financial advisors about the topic, leading to nothing but prolonged anxiety over the issue.
A recent survey of advisors by the Nationwide Retirement Institute suggests that advisors could do more to foster discussions with clients about medical costs. Data also reveal why some advisors may not have approached the topic yet.
They had no idea so many of their clients were worried about it.
According to the survey, over three-quarters (76 percent) of advisors are under the impression their clients feel prepared to cover health care costs above and beyond what Medicare will pay. But when you ask the clients, 35 percent disagree.
“Our survey reveals a gap between what advisors think and what many of their clients think when it comes to health care costs in retirement,” Ron Ransom, senior vice president of integrated relationship strategies for Nationwide, said in a statement. “Advisors can build their confidence by having more conversations about their plan to cover those health care costs.”
“More conversations,” or perhaps delving deeper into the subject, may be the key.
Data certainly suggest advisors have spoken with clients about health care costs to some degree. Among those surveyed, nearly three-quarters (72 percent) of advisors admit that clients are frequently concerned about medical costs in retirement and over three out of five advisors think their clients expect to be advised on the topic.
Further, the “survey finds that 65 percent of their clients have a plan to pay for health care costs beyond what Medicare covers and 76 percent of advisors say their clients are confident their plan has those costs covered,” according to Nationwide’s report.
But again, when asked, clients told a different story.
Nationwide Retirement Institute’s survey of consumers discovered that 63 percent of future retirees are still worried about not having saved enough to cover unplanned medical expenses.
In fact, even the affluent are worried.
Among adults over 50 with a household income above $150,000, nearly three out of four (73 percent) respondents “list out-of-control health care costs as one of their top fears in retirement,” the report noted. What’s more, 35 percent of those with an advisor “say they are not confident in their plan for paying for health care costs beyond what Medicare pays.”
What gives?
Data imply that the nature of the subject may be getting in the way of fully transparent client-advisor discussions.
Over half (52 percent) of clients report that they haven’t talked with their financial advisor about health care costs. The most common reason cited for not doing so? More than a third (37 percent) “consider it a personal issue.”
When asked outright, advisors admit it’s a problem. Fully, 75 percent say it is at least somewhat challenging to discuss how much clients should expect to spend on medical care.
“While often considered personal, you can’t adequately plan for health care costs without discussing the topic,” Ransom said. “Balancing health care costs with a lifestyle goals conversation may make it easier for the advisor to best address their client’s anticipated or unanticipated needs in retirement.”
The report suggests using health care cost assessment tools to encourage further discussion and better planning, which should in turn improve Americans’ financial confidence and retirement outlook.