Advisors are aware of the financial challenges that longevity poses for their clients’ retirement prospects. Americans are living longer and have to plan for longer retirements.
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There are some emotional aspects to longevity that some advisors and clients may be overlooking, though, according to Michael Coelho, managing director at SageView Advisory Group.
“Many aspects of it are a little depressing to think about,” Coelho said during a webinar for the Excel 401(k) Digital Series, but it’s important to raise these issues to help clients prepare.
“The more we as advisors, as trusted consultants, are able to help our clients to take a realistic look at what’s ahead of them, what they need to be thinking about, and what longevity looks like for them, I think it’s going to put us in a great place to be able to help and consult,” he said.
Preparing emotionally for longevity. Coelho pointed out that it’s not just about being alive longer; people are living better, with higher qualities of life and better health than prior generations.
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Health care costs. It’s not enough to be proactive about staying healthy, he said. Healthier retirees will spend more on health care “because they’re around longer. … They are going to incur higher and higher health care costs. So that out-of-pocket health care spending increases.”
Loneliness. At age 85, women are twice as likely to be living alone than men. Coelho pointed out that even when women do predecease their husbands, just 20% of men will be widowers for 10 years or more, compared to half of women who will be alone for a similar duration.
He encourages advisors to help their clients think about “what does that look like, and how are decisions made and quality of life.”
This is an especially important topic when one partner was responsible for the majority of the family finances.
“We have seen a lot of underequipped surviving spouses faced with some pretty tough financial situations who are already dealing with loss,” Coelho said.
Chronic illness. Half of men and three out of five women might need long-term care at some point in their lives, Coelho said. Most long-term care is provided at home, usually by families, but he urged advisors to help their clients plan for at least 90 days of care.
He pointed out that chronic illness isn’t the same as getting a diagnosis for a serious condition. Cancer, heart attacks and accidents may not result in a chronic illness that requires ongoing care, but dementia, and even arthritis could leave an individual unable to do certain everyday tasks on their own.
Legacy. Thinking about longevity also means thinking about the legacy that clients want to leave. Whether it’s preserving photos and videos, or passing down cherished possessions, the best time to think about these things is before illness forces you to.
“It’s a morbid conversation to have with your kids, but I think it’s one that absolutely should happen so that there is a clear understanding of what the [client’s] wishes are,” he said.
He added that legacy isn’t just an inheritance or family heirlooms, but “your values, beliefs, those ethical and spiritual beliefs that you want to pass down. … It’s important to integrate those as well.”