As financial advisors, we have to prepare our clients for the three phases of retirement with a frank discussion about their long-term care (LTC) plans. I’ve found that an effective approach is to tell clients, “I feel it is my responsibility to help you plan for all three phases of your retirement: the go-go, slow-go and the no-go years.” This one simple phrase can start a dialogue about the need to plan ahead for a decline in their health and income.
Phase 1: The go-go years
As the name implies, this phase represents the most active retirement years — when clients are physically and mentally capable of enjoying the things they’ve aspired to do. Those who have worked hard the majority of their adult life look forward to living the “retirement dream,” whether that means golfing, fishing or traveling. To help them realize and finance these dreams, it is our responsibility to ensure our clients are investing properly today to safeguard their income. While people typically spend more income in the early retirement years, it pales next to the expenses that can be spent in the next two phases.
Phase 2: The slow-go years
As clients age, mobility becomes limited and a majority of their time is spent engaged in activities less physically taxing. Health issues often begin surfacing, which can make long-term-care insurance (LTCI) unattainable. Even if a client is still insurable from a health standpoint, the cost of LTCI in the slow-go years can limit benefit options and choices. Investments become more conservative and the clients more frugal.
Phase 3: The no-go years
It’s no surprise that time and age limit people’s mental and physical abilities, often forcing them into a much more sedentary lifestyle. In this phase, some level of support may be required from family or medical professionals. At this point, people will look to their advisors for guidance in how they will now pay for this care. If their financial or insurance professional had the foresight to put an LTCI plan in place, the advisor can explain what they need to do to start receiving benefits from their policy.
As health care continues to make advances, more of us will spend more time than we ever anticipated in the slow-go and no-go years. It is our responsibility as advisors to proactively communicate to clients the importance of planning early for a successful tomorrow.
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