With people living so long these days, why haven’t financial planners been more focused on how to help clients who are planning for retirement specifically plan for longevity? The more sobering side of longevity, that is.
Having worked for two major financial institutions for several years with a heavy focus and vast knowledge base in retirement planning, I can attest that the emphasis with clients nearing retirement was primarily on their income and spending prior to retirement, and how best to replace that income. While I agree that may be an obvious starting point, it does not begin to address the potential shortfalls those clients’ assets could be headed for as they face astronomical rising health care costs throughout their retirement years. Thus the need to address this in client’s financial plans.
Here are just a few of those sobering statistics :
Having the cost of long term care modeled into a financial plan can be an invaluable first step in ensuring the success of one’s retirement plan, and one that every financial planner truly should be taking with investors. Once that awareness is created as to how much health care potentially would cost, the financial plan is then adjusted accordingly to show what steps the investor can take today to ensure that their retirement nest egg is protected from being eroded by unanticipated health care costs in the future.
A cautionary note: Long term care costs can take a major toll on an individual’s portfolio, and combined with other retirement goals, is not always a cost that can be met without having a shortfall of assets in the long run. A thorough financial plan should prioritize one’s financial goals, including health care, and determine how realistic these goals are (the probability that these goals will, or can be reached) with respect to one’s assets and other income needs. The plan should also present alternative planning scenarios in the event of shortfalls.
With people living longer today, there’s no question as to whether or not health care costs are a necessary expense that should be incorporated into every financial plan. The real question is: how well equipped is your financial plan to handle those costs when they arise?
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Our boutique-style firm has an investment philosophy is both prudent and value driven. We combine research from the largest firms on Wall Street with three decades of market experience to provide strategic, tactical and dynamic investment management. Compass Asset Management Group, LLC delivers personalized financial planning, estate planning and investment management advice in a private setting with a high degree of sensitivity to your concerns and objectives. Our goal is to exceed yours expectations by listening closely, understanding deeply and communicating well through frequent, personal consultations entirely focused on your financial goals.
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Please note that the content of this blog does not constitute tax advice and is only intended for the educational purpose of the reader. Please consult your tax advisor for specifics regarding your circumstances.
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Steven M DiGregorio is President of Compass Asset Management Group, LLC and an Investment Advisor Representative with Spire Wealth Management, LLC a Federally Registered Investment Advisory Firm. Securities offered through an affiliated company Spire Securities, LLC a Registered Broker/Dealer and member FINRA/SIPC.
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