Longevity & The Cost of Aging

A Guest Post by Author Mike Padawer


In his article found below, my good friend, Mike Padawer, discusses rising healthcare costs and growing long-term care expenses for retirees.  He points out that, though, awareness is growing, minimal anticipatory action is being taken.  This spells trouble for more than just Boomers.  The solution?  Aging Boomers (and their advisors) need to take financial responsibility by including longevity and the cost of aging in retirement planning. You can read or buy Mike’s newest book on long-term care–What’s the Deal with Long Term Care-or view a Webinar he recorded with us: The Underestimated Cost of Long Term Care in Retirement Income Planning: 5 Simple Strategies Every Advisor Should Know.

Longer Life Expectancy

The average Life Expectancy of those signing the Declaration of Independence was only 36 years. Today, more than 10,000 “Baby Boomers” are turning 65 every day; with a life expectancy – or Longevity – approaching 80 YEARS! It’s not surprising, then, that discussions about retirement and financial planning must address the importance of planning for healthcare cost in retirement.

Higher Healthcare Costs

Fidelity recently released their annual study on healthcare costs in retirement, and they indicated that

  • “a 65-year-old couple retiring in 2016 will need an estimated $260,000 to cover health care costs in retirement, according to Fidelity’s Retiree Health Care Cost Estimate. This is a 6% increase over last year’s estimate of $245,000 and the highest estimate since calculations began in 2002.”
  • “In recent years, the health care industry has experienced a period of historically low spending levels, due to a range of factors including a period of slow economic growth,” said Adam Stavisky, senior vice president, Fidelity Benefits Consulting.
  • “Looking forward, we expect health care spending to pick up from where it’s been in recent years, though less than what we’ve seen over the last few decades.”

Higher Long-Term Care Expenses

For the first time, the Fidelity report also examined Long-Term Care expenses in retirement and concluded,

a 65-year-old couple would need $130,000, in addition to savings for retiree medical expenses, to insure against long-term care expenses.”

Fidelity’s analysis falls in line with the U.S. Department of Health and Human Services which expects

70% of people turning age 65 can expect to use some form of long-term care during their lives.

With respect to Long-Term Care Planning, a study by the LIFE Foundation, a nonprofit consumer education company, shows that even though awareness is on the rise, consumers aren’t taking enough action.

Seventy one percent of respondents believe “50 to 80 percent of adults 65 and older will need long-term care services at some point.”  However, it noted that “just 8 million Americans have a Long-Term Care Plan, even though 100 million are older than 50.

A Strain on the Economy

Consider this article, entitled “Do Boomers Have The Guts And Wisdom To Course Correct Our Aging Nation?,” by Ken Dychtwald, author, gerontologist, psychologist and president of The premise is that as Americans “migrate into elderhood, our huge numbers and vast influence over the economy, social policy and the culture in general will transform America into a ‘gerontocracy.’ And the growing costs of our anticipated illnesses and entitlements will further strain our economy.”

Mr. Dychtwald then lays out the major issues he sees our country facing and his ideas for addressing them–making it fairly clear the responsibility for planning falls primarily on the individual or family.

Americans already have significant financial responsibilities and tend to dismiss the “cost of aging” in their planning.   Fortunately though, the tide is beginning to change as the reality of government limitations and simple economics are becoming better understood.  Individuals and families are starting to plan for Longevity earlier in life, as doing so can significantly lower planning costs while they’re young and in better health.

Regardless of the planning you and/or your clients have done to date, we encourage you to adequately address Longevity & The Cost of Aging as part of that comprehensive planning.

Don Graves, RICP®, CLTC®, Certified Senior Advisor, CSA®
Don Graves, RICP® is a Retirement Income Certified Professional and one of the Nation’s Leading Educators on the Emerging Role of Reverse Mortgages in Retirement Income Planning. He is president and founder of the HECM Institute for Housing Wealth Studies and an adjunct professor of Retirement Income at The American College of Financial Services. He has helped tens of thousands of Advisors as well as more than 3,000 personal clients since the year 2000
Don Graves, RICP®, CLTC®, Certified Senior Advisor, CSA®
Don Graves, RICP®, CLTC®, Certified Senior Advisor, CSA®

Categories: Advisors, Financial, Financial Planning, General/Misc, Health Care


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