How Advisors Can Take the Fear Out of Long-Term Care Planning

Long-term care conversations often follow a challenging path. Many financial advisors hesitate to bring up the topic because it involves discussing clients’ mortality, as well as potential physical and financial dependence. It is an emotional and often overwhelming subject.

Women historically bear the brunt of long-term care responsibilities. They tend to live longer than their male counterparts and also care for their aging parents. Meanwhile, the number of Americans age 75 and older is projected to more than double by 2040, according to data from the U.S. Census Bureau. A daughter or son suddenly being thrust into a caregiving role can create tension among family members and may stall the caregiver’s career and retirement plans.

Financial advisors miss an important opportunity to provide real value to clients when they fail to raise the topic of long-term care. A longevity map can help clients be better prepared to live gracefully and discover private moments with their family members that ease the aging transition.

The most important step in the planning process is to proactively create this longevity map while the client is still in good health. This gives the senior control over decisions about long-term care well before it is needed. It’s human nature for seniors to be more content if they are in control of decisions, even if they don’t necessarily like the choices presented.

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The Longevity Map: Framing the Conversation Around Long-Term Care

As an advisor, you can begin the conversation by talking about longevity in general. Although life expectancy dropped in 2020, largely due to COVID-19, typical Americans will still easily live longer than their predecessors did. Over time, physical and mental abilities naturally slow and can become dysfunctional.

A longevity map begins with a series of questions regarding preferences:

— If you were no longer able to walk with confidence, would you prefer to use a cane or a wheeled buggy for additional balance?

— If you were to require assistance with your personal needs, would you prefer to have your children assist you or engage a professional?

— If you would want to remain in your home for as long as possible, what renovations or repairs should we focus on first to make it function well?

— Is it more important to you to be close to family or to maintain your current social circle of friends?

Positive word choice is important to convey the client’s current health, realistic options and ability to choose the solutions he or she prefers. The answers to these questions will form a map that the caregiver can refer to often.

[READ: Q&A: Women and Estate Planning.]

Memorializing Long-Term Care Decisions

When the day arrives that your client reaches the first hurdle, such as becoming unable to clean the house easily, the caregiver can refer to the map and help the senior recall that the stated preference was to move into a smaller living space rather than move in with children.

Because the senior has made these choices personally, remembering the logic behind the decision will reduce the tensions that invariably flare during major life changes. It can also soothe arguments about current arrangements. For example, a son or daughter could say, “Mom, if you no longer want your sister to live with you because you are not getting along, then we will want to go look at the assisted living communities you liked as your next option.” The parent may realize that she is not ready to take the next step and decide to mend fences in her current living arrangement.

Funding a Long-Term Care Plan

Once your client has a decision tree in place, you will need to create a companion plan to fund each choice. Assets may need to be realigned in order to make necessary updates to the primary residence or to reserve space within a preferred community, for example. High health care costs and financial mistakes due to cognitive decline can be particularly devastating to a portfolio without advance planning.

If your client is healthy, consider long-term care insurance as a funding option. Hybrid policies can reallocate and leverage a lump sum of money from a certificate of deposit, for example. Traditional and hybrid long-term care policies can also be funded annually, quarterly or monthly. They can include protection against inflation as well as a concierge that can help steer the family through the myriad senior resources that may be needed. An astute advisor should collaborate with a long-term care insurance specialist to assess the fine details of any policy.

Revising the Longevity Map

Circumstances change frequently with seniors. They may live longer than expected, or financial assets may become depleted. Caregivers may no longer be available due to a job loss, relocation or their own personal medical issues. If family members are going to combine funds and living arrangements, contingency plans are especially important.

It is vital that the longevity map is refreshed annually. This review can be a more informal conversation, encouraging clients to talk about family, evolving preferences and the limitations they may be experiencing in their daily routine.

An advisor can draw the expected caregivers into the conversation with the client’s permission. This puts the client’s needs front and center. The family also sees the value and ease that the advisor has brought to a difficult topic, enabling the advisor to create a multigenerational account.

[READ: What Advisors Should Know About SLATs.]

Benefits of Longevity Mapping

Seniors have long bemoaned the idea of becoming a burden to their children. Children cringe as the roles are reversed, especially if the caregiver is caring for a senior as well as their own children. All of this feels emotionally fraught and heavy.

Proactive planning while seniors are thriving opens up the opportunity for a reservoir of quiet courage for all parties. Being able to calmly contemplate their preferences removes the fear of the unknown, especially when they understand that they can revise the longevity map.

The emotional benefits of longevity mapping include:

— Aging parents maintain decision-making over their most personal needs or can feel secure that they have designated a trusted person to do so on their behalf. This allows them to focus more thoughtfully on how to best designate their legacy to the people for whom it would mean the most.

— Potential family caregivers get a forward glimpse at how their life would change should their parent’s capabilities change. Instead of being in denial, they can begin looking realistically at how to keep their parent healthy and safe, while not losing their own identity in the process.

— Both parties do not have to waste energy adapting to inevitable changes. Rather, they can embrace the intimate, bonding moments these final chapters create.

This planning literally turns the aging process from potential emotional carnage to a guidebook for preserving an aging person’s most important need, their dignity, while passing meaning and depth to the next generations.

Aging does not have to be a dark and scary journey with constant worry about what is around the next corner. With longevity mapping, it can be a normal, peaceful passage through the golden years.

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