Health Care Costs Are Key Topic

Discussing health care costs in retirement is new for many advisers, and few say they have the knowledge and resources to do it well.

Four in five advisers say they know being capable of having these discussions will help retain clients, according to a Nationwide Financial survey. “There are not enough advisers right now talking about future health care costs with their clients, but more will soon learn how—or risk losing customers to an adviser who can,” said John Carter, president of distribution and sales for Nationwide Financial.

Fifty-seven percent of advisers say their clients are interested in talking about their health care costs in retirement, the survey found. More than half of advisers admit it is challenging to discuss information about their clients’ health, and only 30% say they are confident in their ability to estimate their clients' health care costs in retirement.

Almost half (43%) of advisers say their clients show little interest in discussing the subject; three in four advisers say many of their clients don’t seem to realize how crucial it is to plan for health care costs in retirement and, on average, more than half don’t have a plan to pay for those costs. More than half of advisers say they remind their uninterested clients of the importance of the discussion before switching topics, and 37% say they urge them to have the discussion before switching topics. Only 4% insist on discussing it.


A future challenge for today's retirees is paying for out-of-pocket health care costs. These costs for the average 65-year-old couple can reach $240,000 over 20 years of retirement. People living to age 65 have a 70% chance of needing some type of long-term care in their lifetime. The average cost per year for a nursing home is projected to be $265,000 by 2030, not including a private room.

One problem keeping many advisers from having this discussion is that 43% say they do not have the proper solutions or tools to estimate health care costs in retirement.

“Currently, many advisers will use their clients’ assumptions of their future health care costs to develop a retirement income plan,” said Kevin McGarry, director of Nationwide Financials’ retirement income strategies. “However, four in five clients underestimate their health care costs.”

The 2012 Financial Advisors and Health Care Costs Study was conducted online within the U.S. by Harris Interactive on behalf of Nationwide between July 18 and July 25. The respondents comprised a representative sample of 501 financial advisers with at least 50% of their clients having $250,000 or more in total investable assets.