Donovan’s title is large-case wholesaler. From his base in Mission Viejo, California, he is
tasked with providing support and expertise to retirement plan advisers and
consultants working in the market.
Donovan’s experience in the Southern California employee
benefits market includes sales positions at Assurant Employee Benefits and Sun
Life Financial. Most recently, he worked in sales at Principal Financial Group.
Securian Financial Group and its
affiliates provide financial security products for individuals and businesses
in the form of insurance, investments and retirement plans.
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In its annual survey, Nationwide Financial Retirement
Institute found that more than seven in 10 affluent Baby Boomers think the
Affordable Care Act will cover their long-term care (LTC) costs. The survey’s figures
show that Boomers’ estimates for long-term care costs dropped by more than 50%
from the same survey conducted a year earlier.
Just over a quarter of Boomers (28%) know that the
Affordable Care Act does not cover these care costs. Nearly half say they are
worried about becoming a burden to their families, but 54% say they would
rather die than live in a nursing home.
According to the survey, a majority of affluent Boomers
(78%) want to receive long-term care at home, but few are planning for the
costs. Many are not planning at all.
Affluent Boomers expect long-term care costs to average
$36,220 annually—less than half what they estimated in 2012, when the estimate
for such costs was$78,920. Nationwide says that by 2030, the year the last of
the Baby Boomers will reach retirement age, the cost of a nursing home (which
is just one form of long-term care) is expected to reach $265,000 per year.
According to the survey, 71% of affluent pre-retirees want
to receive long-term care in their own home, but fewer than half think they
will actually receive it. Two in five think they will end up in an assisted
living facility, and one in 10 think they will be in a nursing home.
Opportunity for
Advisers
Industry figures show many are in denial that they will ever
need long-term care, so they never plan for it. However, the U.S. Department of
Health and Human Services estimates that 70% of Americans over age 65 will need
long-term care during their lifetime.
Nearly four in five (78%) say that when they hear the term
“long-term care” they think of nursing home care. In actuality, nearly half of
all long-term care happens at home, with a little over a quarter (27%) taking
place in a nursing home and 24% in adult day care.
“The most common mistake a financial adviser makes is his or
her approach to the discussion. When an adviser says the words ‘long-term
care,’ the client often hears ‘nursing home,’” says Kevin McGarry, director of
the Nationwide Financial Retirement Institute. “This often causes the client to
shut down. Instead, advisers should say: ‘Let’s talk about ways we can keep you
in your home longer.’ ”
“The next step is to get a fact-based estimate of what those
long-term care costs may be and work to build a plan from there,” McGarry says.
“Four in five advisers say they know if they can have these discussions, their
clients will be more likely to stay with them.”
The drop in cost estimate could stem from the media’s focus
on the Affordable Care Act and people’s misconceptions about what it covers, according
to John Carter, president and chief operating officer of retirement plans,
Nationwide Financial. “The reality is, we will have to fund our own long-term
care costs in retirement,” Carter says.
The 2013 Health Care and Long-term Care Costs Study was
conducted online in the U.S. by Harris Interactive on behalf of Nationwide
Financial between September 24 and October 1. The respondents were a
representative sample of 801 U.S. adults aged 50 or older with annual household
incomes of at least $150,000.
Financial advisers can visit
www.nationwidefinancial.com/healthcare to learn more.