In a recent conversation, an advisor shared the tension and anxiety related to adult children in their 30s to 50s having conversations with their parents about aging, future caregiving needs, and health changes. A key factor is financial independence or dependence on the family.

As retirement has changed over the past several decades, longevity has become a vital component of financial planning. With people living longer, continued inflation, and rising healthcare costs, outliving one’s retirement plan is a real concern.

This is why a frank discussion about health, longevity, and long-term care needs to be part of every retirement strategy session with your senior clients. Here are a few thoughts to get the conversation started with clients.

1. Not All Clients are the Same: Accurate Life Expectancy is the Foundation of Comprehensive Retirement Planning

What type of information is discussed or gathered in ongoing planning discussions with clients? Many advisors use age 95 as a standard life expectancy for retirement planning because it’s a conservative estimate. When it comes to finances in one’s advanced years, being conservative is important. However, to develop the most sustainable financial plan, some advisors have opted to use a longevity calculator instead of the industry standard for every client. This will allow you to create a more personalized plan for every client.

Consider including the following question on planning checklists about physical and mental health, lifestyle, and their vision for what their life looks like in their late 80s to 90s.

"If there was a change to your health, where do you see yourself living? At home or in a community with others your age? Does this change if one spouse passes before the other?"

2. Longevity Affects Long-Term Care Projections

The good news can sometimes be the bad news. It's wonderful that people are living longer than anticipated, but often, their financial plan did not project them living into their late 80s to 90s. What if the planning is running low on cash flow? Retirement-age client’s health history and outlook are vital when it comes to effective retirement planning.

For example, a client who lives only to age 70 but spends the last five years of life in a long-term care facility could very well end up needing more money in retirement savings than a healthy person who ages in place and lives ten years longer.

Long-term care has become financially burdensome for most families, and those expenses continue to grow.

Since Medicare and Medicaid cover only a percentage of the care most people entering nursing facilities need, seniors - and their families - are left to make up the difference. With annual costs for a private room in a nursing home close to $110,000, that difference is often significant.

Having an open discussion of your client’s health history, family health history, and longevity expectations can help set realistic goals regarding how much they may need to cover long-term care.

"How are you planning to pay for those later years? The average cost can range between $5K- $10K per month for any higher quality option."

3. Longevity-Related Solutions for Paying for Retirement and Long-Term Care Needs

Over one-third of the country will be part of the longevity economy, which in turn could financially impact the remaining two-thirds of the country. How are families prepared to address the potential cash requirements for their aging parents and loved ones? This is also a good time to bring an alternative for paying for long-term care – life settlements. This solution allows clients to sell their life insurance policy for a lump sum of cash that’s greater than the policy’s cash surrender value.

On average, a life settlement transaction using a competitive auction platform through an independent life settlement broker can earn your client 5x the cash surrender value. This not only creates liquidity but also eliminates future premium obligations, allowing those funds to be used for other planning needs like retirement, investments, and long-term care.

"Do you foresee your adult children or someone else assisting in paying for long-term care? Have you explored all available options to fund these needs?"

Ashar Group is a nationally licensed life settlement firm representing the best interests of policy owners by creating a competitive policy auction to deliver the best value to the seller. Ashar Group does not sell life insurance, management assets, or purchase policies. We are an independent resource for fiduciary advisors and their clients specializing in life insurance valuation for planning purposes. Contact us today.

Enjoy more blogs in our Longevity Series:

Shooting for the Centenarian Club

The Keys to Longevity – It’s Never Too Late but Start Now!

Your client’s life insurance policy may be the most valuable asset they own.  

Seniors in retirement often drop their life policies. The reasons are many; the original need may no longer exist, they may need to eliminate expensive premium payments, or they just need some additional liquidity to help with medical costs and retirement needs. There could be a better way... 

Five Common Life Settlement Scenarios:  

1. Funds needed for LTC (Long-Term Care) expenses - At age 80, Maria moved into a long-term care facility, relying on her adult children to help pay her LTC expenses. She sold her policy and used the proceeds to relieve the financial strain on her adult children, who had previously sacrificed their own planning needs to fund her care. Maria said, “For the first time in years, I feel like I have my dignity back.”  

2. Running out of money in retirement - At age 87, Carlos was living longer than expected and running out of money in retirement. Escalating premium payments were becoming too much of a burden to maintain and draining cash that could be used for other needs. “The life settlement gave me the ability to maintain my lifestyle in retirement.” 

3. Retiring business owner - James was negotiating the sale of his business and discovered that his term policy owned by the business could be transferred to him. Once he became the owner of the policy, he explored a life settlement. “My wife and I now have more money to enhance our retirement lifestyle.”  

4. Policy no longer needed - Judy and her husband (now deceased) had been making premium payments on their life insurance policy for over 30 years. Over time, the original need for the policy no longer existed. “I was able to uncover additional value over the cash surrender value. At my age, found money is a blessing.”  

5. About to surrender their policy – Mike and Sharon were about to surrender a life insurance policy they no longer needed. “Talk about a win-win! We not only eliminated annual premium payments, but we also received a large cash payment from the life settlement.” 

Who has the best chance of qualifying for a life settlement?  

Anyone age 65 or older who has developed health issues since their policy was issued and owns a universal life or convertible term insurance policy has a high probability of benefiting from selling their policy. Policies with a death benefit of $250K or more can qualify. Even policies used in estate planning and business protection with death benefits from $2M - $100M can qualify. Younger policy owners with serious chronic illnesses can also explore the life settlement option. There are many scenarios where a client could qualify for a life settlement.  

Ashar Group is a nationally licensed life settlement firm that acts as a fiduciary to protect the best interests of policy owners by creating a competitive policy auction to deliver the best value to the seller. Ashar Group does not sell life insurance, management assets, or purchase policies. We are an independent resource for fiduciary advisors and their clients specializing in life insurance valuation for planning purposes. Contact us today.