The Convergence Of Health And Wealth Concerns



Concerns over health care dominate the thinking of affluent investors, whether the topic is the cost of future health care needs or the presumption that living arrangements will someday need to be altered to fit the requirements of advanced age and impaired health.

The negotiation investors conduct with themselves over future health concerns is the basis of the Spectrem study The Convergence of Health and Wealth. Investors explained their thinking about the cost of health care and their conversations with family and financial advisors regarding their needs in retirement and old age.

“The difficulty with planning for health care costs is that no one knows what the future holds in terms of health care needs,’’ said Spectrem president George H. Walper Jr. “Investors make plans to pay for their illness and long-term care without a precise price tag to work with. At the same time, investors do not know what limitations they will experience in terms of mobility and intellect that will impact their eventual living situation. All of these matters are top of mind and yet too undefined to provide clear guidelines.”

Medical expenses are by far the No. 1 concern of working investors considering their future retirement needs. According to The Convergence of Health and Wealth, 52 percent of all affluent investors consider their medical costs the No. 1 expected expense in retirement.

Housing got the No. 1 nod from 25 percent of all investors. Those two issues occupy the minds of three-fourths of all working investors.  For less wealthy investors, housing is more likely to be the No. 1 anticipated expense, but it does not overtake medical costs as the most popular choice.

Most investors will someday need to make a decision about where they are going to live once they are no longer able to completely care for themselves. Asked to rate their possible choices on a 0-to-100 scale, affluent investors were most impressed with the choice of paying for someone to come into their home to care for them (51.67). But the cost of such care is dependent upon whether the in-home caregiver needs to be full-time.

The choice with the second-best rating of possible choices for eventual living arrangements is moving into a continuing care retirement community, where the resident can live long-term but health care treatments and service are altered as care requirements increase. That received a rating of 48.24, which is below the midpoint but still preferred to other options.

The least popular option, but the one that perhaps costs the least, is “living with other relatives or friends in my older age”, which rated at 31.35. Investors do express concern about being a burden to their children, and moving in with them when the investor needs additional care is an obvious burden to their family.

Paying for eventual and unknown healthcare and concerns over how investors are going to live when health fails them are complicated topics, and ones that should be discussed with family, friends and financial advisors. But, among working investors, less than half say they have already had the conversation with their children to some degree. Twenty-one percent said the conversations have been extensive, 27 percent say the conversations have been general, and 46 percent say they will someday get around to having the conversation.


Top Takeaways for Advisors

Perhaps conversations about eventual living arrangements and health care costs are awkward when family is involved, but financial advisors should be adept at bringing up tender subjects so that costs and investment options can be explored to make those concerns less painful.

There is no perfect timing for such conversations, but earlier is better than later, because no one knows when the health care costs will begin to mount. Earlier conversations also allow for better and more intricate investment options to deal with whatever problems come up.


©2018 Spectrem Group