Our job is to help clients navigate life's challenges so they can have the peace of mind they have worked hard to achieve. The topic of how health care costs play a role in your clients' financial future runs a close second behind the general sentiment of retirement saving: "I do not want to run out of money." There are many reasons why the future of health care costs is a big question mark, which I will not discuss in this article. Rather, I will speak to the overall issues and strategies to help you execute accounting for health care costs in your practice, so your clients may benefit while your business grows.
The challenge when it comes to properly incorporating clients' health care costs in their plans is that it is hard to estimate, because it depends on a person's health and longevity. Clients are not usually too excited about calculating when they are going to die, but there is research available to help assist this conversation. One company in this field is HealthView Services, which helps financial advisors forecast health care costs for their clients. The data used in the company's programs come from more than 50 million actual health cases. The chart below displays information for a fit 65-year-old couple retiring in 2015 regarding what they may expect for their future health care costs.
| Cost Projections for a 65-Year-Old Couple | ||||||
| Age 65 | Age 70 | Age 75 | Age 80 | Age 85 | Overall Cost | |
| Annual Cost | $6,999 | $8,498 | $10,345 | $12,304 | $14,530 | $266,589 |
| Monthly Cost | $583 | $708 | $862 | $1,028 | $1,211 | |
| Future Dollar Cost | - | $9,851 | $13,902 | $19,169 | $26,243 | $402,034 |
*Source: www.hvsfinancial.com/PublicFiles/Data_Release.pdf
This covers only the general costs and does not include dental, vision, copays, and other out-of-pocket expenses. When you include these in the estimates, the average cost rises to $394,954. Also, note the rise of the cost of care in the later years. When clients are planning, they often simply average the cost over their lifetimes rather than inflating it at a higher rate on the backside of life. So the big question is, what can you do with this information to educate your clients and grow your practice? The following is an outline to help you tackle this topic.
Health care costs strategy
1. Intelligently educate your clients and prospects.
