Not only do Mick Jagger and Debbie Harry want to keep on rocking after age 70, their millions of fans do, too. Not surprisingly, the “youth” generation of the 1960s continues its life-long pattern of disruption, including a change in how all of us view age1. And it is not just a matter of attitude.
Today, life expectancy is higher than ever2. This could explain, at least in part, why so few wealthy investors who want to age “on their own terms” actually plan for the care they may eventually need. They seem to be in denial with respect to their long-term care, avoiding conversations about the issue and failing to plan—even after experiencing a life-changing medical event within their own family3.
Last September 2015, UBS conducted a survey on unassisted living to get a fix on how this generation of investors is (or isn’t) preparing for their golden years. The survey produced several revealing results. Below are a few examples:
Generational shifts are driving changes in long-term care.
The grandparents of 74 percent of our survey’s respondents had relied on family to take care of them in their old age. In contrast, just over a third of the respondents themselves said they expected their families to do the same.
Also, 90 percent of respondents said they wanted to “minimize the burden” of their care on their children. In fact, 42 percent listed burdening their kids as their number one greatest fear with respect to old age. As one 74-year-old male respondent commented, “My kids like to think they would take care of me when the time comes, but they have no idea of the burden they would be undertaking.”
What’s more, the middle-aged children of older investors who participated in the survey acknowledged the increasingly heavy burden of caring for their parents. They cited factors such as record longevity, high costs and distance from their aging parents as causes for the increase.
But, plan or no plan, older, wealthy investors have clear preferences regarding aging “on their own terms.” The vast majority, 89 percent, said they planned to stay in their current homes and wanted a spouse and/or health aide to care for them—but not one of their children. However, while nearly two-thirds felt confident in their overall retirement plan, fewer than half expressed the same confidence regarding their plans for long-term care. And with good reason:
Just half of the respondents had even factored healthcare into their financial plan, and only 23 percent had saved for future medical expenses. Plus, a mere 8 percent had sought advice for managing their healthcare. But here is a key statistic for older investors: Among respondents who worked with an advisor and developed a care plan, 71 percent felt “very” or “extremely” confident about possible long-term care, while only 27 percent without a plan felt that way.
Bottom line: Not only do older investors themselves benefit tremendously from advice and planning, but not having a long-term care plan could produce the very outcome they said they fear most—becoming a burden, emotionally and financially, on their children.
1UBS Investor Watch “Analyzing investor sentiment and behavior: Unassisted living,” 4Q 2015
Source: UBS Investor Watch “Analyzing investor sentiment and behavior: Unassisted living,” 4Q 2015 Full Report available upon request. About the survey: UBS Wealth Management Americas surveys U.S. investors on a quarterly basis to keep a pulse on their needs, goals and concerns. After identifying several emerging trends in the survey data, UBS decided in 2012 to create the UBS Investor Watch to track, analyze and report the sentiments of affluent and high net worth investors. UBS Investor Watch surveys cover a variety of topics, including: Overall financial sentiment; economic outlook and concerns; personal goals and concerns; key topics, like aging and retirement. For this 13th edition of UBS Investor Watch, 1,849 high net worth investors responded to our survey from September 10 – 18, 2015. These investors had [at the time of the survey] at least $1 million in investable assets, including 463 with at least $5 million. Qualitative follow-up interviews were conducted with 90 survey respondents.
Kathleen Entwistle and Bryan Stephens are Financial Advisors with UBS Financial Services Inc., 61 South Paramus Road, Paramus, N.J. 07652 and 299 Park Avenue, New York, N.Y. 10171. UBS Financial Services Inc. financial advisors engage Worth to feature this article. As a firm providing wealth management services to clients, we offer both investment advisory and brokerage services. These services are separate and distinct, differ in material ways and are governed by different laws and separate contracts. For more information on the distinctions between our brokerage and investment advisory services, please speak with your Financial Advisor or visit our website at ubs. com/workingwithus. The strategies and/or investments referenced may not be suitable for all investors. UBS Financial Services Inc., its affiliates and its employees are not in the business of providing tax or legal advice. Clients should seek advice based on their particular circumstances from an independent tax advisor. The views expressed herein are those of the author and may not necessarily reflect the views of UBS Financial Service Inc. a subsidiary of UBS AG. Member FINRA/SIPC.
This article was originally published in the February/March 2016 issue of Worth.