It’s probably no surprise that longterm care is a major concern to investors. The 2015 4Q UBS Investor Watch report, Unassisted Living,1 indicated that UBS investors’ number one concern was becoming a burden to their family.
Yet despite this fear, many investors want to continue to stay in their own homes, relying on a spouse or health aide. Fewer than 40 percent of them have even discussed their long-term care wishes with their children. And less than a quarter have saved for those expenses.
So, why is long-term care such a difficult topic to address among family members? Here in the Northeast, not many homes are designed to be helpful places to age well with dignity. Too often, their cost of maintenance, size and design, as well as their proximity to services, can be challenging.
Yet, there are simple steps to take that can ease the process of preparing for aging and long-term care.
We are living longer; therefore, more of us need care. But at the same time, the cost of that care is rising, and we are failing to plan.
First, have a plan. Thinking about getting old is never easy, and as we get older those decisions become ever more difficult. Where do I want to be? Whom do I want to be near? What do I want around me? A thoughtful approach to these questions is a great first step. There are many resources to help begin this discovery process, and a call to your financial advisor is a great first step.
Communicate with your friends and relatives. The people close to you are the ones that need to know what your desires are so that, god forbid, if they have to make that decision for you, they make the right one. Open, honest communication is the healthy way to share information. Where are your friends planning on retiring to? An important part of anyone’s health, especially as we grow older, is our social network and community. So, don’t wait until your friends start moving away. Have those conversations now so those friends can become part of your plan.
Integrate your needs with your finances. For the best probability of a successful financial outcome, align your long-term care needs with your overall wealth-management plan. Understand the cost of inaction by realizing how much of your disposable income you are spending on your current real estate. Think of what that income could do to improve your lifestyle. What would the cost be if you changed your scenario? Based on your ideas of aging and care, what costs are you willing to cover, yourself, and what would you like to insure against? We are living longer; therefore, more of us need care. But at the same time, the cost of that care is rising, and we are failing to plan.
Aging almost seems like a perfect storm. This inaction could have unintended consequences.
By failing to save for potential costs, talk with their children ahead of time or establish an overall plan for their own care, wealthy investors may unwittingly produce the very outcome they most want to avoid—becoming a long-term burden, emotionally and financially, to their children.
1About 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. Those investors had at least $1 million in investable assets, and 463 had at least $5 million. With 90 survey respondents, we conducted qualitative follow-up interviews. The full report is available upon request. Thomas Mantione and Andrew B. Shantz are Financial Advisors with UBS Financial Services Inc. in Stamford, CT. UBS Financial Services Inc. Financial Advisor(s) engaged Worth to feature this article. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER™ in the U.S. CIMA® is a registered certification mark of the Investment Management Consultants Association, Inc. in the United States of America and worldwide. 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. Insurance products are made available by UBS Financial Services Insurance Agency Inc. or other insurance licensed subsidiaries of UBS Financial Services Inc. through third-party, unaffiliated insurance companies. The views expressed herein are those of the author and may not necessarily reflect the views of UBS Financial Services Inc., a subsidiary of UBS AG. Member, FINRA/SIPC.
This article was originally published in the June/July 2016 issue of Worth.
