An Essential Client Conversation ?Will I be able to pay for my hip replacement at age 85??

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives. Dan Richards

Advisors face a big challenge in planning for boomers. Your assumptions about how long they'll live and the nature and cost of their lifestyle as they age will dramatically impact your planning decisions.

Conversations with boomers about those topics and about the implications of funding health care are difficult but important. 

An increasing number of boomers are looking for leadership and guidance from their advisors in these kinds of discussions – more and more, having informed conversations on these topics is one of the things that sets superior advisors apart. Today's article provides advisors with background and context to have useful conversations with boomer clients on this issue. As a result it is longer than normal.

Three important factors make this an essential client conversation:

  1. The continuing rise in life expectancy, at a rate that would have been inconceivable in the past
  2. The shifting views about the kind of lifestyle boomers will maintain in retirement
  3. Increasing pressure on government's ability to fund demands for health care – and a growing sense among boomers that they'll be funding "discretionary" health care in future

What makes this so complicated is the remarkable explosion in life expectancies in the past 100 years, something that is continuing as you read this. In fact, life expectancies have increase twice as much in the past 100 years as compared to the previous eight centuries combined.

Not only are we seeing people live longer, many clients have an unprecedented determination to live active lives into their eighties and nineties. This puts an intense strain on retirement projections – you need to be conservative enough so clients won't run out of money, but not so conservative that clients deprive themselves unnecessarily, especially in the earlier stages of retirement. 

To have informed discussions about lifespans with clients, it's important that advisors have a solid foundation of knowledge on this issue.  This article is designed to provide background that will make these conversations easier and more productive.

Within this article are links to articles you can share with clients and to two videos that can assist advisors in these conversations:

  1. An interview with Moshe Milevsky of York University on assumptions about lifespans for retirement plans
  2. A TED talk about research on the behavior associated with longevity