The 3 Distinct Phases of Retirement

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Most of our clients don’t normally wake up and think, “Hmmm, I think I’ll purchase some long-term care insurance today.” It’s just not on the top of everyone’s to-do list. Between long work days, taking the kids to school, baseball practice, piano lessons, and family dinners, planning for long-term care is somewhere far out in left field. However, as your clients get older, penciling in a plan for long-term care on their retirement to-do list is a MUST!

The odds that your clients will need some form of long-term care insurance between now and the day they die are 72 out of 100. 72 percent! However, less than 30 percent of Americans over the age of 45 have purchased long-term care insurance to protect them from this need. One of the fastest ways to exhaust retirement savings is to be ambushed by the costs of long-term care expenses.

Many people believe that retirement is going to be 30 to 40 years of golf, tennis, cruises, cocktail parties, and happy hours. But that is just not true. Most will likely go through three distinct phases in retirement, which I like to call the “Go Go” years, the “Slow Go” years, and the “No Go” years. When planning for retirement, your clients will need to keep all three of these phases in mind as well as how to adjust their income over time and balance their spending. Let’s take a look at each of the retirement phases, what they entail, and how your clients must plan for them.

The “Go Go” Years

First off, we have the “Go Go” years. The “Go Go” years are those early years of retirement when your clients are golfing, playing tennis, chasing the grandkids around, traveling, and hitting up the martini bars. Since the “Go Go” years are when retirees are staying more active and enjoying their retirement, it is necessary that they allocate more of their money towards travel and entertainment in these years, while keeping long-term care and future medical costs in the back of their mind. The goal for my own “Go Go” years is to enjoy them to the fullest! Hence, why I have planned ahead and secured extra income for ages 60-80.

The “Slow Go” Years

Unfortunately, the “Go Go” years eventually give way to the “Slow Go” years. The “Slow Go” years are when your clients can still do everything that they did in the “Go Go” years, but they just don’t want to. In fact, they don’t even want to go downtown after 4:30 p.m. because Dad can’t see when it’s dark out! The “Slow Go” years is a time appropriately named because everything just sort of slows down a little more and retirees find themselves to be less active. Chasing the grandkids around is just not happening anymore.

The “No Go” Years

The “Slow Go” years are then followed by the “No Go” years. The “No Go” years are those years when your clients are no longer leaving the building, until they are “leaving the building,” if you know what I mean.  Failing to include a plan for long-term care may result in many clients getting financially wiped out in the “Slow Go” or “No Go” phases of their retirement. Careful planning and adjusting their retirement expenses as needed in all three phases is a must!

One of the biggest challenges that retirees face when planning for healthcare expenses in retirement is uncertainty. This uncertainty comes from not knowing about their ultimate life expectancy, healthcare needs, or how much health and long-term care expenses they will incur. Let me put this into perspective: If one of your client’s houses burned to the ground, it would be an emotional loss, but their homeowner’s insurance would cover them. Likewise, if the same client also totaled their car, they may have some physical injuries, but their car insurance company would protect them. Now, what would happen if this client needed full-time, around-the-clock care to help them live their life? What would that cost them? How long would their savings last? And, what would happen to their spouse and family?

It’s simple really. If the client purchased a long-term care insurance policy, some of the benefits they would receive are as followed:

  • Asset protection
  • Protection of a healthy spouse or partner
  • Removal of care-giving burden from loved ones
  • Peace of mind
  • Maintenance of control, independence, and dignity

In return for a regular premium payment, long-term care insurance can protect clients from what could be a devastating financial loss if they should need expensive care. Rule of thumb: Don’t wait until it’s too late! Clients must qualify for long-term care insurance, so encourage them to not wait until they have a serious medical condition to apply. Review the “Go Go,”  “Slow Go,” and “No Go,” years with your clients and discuss how it’s necessary to adjust retirement income during these three distinct phases. If they are not going to buy long-term care insurance, then they need to buy a life insurance policy with a long-term care bucket or an annuity where the income doubles or triples if they need care.  At the very minimum, they could buy a deferred income annuity that starts income at age 80 or 85.  When it comes to protection from the high cost of long-term care, ANY plan is better than NO plan at all!

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