After last month’s blog celebrating ‘America’s Amazing Super Seniors’, today we return to the Wealthspan focus of Longevity Planning to address the financial aspects of preparing for this new retirement.

We left off discussing the fact that while the majority of Americans are concerned about the financial realities of living long, people don’t seem to realize – or want to realize, that 70% of people over the age of 65 will need some form of LTC (long term care) in their lifetime — yet 70% don’t believe it will ever be them! Nor do they realize that LTC is not covered by Medicare – which will likely then create a potential financial disaster for many.

Clearly there are a number of ways to address this issue, yet I have found in my 15+ years addressing this topic to the financial industry, helping clients focus on the reality of healthcare costs in general, is a good place to start. And for starters, the majority of people are completely unprepared. While healthcare costs are for sure a top concern, most people are unprepared because they don’t even know where to start! In fact, current data shows that a mere 4% of consumers have actually estimated their healthcare costs in retirement … meaning 81% have not.

But where and how do people even start? While there are few models to follow, I like to use Medicare as an example of just how complicated and difficult it truly is to estimate what our future health care costs could actually be. For example, when LBJ signed the Medicare Bill into play in 1965, the annual healthcare costs were $3 Billion; the estimated 30-year costs were $12 billion – yet the reality, it was $107 billion!! They were off just a little bit! But what this scenario helps us realize is that it’s impossible to project what types of breakthroughs, detection, diagnosis, and treatment options will be developed over time … let alone how much they will cost. Today, Nationwide is actually the only company I know of who offers a complimentary Personal Health Care Assessment tool to help with this.

But as a result of America’s increased longevity, combined with 70% of the 65+ population requiring some type of LTC (or extended care if you prefer that term), and most not knowing that this care is not covered by Medicare, we’ve seen a huge uptick in Senior Bankruptcy as a result of heath care costs! In fact, the 65+ population is the fastest growing segment seeking bankruptcy protection over the last 20 years! The 65+ population is up 150% and the 75+ population (the real sweet spot) is up 433%! And need I remind that retiree healthcare costs are up 500% over the last 20 years – and climbing with no end in sight!

The good news is 75% of Americans are looking for solutions – the #1 answer and most valuable financial advice is to help them sort through their health care and LTC options. The problem, unfortunately, is that not enough financial advisors and/or those in the industry are having this conversation. In fact, a Merrill Lynch study just a couple years ago reported that while 85% of clients want to discuss it, only 15% actually did.

While the longevity story is a great one in many aspects, it’s a definite challenge financially. In fact, when Americans look at the likelihood of trying to plan and finance a potentially 30-year retirement, for many it likely feels comparable to climbing Mt Everest! Yet when an 80-year old can actually accomplish the task of climbing Everest, perhaps recognizing the facts of what this new longevity requires financially will help people better prepare for the extraordinary journey retirement really offers today.