As a financial advisor, you may need to help your clients and their families plan for the last stage of life. When planning for retirement, most people focus on wealth management and insurance. But a well-rounded retirement care plan should address other vital elements, including long-term healthcare and estate planning. Although planning for illness or death can make some people uncomfortable, you can guide your clients through the creation process of a retirement care plan that will allow them to perform these important retirement tasks:
- Generate enough wealth to sustain a desired lifestyle
-
Protect wealth in the event of a long-term medical problem, such as a stroke or the onset of Alzheimer's disease
-
Pass down to heirs the majority of wealth, with as little tax burden as possible
The retirement care process
Well before your clients retire, help them establish a retirement care plan. The plan should outline critical retirement issues, as well as action plans for achieving retirement goals. The process for developing and maintaining a care plan includes:
- Build a team Assemble a core team, including an accountant and a lawyer, to help your client assess current and future situations.
- Develop a care plan Conduct in-depth interviews with your client and family members to help them forecast their social and recreational needs, lifestyle preferences, health problems, financial concerns, and legal matters.
- Create a file Make sure that your client creates a file that includes the care plan as well as
copies of relevant documents. The file should also contain a current contact list for key family members, friends, physicians, lawyers, accountants, and financial representatives. Your client should store the file in a safe location that is known to you and your client's family.
- Update the plan Help your client update the care plan annually before retirement begins. After
your client retires, the care plan should be updated more frequently to reflect your client's changing financial or medical condition.
- Execute the plan
When a client has retired, begin executing
the action items in your client's plan. These may include finding an affordable retirement home, adjusting investments, or, in the event of your client's death, following through with estate details.
Elements of a comprehensive care plan
When developing a care plan for your client, discuss a wide variety of factors, including social, health, financial, and legal issues. Make sure that your client includes the needs of a spouse or dependent family members
in the discussions of retirement care plans. Examples of issues that you may want to discuss with your clients are detailed in the following table.
| Care plan area |
Key considerations |
Key questions |
Importance |
| Social |
Preferred lifestyle |
Where does your client plan to live? |
Knowing the location helps determine the cost of living. |
|
Preferred lifestyle |
Does your client plan to finish life at home or in assisted living? |
Either option has a unique set of benefits and costs that must be considered and planned for. |
|
Friends and family |
Do you know who your client considers as
his or her closest family members and trusted friends? |
They provide a support network in the event of an emergency. |
| Health |
Health insurance |
What benefit level will be required in a worst-case scenario? |
Health insurance is more affordable if you can purchase it while your client is healthy. |
|
Medical history |
Do you know your client's medical history? Do you have a list of his or her physicians and prescriptions? |
Preparing your client's medical history ensures that all information is readily available in the event of a medical emergency. |
|
Long-term care |
Does your client's family have a history of debilitating illness and/or long life expectancy? |
Assisted living can cost more than $5,000 per month in many areas, so long-term care insurance should be explored. |
| Finances |
Asset listing |
Are you aware of the assets owned by your client as well as by his or her spouse, if applicable? |
All key assets, such as houses, investments, and financial accounts, should be tracked to help your client's care team. |
|
Asset protection |
Based on a conservative investment strategy, will interest returns be adequate to support your client's preferred lifestyle? |
Investment strategies must provide maximum security for the minimum level of return required. |
|
Tax minimization |
What will be your client's tax rate during the later years? |
Retirement income should be generated so that it's close to being tax
free. |
|
Life insurance |
How does your client want to protect beneficiaries? |
Life insurance policies should be purchased at an early age, based on the level of support desired. |
|
Estate planning |
How does your client want to pass down assets to his or her heirs? |
Estate planning identifies strategies for avoiding probate and minimizing taxes (such as using a trust). |
| Legal |
Wills |
Are an updated will and living will prepared? |
These documents should be updated annually to accommodate changes in probate law. |
|
Power of attorney |
Who will become the point person for handling your client's affairs if his or her care plan must be activated? |
Power of attorney designates who will
handle details in the event that your client isn't able to perform daily activities, such as handling finances or legal matters. |
Establish a solid retirement care plan with your clients to help them plan for a smooth, carefree retirement. And if an emergency occurs, such as a debilitating stroke or even death, a comprehensive care plan will give your client or caregivers immediate access to appropriate medical, financial, and legal support, thereby lessening the inevitable stress and confusion that are typical in such situations.
About the author
Larry Melillo is a manager at KPMG's CFO Advisory Services. CFO Advisory Services professionals help organizations implement strategies and process changes that drive a more value-added finance function.
United States
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