Testing against an unforeseen event
Financial plans and portfolios may contain investments for retirement , life insurance to protect against early death or for estate taxes and disability coverage in the event of an injury or loss of work . We use these financial tools to ensure our clients are protected and that they never run out of money . We plan for economic swings , market corrections , and alas ( heavy sigh ), the continuing low interest rate environment . But what happens when an unforeseen event occurs ? Have you tested these same portfolios against a long-term care event ? Even the best portfolios and financial plans can be impacted by the costs of long-term care .
As you look to organize and market your business , consider stress testing against a long-term care need . With the median cost for a semi-private room in a nursing home facility exceeding $ 93,000 annually , according to Genworth ’ s 2020 Cost of Care Survey , even the best plans can be “ stressed ” to the point of fatigue , let alone failure . How would an Alzheimer ’ s diagnosis , with an average length of care lasting eight years , at $ 93,000 a year , totaling close to $ 750,000 , impact a portfolio ?
“ This year , the impacts of COVID-19 shook the industry as many care providers adopted new measures to keep their patients healthy and safe . To address the needs of an already rapidly aging population during an unprecedented health crisis , home care and facilities saw a significant increase compared to last year ’ s numbers .” 3 Even strong financial plans that contain a long-term care solution should be stress tested .
The conditions we faced in 2020 are likely to continue for some time , and 2021 looks to be more of this longer-thanexpected virtual environment . If stress testing is asking , “ what if ?” in a controlled environment , now is the time to stress test our client ’ s portfolios against a long-term care event . By ensuring that financial plans and resulting portfolios are there for the long term , protected , and built to last , we can ask , “ what if ?” before having to ask , “ what now ?”
With the median cost for a semi-private room in a nursing home facility exceeding $ 93,000 annually , even the best plans can be “ stressed ” to the point of fatigue , let alone failure . www . nailba . org 29