How Does Women Living Longer Affect Financial Planners?

There are ample scientific data and research studies discussing the increased life span of Americans in general and women specifically, but much less information exists about the effect medical ramifications and increased female longevity play in the type of advice financial planners should give.

Financial and retirement income planners must recognize that men and women have different aging characteristics that impact quality of life, longevity and needs during their client’s retirement. Medical circumstances and health trends often dictate the expenditure of at least part of a client’s retirement assets and should consequently play a role in the advice a financial advisor provides.

For example:

• Women tend to resist diseases better than men but are more vulnerable to diseases like osteoporosis, which typically cause a rapid reduction in bone mass when triggered by menopause. Men usually experience a gradual loss of bone.
• As women age, their muscle mass shrinks and can correlate with declining cerebral blood flow.
• Diabetes is another disease that can have a devastating effect on women's health, increasing their risk of heart disease by up to six times.
• Women’s enhanced immune systems make them more susceptible to autoimmune diseases, which strike women three times more often than men. In fact, 78 percent of the population suffering from autoimmune diseases are women.

What all these diseases have in common is that they can lead to cognitive impairment in women. Osteoporosis, specifically, has been shown as an accurate predictor of cognitive decline. Mild cognitive impairment (MCI) is a related condition that often precedes the onset of Alzheimer's-type dementia. Why is this important? Because two-thirds of Americans with Alzheimer's are women.

What This Means to Financial and Retirement Income Planners with Female Clientele

Eighty percent of Americans don't put their personal affairs in order before they die or make proper arrangements for their care when unable to care for themselves. Approaching uncomfortable subjects like aging, health risks, and morbidity with honesty, tact, empathy, and expertise will help all parties involved make well-informed decisions.

Advisors should focus on helping clients deal with the challenges associated with aging, like how to plan for and pay for retirement and end of life considerations. Helping female clients prepare for the three stages of aging (retirement, continuing care retirement communities, long-term care facilities or nursing homes) while they are still in full possession of all mental faculties is essential. Even in the beginning phases of mental impairment, small tasks can seem overwhelming.

3 Retirement Planner Need-to-Knows

Most clients need education about long-term care options, their associated costs and logistical implications, and they also need an advisor to help them understand the typical aging progression as it relates to retirement considerations. For example, many individuals perceive the transition from routine living to a nursing home or long-term care facility as an abrupt event when in actuality it can take years.

There are three things every financial planner who works with female retirees should know:

1) Costs of a Continued Care Retirement Community (CCRC)

For women, the ability to recommend communities with physical fitness programs and socialization opportunities — all proven to delay the onset of dementia — is one way for advisors to stand out and showcase not just their expertise but empathy for a female client’s unique obstacles. Many advisors realize the costs associated with CCRCs are high — entrance fees being anywhere from $100,000 to $1 million with monthly charges between $3,000 and $5,000 — and that the annual cost of long-term care facilities and nursing homes averages $32,572 and $75,000 respectively.

What many clients, and some advisors, don't realize is:

• Medicare does not cover the cost of a nursing home when the individual only requires custodial care
• The average duration from an Alzheimer's diagnosis to death is eight to 10 years as referenced by the Alzheimer's Association.

Helping female clients plan for such costs or mitigate their financial burden helps you deliver the highest value to the people you serve.

2) Best Long Term Care (LTC) Product Options

Retirement planners would be wise to investigate special purpose life insurance products with long-term care riders to offload longevity risk, duration of LTC expense and capital market risk on behalf of their female clients.

One option that has become increasingly popular is a hybrid life insurance policy with long-term care riders. This type of policy offers flexibility in the form of a death benefit, but also an accessible long-term care benefit that doesn't require two of the six daily assisted living requirements. Instead, primary physicians are empowered to determine individual accessibility, and there is no elimination waiting period before payments begin.

3)  Annuity Options

For more risk-averse clients unwilling or unable to risk market volatility and the possibility of losing their retirement savings, annuities with long-term care riders are another option. The solution presented all depends on the hopes, dreams, goals and needs of your client. The key for advisors is not to postpone planning for retirement and to educate clients, women in particular, of the risk of dementia in old age.

Proactively developing a customized and needs-based retirement income plan is challenging, but can be a source of immeasurable reassurance as even the most vulnerable clients age. Your retirement income expertise can be significantly elevated by earning an advanced designation like the Retirement Income Certified Professional® (RICP®), just one way financial planners can build a sustainable portfolio of retired clientele.    

Learn how to deepen your retirement income expertise and better serve the unique needs of your female clients in, "The Guide to Becoming a Successful Retirement Income Planner."