Written by: Matthew Paine , Executive Vice President at GWG Holdings
A growing number of Americans in their prime earning years are finding themselves faced with a financial obligation they may not have thought they would be responsible for: supporting their aging parents in retirement.
Almost one-third of all Americans with a parent older than 65 told the Pew Research Center they have given a parent financial support in the past 12 months and 72 percent of those said the money went to ongoing expenses.
It’s a consequence of the “silver tsunami” of 10,000 retirees a day and it represents an opportunity for insurance agents and financial advisors who can help these clients find ways to support their parents.
For agents and advisors who have based their practices on marketing and selling products to clients in their 40s and 50s, this can be another opportunity to explore their needs and a way to connect with them as a resource they might not know they have.
The sobering fact of retirement is that as many as 70 percent of those older than 65 will need some kind of long-term care during their lives. In many cities, Genworth estimates the expense for a private room in a nursing home approaches $100,000 a year, an expense that can quickly eat through retirement savings. When parents reach this stage of their lives, adult children can find themselves in a frenzied hunt for assets to pay for quality care. You can play an important role in finding and understanding assets the parents hold as well as products the children can use to generate assets they can use to pay for these costs.
Because of the new tax law, life insurance policies are in need of a review across the board. Many were purchased to pay for estate taxes that no longer apply and the IRS has reduced the potential taxable amount of a life insurance policy that is surrendered to the issuing life insurance company or sold on the secondary market. Aging parents may be able to repurpose their existing life insurance policies for money used to fund care needs.
Talking to clients about their parents’ needs is a way to deepen your relationship with them at a time when they may feel like they have no one to turn to who understands the issue they are facing. With the rising number of retirees and the skyrocketing cost of retirement, you can assure them they are far from alone.