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What's the real cost of ill health in later life?

By Jeremy Squibb, financial life planner & head of life planning, Serenity Financial Planning Ltd

Published: 02/03/2020

How often, as an adviser, have you been asked, ‘how much will ill health cost me later in life?’

Maybe you have seen the fear and concern in the eyes of your clients as they recall friends or relatives who have seen their wealth and savings disappear to fund the additional costs of a more comfortable remainder of their life?

With the tools at the disposal of financial planners such as Voyant, Truth, and a range of other modelling programs, it is now far easier to demonstrate the impact to clients on what the funding impact may look life, what may be left, and where there may be shortfalls. Maybe some clever estate planning can protect the beneficiaries and beat the local authority, or maybe, there may be some form of protection which can be put in place to cater for the surges in fees?

Take a step back for a moment

Ask yourself – ‘What is my client’s greatest worry?’

Maybe, just maybe, they want to feel comfort, happiness, and a sense of satisfaction or achievement. Maybe there are things which they want to get done, things which one day they will no longer be able to achieve. Maybe ill health will make this impossible irrespective of wealth?

Undoubtedly ill health will make people reflect on their financial situation, but are they adequately prepared for that time when life changes – an awareness that unlike a video game, there is no ‘Play Again’ button. The chance has gone, and all that is left, is the rest of their life with whatever state of health they have, and whatever restrictions are now imposed upon them.

I am sure you are familiar with the Retirement Smile – where spending (and activity) starts off high, reduces after perhaps 15 years, then suddenly, expenditure escalates in the last few years of life. That can be modelled with various assumptions, but there are so many variables, most of which involve them as people not necessarily their wealth.

Taking things for granted

Ask yourself this – how prepared are you to be told tomorrow that you can no longer do the simple things you take for granted – walking with comfort, being able to go out unaided, travel abroad – even drive your car. Just think for a minute what that would be like if you found that out yesterday?

This happens to somebody’s client every single day.

Was the first thing which sprung to mind ‘how will I cope financially’ or was it ‘all those things I promised myself, I can no longer do’. ‘One day I’ll…..’ – that sentence suddenly stops, as one day can never come again – you’ve missed your chance.

There are two burning questions 

1. How prepared are your clients for when their lives have to change – have they done the things which matter most, or are there still things left undone. Have they lived the life they wanted, have they become the version of themselves they aspired to be?

2. Would they rather have the resources to live now, and to have comfort in the future, or are they hell bent on getting one over the local authority which could mean sacrificing their future comfort?

Read ‘The Top 5 Regrets Of the Dying’ by Bronnie Ware, and you will find huge insight into both of those questions, and each is ultimately a question of choice.

Until you know what your clients true objectives are, what their real choice would be, is it possible to plan around the ifs, buts, and maybes?

The genuine role of the Financial Planner is to be aware, that every discussion they have with a client impacts the rest of their life, and none of us know how long that will last – it could be 10 hours or 40 years.

Once you have that awareness, you can prepare your clients for change, for ill health, and have the discussion which enables them not to miss out on what they hold most dear.

The worst words anyone can ever hear are ‘If only I thought to do this before’.

That is the real cost of ill health in later life – the cost of regret.

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