(Corrects sixth paragraph to say that the Raymond James'
calculator is based on concepts from MIT AgeLab, not a direct
By Dan Butcher
March 27 Brokerages are rolling out software to
help financial advisers with a challenge that can seem like
fortune-telling: projecting clients' retirement health care
Rising healthcare expenses can eat away at retirement
savings. Future total healthcare costs for a 65-year-old couple
retiring this year will average $394,000 in today's dollars,
according to a report this week by HealthView services, a
retirement healthcare data company in Danvers, Massachusetts.
But a couple that retires in 2025 at age 65 will need
$464,000 to fund those same expenses, which include various
Medicare premiums, copays and dental visits. The bills only rise
as couples live beyond average life expectancies, according to
Financial advisory firms are beefing up their software to
tailor projections of clients' retirement healthcare costs. The
figures can drive home reality, especially as the tools become
more sophisticated, advisers say.
The jolt is much-needed. Many Americans age 50 or more do
not include healthcare costs in their retirement planning, even
though the price tag is their greatest concern, according to a
2014 Merrill Lynch survey.
Raymond James added a new healthcare calculator to its
financial planning software last year based, in part, on
concepts developed by the MIT AgeLab, a Massachusetts Institute
of Technology (MIT) research program that encourages the
development of new technologies to support human longevity.
The calculator helps stimulate retirement planning
discussions at Briggs Wealth Management in Clearwater, Florida,
a Raymond James-affiliated firm. Advisers Kimberly and Dennis
Briggs use it to estimate everything from future Medicare
premiums to long-term care insurance premiums, she said.
The tool, part of a broader financial planning analysis,
relies on clients' answers to questions about family histories,
chronic illnesses, and other factors.
Clients then review several future healthcare scenarios,
which can be one based on their current strategy, and two others
with and without long-term care insurance. The analysis, for
example, showed one couple whose families had a history of
medical problems that buying long-term care insurance could
boost the probability of reaching their retirement goals from 40
percent to 76 percent.
Achieving those goals can depend on curbing current expenses
to save more, Kimberly Briggs said. Putting a number on future
healthcare expenses can motivate clients to scale back vacations
or buy a smaller house, she said.
Merrill Lynch launched financial planning software last year
that uses interactive graphics and charts to help clients
understand future healthcare costs. Clients remember information
more easily that way than after a long conversation, said Susan
Acker, a Merrill Lynch adviser in Rochester New York. They
interact with the program on Acker's iPad by tapping on icons to
see research and charts about their future costs.
Small firms are finding healthcare-focused tools in
off-the-shelf programs such as MoneyGuidePro, a financial
planning program by PIEtech Inc in Powhatan, Virginia.
The results of the process may surprise clients. Healthy
retirees, for example, typically spend more on healthcare than
those with medical problems, such as diabetes, according to
HealthView, the data provider. That is because good health often
means living longer.
(Reporting by Dan Butcher; Editing by Suzanne Barlyn and