Your Retirement-Age Clients and Budget Politics

While advisors are there to serve those with investable assets, it is not only your clients who are affected by politics, the Federal budget and cuts to programs. It may be your clients’ family members, their aging parents or struggling adult kids.

When family members are beneficiaries of various public programs that help them get by, your clients may not be affected except with feeling relief. But when programs are slashed, the reverberation can affect your own clients, who are likely to be better off financially and therefore expected to help. Every advisor needs to consider this. Cash flow projections on retirement savings can be totally disrupted when your client has to pitch in and give financial help to a low-income family member.

Imagine this: your Boomer clients are ready for retirement. You have carefully worked out what they will need to sustain their lifestyle and make their money last. One or the other of them has low income aging parents in their 80s. Their parents have part of their health care costs paid by Medicaid. Medicaid gets slashed. Your client has to help pay the 20% of costs Medicaid was previously covering for their parent’s health care costs. And since those costs tend to rise with aging, your client will potentially pay the cost of a supplemental insurance policy or non-covered medications or other things.

Here’s another thing to see in looking at how budget cut proposals can destroy your careful retirement income planning for your clients. Some have disabled siblings, adult children or others who benefited directly from the Medicaid expansion of the Affordable Care Act. Some of those folks are not yet eligible for Medicare and rely entirely on Medicaid for all health care coverage. With massive cuts to Medicaid, they are among the millions who would lose insurance altogether. If they have a well-to-do family member, your client, where will they look if a medical need arises and there is no way to pay for it? Probably to your client.

Then, lets look at your clients’ lowest income family members who rely on the Supplemental Nutrition Assistance Program (SNAP), formerly called food stamps. Nearly five million seniors rely on this program in order to afford food. A massive cut (proposed) of $194 billion would surely affect them immediately. Can you imagine any client refusing a request from a low-income family member for money because he or she couldn’t afford groceries? That grocery money contribution could be every week and go on indefinitely into the future.

Perhaps this is just a heads-up for every financial planner to build into clients’ retirement planning that some cash may be needed on a monthly basis to help their relatives who can’t get by without their help. In my own family, four of us pitch in every month to support a low-income sibling. He has Medicare and also Medicaid. For all of us who are Boomers and a bit older, a hit to the existing Medicaid benefit would cost each one of us more dollars every month than we are currently paying.

Your clients may be in the same situation. We at AgingInvestor.com hope you will bring up the subject and help your clients plan accordingly. You would do that by asking clients planning retirement if there is anyone in the family they may be called upon to help support.

Our political climate may not change for some time. And every lower income American who is a needy family member of your retirement-aged clients will be affected one way or another. Help them prepare for the anticipated expense.