Predicting the Unpredictable: How AI Enhances Long-Term Care and Retirement Planning

By: John Sieb, Business Head and COO of LTC, Prudential

Lily Vittayarukskul, Founder and CEO, Waterlily

Foreword

I met Lily Vittayarukskul in 2023 as she shared how her traumatizing experience of navigating long-term care for her aunt, who raised her as a second mother, inspired her to found Waterlily to help families better prepare for long-term care, whether in old age or in relative youth.

I’ve shared my frequent perspective with her as she’s built the company and solution that Prudential is piloting today. During that time, I’ve learned how artificial intelligence can impact the long-term care industry from a planning perspective. As I reflect on the many accelerating trends that our industry is facing, I conclude that the timing of this technology and solution couldn’t be more important for the aging community to prepare for their future.

I’ve taken the time to share my thoughts here because the industry needs to learn how to adopt these technologies to meet the demands of the rapidly shifting long-term care landscape in the US. Families need the sophisticated solutions that artificial intelligence enables, and it is our responsibility to be well informed of the rapidly evolving technology available to our industry, and to comprehend the practical manners in which it can be implemented to improve policyholder experience and outcomes.

Key Topics:

1. Increasing long-term care costs, the impending “silver tsunami” of retiring baby boomers, and the increasing heterogeneity of Americans and their families demands personalized LTC planning as a staple for every household.
2. A historical analysis of personalization in LTC and a comparison to AI adoption in bordering industries.
3. A realistic look at how AI can scale personalized financial and logistics planning with ML-powered predictions about an individual’s future LTC needs.
4. Practical outcomes of adopting AI for scalable plan personalization.
5. Analysis of the future of AI in LTC.

As we explore these pivotal themes, we invite industry leaders and professionals to join us in shaping a future that harnesses technology to prepare America for better, more personalized care and planning solutions.

Introduction

Navigating the complexities of long-term care (LTC) and retirement planning can be daunting with compounding uncertainties of how our health, long-term care and finances will evolve over the course of our lives. For millions of Americans that complexity rises every year, propelled by longer lifespans, new and evolving health concerns, and an economy growing in its complexity with rapidly shifting trends, making reasonable predictions about our future health, care needs, and finances can feel more difficult than ever. This, coupled with the rising demand for long-term care, is placing unprecedented pressure on individuals, families, and supportive systems, highlighting an urgent need for innovative, manageable personalized information & solutions that enable data-driven decisions to drive value-added outcomes.

In this quest for innovation, Artificial Intelligence (AI) has emerged as a pivotal tool. Prudential is engaging with Waterlily in a pilot collaboration at the forefront of applying this technology to long-term care, leveraging the latest advancements in machine learning and artificial intelligence to explore personalizing the long-term care planning process, aiming to make previously inaccessible insights attainable. This partnership is poised to shape a future where LTC planning is informed, precise, and empowering for everyone involved.

This initiative represents a significant step in our exploration of AI’s potential to revolutionize long-term care planning. It is a part of our ongoing effort to evaluate innovative solutions that could provide more personalized, informed, and empowering planning processes for our customers.

More than a showcase of a pilot; this exploration should serve as a clarion call to the financial and insurance sectors at large. We are at a critical juncture where the integration of AI in personalization and customer experience is not merely advantageous but essential. This article delves into the evolving landscape of our industry, where AI's burgeoning capabilities best align with the needs presented by America's evolving demographic cohorts. It is a testament to the necessity of embracing AI to navigate the intricacies of long-term care and retirement planning effectively, urging a collective movement towards innovation and customer-centric solutions.

Embracing Change: The Drivers Behind AI Adoption in LTC Planning

Embracing Change: The Drivers Behind AI Adoption in LTC Planning

As we navigate through an era of unprecedented change in long-term care and retirement planning, it becomes crucial to identify and understand the catalysts propelling us towards innovative solutions like Artificial Intelligence. These catalysts, stemming from both demographic evolutions and financial pressures, are reshaping the expectations and realities of These are optional services offered through Waterlily not Prudential. Waterlily is a third-party vendor, who is not an affiliate or subsidiary of any Prudential business. Certain services may not be available in all states ©2023 Prudential Financial, Inc. and its related entities. Prudential, the Prudential logo, and the Rock symbol are service marks of Prudential Financial, and its related entities, registered in many jurisdictions worldwide. 1078249-00001-00 ED 2/24 LTC. In the next two sections, we'll explore the recent shifts impacting the industry and underscore the growing need for the adoption of personalization in the ways that we help families plan and prepare.

As we navigate through an era of unprecedented change in long-term care and retirement planning, it becomes crucial to identify and understand the catalysts propelling us towards innovative solutions like Artificial Intelligence. These catalysts, stemming from both demographic evolutions and financial pressures, are reshaping the expectations and realities of LTC. In the next two sections, we'll explore the recent shifts impacting the industry and underscore the growing need for the adoption of personalization in the ways that we help families plan and prepare.

The Impact of Demographic Shifts: Navigating the Silver Tsunami in LTC and Retirement

As we delve into the transformative potential of Artificial Intelligence in long-term care and retirement planning, it's imperative to understand the backdrop against which these innovations are set to unfold. We stand on the cusp of a historical shift in our societal makeup, often referred to as the "silver tsunami." This metaphor captures the wave of baby boomers who are now entering their retirement years, a group that's not only significant in size but also in its potential to reshape the landscape of LTC and retirement planning. Born between 1946 and 1964, these individuals bring with them a wealth of experience, expectations, and challenges unique to their generation.

As this cohort transitions into retirement, we're witnessing a pivotal transformation in the LTC domain. Traditional caregiving networks, once the backbone of elder support, are becoming less reliable due to higher divorce rates, smaller family sizes, and increased geographical dispersion. This demographic shift is not just a matter of numbers; it introduces a complex interplay of financial and health-related challenges. Despite possessing more financial resources than previous generations, the distribution of these resources among boomers is uneven, and their prolonged lifespans are often accompanied by intricate, chronic health issues. Consequently, there's a burgeoning expectation for a more sophisticated, quality-driven approach to retirement and care planning—a demand that aligns perfectly with the capabilities and promise of AI.

This confluence of demographic changes and elevated standards is ushering in a new era in retirement and LTC planning. The aging process, as envisioned by the baby boomers, challenges existing paradigms and compels a thorough reevaluation of care and support structures. We find ourselves at a pivotal moment, tasked with reimagining and reshaping the future of aging, care, and retirement to meet the needs of a generation that's redefining what it means to grow old.

As we recognize the necessity to reimagine and reshape the future of aging, care, and retirement, addressing the financial challenges of long-term care emerges as a critical component of this transformation. The journey towards innovative solutions in LTC is incomplete without confronting the financial and senior aging realities that burden families and call for systemic reform. This next section delves into the heart of these financial challenges, unveiling the intricate web of costs, preparedness, and the pressing need for a paradigm shift in how we approach long-term care financing.

A Comprehensive Look at the Financial Strain of Long-Term Care: Unveiling the Burden on Families and the Need for Systemic Reform

The financial landscape surrounding long-term care is a minefield of escalating costs and unpreparedness, placing an immense burden on individuals and their families to make quick decisions with inadequate information. As we delve deeper, it's evident that the reasons behind this financial strain are multifaceted and deeply rooted in both societal expectations and systemic inefficiencies.

Firstly, the cost of care, whether it's delivered at home or in specialized facilities, has skyrocketed, far outpacing general inflation rates. This surge is attributed to several factors, including the increased demand for services from an aging population, the rising cost of healthcare labor, and the technological advancements in medical care. These costs can swiftly drain life savings, pushing families into precarious financial situations.

Compounding the issue, many individuals find themselves woefully unprepared for these expenses. Traditional financial planning tools often fall short, offering oversimplified calculations that fail to account for the nuanced and dynamic nature of healthcare needs and costs over time. This lack of personalized planning leaves many in the dark until they're directly confronted with the need for care.

The burden of care costs frequently falls on family members, who are typically untrained and unprepared for the financial and emotional toll it entails. This responsibility often lands disproportionately on women, who traditionally assume caregiver roles, further exacerbating gender inequalities in work, pay, and future financial security.

Moreover, conversations around planning for LTC are notoriously inadequate within families, leaving many caught off-guard by the realities of providing or financing care. The gaps in communication, required information and planning can lead to poor decision-making, strained relationships, financial hardship, and inadequate care.

Cultural differences also play a significant role in how families approach LTC. In many Eastern cultures, there's a stronger tradition of multi-generational living and a cultural expectation for children to care for their elderly parents. This contrasts with Western societies, where there's a greater reliance on institutional care. However, the financial pressures and emotional burdens are universally challenging, regardless of the cultural context.

To navigate this crisis, a paradigm shift is needed. We must foster open discussions about the realities of aging and LTC, promote financial literacy and planning from an earlier age, and innovate financial tools that offer more personalized, realistic projections for LTC costs. Moreover, there's a pressing need to reevaluate and reform how care is delivered and funded, ensuring it's accessible and equitable for all, regardless of gender or cultural background.

The financial pressures of LTC are not just a problem for the elderly or their immediate caregivers; they're a societal issue that demands a collective, informed, and compassionate response.

In light of these challenges, we must embrace technological advancements that can address the complexities of LTC planning and financial management.

Bridging the Gap in Financial Planning for Long-Term Care

While the healthcare industry has seen a significant infusion of AI technologies, aimed at enhancing care quality and predicting health outcomes, a parallel need for innovation in the financial aspects of long-term care planning has emerged. Companies like Silverberry Genomix and CarePredict are pioneering in leveraging AI for predictive healthcare and personalized longterm care management. However, the domain of financial planning, cost estimation, and insurance policy selection for LTC remains relatively underserved by the in-depth personalization that AI can provide for consumers, presenting a ripe field for groundbreaking advancements.

In the broader landscape, companies like Wealthfront and Betterment demonstrate the potential of AI in personalizing investment strategies, hinting at how similar technologies could transform LTC-specific financial planning. Similarly, Lapetus Solutions’ approach to incorporating biometric data for life insurance underwriting points toward innovative methods that could be applied to predict LTC insurance needs more accurately.

Platforms such as Policygenius and Cover are exploring using generative AI to simplify steps in the insurance customer experience journey, offering a glimpse into how future tools might streamline LTC insurance policy comparison and selection. Moreover, United Income’s (acquired by Capital One) holistic approach to retirement planning, encompassing spending strategies and estate planning, exemplifies the potential for AI to offer a comprehensive financial planning solution tailored to the retirement and LTC sector.

The contrast between the advancements in healthcare management and the nascent stage of financial planning innovation for LTC is striking. It not only highlights the untapped potential in this area but also positions companies exploring this frontier, such as Waterlily, at the cusp of leading a significant shift in how we approach LTC planning.

Bridging this gap demands a focused effort to develop AI-powered tools that address the logistical and financial complexities of LTC planning.

By drawing inspiration from existing technologies in investment, insurance, and holistic financial planning, we can envision a future where AI not only aids in managing health-related aspects of LTC but also empowers individuals and families with precise, personalized financial guidance.

This shift towards integrating AI in both healthcare management and financial planning for LTC is not just an opportunity for innovation; it's a step towards a more secure, well-prepared future for aging populations, ensuring that long-term care is accessible and manageable for everyone.

The Growing Need for Personalized LTC Planning

The journey towards personalized long-term care planning has seen its share of milestones, with Genworth's popular Cost of Care Survey being a notable example. This initiative marked an important step towards customization, offering a more detailed look at care costs across different regions. However, while Genworth's survey was groundbreaking at the time, it represents an early effort that has not seen substantial evolution in terms of personalization in the years since.

Our society is made up of increasingly diverse individuals and families—each person's health, financial situation, and family dynamics are unique, creating a situation that generic methods can't fully address. Relying solely on averages, even adjusted for localized costs, poses clear risks for those who don’t fit a perfect mean—underestimating someone's LTC costs can leave them woefully unprepared, facing financial strain and limited care options. Conversely, overestimation can lead to unnecessary financial sacrifices, such as opting for overly expensive insurance policies or misallocating financial resources that could impact their quality of life or investment potential.

The transition from generic, one-size-fits-all plans to highly personalized strategies is not just a luxury; it's a necessity for effective LTC planning. While Genworth's Cost of Care Survey was an important step in the right direction, today's technology offers the opportunity to take a giant leap with personalized choices. Modern AI can sift through vast amounts of data to deliver personalized recommendations that consider a wide range of variables, from personal health forecasts to financial planning nuances.

Increasing Engagement and Action Through Personalization

The move towards personalized LTC planning is not just a technological upgrade; it's a fundamental shift in how we engage individuals in the planning process. In today's attention-scarce environment, capturing and retaining interest in LTC planning is paramount. Personalization serves as a crucial bridge between awareness and action. By transitioning from generic, one-size-fits-all approaches to plans that reflect individual circumstances, we significantly increase the relevance and impact of LTC planning.

The significance of not just capturing but also retaining attention in long-term care planning cannot be overstated. Too often today’s plans draw attention to a vague need for planning, but the inconvenience of planning combined with the many distractions clients face often lead to a plan being filed away with no action ever being taken, leaving the client as unprepared as they were before the plan had been drafted. Personalization does more than just draw attention to the need for LTC planning; it plays a pivotal role in ensuring that individuals not only formulate a plan but also take the necessary steps to implement it.

Personalized LTC planning addresses this common postponement or complete disregard of action by building the plan from an individual's unique circumstances, health projections, and financial situation. This customization makes the plan not just a document to be filed away but a living blueprint that speaks directly to the individual's life. The direct correlation between the plan and the individual's reality enhances the sense of urgency and importance, making it far more difficult to ignore or put aside.

By making the planning process intimately relevant to each individual, personalization compels individuals to move beyond mere planning to actual preparation. It underscores the reality of the challenges ahead: that this is not what the average American will face, but what you personally will face. This makes the importance of the plan resonate on a deeply personal level, and thus, harder to sideline amidst life's distractions.

This shift towards personalized LTC planning is more than a trend; it's a necessary evolution in how we approach aging and care. As we navigate a world brimming with distractions, the ability of personalized plans to cut through the noise and prompt meaningful action is not just beneficial—it's essential for securing a future where everyone is prepared to meet their LTC needs with confidence and precision.

Waterlily's AI-Driven LTC Planning Model

In my role at Prudential, overseeing our long-term care business and policyholder experience, I've had the privilege to witness innovations in our evolving industry to improve client engagement and satisfaction. Our recent pilot partnership with Waterlily, an innovator in AI-driven healthcare analytics, marks a significant milestone in our journey to revolutionize how we approach the prediction and management of long-term care needs to provide a more personalized and valuable experience to our policyholders and their families with LTC planning that provides optionality on how they want to age in place, the associated support model and offering wellness solutions to stay happier, healthier and more independent longer

Waterlily's models represent an important stride forward for machine learning innovation in our industry, meticulously trained on extensive and diverse datasets that encompass a broad spectrum of healthcare scenarios. This foundation enables an unprecedented level of accuracy in forecasting care needs, a crucial aspect as we aim to tailor our services more precisely to our clients' future requirements. The technical prowess of Waterlily's AI solutions is not just about the volume of data but the quality of insights extracted from it, providing a nuanced understanding that far surpasses traditional statistical methods.

The beauty of Waterlily's approach lies in the integration of sophisticated statistical models, each designed to tackle specific challenges in long-term care planning. By employing a combination of regression, classification, and time-to-event models, Waterlily achieves a comprehensive analysis capability, predicting not only the likelihood and nature of care needs but also the timing, duration, and how family involvement and care environment selection will impact the cost of care. This multifaceted predictive capacity ensures that our planning tools are equipped with a depth of insight that is both novel and invaluable in the industry.

Our pilot collaboration with Waterlily reflects a shared vision to empower individuals and professionals with cutting-edge tools for making informed decisions about long-term care. By testing Waterlily's AI-driven insights, we are not only exploring the capability of enhancing our existing offerings but also how this may set a new standard for precision and foresight in the industry. The technical sophistication and evidence-based validation of Waterlily's models provide a solid foundation for our efforts to address the complex challenges of long-term care planning, ensuring that we can offer solutions that are not just effective but truly transformative.

As we move forward with this partnership, I am excited about the possibilities that lie ahead. The integration of Waterlily's AI capabilities into our services could prove to be a game-changer, enabling us to offer unparalleled accuracy, personalized planning, and proactive solutions to our clients. This collaboration is a testament to our commitment to innovation and excellence in serving the evolving needs of our clients, paving the way for a future where long-term care planning is informed by the best of what technology has to offer.

Prudential's Strategic Vision with Waterlily: Revolutionizing LongTerm Care Planning

At Prudential, our commitment to innovation and excellence in service is at the heart of everything we do. Our upcoming pilot with Waterlily, a leading provider of advanced planning tools for long-term care, is a testament to this commitment. This partnership is set to explore new ways to engage with clients and their families, enhance our service offerings, and redefine the standards of personalized financial planning in the industry. Here are the key outcomes we are evaluating from our pilot with Waterlily:

Strengthening Client and Family Relationships

Our pilot with Waterlily enables us to evaluate how incorporating a holistic view of our clients' LTC needs, factoring in not just the individual but their entire family dynamic, can build deeper connections with existing and prospective clients.

• Foster Deeper Connections: By including family members in the planning process, we're not just planning for our clients; we're planning with them. This inclusive strategy could deepen our relationship with existing clients and introduce Prudential's values and services to their families.
• Expand Our Client Base: Engaging entire families presents a natural opportunity to grow our business organically, turning every family member we interact with into a potential new client who has already experienced the value Prudential brings.

Differentiating with Personalization

The use of Waterlily's state-of-the-art technology signifies our dedication to providing the most accurate, personalized, and forward-thinking planning solutions available and may improve our ability to attract and retain clients.

• Attracting Prospective Clients: The inclusion of Waterlily’s predictive capabilities in our pilot can help us showcase our commitment to leveraging cutting-edge technology for the benefit of our clients. This level of innovation and personalization is a key factor for new clients choosing Prudential.
• Boosting Client Loyalty: For our existing clients, this pilot reinforces Prudential's role as a dynamic and proactive partner in their financial well-being, encouraging long-term engagement and retention.

Driving Financial Product Sales

Our pilot with Waterlily’s personalized planning capabilities enable us to present financial solutions that are tailored to each client's unique circumstances:

• Building Trust with Personalization: The precision and customization provided by Waterlily's tools may help enhance clients' trust in our recommendations, making them more likely to consider our financial products as essential components of their LTC planning.
• Highlighting Unbiased Recommendations: The objectivity of AI-driven advice may help mitigate skepticism, allowing clients to feel more confident in the financial strategies we build, including those touching upon insurance and other critical financial products.

Promoting Health and Wellness

Our pilot with Waterlily goes beyond financial planning; it also explores how AI can empower clients to take control of their health.

• Encouraging Proactive Health Management: By providing a clear picture of potential future health scenarios, we are evaluating how Waterlily can motivate clients to adopt healthier lifestyles, potentially reducing their future LTC needs and enhancing their quality of life.

Catalyzing Meaningful Engagement

We’re also hopeful that this pilot will result in more meaningful conversations with our clients and policyholders.

• Deepening Trust Through Engagement: Discussing personalized LTC plans allows us to demonstrate an unparalleled level of care and commitment to our clients' futures. This approach could help us build deeper trust, laying the foundation for a strong, enduring client-professional relationship.
• Facilitating Holistic Financial Wellness: These conversations touch upon a broad spectrum of financial planning needs, and could help clients perceive Prudential as not just a provider but as a trusted advisor committed to their overall well-being.

Looking Ahead

Our initial work with Waterlily is more than a pilot; I hope that it is a stepping stone towards the future of personalized financial planning. By integrating Waterlily's advanced planning capabilities, Prudential could not only enhance our service offerings but also reaffirm our dedication to innovation, client satisfaction, and industry leadership. This strategic partnership exploration has the potential to deliver unparalleled benefits to our clients, their families, and to Prudential as we continue to set new benchmarks in personalized LTC planning.

AI's Evolving Role in LTC: Machine Learning, Deep Learning, and the Rise of LLMs

In the realm of long-term care and retirement planning, the evolution of artificial intelligence is nothing short of revolutionary. At the heart of this transformation are three distinct yet interconnected AI technologies: traditional machine learning, deep learning, and the latest buzz in the tech world—Large Language Models (LLMs).

The AI Spectrum in LTC Tech

• Traditional Machine Learning: This is where it all started. Machine learning models analyze historical data to find patterns and make predictions. In LTC planning, these models have been instrumental in assessing risks and forecasting care needs based on a range of factors, from health statistics to financial situations.
• Deep Learning: A subset of machine learning, deep learning utilizes neural networks with many layers (hence "deep") to process data in complex ways. It excels at interpreting vast datasets, making it perfect for predicting personal LTC needs with higher accuracy. Deep learning models can sift through and analyze information about health trends and lifestyle choices, offering predictions that are both precise and personalized.
• Large Language Models (LLMs): The new frontier in AI, LLMs, like GPT (Generative Pretrained Transformer), have garnered attention for their ability to understand and generate human-like text. This technology represents a significant leap forward in natural language processing, making interactions with AI more intuitive and human-centric.

Where Waterlily Stands

Currently, Waterlily leverages machine learning and deep learning models for its long-term care predictions. These reliable models bypass issues like hallucinations—misinformation or false data generation—often associated with LLMs. This approach ensures that their predictions remain grounded in accuracy and reliability, foundational pillars for anyone navigating the complexities of LTC and retirement preparation. LLMs are used where their outputs are more easily verifiable and less susceptible to hallucination, such as for digesting and retrieving information from uploaded policy PDFs in order to expedite financial planning on the back of LTC needs predictions.

The continued integration of LLMs into LTC planning, through platforms like Waterlily and others, is inevitable and promising. They hold the potential to revolutionize client engagement by providing dynamic, conversational interfaces that can explain intricate planning concepts in easy-to-understand language, offer personalized advice, and even aid in drafting care-related documentation.

Looking Ahead

As we navigate the future of LTC planning, the complementary strengths of machine learning, deep learning, and LLMs will play a critical role. While machine learning models continue to provide the backbone for predictive analytics, deep learning will push the boundaries of what's possible in personalized care planning. Simultaneously, LLMs will transform client interactions, making technology more approachable and planning processes more engaging.

The synergy of these AI technologies promises a more nuanced, efficient, and user-friendly approach to LTC planning. For professionals in the field, embracing this spectrum of AI means being able to offer unparalleled precision, customization, and service quality. As AI continues to evolve, its integration into LTC planning tools like Waterlily will not only enhance the planning experience but also ensure that clients are better prepared for the future, with strategies that are as forward-thinking as the technology behind them.

Key Takeaways:

1. Without proper planning, American families will be devastated by the increasing costs of long-term care and navigation of support complexities.
2. Personalization of national averages and ZIP code-based costs are insufficient to properly prepare the modern American. The results lack sufficient accuracy and attention-grabbing power to convince families to take urgent action on their plans.
3. Artificial intelligence is raising the bar for personalization, and tools like Waterlily are using it to solve the problems our market is facing today.
4. The advent of LLMs is driving innovation across multiple AI technologies, each with their own advantages and pitfalls - companies that take the first step will learn the fastest and build the long-term care industry that must exist to support America’s growing care and planning needs.

Conclusion: Navigating the Future with AI in LTC and Retirement Planning

The integration of AI technologies like machine learning and Large Language Models is set to revolutionize the way planning is conducted, bringing unprecedented precision and personalization to the forefront. As we explore these advancements, we begin to unlock new possibilities, simplifying the intricate processes of LTC planning and offering the potential for more nuanced guidance than ever before.

The collaborations between Waterlily and industry leaders reflects a milestone in our journey, highlighting the potential of technology to enhance the quality and depth of planning services.

I foresee a future where families face the planning process not with trepidation, but with a sense of preparedness, armed with AI-enhanced insights, the support of seasoned professionals, and the assurance of well-crafted readiness for the future.

As we move forward, the fusion of AI technology and expert knowledge offers an avenue to transform the challenges of aging and care from daunting uncertainties to manageable aspects of life. It's about turning the journey into one marked by informed decisions, proactive planning, and the collective wisdom of a community dedicated to making a profound impact. In this evolving landscape, AI doesn't just support planning; it reshapes the experience into one of empowerment, clarity, and optimism for families and professionals alike.

These are optional services offered through Waterlily not Prudential. Waterlily is a third-party vendor, who is not an affiliate or subsidiary of any Prudential business. Certain services may not be available in all states ©2023 Prudential Financial, Inc. and its related entities. Prudential, the Prudential logo, and the Rock symbol are service marks of Prudential Financial, and its related entities, registered in many jurisdictions worldwide.

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