Long-Term Care Preparation – Are You Ready?!

Long-Term Care Preparation – Are You Ready_!.mp3: Audio automatically transcribed by Sonix

Long-Term Care Preparation – Are You Ready_!.mp3: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker 1:
Welcome back to the Federal Retirement Show. I'm your host, Val Majewski, with American Benefits Exchange. And as always, I really appreciate you taking the time out of your busy schedule to join us to view our content. That's what it's here for. In fact, we have over 175 episodes for you, the federal employee that's looking for accurate information when it comes to your benefits and retirement situation. And today, we're going to be talking about something that's hitting home for me and my family and something that we've discussed previously on the federal retirement show. We're going to talk about preparation for your future, not necessarily for retirement income, but for your well-being. And we're talking about long term care and long term care preparation. You want to make sure that that you're ready for this and the what ifs in life and what's going to come down the pike. And I'll give you an example before we dive in. Um, you know, my family and I were dealing with a situation in our family as well. A member of our family is in this kind of situation and seeing the toll that it takes and seeing the costs that are involved and, and seeing the options that are available and what needs to be done and, and who's taking care of what and, and ensuring all of this is done properly for the well-being of your loved one. And this is, as you, the federal employee, are going and preparing for retirement.

Speaker 1:
We're going to talk about one aspect today. Now, we had previous episodes. We were talking about leaving assets to your loved ones and doing it in a more effective way, um, with life insurance. And if you haven't seen those episodes, I highly recommend you can pause here, you can go back, you can view those previous ones and we can, uh, you know, pick up and you can hit play again. But what if you don't have long term care plans? And what if you haven't really taken the time to view this from a, you know, a 30,000 foot view and really take a peek at it because a lot of people think when I talk to them, oh man, you know, I'm never going to need that. Or, you know, my, my kids will take care of me or, you know, I'm just going to when, when that, that comes, I'm just going to, you know, there's going to put me in a box and bury me and that that's a great thinking. But in actuality, in practice, it's probably not going to happen. So just thinking ahead, preparing you and your family for what could happen down the road, I want to go over an option that might make sense. Now normally we're not really pitching, you know, product service or things like that. We want to get you a full benefits and retirement review. But just as this is hitting home, you know, I wish our loved one had taken care of something like this.

Speaker 1:
And unfortunately, that was not set up. So we are left right now to, to scramble for this loved one. So as, as you, the, the person that's nearing retirement or thinking about retirement down the road and what that's going to look like. Yeah. The ideal scenario is that you live your, your happiest, healthiest, most active, fun filled retirement life that you possibly can. But what if something happens? What if the unforeseen comes around the corner? You know? Will you be prepared financially? Will you be prepared for where you're going to go, what you're going to do? And will you be prepared so your family's not left with this burden to take care and pick up the pieces and maybe have to fund what's going on your care going forward. So let's take a look at this and let's dive into today and talk about long term care preparation and asking you the question, are you ready? Why is long term care important and why are we bringing this up? Well, because for those turning 65, those who are 65 or older, there's a 70% chance that you're going to need long term care sometime in your life. 70% chance. Seven out of ten people that are 65 or older are going to need some form of long term care down the road. Okay. Um, the average assisted living cost and this is something that we've just experienced average assisted living costs across the country over $5,400 per month.

Speaker 1:
Per month. Average assisted living costs per month. Memory care, which is again now where we're at. We have we've progressed to this with our loved one. Um, almost $6,700 per month on average. And depending on where you live, it could be higher, could be a little lower, but that's the average. And then the average duration of stay in an assisted living or a nursing home or memory care is 3.1 years. So you could do the math to see what the total cost could be. And if you don't have the assets built up, or if you're not prepared for this, or you might be getting income, but it may not be this high, your lifetime income sources and it may drain on some other assets of yours that you had planned to, to leave to loved ones or whatever. Are you prepared for this now? Long term care. We we can talk about those kind of policies and those kind of plans that are out there. And you as federal employees, you used to have an option. It's called the federal long term care insurance program. But they have stopped taking applications, and they've extended that pause on new applications and coverage increases until at least December 19th of this year, 2026. So that is currently not an option. That's a group plan that that you have. But they have not been taking applications for several years now.

Speaker 1:
And the problem with private life insurance, I'm sorry, life insurance, long term care insurance is that it's hard to get. Um, the underwriting has been extremely tough. It's tough for federal employees or anybody to get individual long term care insurance. Plus there's a lot of carriers that are getting out of that business, insurance companies that are getting out of that business. And not only is it tough to get, but once you get it, there are continual price increases along the way. And those have been cost prohibitive for some where they've had to cancel their policies. So that policy started as a small premium or smaller, and it's increased over time. And it's priced them out. They can no longer afford to keep that long term care plan that they had in place. So what if there was another option? I said, I'm not normally talking about specific plans or products. I'm talking in concept today. There are several companies that offer these types of things, but because of what we're going through and, uh, other people out there, I know we're going through this because we see them in the same facilities that our loved one is in. There's a chance that, that you might go through this as well. And I don't want to wish that upon anybody. Trust me, that is not the thing here, but it's to have the conversation with your family to protect them for the what ifs in life.

Speaker 1:
And what if you used your unused assets, unused assets, to fund your long term care? And in in previous conversations, I said we talked about instead of leaving your family assets, leave them life insurance. It's a better value, better bang for your dollar cost wise when it comes to that. So what if you had unused assets, let's say you had a TSP or other IRAs or other retirement savings that you just weren't going to use. You didn't need the extra income. You wanted to just set that aside and let that money grow. What if your marked some of it to plan ahead for long term care costs? How would that look? What would that be? Let's take a scenario, a scenario here an example. Let's look at a federal employee that had 250,000 in TSP that they weren't going to do anything with. It was just going to sit and grow. And yet it can grow to be a good amount over the course of your retirement. But there's only so much it's going to grow to. And if you ever get into a long term care scenario, that can go pretty quick based on the cost that we just mentioned. That doesn't include other medical costs that could happen. You know, there could be surgeries and hospital visits and doctor visits and other procedures and medications and all of this stuff on top of your room and board, basically at an assisted living or nursing home or memory care unit.

Speaker 1:
So zero plans to utilize this and ideally wanted to leave a legacy gift to the loved ones. They didn't want to touch it, leave a legacy gift. But if you went through a long term care scenario, that legacy can go all the way down to zero and be eliminated. So now you've got nothing that you're leaving to your loved ones. So what if there's a better way to utilize an earmark? This 250 000 for this federal employee and provide the protection they need, the legacy gift they need, without really getting rid of their cash. Can we better utilize that money? Absolutely we can. Now, I will say this a person does have to qualify health wise to get the best bang for their dollar. But there are options that people can set these plans up also, even if they don't qualify for long term care. So I'll repeat that again if you might be otherwise ineligible for regular long term care, there are ways that we can help you out and put you into a, a plan or a situation, a solution that does not require you to be in the best of health or answer any health questions whatsoever. Now, the more health questions you can answer, the better value you're going to get. But what does it look like? What can we do with that? And again, I'm talking concept.

Speaker 1:
I'm not talking about a specific company or a specific plan, but in concept how would this work. So 250,000 lump sum. What do you do? What can that do for you? You can leave it in the bank. And if you have a long term care situation, you can start pulling money out. Now the problem with that is again, as costs can rise, as you get worse and worse, perhaps, or just the cost of medical care in general rises or gets greater, then that money can run out. So what if we created an unlimited bucket of long term care benefits? Take 250,000 in this scenario, I think this was a 60 year old, and it would generate $17,000 a month that could be utilized for long term care purposes. And it's an unlimited bucket. So the max benefit was 17,000 a month and it was unlimited. It was never going to run out. So the fear of running out of money to pay for your future long term care needs. That part's eliminated. We crossed that off the list. Okay, what's the next thing? Legacy gift. What if now this 250,000 created a tax free death benefit for your loved one? So we turned 250,000 in this example to 408,000 of a tax free death benefit. Better value, better bang for your money. Now. Yes there is. There is the chance that if you live long enough that that 250 could have grown to be bigger than the 408.

Speaker 1:
Okay. But it's still taxable. So how how great would it have to grow then after taxes for your loved ones to get 408,000? But this now we're turning that lump sum into two things. An unlimited bucket that can be used for long term care if you're in that situation, and a death benefit if the long term care is not used. Now also, it's a combination of both. If you use some long term care benefits, it reduces the death benefit. Eventually that death benefit could go down to zero. But there's there's a combination there. Then what if you never use the long term care and you've got cash built up in there? Yeah. You still have cash building up. And the cash could eventually get greater than the 250,000 that you put in. So yes, there are some cost built in for long term care for the life insurance death benefit part. But eventually, if you go long enough where you didn't use any of the benefits, that cash value could grow to greater than the money that you put in. Pretty awesome stuff. So this is a way, just a concept to get better value for your money, that you're not going to use better value for the money that you're setting aside. Earmarking for rainy day, which could include long term care, could include legacy gift, could include a number of things, but now you can earmark it specifically and dedicated specifically to these causes to making sure you're taking care of should you need this kind of care, providing that legacy gift for your family on a tax free basis.

Speaker 1:
And oh, by the way, if you don't use the benefits, there's still cash involved. If you need it, you can take it out. I think it's a win win win when it comes to this providing better value. So what's the catch? The only catch is to set up the plan. Eventually. Over time, we're going to be paying the taxes on the 250 to start. So we can't just take let's say, if you've got the money in the taxable portion, the traditional portion of TSP, we can't just automatically go boom. It's going to be tax free death benefits. We need to pay the taxes over time. But that's really the the only main catch. The other one, if there is you've got to qualify health wise to get the top, top tier. But there are plans available for those that don't even qualify health wise. So I mentioned at the beginning long term care preparation. Yeah. The question is, are you ready? Are you ready for what's coming down the pike and what could happen? No guarantee. And I certainly don't want anybody to go through this kind of thing. But knowing what I know now and experiencing what we're experiencing, I want everybody to make sure that you're prepared. I know that we are prepared as.

Speaker 1:
And I'm not saying I'm I'm super young or, or older, whatever. I'm kind of right in the middle, right middle aged. Um, we have plans in place that if something were to happen, we know that, that those things are taken care of, right? We don't want them to happen, but it's for the what ifs in life. It's the preparation. And it's not, you know, money that you spend that's just gone, you know, use or lose. This is multifunctional if you set up your plan properly. So, you know, is this concept right for you? I don't know, and maybe I'm just, you know, speaking out of personal experience and I'm not really hitting home with any federal employees out there, but chances are somebody out there needed to hear this today. Somebody out there was thinking about this, had a discussion with a family member, was curious if this was the right thing. You got to talk to one of our experts. You got to set a time to review your benefit situation. So go to our website, federal retirement show.com, fill out the form. One of our experts will reach out to you to review your entire situation, but also make sure you ask about long term care preparation, and we can review all the options with you. We can go over and see which one is right for you. Maybe none of them are, but there might be a plan, and chances are there is a plan that's suitable and that can be designed specifically for you.

Speaker 1:
It's all customizable, so ensure that you are set up properly and that your desired plan, your proper plan is implemented. That is the goal. So are you ready? I want that answer to be 100% yes. And maybe you are ready and I'll clap my hands. Kudos to you. All right, high five. You've done a great job. You're going to help your family out because as I said, we're experiencing it on the other side. And as much as you know, you're going to step in and do what you have to do, it can be a burden. It really can be you love for that to be taken care of. And that way it's not a problem for your loved ones when you're in retirement and going through something like this. So that being said, if you do have questions, I encourage you. I'll say our website one more time. It's federal retirement show.com. Fill out the form. One of our experts across the country. If it's not me personally, we'll be reaching out. But make sure to reference this episode and that you want to hear about long term care solutions, and maybe even specifically that unique scenario that we talked about on this episode. So thank you again for your time and watching the Federal Retirement Show. I'm your host, Val Majewski, and look forward to seeing you on a future episode.

Speaker 2:
For generations, retirement was seen as the finish line. But for a growing number of Americans, retirement isn't ending careers anymore. It's simply becoming an intermission. I'm Jim Teraoka for the Retirement Radio Network powered by Emeril Live. According to the center for Retirement Research at Boston College, approximately 39% of working age U.S. households are at risk of facing a lower standard of living in retirement, causing a cascade of retirees people returning to the workforce after months or even years away. For many older Americans, the motivation is financial inflation continues, pressuring household budgets, with recent studies showing nearly 70% of retirees who return to work concluding money is the primary reason. Cbs news Mark Strassmann breaks down some current day key financial retirement figures.

Speaker 3:
The national average for one person to live comfortably in retirement roughly $967,000 in savings. Every retirement scenario is different, but that's $74,000 a year for the average American worker to live out his retirement.

Speaker 2:
But finances only tell part of the story. Many retirees discover they miss the structure, purpose, and social connection that work provided. After decades of solving problems, mentoring coworkers, and staying mentally engaged, full time leisure can feel surprisingly isolating. And unlike previous generations, today's retirees are healthier and more active well into their 70s and beyond. In other words, the career arc is evolving, with some embracing phased retirement, shifting into part time schedules or consulting roles with former employers. Others are launching entirely new businesses. Turning decades of experience into second careers, and remote work has opened doors that barely existed ten years ago, allowing retirees to work flexible hours from virtually anywhere. But if you're someone who still believes in the traditional retirement setup, CBS News Jill Schlesinger says there are rules to abide by.

Speaker 4:
Everyone needs a plan first. Figure out when it's best to claim Social Security next, fund an emergency reserve still working, set aside 6 to 12 months worth of living expenses and keep that reserve in a safe, easily accessible, interest bearing account.

Speaker 2:
The traditional thinking of retirement stopping work completely at 65th May be beginning to fade. For some Americans, retirement is no longer about stepping away forever. It's about having the freedom to decide what comes next for the retirement radio network powered by Emperor Life. I'm Jim.

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