EP 99: Protecting Your Assets: Affording Long-Term Care in Retirement
The X's and O's
In this episode of the Retirement Plan Playbook, hosted by Brent Pasqua, Matthew Theal, and Joshua Winterswyk of Evermont Wealth, the discussion focuses on developing strong long-term care protection in retirement.
The episode begins with casual banter about baseball and moves into more serious topics like the sentencing of Sam Bankman-Fried and the performance and implications of Donald Trump's, “Truth Social” SPAC offering under the ticker symbol DJT.
The core of the show is an extensive look at the considerations, costs, and planning strategies around long-term care, emphasizing the importance of early and informed planning to secure a comfortable and worry-free retirement.
01:19 Baseball Season Banter: Angels' Woes
03:57 Sam Bankman-Fried's Sentence: A Deep Dive into the FTX Saga
09:13 The Trump SPAC and Truth Social: Investment or Political Contribution?
13:48 Navigating Long-Term Care Costs in Retirement Planning
21:08 Exploring Self-Insurance and Out-of-Pocket Care Costs
24:32 Challenges and Trust Issues with Long-Term Care Policies
26:24 Alternative Strategies for Long-Term Care Planning
28:29 Utilizing Home Equity and Other Assets for Long-Term Care
31:44 Creating a Personal Long-Term Care Fund
37:32 Final Thoughts and Recommendations
37:35 Evermont Recommends
Connect With Evermont Wealth:
Transcript
Intro: Welcome to the Retirement Plan Playbook hosted by Brent Pasqua, Matthew Theal, and Joshua Winterswyk of Evermont Wealth. This podcast dives deep into investment strategies, retirement planning, and current events, equipping you with the insights needed to craft a robust retirement playbook adaptable to any political or economic climate.
Intro: Join Brent, Matthew, and Joshua as they guide you through the complexities of retirement planning. Offering expert advice. to tackle challenges and the later stages of your journey. It's time to build your optimal retirement playbook. Now let's dive into today's episode.
Brent: Welcome to the Retirement Plan Playbook. My name is Brent Pasqua. I'm host and founder of Evermont Wealth and obviously a financial advisor. I'm joined by Matthew Theal and Joshua Winterswyk who are both financial planners. And today we're going to go through protecting your assets and affording long term care in retirement.
Brent: Because I think one of the things that could be very challenging in retirement is trying to figure out if you have enough money to cover the what ifs. At the end of your life, if those events begin to happen. And I think everybody's always so concerned about that. And so we're going to dive into that today.
Brent: But as we get into that Matt, did you even notice that baseball season started?
Matthew: Yeah, I did. Unfortunately I'm an angels fan and you know, it's not looking very good for the angels this season. The Angels lost Shohei Itani in the off season and they didn't sign any notable free agents. It's started good so far for the Angels.
Matthew: They've been booing Anthony Rendon, who's a free agent who signed for the team and hasn't got a hit in over a year. So that means it's starting out good? Cause they're booing him? Yeah. They lost Shohei Othani. They're booing the owner Artie Moreno. So yeah, I noticed baseball started Josh is a big baseball guy, right?
Joshua: No,
Matthew: no,
Joshua: no. I mean, I don't dislike baseball. I'm just kind of down on baseball last, you know, 10 years. It's boring. No. And I know they made changes to try to make it better. I just haven't been as interested as I am just as other sports, but I'm a big sports fan, so I'm not going to say I don't completely.
Joshua: Like baseball, but I haven't, I did notice it started because Matt was in here that opening day talking about how baseball's back, put it on the TV for lunch. But I haven't heard him really talk about baseball since that opening day.
Matthew: Well, actually I made you put the Dodger game on because I wanted to watch real baseball.
Matthew: I didn't want to watch the triple angels
Brent: play. Remember all the years we played fantasy baseball, as soon as like opening day was here and the first pitch was out, like we had. Every game on going and then now we don't play fantasy baseball and now we don't really watch that much baseball.
Matthew: Yeah. I barely even know who the players are.
Matthew: Now. Are you
Brent: watching
Matthew: more
Brent: baseball since you're in the little league a lot? No, because I just don't have time to watch it more. But if I did, I mean, I love going to a game and I love watching it when it's on for sure. It's America's pastime. I mean, I think it's such a fun sport to watch a lot of times.
Brent: But games are long, but they've gotten better. They've gotten faster.
Joshua: There's just a lot of games. There's just a lot of options now. You know, with sports and everything else and TV. Are you guys planning to go to a game this year?
Brent: I'm definitely going to go to a game. Dodgers
Joshua: or Angels? Dodgers.
Matthew: Yeah, I don't know.
Joshua: Haven't decided yet. I
Matthew: mean, Dodger Stadium is like 20 minutes from my house and Angel Stadium is like an hour from my house. So, I don't know, would you drive an hour for AAA baseball?
Brent: No, dude, we have the
Matthew: Quakes in
Joshua: Rancho Cucamonga.
Matthew: Exactly.
Brent: I mean, would you drive an hour to go to an Angel game, Matt?
Matthew: With the current team, probably not.
Joshua: I hope you're there this year. Get you back at the Big A.
Brent: That's where you belong. I heard they're scrappy this year though.
Joshua: They still got Mike Trout, man. You gotta, you gotta go. Yeah, Mike Trout's cool. Hey, but if you go to a doctor game, let me know. I might be interested.
Brent: All right, let's get into the hot take headlines.
Brent: Sam Bank Brent Fried, the founder of the collapsed crypto exchange FTX, was finally sentenced and he was sentenced to 25 years in federal prison on March 28th of this year. That sentence is well different than what he could have been sentenced. The maximum for. What he did was 115 years. But the, his lawyers were asking for six and a half years.
Brent: They found him at 25 years. What's your thoughts on this?
Matthew: I don't have a hot take or a good opinion. I guess we'll just recap what, who's Sam Bankman freed was and what he did. So he was the founder of the FTX crypto exchange and he ended up taking the customer's deposits cause crypto is unregulated and.
Matthew: Giving it away to politicians and putting the money inside of a hedge fund that he ran called Alameda and essentially gambling with the customer's money. And then when the crypto market started crashing in 2022, they've since came back as you know, all the listeners know Sam bakeman freed his clients or customers start asking for their money back and there's no money.
Matthew: So
Brent: he did buy a bunch of luxury property, right? And he was actually spending and living this lavish lifestyle, or did they just paint him that way?
Matthew: Yeah, he had a few lavish properties but a lot, it sounded like most of the customer's money is money went into the hands of politicians and that's through the Alameda hedge fund that he also ran.
Brent: It seems like he, it says that he can get 15 percent off his sentence for good behavior, which puts him. I think when I did the math based on his age, he could serve about 21 or so years or 22 years. And at that point he would be about 52 or 53. I mean, he's still got part of his life left when he gets out.
Matthew: Yeah, he could you know, it's a good chunk of life left, especially with modern technology, but you know, what's crazy is he had to forfeit 11 billion, it's a lot of change.
Brent: So money that he had made, he loses. I think that would be obvious, right?
Matthew: Yeah, I think so. But do you know how much they've recovered?
Brent: That's what I wanted to know.
Matthew: What I heard is that they're going to get close to almost recovering everything because the crypto markets are so good.
Joshua: So do you think that if all customers or most customers are made whole, do you think 25 years is too much?
Matthew: No, he's still running. Yeah. So let me tell you this though.
Matthew: Do you know Claude? The AI agent I like I do. So I think Claude's done by this company called Anthropic and he was one of the first investors in that company. So that position is where I think worth like, you know, a billion dollars right now or something ridiculous like that. His position in that company.
Matthew: Yeah. He was one of the first investors in it. Wow.
Joshua: I think it's fair. And the reason why is he doesn't seem like. He has any regret.
Brent: Correct, and I don't think he cooperated and was honest along the way, which is another reason why he deserves it. He said he was still lying during the trial.
Joshua: Yeah. That's not good.
Brent: I, I, the other problem, you know, with all of that is the obvious. I mean, how many people's lives did he impact and change and interrupt, disrupt or affect in such a negative way where he, I mean, that could be someone's entire life savings or retirement everything.
Matthew: Yeah. They said a lot of people put their whole life savings at FDX and we're doing, you know, crypto because they believed in what, you know, the crypto mission was.
Matthew: And just to have that wiped away.
Joshua: But could you make the argument that, like, you're already entering a risky place? Like, that's somewhat on the investor as well. I mean, he even had Tom Brady duped.
Matthew: Yeah, he did. Yeah. But the thing with crypto though, is like a lot of people don't view it as risk, right? They view the dollars risk.
Matthew: That's the whole sales, but I mean, it's still an
Joshua: investment, right? I mean, you, you are taking risk.
Matthew: Yeah. I don't know. Maybe the media, like glorifies it, but you know, if from my understanding from how I've taken from crypto, like if you're one of the full crypto people, it's every dollars in crypto. It's your whole life savings.
Matthew: Like you believe it. You're drinking the Kool Aid fully.
Joshua: So then do you feel that bad for the people that lost money? Yes,
Brent: I
Joshua: do too.
Brent: Yeah, that would be awful. That is terrible. The judge said that the sentence reflected the risk that he could do something bad in the future.
Joshua: Yeah, that's the way I feel.
Brent: Me too.
Joshua: You even see his parents up there and just like, how would you feel? I'm sure they just feel awful as well.
Brent: Yeah. I'm assuming for the victims and then you've probably feel some, like you'd seen your son go off to jail. So that's hard. So like out of all of this, the parents are probably hurt the worst.
Joshua: Such a bad situation,
Brent: but at least he, from this point for the near future, he's not going to be able to hurt anybody else. So that's good.
Joshua: Yeah, absolutely. And buyer beware for all those crypto buyers. Matt and he takes on that.
Brent: I have no take next topic. All right, let's get onto the next one. The other one's a big one.
Brent: Another controversial topic. It's the, the Trump's back. Matt, why don't you tell us a little bit about what's happening with the Trump's back, how it was started and then where we're at with it.
Matthew: So this is about truth social. And we've heard about when Donald Trump got D platforms, he started his own.
Matthew: I'm
Joshua: sure you've heard
Matthew: social media company called truth, social. And I actually think this SPAC was announced in like 2022.
Joshua: But
Matthew: it took a long time for it to actually come to market. It came to market you know, middle of March. And the ticker symbol is DJT. Interesting story on that. I guess it's from one of Trump's, he like still owned the ticker symbol from one of his failed businesses.
Matthew: So he got to use the DJT back it's back Yeah, and the stock started trading and it went ballistic as you'd imagine anything Trump does it went from 20 a share all the way Up to 79 a lot of retail investors were buying it. I'm not sure how much Trump was worth because of it I think it was like an extra three to eight billion is what I've heard.
Matthew: I'm not sure if you guys heard anything different but since a few weeks later have gone by now, it's back to 36 a share. So it's kind of almost round tripped and you know, it's not really a business. I heard some financials on true social. I think they make about 4 million bucks a year. So probably less than not a lot.
Matthew: No, not a lot. Probably less than the, you know, one of your favorite, like, I'm sure your dry cleaner makes that price justified. No. Absolutely not. No, it's just a meme stock. This is a SPAC
Brent: meme stock, you know. From my understanding of, this is another way for people to be able to put money into the Trump potential campaign.
Brent: It's another way that they're investing in Trump because he's extracting, or he potentially could be extracting a lot of this money eventually if he's approved to do it, because from my understanding he's not approved to sell any of his shares at this point.
Matthew: Yeah, he can't sell. There's a lockup period, but when he does, you're right.
Matthew: I mean, this is, could add a few billion dollars to his net worth. He sells, you know, half of his shares or something. Now he has a lot of money for the presidential campaign.
Joshua: Yeah. But also just help with his leverage, right? I mean, he's worth more. So he has more financing options, more leverage, which, I mean, to me, it just sounds like if you're investing in this, you're, you're supporting his campaign.
Joshua: Kind of like what you're saying. Right.
Brent: Right. And, and. Is that a very risky investment? So if you're putting money into this, are you actually just going to contributing to Donald Trump? Are you using this as an investment?
Joshua: I don't think it's a very good investment, man. Just mentioned that, right? That price doesn't match the value to the company's revenue.
Joshua: So I think it's more, you're deciding to support Trump than, You're looking to invest in it as an investment, which it's fine. And then it's your money you want to do with whatever you want with it. But
Matthew: it's an election contribution,
Joshua: right? I guess you can look at it like with upside, but wow. I mean, it exploded first hit the market and yeah, I mean, you related it to GameStop, right?
Joshua: It's almost like a meme meme stock.
Matthew: I wouldn't be shocked if we're sitting here in September and this thing's trading at some outrageous price and it like has shot up a bunch over, you know. Right next to the election.
Joshua: Do you think though that it actually like becomes a more successful business?
Matthew: No, it's not a business.
Joshua: No, I know. But truth social, if you're looking at that idea,
Matthew: no, why would anyone use true social, not to be rude if you, if you use it, but I mean, the company's making a couple million bucks a year. I mean, that's chump change in the social media business world.
Brent: So basically it's just, it's values based off of popularity and, and the name of Donald Trump.
Brent: And, you know, there's other risks that go into that, right? Like if something happens to him, like what is the value of the business at that point?
Matthew: Yeah, probably zero, but I mean, people love Trump. They'll buy anything. Trump. Yeah. It's exciting.
Brent: Even when he's dead though?
Matthew: That'll probably make it go up.
Matthew: Well, I mean the stock, no, but I'm sure some of his, his memorabilia will. It is
Brent: something interesting to watch. It'd be curious to see how it plays out over the next couple of months. And as we get into the election, cause this could play a role in the election.
Matthew: What would be crazy is if it does play a role in the election, it gets Trump the money he needs to win the election.
Matthew: And then this becomes the new normal. Right. Where presidential candidates are doing SPACs on all these weird sorts of businesses. And like, you know, the next one we have like the Newsome SPAC versus you know, I don't know who the, the Ron DeSantis SPAC or something like that. Yeah, their campaigns are, are fighting businesses.
Joshua: Yeah. It'd be interesting for markets.
Brent: All right, well, let's get into the retirement planning corner. Just a massive topic that has been increasing over time is. Really trying to figure out if in the event that you need extended care or long term care towards the back half or the last couple of years of your life, how you would afford to pay for that.
Brent: The average cost of long term care is increasing all the time. The average cost of long term care in the state of California is over a hundred thousand dollars. Wow. And the average stay in a long term care facility. Is 3. 2 years. And that is increasing year over year. We've seen that number increase from a few years ago.
Brent: That was at 2. 7. Now it's at 3. 2. So people are living longer. People are staying in long term care facilities longer, and it is a massive industry, but it is also a massive risk to person's nest egg.
Matthew: Yeah, those are really great stats. Brent, did you know that 70 percent of people turning 65 will use long term care in their life?
Matthew: So basically it's the norm and there's really not a good solution on the market to solve the problem for people.
Joshua: I have a take because people are living longer, but not necessarily healthier lives, so we're keeping people alive longer, correct, but they're not able to actually do those daily activities for themselves while they're still living and maybe sick or receiving treatment or something like that.
Joshua: So it makes
Matthew: sense. It's like what Peter, Peter Tia is like whole whole thing is right. It's like the. How you age, right? Like aging gracefully and you know, this isn't aging gracefully. If you need long term care, unfortunately you can't take care of yourself.
Brent: And the thing I want to remind people is that the cost of long term care is also dependent on the type of care that you're receiving.
Brent: So for example, if you're, let's call it, you know, 78 years old and you're in a long term care facility and you're independent and you just want to be in a facility because you don't want to live at home and you don't, you'd like the amenities that a long term facility can offer you at that stage in life, or you like the social aspect, it could be a much more reasonable in costs, but if you're in a long term care facility.
Brent: Because you have, let's call it Alzheimer's and you're in memory care, the cost of care is going to be a lot more expensive and it's going to be in that six figure range. And so those costs obviously can add up very quickly. When you're talking about year over year and you can in Alzheimer's or dementia state, you could live a very long time and that could drain one's assets.
Brent: And I think if it's me personally, and if I'm in that state, I don't want to be in a low level care facility. I would like to think that I would be taken care of with very good care. And you have to have money to get that level of care, at least the way that things are set up now.
Joshua: Yeah. And what I'm hearing you say is.
Joshua: You want that top level care. You're looking at six figures, but even to receive not top level care, even if you're in some sort of assisted living, I mean, you're still looking at 50, 60, 000 a year for that style of care, which could not be up to the standard that you actually want, and that's still a lot of money.
Matthew: So for these levels of care, you guys are talking about, I'd assume the gold standard that you're, you're saying you'd want for yourself, Brent is in home care.
Brent: Well, I don't, I don't, that's a good question. I mean, I don't think everybody, everybody wants to be taken care of at home, but being taken care of at home is financially unreasonable for most people.
Brent: When my grandmother needed in home health care, it was somewhere in the range, depending on the amount of hours it was. 14, 000 to 18, 000 a month. For her to be taken care of at home based on the level of treatments that she needed and 24 hour care every day of the month. What year was this? This was in 2019 and 2018.
Brent: Now, after all the, all the inflation is probably 30 grand a month. It can be, they can be very, very, very expensive. And, you know, obviously costs of hourly wage in the state of California just went up. So that's another factor. I mean that all of those things go into the cost per hour that takes to be taken care of at home.
Brent: The cost at home is very expensive, but yes, all of us would like to be taken care of at home. But let's say you have Alzheimer's and your spouse is, you know, not in a state where they can be taking care of you 24 hours a day with Alzheimer's because they're older as well. You're probably going to need to go into an in home facility
Joshua: at some point.
Brent: Correct. And when we talk about long term care, what we're talking about is Home health care. We're talking about assisted living. We're talking about nursing home care. We're talking about different levels of long term care. They all are defined as long term care, but all of those cares are requiring you to pay mostly either out of pocket or out of some of these other ways that we're going to discuss.
Matthew: And I think what most people too, who are probably sitting back and listening to this, if they're not really familiar with long term care, they're going to think, Oh, well, my Medicare, my Medicaid, my health insurance is going to cover this. But this is not the case, right? This is another type of policy that people should buy in case they need it.
Matthew: Correct?
Brent: So Medicare does not cover you for long term care. Long term care is also known as custodial care. So when you're unable, or you need assistance with doing your daily activities, If you're not able to, let's say, shower, clean, cook, go to the bathroom on your own, then you're in a state where you require long term care.
Brent: Medicare will cover you for when you're getting care that you're going to get better or there's a good chance that you're going to recover. You had a surgery, it's going to take you six months to recover, you're going to get better. So Medicare has their coverages in place for things like that. But as far as being taken care of for long term care, when you're not going to get better, that is when you're not covered for.
Brent: And at that point, you have to then pay out of pocket or you have an insurance policy that's going to cover you or Medicaid, which means a state federal federally funded program will come in and, and take care of you or, and what happens there. Is that you basically can have no assets if you were to go onto Medicaid.
Brent: And at that point you have to run down all of your assets and you have to be taken care of at a low level care.
Joshua: So you have to spend all of your existing money before you can even qualify.
Matthew: Correct. I feel like this is going to become a massive problem in the country. Cause you know, we all know the stats on the baby boomers.
Matthew: They're getting older. The, I think the oldest baby boomer groups by turning 80 this year. And the youngest is in their mid sixties. Right. So this is something that's going to be exploding in you know, cost over the next, probably 20 to 35 years. I think it's already happening. Yeah, it already is.
Matthew: How do people pay for this? Right. I mean, I know the answer, you know like, is it a policy or we self insuring? What do you guys think?
Joshua: Well, the first thing, I mean, you pay out of pocket, right? Before we even get into self insurance, you're going to self insure yourself. You have the assets to pay for this care.
Joshua: And I'll, I'll hit on the first two that just pop into my mind, but. Again, you're paying out of pocket for the care that you would like. What I see a lot of too, on the other side of that is you don't have enough money and some sort of family member is just taking care of you, right? Can't forget about kind of that option for a lot of people.
Joshua: But yeah, first is just self insured.
Brent: The second way that you could pay for that is you have an insurance policy. And to have an insurance policy that is changing now in the landscape of how. You can get coverage. When I started in the financial planning business back in the early two thousands, long term care policies were like buying car insurance.
Brent: I mean, everybody in a, in that kind of range of age was really doing it. And there was salesmen that were selling these policies all over the place. And what would happen is, is you would buy a policy that would charge you a monthly premium and you would be receiving a pool of benefits. So for example, let's just make things simple.
Brent: You pay 200 a month for the rest of your life until you need the policy. And then when you needed it, it was going to give you 200, 000 of benefits. And that benefits in our example could potentially stretch out over two years or three years or whatever, but also to qualify for those benefits, there was all these limitations.
Brent: And then how you got paid out that 200, 000, there was all these limitations that you had to qualify for. So it wasn't like a straight 200, I'm going to go pick my facility. It's, you know, 10, 000 a month and the facilities and the long term care policy is just going to pay for that. It got way more complicated than that.
Brent: Then, in addition to that, the cost of care increased dramatically. And when that happened the insurance companies began to raise people's monthly premiums. And when that happened, people then not began not being able to afford their policies that they had paid into it. So can you imagine that for 15, 20 years, you've been paying into a policy at, let's just call it again, 200 a month.
Brent: And now the insurance company is raising it to 500 a month, which was very common. Like they jumped these rates out, skyrocketed by hundreds of percentage bids, and then all of a sudden, you know, you're in your late seventies and now you have to now pay account for 500 a month on a fixed income. They can't do it.
Brent: So at that point, policies began to drop off. Insurance companies began to struggle to pay out the cost of long term care and the whole landscape of these policies began to change and get overridden. And so we've seen clients that had CalPERS, other big programs. Or they've had long term cares either go and completely change the policies where they had to either reduce what they were paying and lower their benefit, or they could keep paying what they were, but their benefits would greatly reduce, or they had to have a massive increase.
Brent: And, and so it caused massive problems in long term care. So what I think has happened. Is a lot of people now do not trust the long term care policies because of all of the way that this has been going for the last couple 10, 15 years. Right. So then they don't even want to buy a policy because there's no trust, right?
Brent: Because you don't know, what are you going to be paying in the future? Are you going to be able to qualify for the benefits? Is the benefits going to provide me the type of care that I really want to have in the future?
Matthew: And from the insurance company's angle, I mean, we, at the start of the show, we taught you gave a bunch of really good stats.
Matthew: And then I came in with the 70 percent of people are going to require it. That's a bad bet from the insurance company standpoint insurance companies they want to bet on Events that don't happen that much
Joshua: people not using.
Matthew: Yeah, that's how they make money.
Joshua: Well, we see too I know Brent we've worked on a couple long term cases before as well But you get a quote for a long term care policy and the premium doesn't justify the actual benefit, correct?
Joshua: You know, when we run those numbers and run a quote that those two don't come together. And so a lot of people are saying, why am I putting in 500 a thousand dollars a month when I'm only getting out X? Is that an
Matthew: example? Like 500, 000 a
Joshua: month? Yeah. I mean, it could be even more than that for those insurance policies.
Joshua: And so again, the insurance landscape was really hard for long term care. I think my summary from this is it's really complicated. It's expensive and you have to be sick enough to actually use it. And a lot of people don't realize that they think, you know, as soon as I need care, I'm going to be able to advance this benefit like Brent was just talking about, but you have to actually qualify to be able to use the coverage.
Joshua: And a lot of people get really frustrated when that. And there's a
Matthew: waiting period
Joshua: too, right? The elimination period. It can be depending on, you know, the policy and the premium you're paying, but you know, the shorter, the amount of time you, the elimination period is to where benefits kick in. The cost of the insurance is increased.
Matthew: So as it stands right now, do you guys think longterm care policies that you could buy on the market are good for, for people? It kind of sounds like they're not.
Brent: I think people have to look at all of their options. They have to, you have to look at a policy. You have to look at self insuring. You have to look at some of the life insurance benefits that are out there that offer long term care in it.
Brent: You have to just know the landscape of what the market is offering. If you were to ever come into that situation, but I think one of the biggest mistakes people make when they're looking and thinking about their long term care is how much is care going to actually cost them out of their pocket.
Brent: Because if you're in a long term care facility, The facility is really covering all of your needs, right? Like your foods included in that cost and all your, a lot of the tortures. And you know, you've got a bottom line bill, but you have to understand like that's all of your costs when you're living in there, like you're not paying for things outside because you're staying in the home.
Brent: So if you have, let's say a 10, 000 long term care costs to pay the facility. And your social security is 5, 000. Then you have a 5, 000 monthly gap. That's what you need to cover. So how do you cover that gap? Do you have enough savings? Do you have enough portfolio? Do you have enough retirement accounts? Is your nest egg big enough to cover the 5, 000?
Brent: You don't have to cover the 10. Cause you already have five coming in from your fixed income from let's call it social security, but you do have to cover the five. And so that's what you have to figure out is how are you going to cover that other gap? A lot of people constantly think about, I have to cover the full 10, 000.
Brent: That is not true. You have to cover what you don't have coming in monthly.
Joshua: And maybe not even looking at, like you're saying, if you're in, you need care, you're probably not spending much more money than outside of your care. So if you're like, I already need 10, 000 to live and I spent another 2000, that might not necessarily be the same for you if you do need care, because you're not going to be doing all of those normal things.
Joshua: You were,
Brent: you're not shopping regularly on Amazon,
Matthew: right? You're not going on a trip. Most likely. Correct. Yeah. I should have seen my grandma and she was in assisted living. It's Amazon bills are racking up.
Joshua: Really? What were you buying on her Amazon account?
Brent: But if you're in a long term care facility, there is a good probability that you're probably not going to be living at home.
Brent: I understand the situations where one spouse could be living at home and the other spouse is in a facility that can happen. It's not traditionally what we see happen. Both spouses generally leave the house and go into the facility together. And if you have equity in your home, then you also have another way to cover yourself for long term care, because that money goes into an account that you could pull from on a monthly basis.
Brent: And you could be using that money to cover that cost in long term care. If you're not worried about your inheritance, going to your kids. Or to some beneficiaries, then that is another safety net that you have. It's kind of like your ACE in your hole. It's in your back pocket. You have the equity in your home that will cover you for long term care.
Brent: And the reason why I think it's important to think about that is if you want to enjoy your retirement and you don't want to be so concerned about the last couple of years of your life, then, and you want to spend the money that you work so hard for. You don't want to get in a position where you're not spending any money in retirement or enjoying your retirement because you're so worried about that 3.
Brent: 2 years at a hundred thousand dollars. That you may need in the event that you need long term care.
Matthew: So it's a 300, 000 that they've needed. So you're saying use the equity in their home to pay for the facility.
Brent: Correct. They could, yeah, it's an option. It is an option. They could sell the home. They could.
Brent: You know, re do a reverse mortgage potentially. I mean, depending on the circumstances, I mean, they'd have to qualify for that, but there is equity. If there's equity in the home, there's a lot of ways that they can extract the equity.
Joshua: This is one reason though, why reverse mortgages have also become more popular.
Joshua: Correct. Because reverse mortgages, you know, you can even create a line of credit off of the reverse mortgage for when you need it. So if you're doing it even prematurely. Before you actually need the care to set up the reverse mortgage on the line of credit to say hey When this time comes I can use it, you know, a lot of people do use that that way
Matthew: Is it a bad idea to sell the house though?
Matthew: Or would it be better just to pull the equity out like you guys are saying in a reverse mortgage or through the bank?
Joshua: It depends
Matthew: depends.
Joshua: Yeah, I think everyone's situation is different I think what I hear you saying to this and to you brent what you summarized it great, but was You You know, this discussion also involves your family.
Joshua: You know, if you have children, even grandchildren, where do you want to be? There's a lot of variables to having this long term care discussion more than just, do I need an insurance policy?
Matthew: That's who this is falling on. Like if you're listening to this and you're in your six, you know, mid sixties. You can do all the planning you want.
Matthew: It's probably mostly falling on, you know, the generation below you, your kids or your grandkids, like you're saying, Josh.
Joshua: And if you don't want it to fall on them, then you need to do more planning now. But I think what we're seeing a lot is it is falling on the children.
Matthew: Yeah. Mom, mom or dad needs help.
Matthew: What do I do? Help me. You're, you're their financial advisor.
Brent: The planning strategy that I've used that I've found to be very successful in working with clients. Is I will sometimes open them a separate brokerage account and I'll have them stick in a lump sum. It doesn't have to be a lot could be 10 or 15, 000, you know, depending on their age.
Brent: And we have them add five, six, $7,000 a a year into that account. And we put that money in either 90%, 80%, a hundred percent in stock, and we let that money continue to grow. And we have that money. So if someone's in their, in their sixties, let's call it 65, we have a 20 year duration of them doing it. And we'll calculate back, let's just call it at a 6 percent return.
Brent: If they want to have 300, 000 in their account by the time that they're 85 and 20 years from then what they need to put in annually, and even though they're retired, and even though they're on a fixed income, they're not having to pay that money to an insurance company. They're just putting that money away into that separate account on a yearly basis.
Brent: And when they're 85, they can use that money however they want. Or if in 10 years from then they decide, Hey, I don't think I'm gonna need longterm care. These are the reasons why they have that money out fully accessible to them. They just sell their stocks or they sell their securities and they move on and they can able to use that money, but they're in full control of that money at any point in their life.
Brent: They're taking control of their longterm care situation. They're not saying I'm not going to spend anything. I'm so afraid of what's going to happen. If I need long term care, they're saying I'm creating this other little side bucket of money. I'm committing resources to it every single year. I'm investing it at a risk at a higher risk because my duration is long.
Brent: It's different than the rest of the way my retirement is invested. And if I need this money in 20 years, I have it now available to me.
Matthew: Yeah. You're, you're kind of setting up like a 401k or IRA for long-term care.
Joshua: The way I look at it is you're building your own insurance policy. I mean, that's really what you're, in my eyes, what you're doing.
Joshua: Right. You're making the premiums to yourself. You're just in control of it all, and you're, you don't have all of the cost of insurance. Limiting your options later in life either.
Matthew: It'd be great if the government came up with some kind of tax deferred way for Americans to save like this.
Joshua: That's a good
Brent: idea.
Brent: You would think because they're covering the cost of people who don't but I don't, I think there's obviously always going to people be people that can't cover the cost on their own. But if you're in a position to save money, it is another great way to put it away, put it aside because remember when you're.
Brent: At that point, let's say there is 300, 000. You're keeping that money invested during that time. So you're not going to be selling all of your stocks at that point. That money is going to keep growing while you're taking it out. And hopefully you're able to withdraw it down slowly that it really can cover you for a much longer amount of time.
Brent: And the quality of care that you get is at the better choosing of you or, and your kids at that time. That you can be in a facility that has a lot of value to you. Maybe location is good for your kids. Maybe the type of food that you're getting there is better. Maybe the, the, the quality of care is top notch of what you need.
Brent: But you're picking facility. You're not having a set list of, of nursing homes that you have to go to because your insurance company says you have to,
Matthew: yeah, you're in control. And Josh, I just thought of something. I could be wrong. HSAs. Can you use this for long term
Joshua: insurance premiums? I think you could pay insurance premiums out of them, but it is a healthcare related event.
Joshua: I don't know off the top of my head for sure. I'd have to look that up, but I don't remember either. That could be potentially a good option.
Brent: But I, I think you guys made some good points. I mean, when you're planning to, for long term care is important to discuss these things with your family. Always make sure also you have your power of attorneys and wills in place, because I mean, while it's difficult to make healthcare decisions for yourself, if you're not in the mental state to make that, you want your kids to do that for you.
Brent: So get your affairs obviously always in order. Make sure your power of attorneys are in place. But also get familiar with these situations as you think about your own retirement and you think about your own longterm care. I know I think about that stuff. I mean, yeah, it's because I'm also in the industry, but at 85, you know, I probably have ideal areas.
Brent: Where I want to be living or facilities that I would want to be at where, you know, it's more conducive to what I'd want for the last stages of my life.
Joshua: Two things. I have HSAs you can use for long term care. All right. Yes. Good. So that could be another use case for HSA accounts. To piggyback on what you said, I think if it's.
Joshua: Important to you, right? You're thinking about life and long term care. I think in summary, there are a lot of options for you. If you want to take the planning steps and it's not just being sold an insurance policy
Matthew: and, you know, invest in, it's a great way that makes a lot of sense.
Brent: Yeah, I don't think there's the perfect scenario for everybody.
Brent: I think there's good options that requires in depth financial planning, retirement planning, as you're starting to plan and go through that, you know, whether it's the transition into retirement or you're just purely enjoying retirement, those conversations need to be discussed on what are we going to do if we get into a situation where one spouse, both spouse need long term care and the cost starts to go up to hundreds of thousands of dollars.
Brent: How are we going to cover ourself? Well, we know there's different ways and these are all very good options.
Matthew: Any final thoughts guys? No. Well said, Brett.
Brent: Let's get into our recommends.
Matthew: All right. I'll get us started. I'll kick us off. Weather's starting to get a little bit better. Sun's out, been warming up, have what?
Matthew: 70s, 80s last week or so. I got the water table out for the kids.
Joshua: I was surprised that like, Oh, it went over 80, right?
Matthew: Yeah, it's nice weekend. Water table. Do you have one Josh? I do. Yeah, Brent. Your kids are probably a little old for a water table. You've moved on to pools. Yeah, they want a
Brent: pool. But they love, I have so many pictures of them using water tables as kids.
Brent: Yeah, I
Matthew: highly recommend it. Grandparents or new parents, you know, get a water table down, take one down. Even if you're like a grandparent and you have the grandkids coming over just for the day. I mean, the water tables aren't that expensive. Buy one, put it in the backyard. Your grandkids will think it's the greatest thing ever.
Matthew: Yeah.
Joshua: We got one. And then grandma, my mom got one for when our little guy goes over there. He loves them.
Matthew: I showed my mom the pictures this weekend of the kids doing it. And she was like, Oh, I should probably get one for my house too. I mean, Costco has them
Joshua: pretty affordable.
Matthew: Who wants to go next?
Joshua: I'll go next.
Joshua: I wanted to thank Matt and his wife. He brought in some Eclipse glasses today. I was not prepared. We didn't even talk about the Eclipse. I know. Crazy, right? But what a wild outcome I recommends is the next eclipse. You need eclipse glasses so you could actually take a look at it. When's the next eclipse next week?
Joshua: The last one was the last one they told me was once in a lifetime. I think I've seen a couple now, but yeah, you need glasses. And I got to see the eclipse. I think I remember even wearing those type of glasses in school when we had an eclipse, like an elementary school.
Matthew: But yeah, that was cool. Thank you.
Matthew: Shout out to Haley. Yeah,
Brent: absolutely. My recommends is Full Swing on Netflix. Season two of Full Swings is out, which is a, a golf documentary. And it's goes through some of the players time on the, and different events and events that they either won or that they participated in. And you get to see like an inside, like part of the golfer's life, both with their family and what they go through.
Brent: But in a couple of seasons, it also went through their experience on going through the Ryder Cup when the U. S. plays Europe in a team event. Which is completely different format than regular golf. And how exciting that type of event was like, I don't get to watch again, a lot of shows, but I was traveling and I was able to watch a lot of those episodes.
Brent: Phenomenal show. I think it seemed like that show was a complete hit last season. And like, it seems like from the show this season, like there, some of these guys are just completely famous now because of putting on the show or having people see the show.
Matthew: Yeah. I mean, I got a lot to say,
Matthew: but actually I'm just going to speak for all your clients right now who've come up to Josh and I, you know, some client events or seeing us around the office and talk golf with Josh and I. And they're always like, when's Brent gonna get out on the course?
Joshua: Hopefully this is getting him to take that one step forward to actually playing golf with us.
Matthew: Lights the fire.
Brent: Yeah, lights the fire. I don't have a lot of time to play golf, but it makes me want to go to the next Ryder Cup and so I was already looking into tickets to Ryder Cup, which is in New York next year. Which would be a pretty cool event to go to. I'll let you, I'll let you take me to the Ryder cup.
Joshua: I was really excited. Cause I walked into Brent's office and he was telling me you watch full swing. It's like, did you watch it? I was like, I actually haven't yet. I watched all the first season and he was looking up like the Ryder cup details for the next year's event. And I was like, hopefully this is the start of something really good for Brenton golf.
Joshua: But the show's really good. I've just, I'm halfway through season two and really have liked it.
Matthew: I'll get excited when I walk into Brent's office and he's comparing Scotty Cameron putters and asking me which one he should get.
Joshua: Did you have a favorite golfer?
Brent: No, I just enjoy watching all of their experiences.
Brent: I think they're, they're all so unique in their own ways. But what it does make me do is have another bucket list. Like I, I think now I start to think about what are all the things I want to experience? Like the Ryder cup would definitely be one I'd want to experience. That seems like an outstanding event to go to.
Joshua: Yeah, I agree. I
Brent: mean, it's master's week too. I mean, going to the master's would be cool. Yes. Going to the master's would be outstanding also. All right. So let's close the show as advisors, our passion is, is, is assisting others. It's the very reason we've chosen this path. For those interested in arranging a meeting with any of our team members, please visit evermont.
Brent: com to book a complimentary consultation. Additionally, we invite you to download our ebook directly from our website and for access to the shows episode notes, please head over to the retirement plan, playbook. com. Thank you. Thank you.
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