Planning for Long-Term Care: Costs, Risks & Smart Strategies

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It's long-term care awareness month, so today

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we are talking about the challenges people have

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with financial planning when dealing with the costs

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of long-term care and how do you

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figure how to address it.

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Let's talk more on Something More.

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Welcome to Something More with Chris Boyd.

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Chris Boyd is a certified financial planner, practitioner,

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and senior vice president and financial advisor at

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Wealth Enhancement Group, one of the nation's largest

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registered investment advisors.

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We call it Something More because we'd like

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to talk not only about those important dollar

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and cents issues, but also the quality of

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life issues that make the money matters matter.

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Here he is, your fulfillment facilitator, your partner

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in prosperity, advising clients on Cape Cod and

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across the country.

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Here's your host, Jay Christopher Boyd.

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Welcome, everyone.

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Thanks for being with us.

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I'm Chris Boyd.

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I'm here with Jeff Perry and Russ Ball.

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We are all of the AMR team at

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Wealth Enhancement and glad to have you with

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us for another episode.

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November is Long-Term Care Awareness Month.

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It's probably a good thing to have this

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once in a while because this is a

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topic nobody likes to talk about, but it

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can be consequential in your financial planning.

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The costs of long-term care are significant.

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Long-term care, for setting the stage, what

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is it?

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Long-term care is the kind of care

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that isn't immediate and acute.

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It's not care in a hospital or going

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to your doctor.

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It's rehab.

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It's a nursing home.

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It's home health care.

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It can be a wide range of the

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ways we receive care, but this can have

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a corrosive effect on one's resources because the

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costs are quite substantial.

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We find that as we are an aging

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society, we are living longer.

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We have good medical care in many cases.

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You can all complain about some of the

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way the system works, of course, and the

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costs associated with it, but people are living

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longer generally.

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We had a disruption with the pandemic, but

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that's behind us.

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Not to say that COVID doesn't exist, but

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that's not really disrupting people's length of life

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at this point as much.

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Statistically, we are living longer.

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As we live longer, we have the risk

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of more chronic issues and the need for

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more assistance, whether that is cognitive impairment or

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physical challenges.

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How we deal with those, when we pay

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for that assistance, that's essentially what we're talking

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about when it comes to long-term care.

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Now, there are other examples outside of aging,

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stroke or some kind of head injury.

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There are things that happen that can create

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this need at different stages of life.

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There are certain illnesses that can affect people

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sooner.

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Certainly, early onset Alzheimer's, maybe ALS is an

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example that we think of as something that

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can hit people at all ages.

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By and large, this is something we associate

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with aging.

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The challenge becomes, how do we deal with

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it?

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How do we think about this?

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Jeff, you look like you're about to comment

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on something.

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It's the thing that when we do the

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financial planning and we get to stress testing

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their financial plan and looking at what ifs

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and all this, it's the thing that most

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people dismiss really quickly.

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It's like, that's not going to happen to

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me, or we're going to take care of

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each other, or my child is going to

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move in with us, even though maybe the

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child hasn't been talked to yet.

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Do they know that?

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Do they know they're giving up their job

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to help you with your care?

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It's all around us, whether you've had an

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elderly grandparent, a parent, whether you have a

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neighbor, it's not something that's invisible.

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One of the statistics that surprised me when

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we were reviewing long-term care month in

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November was that over 70% of Americans

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turning 65 require some form of long-term

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care during their lifetime.

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Isn't that astounding?

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Seven in 10.

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Now, that could be a shorter rehab.

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It could be a prolonged stay in a

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nursing home facility, could be assisted living, all

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these variables.

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There's a wide range of possibilities.

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But when you think about that, of those

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who are in retirement at some point, as

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many as 70% will have a need

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for assistance in this way.

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How do you be dismissive of that?

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We have all the jokes.

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Used to be people would throw out the

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phrase, we're calling Dr. Kevorkian or something like

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that.

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Russ, you might not know who Dr. Kevorkian

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is.

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He was the assisted suicide doctor.

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Russ is the young guy, if people don't

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know in the crowd here.

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But nowadays, it's like, oh, well, we've got

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a pillow or some kind of way to

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dismiss it.

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Yeah, people use humor to dismiss it.

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Or I just had someone in the office

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the other day who said, I just won't

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do that.

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Right.

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Yeah, but no.

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You'd like to be in a position where

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you just won't have that.

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But we don't always have control of these,

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particularly if we're at a stage of life

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when we're frail.

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And we may not be independent to say,

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nope, I'm not going to do that.

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You might have the will of saying, I

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don't want to be in a position where

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I need assistance.

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But again, as we said, there's a range

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of things.

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If you need some assistance, it's different from

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that image we have of someone in a

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nursing home and just not having their faculties

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and so on.

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They're just in a real sad situation.

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That's not always what we're talking about here.

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No, no.

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And it says, so 70%, if you're 65,

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70% of those people have some type

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of long term care event.

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And it may be handled in the ways

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that we're describing.

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It could be a family member, it could

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be a short stay.

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So that's a reasonably high frequency occurring.

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And the impact to a financial plan can

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be significant.

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So it's not really something that you should

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ignore because the impact could be half a

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million dollars.

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It could be.

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And it really depends, right?

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You had a client in the other day

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who was paying out of pocket for care

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at home for his spouse who is suffering

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from cognitive decline, dementia, maybe Alzheimer's.

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And he said something more like 300 and

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something.

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Was it 350 or something?

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He was pulling out of his pocket to

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pay.

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Now, he had the resources and he could.

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So it was money well spent.

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Not everyone has those kinds of resources to

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be able to do that as the option

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to say, I want the comforts of home.

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Right.

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Well, the two ends of the spectrum don't

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have to worry about it.

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If you have no money, there's going to

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be Medicaid.

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And if you have a lot of money,

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you can pay out of pocket.

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It's the people, as it is usually, right?

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The people that are kind of in the

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middle.

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Yeah.

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They have wealth, but not enough to feel

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like, oh, it's no worry at all.

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The real worry scenario is that kind of

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person that has wealth, but not so much

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that it's easy to address out of pocket.

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And the first of the spouses in a

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married couple has the need for institutional care

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that could really be draining to their wealth,

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leaving the surviving spouse in a position where

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they're really compromised for their financial security.

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You know what I mean?

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That's the worry scenario.

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So, interestingly, it seems as though for so

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many people having the risk of being affected

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by this, it's pretty modest as to how

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many people have chosen to insure to help

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them mitigate this risk from depleting their wealth.

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Yeah.

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I think it was something like 11%.

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Exactly.

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According to our data, it's only 11%

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have purchased a long-term care policy.

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I think, I mean, I'm sure you have

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more to say on that, but I think

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long-term care, generally, long-term care insurance

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has a reputation now for being extremely expensive

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for premiums going up year after year, which

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people obviously don't like.

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So, I think it's kind of become one

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of those things that it's like, yeah, that's

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way too much for me.

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And we get that a lot when clients...

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We do.

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And I think it's important to distinguish some

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of that.

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So, if I'm buying a policy today, I'm

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paying a much higher premium than someone who

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bought that same amount of coverage in 1995

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or whatever it might have been, you know,

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30 years ago, 25 years ago.

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The premiums they charged were understated relative to

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the amount of claims.

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People are living longer.

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People are needing this more.

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They didn't plan well.

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They didn't invest well.

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The interest rates were very low for a

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prolonged time.

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In the 90s, before HIPAA, this wasn't a

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mainstream product.

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It was a fringe product.

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So, all these variables factor into why it

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is that insurance companies didn't properly price the

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product.

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So, now they're paying the price by trying

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to jack these prices up on existing insureds.

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Whereas people who buy it today, I don't

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think they have to worry as much that

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their premiums are going to go higher because

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they've already built in much higher costs at

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the outset.

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So, it is more costly.

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And now there's other ways of trying to

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approach this as an insurance product with life

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insurance or annuity hybrid products.

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Before we dig into any insurance solution, let's

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put some perspective on how do we treat

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this?

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How do we think about when do I

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insure?

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Should I insure at all?

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So, as you pointed out, Jeff, if I

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have very modest assets, I'm going to spend

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through them quickly and then I'd have availability

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to benefit from a welfare resource that the

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states provide.

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Medicaid is designed for people who run out

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of resources for health concerns.

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And it is this kind of circumstance where

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we find that bankruptcies are driven oftentimes by

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health events, healthcare costs.

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And this is one of those circumstances.

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People in their elder years who end up

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00:11:57,080 --> 00:12:01,020
on Medicaid exhaust their resources to be eligible

276
00:12:01,020 --> 00:12:02,340
to be on Medicaid.

277
00:12:03,660 --> 00:12:07,900
Not ideal, but at least there's a resource

278
00:12:07,900 --> 00:12:10,820
if you do run out of resources of

279
00:12:10,820 --> 00:12:13,020
your own, the state is helping.

280
00:12:14,300 --> 00:12:17,400
Oftentimes, the question is, is that the best

281
00:12:17,400 --> 00:12:18,040
quality?

282
00:12:18,220 --> 00:12:19,880
Am I getting what I would have otherwise?

283
00:12:20,780 --> 00:12:22,680
And it may not be at home in

284
00:12:22,680 --> 00:12:23,520
those circumstances.

285
00:12:23,720 --> 00:12:25,520
It might be in- It's choices are

286
00:12:25,520 --> 00:12:26,440
limited for sure.

287
00:12:26,700 --> 00:12:27,060
Less choices.

288
00:12:27,280 --> 00:12:31,100
So, that's another reason why insurance can be

289
00:12:31,100 --> 00:12:34,720
preferable to open up some possibility of choices.

290
00:12:34,940 --> 00:12:37,460
But in those instances when we have modest

291
00:12:37,460 --> 00:12:43,080
resources, the cost of coverage might exacerbate the

292
00:12:43,080 --> 00:12:45,740
problem and it may not be a priority.

293
00:12:47,020 --> 00:12:49,260
And as you said, for people who have

294
00:12:49,260 --> 00:12:53,060
wealth, one of the things we do when

295
00:12:53,060 --> 00:12:55,100
we do a financial plan is stress test

296
00:12:55,100 --> 00:12:58,260
to say, well, what would happen if we

297
00:12:58,260 --> 00:13:01,020
had a prolonged long-term care scenario?

298
00:13:01,700 --> 00:13:05,940
Could we withstand the costs that might be

299
00:13:05,940 --> 00:13:07,220
associated with that?

300
00:13:08,040 --> 00:13:10,660
And if the answer is generally, yeah, it

301
00:13:10,660 --> 00:13:12,120
looks promising.

302
00:13:12,520 --> 00:13:15,260
You could hold your ground.

303
00:13:15,660 --> 00:13:19,080
You might lose some wealth, but you wouldn't

304
00:13:19,080 --> 00:13:20,200
go penniless, right?

305
00:13:20,240 --> 00:13:23,500
Or wouldn't exhaust your wealth and your spouse

306
00:13:23,500 --> 00:13:26,880
would still have resources if they survived you,

307
00:13:27,080 --> 00:13:30,520
that kind of thing, then it becomes optional.

308
00:13:30,720 --> 00:13:31,860
Do I want to insure?

309
00:13:32,140 --> 00:13:34,440
Do I want to mitigate that risk or

310
00:13:35,060 --> 00:13:36,840
pass that risk to the insurance company?

311
00:13:37,000 --> 00:13:38,560
If the answer is yes, fine, do insurance.

312
00:13:38,900 --> 00:13:40,400
You can afford it in that scenario.

313
00:13:41,080 --> 00:13:43,340
If the answer and more often than not

314
00:13:43,340 --> 00:13:44,580
is, I don't think I want to spend

315
00:13:44,580 --> 00:13:45,980
that money because I don't know if I'll

316
00:13:45,980 --> 00:13:46,560
need it.

317
00:13:47,420 --> 00:13:49,620
And they're less inclined to, they're more inclined

318
00:13:49,620 --> 00:13:51,200
to say, I'll cover it out of my

319
00:13:51,200 --> 00:13:51,760
own pocket.

320
00:13:52,520 --> 00:13:55,820
So then you've got this middle ground where

321
00:13:55,820 --> 00:13:58,000
it would do damage.

322
00:13:58,620 --> 00:14:02,860
And we find oftentimes people still are reluctant

323
00:14:02,860 --> 00:14:06,240
to use an insurance product as the solution

324
00:14:06,240 --> 00:14:06,940
to that.

325
00:14:07,480 --> 00:14:11,560
Though I think now we can maybe enter

326
00:14:11,560 --> 00:14:15,480
into that discussion, but there's some interesting product

327
00:14:15,480 --> 00:14:17,320
solutions to help people with that.

328
00:14:18,020 --> 00:14:20,500
One option is to take a chunk of

329
00:14:20,500 --> 00:14:22,340
money, put it into an either an annuity

330
00:14:22,340 --> 00:14:24,980
or an life insurance product that is designed

331
00:14:24,980 --> 00:14:27,340
with long-term care costs in mind.

332
00:14:28,340 --> 00:14:30,800
And it might go a long way in

333
00:14:30,800 --> 00:14:32,600
mitigating those costs.

334
00:14:32,780 --> 00:14:36,220
And if you don't have a long-term

335
00:14:36,220 --> 00:14:39,280
care event, there's the possibility you'd get money

336
00:14:39,280 --> 00:14:39,700
back.

337
00:14:40,320 --> 00:14:40,420
Yeah.

338
00:14:40,520 --> 00:14:42,020
Well, that's one of the objections.

339
00:14:43,100 --> 00:14:46,180
We already said that people say, I'm not

340
00:14:46,180 --> 00:14:46,800
going to use this.

341
00:14:47,000 --> 00:14:49,100
I get another solution, et cetera.

342
00:14:49,980 --> 00:14:52,020
And they're thinking, well, if I pay these

343
00:14:52,020 --> 00:14:54,140
premiums, it's just throwing money out the window

344
00:14:54,140 --> 00:14:55,480
because I may never use it.

345
00:14:55,620 --> 00:14:56,800
Like all insurance, by the way.

346
00:14:56,960 --> 00:14:57,820
Yeah, exactly.

347
00:14:57,980 --> 00:14:59,760
That's the point of insurance, right?

348
00:14:59,980 --> 00:15:03,560
But the annuity hybrid policies do add at

349
00:15:03,560 --> 00:15:06,040
least the option of getting income from that

350
00:15:06,040 --> 00:15:08,820
policy, if you will, or a death benefit

351
00:15:08,820 --> 00:15:11,420
if there's a life insurance piece component to

352
00:15:11,420 --> 00:15:11,600
it.

353
00:15:11,960 --> 00:15:13,380
So I think that takes away one of

354
00:15:13,380 --> 00:15:14,320
the objections anyway.

355
00:15:14,960 --> 00:15:17,520
I will point out there is another consideration

356
00:15:17,520 --> 00:15:18,060
to that.

357
00:15:18,980 --> 00:15:21,560
In the case of an annual premium, I'm

358
00:15:21,560 --> 00:15:24,820
using a very modest amount of my wealth,

359
00:15:24,960 --> 00:15:26,280
my resources annually.

360
00:15:26,480 --> 00:15:29,460
It's a percentage of my returns perhaps each

361
00:15:29,460 --> 00:15:31,020
year, right?

362
00:15:32,040 --> 00:15:34,720
Whereas if I take a lump sum of

363
00:15:34,720 --> 00:15:38,640
money I've set aside, maybe they're giving up

364
00:15:38,640 --> 00:15:40,920
some earning opportunity in the process because these

365
00:15:40,920 --> 00:15:43,540
products that do this don't give as good

366
00:15:43,540 --> 00:15:44,880
a rate of return, right?

367
00:15:45,260 --> 00:15:50,120
But I've taken $100,000, $150,000 of

368
00:15:50,120 --> 00:15:53,280
my resources and put it in this, I'm

369
00:15:53,280 --> 00:15:54,740
going to call it a sinking fund of

370
00:15:54,740 --> 00:15:55,520
sorts, right?

371
00:15:55,540 --> 00:15:57,320
It's allocated for this purpose.

372
00:15:57,640 --> 00:16:00,180
It may not be performing the way it

373
00:16:00,180 --> 00:16:02,260
would otherwise, right?

374
00:16:02,540 --> 00:16:04,400
But if I have a long-term care

375
00:16:04,400 --> 00:16:08,740
event, the insurance product I've paid an annual

376
00:16:08,740 --> 00:16:14,760
premium, in the case of the $150,000

377
00:16:14,760 --> 00:16:17,640
instance, I'm going to use my money.

378
00:16:17,740 --> 00:16:19,920
The insurance company is using my money in

379
00:16:19,920 --> 00:16:20,620
that scenario.

380
00:16:20,960 --> 00:16:23,620
I've given up a significant portion of wealth

381
00:16:23,620 --> 00:16:26,560
that before the insurance is really going to,

382
00:16:26,720 --> 00:16:29,400
the company is really going to factor in.

383
00:16:30,060 --> 00:16:33,320
So I've got a much higher deductible, if

384
00:16:33,320 --> 00:16:36,120
you will, in this scenario because I've got

385
00:16:36,120 --> 00:16:39,080
more skin in the game, which isn't something

386
00:16:39,080 --> 00:16:41,800
we don't always think about with that trade

387
00:16:41,800 --> 00:16:43,260
-off of, oh, if I don't use it,

388
00:16:43,320 --> 00:16:44,880
I'll at least get my money back.

389
00:16:45,860 --> 00:16:48,200
Yes, but you're putting more of your money

390
00:16:48,200 --> 00:16:52,620
up front as the way to manage that

391
00:16:52,620 --> 00:16:53,700
cost, right?

392
00:16:54,840 --> 00:16:57,040
Counterpoint is you don't have to worry about

393
00:16:57,040 --> 00:17:01,760
increasing premiums because you've made the commitment, you

394
00:17:01,760 --> 00:17:03,680
put the money in, you know your benefit.

395
00:17:04,339 --> 00:17:05,920
You don't have to worry in 10 years,

396
00:17:06,000 --> 00:17:08,920
if you're paying annual premiums, that the premium

397
00:17:08,920 --> 00:17:10,900
is going to double or whatever people worry

398
00:17:10,900 --> 00:17:11,160
about.

399
00:17:11,640 --> 00:17:11,740
It's a good point.

400
00:17:11,740 --> 00:17:13,160
And then the other thing that we have

401
00:17:13,160 --> 00:17:16,040
to be looking at is, does that scenario,

402
00:17:17,040 --> 00:17:19,180
some do, some don't, does it account for

403
00:17:19,180 --> 00:17:21,500
an inflationary issue?

404
00:17:22,200 --> 00:17:24,980
Some products don't account for that.

405
00:17:25,420 --> 00:17:28,060
So it may be important that you at

406
00:17:28,060 --> 00:17:30,840
least try to work that into your numbers.

407
00:17:31,280 --> 00:17:33,440
I find a lot of times people have

408
00:17:33,440 --> 00:17:36,220
bought an insurance policy, a traditional policy, but

409
00:17:36,220 --> 00:17:40,520
they didn't include an inflation feature and that's

410
00:17:40,520 --> 00:17:43,380
diminished value over time, right?

411
00:17:44,080 --> 00:17:46,580
Cost of care going up, you know, we

412
00:17:46,580 --> 00:17:49,480
have 5%, right?

413
00:17:50,720 --> 00:17:53,840
The healthcare kind of costs, which go up

414
00:17:53,840 --> 00:17:55,460
high, you know, go up faster.

415
00:17:56,660 --> 00:18:01,800
Anyway, so insurance is one of the possibilities.

416
00:18:01,900 --> 00:18:03,400
Maybe it's worth talking about what are the

417
00:18:03,400 --> 00:18:05,180
costs for different kinds of care?

418
00:18:05,840 --> 00:18:07,820
Because, you know, when we talk about it

419
00:18:07,820 --> 00:18:12,020
nationally, the numbers are one number, but in

420
00:18:12,020 --> 00:18:17,400
our region, in Massachusetts, your region, my region,

421
00:18:17,540 --> 00:18:18,980
our area, yeah, it's Ross and I over

422
00:18:18,980 --> 00:18:22,060
here, Jefferson, Florida, where it's a little less

423
00:18:22,060 --> 00:18:23,400
costly than it is in Massachusetts.

424
00:18:24,440 --> 00:18:27,040
It's tied to the cost of living really.

425
00:18:27,620 --> 00:18:29,780
And the, you know, what they have to

426
00:18:29,780 --> 00:18:30,760
pay for wages.

427
00:18:31,260 --> 00:18:34,800
You can't have AI bring efficiencies to your

428
00:18:34,800 --> 00:18:38,060
long-term care provider, to help you out

429
00:18:38,060 --> 00:18:39,680
of the chair or to move from the

430
00:18:39,680 --> 00:18:42,200
bed to the chair or to feed you

431
00:18:42,200 --> 00:18:45,100
or make meals for you or whatever it

432
00:18:45,100 --> 00:18:45,440
is, right?

433
00:18:46,420 --> 00:18:50,460
This is dispense medication or whatever, you know,

434
00:18:50,500 --> 00:18:52,820
all the things that can happen with some

435
00:18:52,820 --> 00:18:54,400
form of long-term care.

436
00:18:54,680 --> 00:18:58,240
It is people, it's a people care and

437
00:18:58,240 --> 00:19:00,140
it is people who do that.

438
00:19:00,760 --> 00:19:02,480
And that's where the costs lie.

439
00:19:02,600 --> 00:19:05,400
So if you live in a more higher

440
00:19:05,400 --> 00:19:08,140
cost of living area, the costs of care

441
00:19:08,140 --> 00:19:09,000
are quite high.

442
00:19:09,640 --> 00:19:11,380
If you live in a lower cost of

443
00:19:11,380 --> 00:19:14,300
living part of the country, that's going to

444
00:19:14,300 --> 00:19:14,580
help.

445
00:19:14,760 --> 00:19:17,700
So if you have family in, I don't

446
00:19:17,700 --> 00:19:20,320
know, Mississippi or Alabama or one of those,

447
00:19:20,380 --> 00:19:22,200
I think those are the places where it's

448
00:19:22,200 --> 00:19:24,220
a little less costly for long-term care.

449
00:19:25,020 --> 00:19:26,340
Maybe that's where you want to receive your

450
00:19:26,340 --> 00:19:26,700
care.

451
00:19:26,880 --> 00:19:27,580
I don't know.

452
00:19:27,760 --> 00:19:29,080
It's a lot less out of pocket.

453
00:19:30,040 --> 00:19:33,860
Whereas if you are in New England or,

454
00:19:33,920 --> 00:19:38,220
you know, California, Los Angeles and San Francisco,

455
00:19:38,560 --> 00:19:39,780
you know, the costs of care are going

456
00:19:39,780 --> 00:19:41,120
to be much higher.

457
00:19:41,320 --> 00:19:42,640
If you're in the DC area, it's going

458
00:19:42,640 --> 00:19:44,520
to be costly, you know, that kind of

459
00:19:44,520 --> 00:19:44,720
thing.

460
00:19:44,760 --> 00:19:46,960
You can kind of get a feel for

461
00:19:46,960 --> 00:19:49,540
where, you know, where these higher costs of

462
00:19:49,540 --> 00:19:52,720
living locations are, it's going to correspond.

463
00:19:53,240 --> 00:19:56,140
So today in our area, the cost of

464
00:19:56,140 --> 00:19:59,100
a nursing home on Cape Cod, in the

465
00:19:59,100 --> 00:20:04,520
ballpark of $180,000 a year for, you

466
00:20:04,520 --> 00:20:07,640
know, a full-time nursing home scenario, if

467
00:20:07,640 --> 00:20:11,200
you had cognitive care, that's more, you know,

468
00:20:11,220 --> 00:20:13,800
because there's different precautions that need to be

469
00:20:13,800 --> 00:20:17,040
planned for and it's a higher level of

470
00:20:17,040 --> 00:20:17,240
care.

471
00:20:18,260 --> 00:20:21,740
So if you're in assisted living, it's less,

472
00:20:22,240 --> 00:20:25,620
you know, but it's still, you know, not

473
00:20:25,620 --> 00:20:26,660
inconsequential.

474
00:20:27,320 --> 00:20:30,800
Insurance can help with the range of care.

475
00:20:32,080 --> 00:20:35,540
But in any case, what about family?

476
00:20:35,740 --> 00:20:39,820
You know, we find that, Jeff, I don't

477
00:20:39,820 --> 00:20:41,580
know, would we can be considered still the

478
00:20:41,580 --> 00:20:42,600
sandwich generation?

479
00:20:44,520 --> 00:20:45,660
Well, I think so.

480
00:20:45,820 --> 00:20:48,340
I mean, you know, being late 50s, early

481
00:20:48,340 --> 00:20:50,240
60s, your parents are getting older.

482
00:20:50,360 --> 00:20:52,260
I went through this with my mom, as

483
00:20:52,260 --> 00:20:56,360
you know, and yes, you're the, you know,

484
00:20:56,400 --> 00:20:57,740
you're the first line of defense.

485
00:20:58,020 --> 00:21:00,520
And, you know, everybody wants, thinks that they

486
00:21:00,520 --> 00:21:02,560
can take care of their parents or their

487
00:21:02,560 --> 00:21:03,160
loved ones.

488
00:21:03,240 --> 00:21:04,900
Not everybody, but a lot of people think

489
00:21:04,900 --> 00:21:06,400
they're going to take them into the home

490
00:21:06,400 --> 00:21:07,460
and provide care.

491
00:21:07,900 --> 00:21:11,640
But from, you know, from my experience, that

492
00:21:11,640 --> 00:21:13,940
can work for a short time, depending on

493
00:21:13,940 --> 00:21:17,080
the ability, the cognitive ability, the physical ability.

494
00:21:17,640 --> 00:21:19,880
But as someone ages and they lose their

495
00:21:19,880 --> 00:21:21,600
ability to be, you know, to be mobile

496
00:21:21,600 --> 00:21:23,260
or to make good decisions on their own,

497
00:21:24,160 --> 00:21:27,420
it's really not the best decision to take

498
00:21:27,420 --> 00:21:29,920
care of somebody in the home, especially if

499
00:21:29,920 --> 00:21:32,880
there's, you know, is the home adequate in

500
00:21:32,880 --> 00:21:35,540
first floor living and all these things.

501
00:21:35,860 --> 00:21:36,800
It's the structure of it all.

502
00:21:36,820 --> 00:21:40,320
It's caregiver fatigue is something that is.

503
00:21:40,400 --> 00:21:42,120
Really a big part of it, right?

504
00:21:42,480 --> 00:21:47,660
It's just one person, one, you know, a

505
00:21:47,660 --> 00:21:51,620
child, a spouse, whoever is that caregiver.

506
00:21:52,380 --> 00:21:55,040
It really is hard for them to do

507
00:21:55,040 --> 00:21:55,820
it on their own.

508
00:21:56,260 --> 00:21:59,100
You know, and oftentimes physically, if, you know,

509
00:21:59,180 --> 00:22:01,220
the you can kind of have the visual

510
00:22:01,220 --> 00:22:04,760
of the frail, older woman trying to take

511
00:22:04,760 --> 00:22:08,260
care of the, you know, much taller, heavier

512
00:22:08,260 --> 00:22:10,260
husband, you know.

513
00:22:11,180 --> 00:22:11,780
How's that?

514
00:22:11,980 --> 00:22:12,800
We've had that.

515
00:22:13,060 --> 00:22:15,460
And, you know, with a five foot two

516
00:22:15,460 --> 00:22:17,500
woman weighing a hundred pounds with a 250

517
00:22:17,500 --> 00:22:20,200
pound husband and her looking at us and

518
00:22:20,200 --> 00:22:21,500
saying, I'm going to be able to take

519
00:22:21,500 --> 00:22:22,040
care of him.

520
00:22:22,040 --> 00:22:22,820
Yeah.

521
00:22:23,200 --> 00:22:23,640
Yeah.

522
00:22:24,280 --> 00:22:29,380
And I mean, to a point, but, you

523
00:22:29,380 --> 00:22:32,820
know, it's one thing when it's like, oh,

524
00:22:33,300 --> 00:22:34,980
you know, my fingers aren't as nimble as

525
00:22:34,980 --> 00:22:35,800
they used to be.

526
00:22:36,160 --> 00:22:38,220
Need a little help with the buttons or,

527
00:22:38,340 --> 00:22:40,060
you know, some of the things that are

528
00:22:40,600 --> 00:22:42,760
the activities of daily living.

529
00:22:43,540 --> 00:22:47,320
But, you know, and those typically just to

530
00:22:47,320 --> 00:22:49,840
review, you know, that's the things you do

531
00:22:49,840 --> 00:22:51,980
when you when you wake up, you get

532
00:22:51,980 --> 00:22:54,040
out of bed, transferring.

533
00:22:54,500 --> 00:22:54,640
Right.

534
00:22:55,340 --> 00:22:58,480
So mobility, you're able to move around, you

535
00:22:58,480 --> 00:23:01,820
go to the bathroom, you take a shower,

536
00:23:01,980 --> 00:23:04,320
you dress, you have your breakfast, you know.

537
00:23:04,480 --> 00:23:07,760
So these various kinds of things that are

538
00:23:07,760 --> 00:23:11,340
the activities of daily living, if you're not

539
00:23:11,340 --> 00:23:15,520
fully able to handle them yourselves, these are

540
00:23:15,520 --> 00:23:18,060
when people typically look to long term care

541
00:23:18,060 --> 00:23:18,940
to assist.

542
00:23:20,120 --> 00:23:22,560
And it could be for cognitive or physical,

543
00:23:22,780 --> 00:23:25,740
right, that drive these issues.

544
00:23:26,660 --> 00:23:29,080
So in any case, you know, it's one

545
00:23:29,080 --> 00:23:30,540
thing to start with a little bit of

546
00:23:30,540 --> 00:23:31,880
help and it's a team effort.

547
00:23:32,180 --> 00:23:35,360
And then as things progress, it may be

548
00:23:35,360 --> 00:23:39,200
not as viable to be that caregiver.

549
00:23:39,740 --> 00:23:44,160
And oftentimes it's it's not uncommon for the

550
00:23:44,160 --> 00:23:48,500
caregiver to get sick from this being so

551
00:23:48,500 --> 00:23:53,760
attentive and concerned and caring, but stressed that

552
00:23:53,760 --> 00:23:56,340
they end up having their own health events.

553
00:23:56,760 --> 00:23:59,640
And then you've got two people with challenges.

554
00:24:00,240 --> 00:24:01,840
So you don't want to leave things to

555
00:24:01,840 --> 00:24:04,980
a point where you're you're in that strained

556
00:24:04,980 --> 00:24:05,980
scenario.

557
00:24:06,360 --> 00:24:08,500
You know, we just had a conversation about

558
00:24:08,500 --> 00:24:11,000
this, the idea of being the sole caregiver

559
00:24:11,000 --> 00:24:14,580
with a client this week and saying, you

560
00:24:14,580 --> 00:24:16,640
know, don't want it.

561
00:24:16,740 --> 00:24:18,720
It's easy for it to become a strain

562
00:24:18,720 --> 00:24:21,700
for the the person who's doing that caregiving.

563
00:24:21,880 --> 00:24:25,300
You need to bring in some help before

564
00:24:25,300 --> 00:24:26,460
you get.

565
00:24:27,460 --> 00:24:29,120
Yeah, before you get to a point where

566
00:24:29,120 --> 00:24:31,640
you're so drained, you know.

567
00:24:33,120 --> 00:24:35,280
So what else should we cover in this

568
00:24:35,280 --> 00:24:36,020
topic, Jeff?

569
00:24:36,680 --> 00:24:38,400
I think we should jump back to the

570
00:24:38,400 --> 00:24:41,960
stress testing and the financial plan and discuss

571
00:24:41,960 --> 00:24:43,640
a little bit of the details of that

572
00:24:43,640 --> 00:24:45,340
and what comes out of that process.

573
00:24:46,140 --> 00:24:47,700
Russ, you want to walk us through that?

574
00:24:48,840 --> 00:24:50,680
Yeah, well, as as the guys are saying,

575
00:24:50,780 --> 00:24:56,140
it's usually the biggest, you know, drain of

576
00:24:56,140 --> 00:24:57,520
wealth later in life.

577
00:24:57,660 --> 00:24:59,820
When we when we model the long term

578
00:24:59,820 --> 00:25:01,760
care scenario into a plan, we usually start

579
00:25:01,760 --> 00:25:05,460
with a three year projection for long term

580
00:25:05,460 --> 00:25:05,760
care.

581
00:25:06,580 --> 00:25:08,600
And when we say that that compounds at

582
00:25:08,600 --> 00:25:12,900
five percent in increasing costs year after year,

583
00:25:13,100 --> 00:25:14,760
we're looking at it towards the end of

584
00:25:14,760 --> 00:25:16,480
someone's plan in their 90s.

585
00:25:16,560 --> 00:25:17,900
It could be 20 years, 30 years down

586
00:25:17,900 --> 00:25:18,320
the road.

587
00:25:18,560 --> 00:25:21,860
That amounts to a large, large expenditure year

588
00:25:21,860 --> 00:25:22,140
to year.

589
00:25:22,420 --> 00:25:25,620
So when people see how it looks on

590
00:25:25,620 --> 00:25:27,160
the plan and they see that drop off

591
00:25:27,160 --> 00:25:29,620
towards the end of the plan, it's a

592
00:25:29,620 --> 00:25:29,960
shock.

593
00:25:30,160 --> 00:25:31,400
You know, it's it's a surprise.

594
00:25:31,620 --> 00:25:33,260
And even if people are looking to self

595
00:25:33,260 --> 00:25:37,780
-insure and they see the dramatic impact, oftentimes

596
00:25:37,780 --> 00:25:39,080
they go, oh, well, I don't think I'm

597
00:25:39,080 --> 00:25:39,400
going to need that.

598
00:25:39,480 --> 00:25:40,980
I'm not going to live that long, as

599
00:25:40,980 --> 00:25:41,720
you guys are saying.

600
00:25:42,320 --> 00:25:44,640
But the reality is that is a potential

601
00:25:44,640 --> 00:25:47,160
reality and it's something you need to plan

602
00:25:47,160 --> 00:25:47,540
for.

603
00:25:49,900 --> 00:25:52,040
So, yeah, I know that like one of

604
00:25:52,040 --> 00:25:54,120
the things that Chris often points out is

605
00:25:54,120 --> 00:25:57,020
there are certain things you can do, for

606
00:25:57,020 --> 00:26:01,060
example, in Massachusetts to to leverage, you know,

607
00:26:01,060 --> 00:26:02,640
your own home equity, for example.

608
00:26:02,760 --> 00:26:04,300
That's another thing people will look to if

609
00:26:04,300 --> 00:26:06,600
if they can't cover the expense out of

610
00:26:06,600 --> 00:26:08,940
pocket or from their investments, they'll look to

611
00:26:08,940 --> 00:26:11,740
the home that they usually have built up

612
00:26:11,740 --> 00:26:12,220
a lot of equity.

613
00:26:12,640 --> 00:26:12,740
Yeah.

614
00:26:12,740 --> 00:26:15,320
And possibly there's ways to have a very

615
00:26:15,320 --> 00:26:18,820
modest insurance policy that can help to insulate

616
00:26:18,820 --> 00:26:21,240
the equity in the home for the surviving

617
00:26:21,240 --> 00:26:24,420
spouse that it might still be available to

618
00:26:24,420 --> 00:26:26,440
them to draw from in some form or

619
00:26:26,440 --> 00:26:29,900
fashion if everything else got spent through, you

620
00:26:29,900 --> 00:26:30,340
know.

621
00:26:35,440 --> 00:26:37,280
Maybe you have some things to add, but

622
00:26:37,280 --> 00:26:40,660
the other thing that often comes up that

623
00:26:40,660 --> 00:26:42,580
people do is they look to estate planning

624
00:26:42,580 --> 00:26:44,900
to as a solution.

625
00:26:45,180 --> 00:26:47,140
I think that's the right direction to like

626
00:26:47,140 --> 00:26:48,120
wind this down.

627
00:26:48,260 --> 00:26:48,460
Yeah.

628
00:26:48,540 --> 00:26:49,740
We got to talk about that a little

629
00:26:49,740 --> 00:26:50,080
bit.

630
00:26:51,960 --> 00:26:56,600
So estate planning issues, number one, there's really

631
00:26:56,600 --> 00:27:00,540
two divergent directions to go when thinking about

632
00:27:00,540 --> 00:27:01,460
an estate plan.

633
00:27:02,020 --> 00:27:04,660
There's one where you are intending to try

634
00:27:04,660 --> 00:27:08,700
to protect assets from the spend down process

635
00:27:08,700 --> 00:27:11,900
and essentially give them away, whether to a

636
00:27:11,900 --> 00:27:14,620
trust or to family members in the form

637
00:27:14,620 --> 00:27:20,920
of five years prior to the expense happening.

638
00:27:21,400 --> 00:27:24,540
That's hard to plan that way, but that's

639
00:27:24,540 --> 00:27:25,240
a direction.

640
00:27:25,620 --> 00:27:26,660
So maybe people use it.

641
00:27:26,820 --> 00:27:27,160
Clock's ticking.

642
00:27:27,640 --> 00:27:32,720
Most people we talk to have resources where

643
00:27:32,720 --> 00:27:35,140
they want to continue to control their wealth.

644
00:27:35,240 --> 00:27:37,220
They don't want to lock it up in

645
00:27:37,220 --> 00:27:38,860
a way that they don't have access to

646
00:27:38,860 --> 00:27:39,080
it.

647
00:27:39,520 --> 00:27:43,760
And so we generally find they tend to

648
00:27:43,760 --> 00:27:46,500
be really gravitating toward more of a living

649
00:27:46,500 --> 00:27:52,040
trust or revocable trust approach to their outlook.

650
00:27:52,420 --> 00:27:54,240
And if they came down with some kind

651
00:27:54,240 --> 00:27:59,940
of a diagnosis or prognosis where it seemed

652
00:27:59,940 --> 00:28:02,760
very likely that they'd have a long-term

653
00:28:02,760 --> 00:28:05,440
care event, they may revisit how their strategy

654
00:28:05,440 --> 00:28:05,920
would work.

655
00:28:06,380 --> 00:28:07,880
And maybe they wouldn't be able to protect

656
00:28:07,880 --> 00:28:10,920
it all, but they might consider protecting some.

657
00:28:11,020 --> 00:28:14,340
In most cases, these families want access.

658
00:28:14,720 --> 00:28:15,640
They want control.

659
00:28:16,000 --> 00:28:18,000
Even if it means using some of it

660
00:28:18,000 --> 00:28:21,240
for their care, they want that decision-making

661
00:28:21,240 --> 00:28:24,900
ability and not to be purely dependent on

662
00:28:24,900 --> 00:28:28,280
the goodness of the state to help determine

663
00:28:28,280 --> 00:28:30,960
what they can and can't do and the

664
00:28:30,960 --> 00:28:32,480
quality of the care they might have.

665
00:28:32,480 --> 00:28:34,580
So things to think about.

666
00:28:34,900 --> 00:28:38,740
You should have some basic estate planning documents.

667
00:28:38,860 --> 00:28:39,740
I speak generally.

668
00:28:40,640 --> 00:28:43,520
Everyone's sense are different, but things to consider.

669
00:28:43,720 --> 00:28:46,880
A power of attorney, a healthcare proxy, a

670
00:28:46,880 --> 00:28:49,340
living will, because healthcare proxies work in some

671
00:28:49,340 --> 00:28:49,940
jurisdictions.

672
00:28:50,840 --> 00:28:52,900
Living will might be in a different jurisdiction.

673
00:28:53,960 --> 00:28:56,540
You may want, in addition to a will,

674
00:28:56,780 --> 00:28:57,400
a trust.

675
00:28:57,400 --> 00:29:00,840
And these types of trust may be decisions

676
00:29:00,840 --> 00:29:04,200
you navigate with your estate planner, but certainly

677
00:29:04,200 --> 00:29:07,260
involve your financial planning as we can help

678
00:29:07,260 --> 00:29:09,780
you think through the pros and cons of

679
00:29:09,780 --> 00:29:13,680
some of these decisions, given your size of

680
00:29:13,680 --> 00:29:17,720
wealth and circumstances and family dynamics and so

681
00:29:17,720 --> 00:29:18,040
forth.

682
00:29:19,640 --> 00:29:21,980
So what didn't I cover, Jeff, when it

683
00:29:21,980 --> 00:29:23,440
came to the estate planning thing?

684
00:29:23,840 --> 00:29:24,500
Oh, I know.

685
00:29:24,800 --> 00:29:25,940
Family conversations.

686
00:29:26,280 --> 00:29:28,600
Well, you know that's where I was going.

687
00:29:28,660 --> 00:29:30,220
I knew that was where you were going.

688
00:29:30,820 --> 00:29:35,540
Have these conversations this weekend, meaning just have

689
00:29:35,540 --> 00:29:37,020
them long before you need it.

690
00:29:37,460 --> 00:29:39,440
Don't assume that certain people are going to

691
00:29:39,440 --> 00:29:41,700
be available to provide care.

692
00:29:41,880 --> 00:29:43,560
Don't assume that you're not going to need

693
00:29:43,560 --> 00:29:45,260
some type of long-term care.

694
00:29:45,380 --> 00:29:47,900
Have these conversations with your family, with your

695
00:29:47,900 --> 00:29:49,520
financial planner and your estate planner.

696
00:29:50,240 --> 00:29:51,720
And there are many things you can do.

697
00:29:51,720 --> 00:29:53,540
We're just scratching the surface, and it's very

698
00:29:53,540 --> 00:29:56,860
individualized based on your circumstance, your wealth, the

699
00:29:56,860 --> 00:29:58,280
real estate that you own, just some of

700
00:29:58,280 --> 00:29:59,300
the things we touched on.

701
00:30:00,280 --> 00:30:02,460
And make a plan for the what-ifs,

702
00:30:02,620 --> 00:30:07,320
because 70% of the people who return

703
00:30:07,320 --> 00:30:09,160
65 are going to need to at least

704
00:30:09,160 --> 00:30:11,280
deal with this issue at different levels, of

705
00:30:11,280 --> 00:30:11,580
course.

706
00:30:12,160 --> 00:30:15,540
But don't just ignore and think it can't

707
00:30:15,540 --> 00:30:17,280
happen to you, because take it from us.

708
00:30:17,320 --> 00:30:18,540
We see a lot of people, and it

709
00:30:18,540 --> 00:30:19,320
does happen to you.

710
00:30:19,320 --> 00:30:20,400
It does happen to us.

711
00:30:21,140 --> 00:30:24,720
So be prepared, make a plan, and be

712
00:30:24,720 --> 00:30:27,260
ready long before you need it, not in

713
00:30:27,260 --> 00:30:27,560
crisis.

714
00:30:28,300 --> 00:30:28,680
Well said.

715
00:30:28,860 --> 00:30:31,440
And you mentioned this weekend.

716
00:30:32,960 --> 00:30:35,700
Let's take a moment to wish everyone a

717
00:30:35,700 --> 00:30:36,560
happy Thanksgiving.

718
00:30:37,080 --> 00:30:40,240
This will be our episode prior to Thanksgiving.

719
00:30:40,780 --> 00:30:43,700
So thanks for being with us so often.

720
00:30:43,840 --> 00:30:46,520
We appreciate you as a listener, and we

721
00:30:46,520 --> 00:30:49,160
certainly are thankful for the clients who place

722
00:30:49,160 --> 00:30:51,040
their trust in our services.

723
00:30:51,820 --> 00:30:54,260
But in any event, we all have so

724
00:30:54,260 --> 00:30:54,880
many blessings.

725
00:30:55,160 --> 00:30:57,960
We need to focus on those blessings.

726
00:30:58,520 --> 00:31:01,400
It's nice that we have this day annually

727
00:31:01,400 --> 00:31:03,060
to take the time to do that.

728
00:31:03,760 --> 00:31:05,620
So in any event, we wish you all

729
00:31:05,620 --> 00:31:08,600
a happy Thanksgiving, and thanks for being with

730
00:31:08,600 --> 00:31:09,720
us this week.

731
00:31:09,960 --> 00:31:12,920
Until next time, keep striving for something more.

732
00:31:14,260 --> 00:31:16,380
Thank you for listening to Something More with

733
00:31:16,380 --> 00:31:17,100
Chris Boyd.

734
00:31:17,360 --> 00:31:19,560
Call us for help, whether it's for financial

735
00:31:19,560 --> 00:31:23,480
planning or portfolio management, insurance concerns, or those

736
00:31:23,480 --> 00:31:25,520
quality of life issues that make the money

737
00:31:25,520 --> 00:31:26,620
matters matter.

738
00:31:27,020 --> 00:31:30,260
Whatever's on your mind, visit us at somethingmorewithchrisboyd

739
00:31:30,260 --> 00:31:33,440
.com, or call us toll free at 866

740
00:31:33,440 --> 00:31:38,980
-771-8901, or send us your questions to

741
00:31:38,980 --> 00:31:42,920
amr-info at wealthenhancement.com.

742
00:31:43,200 --> 00:31:45,060
You're listening to Something More with Chris Boyd

743
00:31:45,060 --> 00:31:45,900
Financial Talk Show.

744
00:31:46,040 --> 00:31:47,840
Wealth Enhancement Advisory Services and J.

745
00:31:47,940 --> 00:31:50,240
Christopher Boyd provide investment advice on an individual

746
00:31:50,240 --> 00:31:51,380
basis to clients only.

747
00:31:51,540 --> 00:31:53,520
Proper advice depends on a complete analysis of

748
00:31:53,520 --> 00:31:54,700
all facts and circumstances.

749
00:31:55,000 --> 00:31:56,800
The information given on this program is general

750
00:31:56,800 --> 00:31:58,840
financial comments and cannot be relied upon as

751
00:31:58,840 --> 00:32:00,400
pertaining to your specific situation.

752
00:32:00,620 --> 00:32:02,600
Wealth Enhancement Group cannot guarantee that using the

753
00:32:02,600 --> 00:32:04,600
information from this show will generate profits or

754
00:32:04,600 --> 00:32:05,700
ensure freedom from loss.

755
00:32:05,920 --> 00:32:08,060
Listeners should consult their own financial advisors or

756
00:32:08,060 --> 00:32:10,180
conduct their own due diligence before making any

757
00:32:10,180 --> 00:32:10,940
financial decisions.