Safe Money - 8-10-24

Episode Transcript

Speaker 1 (00:00):
Good Saturday morning to all on this second Saturday of
August twenty twenty four. Dick chilligear and this is Safe Money.
We are here every Saturday to talk with you, our listeners,
about how to keep money safe in today's very unsafe world.
You know, August has not been a good month for

(00:22):
the market. On Thursday, August first, the Dow was down
five hundred and ninety eight points. On Friday, August second,
it was down another eight hundred and ten points. The
following Monday, August fifth, it was down one thousand and
eighty four points. Now it's continued down during the second

(00:46):
week of August. There's been some gains this week, some
volatility this week, but the fact remains that my clients
did not lose money. As a matter of fact, my
new clients, newer clients shared in a thirty five percent
bonus on money invested, and that thirty five percent bonus

(01:11):
is still good for you. If you'd like to invest,
we would have that thirty five percent bonus for you.
First and foremost, this Saturday morning is the reminder that
the Run with Carl is coming up here in only
twenty three days. A reminder the Run with Carl is

(01:31):
coming up here very shortly on September second. Labor Day,
September second is in only twenty three days. This is
a special Run with Carl, our special thirtieth anniversary of
the Run with Carl. Note that the Run with Carl
is managed and operated by a special partnership between the

(01:51):
Bettendorf Community Schools and the Pleasant Valley Community School Districts.
It is the Run with Carl that has created the
Carl D. Schillig Memorial Fund, which is a five oh
one c three organization that has provided over fifty scholarships
to graduates of Pleasant Valley and Bettendorf High Schools over

(02:14):
the years. In two thousand fourteen, the Bettendorf School Foundation
and the Pleasant Valley Educational Foundation combined efforts to take
ownership of the Labor Day Run with Carl. Race proceeds
benefit the educational foundations at both school districts. Today, the

(02:36):
Run with Carl continues to honors, to honor Carl's legacy
and continues to have the full support of the Schillig family. Remember,
the thirtieth annual Run with Carl is in only twenty
three days. If you have not registered yet, go to
the run with carl website to get registered for the
one half mile Children's Fund Runs, the five mile run

(03:01):
in the five k run walk the second thing this morning.
I want to remind you that during this month of August,
we continue offering our virtual monthly community meetings. The next
meetings are scheduled for Tuesday, August twentieth and Thursday August

(03:22):
twenty second. On Tuesday August twentieth, Craig talks about the
basics of Medicare and then focuses on the Medicare supplements.
Two days later, on August twenty second, Craig again reviews
the basics of Medicare and then focuses on the alternative
to Medicare, and that is the Medicare Advantage plans. That's

(03:47):
Medicare Part c Craig. Call Craig to participate, call him
at five six three three three two twenty two hundred
and receive instructions on how to participate virtually, or go
to my website. Go to www. Dickshillig dot com and

(04:09):
scroll over to the contact icon for my email address
and send me an email if you'd like to correspond
in that manner. Over the last several Safe Money shows,
we discuss the risk or potential risks with our retirement assets.
The first of these risks we defined as the healthcare risk.

(04:32):
Now built into that risk is the risk of the
costs of long term care. None of us see ourselves
needing long term care, but folks, it's a reality, a
reality that can't be ignored. We all need to have

(04:52):
a plan for long term care, especially for married couples.
Marry couples need especially to have a plan for long
term care built into our retirement plan. Let's look at
long term care costs for a minute. These costs can
be significant. In the United States, long term care costs

(05:17):
between thirty five thousand and one hundred and eight thousand
dollars a year. Thirty five thousand is almost one hundred
dollars per day. One hundred and eight thousand is almost
three times or three hundred dollars per day. Private rooms

(05:37):
and nursing homes are the most costly, with an average
of one hundred and eight thousand dollars a year, or
almost three hundred dollars per day. The estimated meeting costs
of long term care in twenty twenty four is five thousand,
five hundred and eleven dollars per month for assisted living

(06:01):
in ten thousand, twenty five dollars per month for a
private room in a nursing home. What drives these costs well,
One major factor is where you need to receive care
at home. In home care can be expensive, particularly if

(06:22):
you need round the clock or specialty care that family
members and volunteers cannot provide. Sixty five percent of seniors
sixty five and older get long term care at home
for up to two years. According to data which was
recently released, the average cost of professional home care was

(06:46):
twenty dollars per hour in twenty sixteen. For thirty hours
per week, that is four to five hours a day,
the annual sum would be roughly thirty one thirty one
thousand dollars. That's a lot of money. That's the cost
for at home care now at an assisted living facilities.

(07:13):
These residential options enable people to have some independence along
with access to twenty four hour care. About thirteen percent
of people aged sixty five and older receive long term
care in this setting. Thirteen percent of people aged sixty

(07:34):
five and older receive long term care in an assisted
living facility setting. The estimated average cost in twenty sixteen
was three thousand, six hundred and twenty dollars per month
for a one bedroom unit, adding up to an annual
cost of more than forty three thousand dollars. So that's

(08:00):
care in an assistant living facility now in a nursing home.
This setting provides clinical care to people who need daily
medical support. More than half the persons who get long
term care receive it in a nursing home. According to

(08:23):
two thousand and sixteen average costs, average cost per month
was about sixty eight hundred dollars for a semi private
room and seventy six hundred dollars for seventy six one
hundred dollars per month for a private room on an
annual basis. Boy those figures add up to eighty two

(08:47):
thousand dollars or ninety two thousand dollars respectfully. Long term
care costs rather receive that home or or in an
assistant living sent or in a nursing home, are expensive
and are at risk to our assets. Long term care

(09:08):
costs are at risk, especially to married persons if one
of the partners in a marriage is subject to long
term care costs. These costs are met normally with savings
or retirement plans with assets that both persons in a
marriage have worked for together, for savings and accumulations. How

(09:33):
do we plan to address these costs? Resources are from
savings or investments, whether those savings or investments are qualified
or whether they are non qualified. When planning for the
potential costs of long term care, long term care insurance
is one option, but the cost of this insurance is

(09:56):
not inexpensive. Is it right for you? Let's talk about
the plans you have made for long term care costs.
Call us call me at five sixty three three three
two twenty two hundred or email me. Go to my
website which is wwwdikshilling dot com and scroll over to

(10:20):
the contact icon for my for my email. Don't look,
don't overlook this vital planning strategy, especially if you are married.
I'd like to share with some of my clients and
receive that thirty five percent bonus. So there are long

(10:44):
term care annuities, and I'd like to talk about long
term care annuities this morning with you a little bit.
When planning for the potential cost of long term care,
you've probably considered long term care insurance, but premium for
long term care insurance can be expensive, and if you

(11:05):
do buy the coverage, you probably hope you never have
to use it. The prospect of paying costly premiums for
long term care insurance that you might never use might
discourage you. So available is the long term care annuity?
What is it? It is a hybrid product offered by

(11:29):
some insurance companies. It is a non qualified annuity that
provides long term care benefits. It can't it cannot be
used with IRIS or employer sponsored qualified retirement plans. These
policies allow you to use the annuity proceeds for long

(11:51):
term care, and if you don't use the long term
care benefit, you still have typical annuity options. For instance,
you can convert the annuity to a stream of income
payments we call it an annuitization, and redeem the annuity
its maturity, or at your death, you can pass the

(12:15):
remaining balance of your annuity to your named beneficiaries. While
policy proceeds that may differ from company to company. Generally,
you put money into an annuity, usually in a lump
sum or through a series of premium payments. You may
also exchange another annuity for a cash value life insurance

(12:38):
for a long term care annuity via we call it
a ten thirty five exchange. The annuity typically pays a
fixed rate of interest each year. In addition, the annuity
provides for long term care benefit usually equal two, two
or three times your annuity cash value, subject to a

(13:00):
maximum benefit period, which is the maximum length of time
that you may receive long term care benefit payments from
the annuity. Long term care annuity benefits are often paid monthly.
There is usually a charge for long for the long
term care component, generally ranging from four tenths of percent

(13:25):
to one and a quarter percent of the annuity's cash
value that is deducted from your annuity each year. Typically,
long term care annuities have the same qualification requirements as
both long term care insurance policies. You first have to

(13:45):
be considered insurable by the annuity company, which means you
have to answer questions related to whether you have suffered
from any major illness such as cancer or heart disease,
or whether you have a significant cognitive impairment like Alzheimer's disease.
But you usually don't have to undergo a physical and

(14:09):
the underwriting is generally less stringent than with a stand
alone long term care insurance, it's easier to qualify for
the long term care annuity. Like most stand the lone
long term care policies, in order to be eligible for
the long term care benefits from the annuity, you must

(14:30):
either suffer from cognitive or mental incapacity or be unable
to perform at least two of the six activities dately living.
Now the activity is of daily living? What are they?

(14:50):
They include feeding, bathing, dressing, transferring, continence, and towards. Therefore,
benefits are typically available after a waiting period between thirty
days and two years, depending on a particular product. Say,

(15:15):
for example, you pay seventy five thousand dollars to purchase
a long term care annuity. You selected the long term
care benefit equal to two hundred percent of your annuities
cash value with a five year benefit period. Initially, your
long term care benefit equals one hundred and fifty thousand dollars.

(15:39):
That's seventy five thousand dollars times two. Let's assume that
the annuity earns four point five percent interest per year
and the cost of the long term care provision is
five to tenths percent per year. At the end of
twenty years, Presuming that you have no withdrawals, the annuity

(16:02):
is worth about one hundred and sixty four thousand dollars
and the long term care benefit amount is three hundred
and twenty seven thousand dollars. This will provide maximum long
term care benefit payments of fifty four hundred dollars five thousand,
four hundred dollars per month for as long as five years,

(16:26):
and even if cumulative long term care payments exceed the
annuity's contract value remember that contact value was one hundred
and sixty three thousand dollars. The long term care payments
will continue until you either exhaust the long term care
benefit amount or you no longer need long term care. Now,

(16:51):
this is a hypothetical example. It does not represent a
specific product. Products, terms and conditions may differ per company.
Check the annuity issuer for specified product details. What about taxes? Generally,

(17:14):
withdraws from an annuity are considered to come from earnings
first and subject to income tax with respect to long
term care annuities. In particular, prior to twenty ten, payments
of long term care benefits form annuities were also deemed
to have been taken from annuity earnings first. Then principle. Thus,

(17:41):
each long term care benefit with taxes ordinary income to
the annuity owner until all earnings within the annuity have
been exhausted beginning January tenth of one ten. Potential favorable

(18:02):
tax treatment applies to certain withdraws from annuities purchased after
nineteen ninety six if the withdraws are used to pay
for qualified long term care of coverage. This means is
that you won't have to pay income taxes on the
benefits you receive from your long term care annuity that

(18:23):
are used to pay for long term care expenses. Boy,
that's important. Long term care insurance is one of the
options that we have to address the costs of long
term care. But long term care insurance premiums are very

(18:46):
very expensive, and the qualifications for those long term care
insurance policies are pretty stringent. Sometimes if physical is required,
more times than not, a physical is not required, but
is required is a thorough investigation of your past health history,

(19:10):
and boy, that becomes very very important. Long term care
costs are a risk. Long term care costs are a
risk to our assets. Long term care costs, especially for
merried couples, are an extreme risk to our assets. So

(19:33):
there are pluses and minuses on any financial product, and
certainly there are advantages and disadvantages on long term care
insurance plans. Is it right for you? Whether it is
right for you or not depends on a number of factors.

(19:54):
But the long term care annuity is clearly a viable
option available for long term care planning that might meet
a second look. So long term care annuity is something
that I encourage you to take a look at. Long

(20:15):
Term care costs, whether received at home or at an
assisted living center or in a nursing home, are expensive
and they are a risk to our assets. Especially they
are a risk for married couples. Long term care costs
are a risk, especially to married persons if one of

(20:39):
the partners in a marriage is subject to long term
care costs. These costs are met with savings and retirement plans,
with assets that both persons in a marriage have worked
for together. For savings and accumulations, How do you plan
to address the costs of long term care? Resources that

(21:03):
are available are from savings or investments, whether those savings
are investments or qualified or non qualified. When planning for
the potential cost of long term care, long term care
insurance is one option, but the cost of this insurance
is not inexpensive. The cost of long term care insurance

(21:27):
is expensive and the eligibility for long term care insurance
is quite quite stringing. So I'd like to talk with
you about the long term care risk. Please give me
a call call me at five to sixty three three
three to two twenty two hundred, or go to my email.

(21:51):
Go to my website go to www. Dickshillick dot com
and then scroll over to the contact icon for my
email address and send me an email. Tell me about
your situation if you'd like to correspond in this manner,
in the email manner, and to protect your privacy and

(22:13):
to protect you from a lot of other risk as well.
But don't look over don't overlook this vital planning strategy,
especially if you are married. Share with some of my
clients and receive that thirty five percent bonus. Don't forget

(22:36):
that thirty five percent bonus is available on money invested
in this long term care annuity and consider that long
term care annuity as a protection resource for these costs
of long term care. Don't overlook this vital planning strategy,

(23:00):
especially if you are married. Boy, receive that thirty five
percent bonus. That thirty five percent bonus is still available.
Give me a call, send an email to inquire more
about that thirty five percent bonus and how that bonus
can be applied to help protect that risk of long termcare.

(23:26):
Long term care is a reality and a reality that
most of us tend to overlook in our planning, in
our retirement planning strategy or our savings planning strategies. Don't
overlook that risk. It's a huge risk and it's a
risk that we all need to consider in our planning.

(23:48):
Don't forget. The Run with Carl is coming up here
in only twenty three days. Go to our website, go
to www. Run with Carl dot com and plan on
registering for the Run with Carl coming up here in
only twenty three days. You can sign up for the

(24:08):
one mile, for the half mile run, for the five
k run walk, or the five mile run. It's as
I say, we are in our thirtieth year of the
Run with Carl. So the Run with Carl has been
a Iowa city tradition. It's been a quad city tradition.

(24:31):
Many participants are from the Quad cities. Many of the
participants are from the Pleasant Valley and the Bendorf School districts,
but we have participants from all over the Quad Cities
in the surrounding areas. So don't forget to register for
that thirtieth year event for the Run with Carl. Just

(24:54):
go to that website Run with Carl dot com, and
you a lot of information on that website concerning the
Run with Carl and invite you to register for that
event coming up here in only twenty three days. A
lot going on in today's world. Remember to plan for

(25:15):
the costs of long term care. Remember to include that
planning in your retirement or your saving strategy, and do
that planning with your spouse because that risk of long
term care costs is a risk to spouses in particular.

(25:37):
That's about all we have for you this morning, so
look forward to hearing from you for the registering for
the Run with Carl, or don't forget to register for
our virtual community meetings coming up here August twentieth. In
August twenty second. That's all I have for you this morning.

(25:59):
Have a great, great weekend, good day,