Long-Term Care In Retirement

Maleeah, CJ, and Shawn talk about the costs of long term care as you get older and the importance of finding the best way to cover it.

Episode Transcript

(00:02):
This is money in Motion with ClassFinancial, a fun and informative show designed
to help you get answers to allyour retirement questions in one place at Both
lines are open for you right now. Love to have you join us.
Maybe you are sitting in the backupon the beltline, safe time, safe
place to make a call. We'dlove to have you on six oh eight
three two one thirteen ten. That'ssix oh eight three two one thirteen ten.

(00:26):
Yeah, westbound belt line slow thismorning of course gets you on the
air with that retirement planning professionals fromClass Financial join this week by Cjkloss and
Malia Quavis. You can learn moreabout Class Financial on their website class financial
dot com. That's k L Aasfinancialdot com. They're telephone number six oh
eight four four two five six threeseven. No charge for that initial gets

(00:46):
to know you appoyment ach Loss Financial. It will be complementary to you again
their number six oh eight four fourtwo five six three seven. And to
get on the air this morning.All I get you is gets call six
oh eight three two one thirteen ten. That's six oh eight three two one
thirteen ten. Has mentioned Joined thismorning by c J. Closs and Alia
Wavis CJ. How you doing thisweek? I'm doing great. How are
you, Sean? I'm doing reallywell. Malia? How have you been

(01:10):
very good? These are beautiful daysof fall a our beautiful, beautiful day
has got some great temperatures ahead aswell. I think probably lose the rest
leaves today too. With that definitelygot coming. So we've got a got
an interesting conversation. They're always interestingconversation. This one I will probably pique
your interest because it's gonna be talkingabout, of course, things like long

(01:30):
term care and the costs that thatthat that and the effects they could have
on things like your like your retirementassets. Is a really important conversation,
had something that folks often overlook.So we'll we will get into that conversation
and just a moment. As mentioned, the phone lines are open for you
this morning six oh eight three twoone thirteen ten. That's six oh eight
three two one thirteen ten, thewebsite for Class Financial Class Financial dot com.

(01:53):
That's Kate LaaS Financial dot com andof course their telephone number six O
eight four four two six three seven. Speaking of that number a little bit
later on the program, you're definitelywant to hold on to it becase we're
gonna do the Class Quiz Question theWeek a chance to win a fantastic prize
this week, no exception our friendsfrom Class Financial that provided a twenty five
dollars gift card to Sephora. Youcan win again that coming up a little

(02:14):
bit later in the program with theClass Quiz Quiz question of the Week.
Little tip though, if you payparticularly close attention. Oftentimes almost every time
the question answer come up during theshow, so you get a little leg
up on everyone else for just payingattention to the program. And before we
get rolling on this week's topic,speaking of the Class Quiz question week,
let's take a look back at lastweek's question to get the answer there as

(02:35):
well. Yeah, so, lastwe put a great conversation regarding college planning,
whether it be for your own childrenor for your grandchildren, and how
you might look at funding that andnot not decimating the rest of your portfolio
ideally, So our question of theweek was what is the name of one
of the funding vehicles used for collegeplanning? Is it a five p twenty

(02:59):
nine plan or a four to ninetynine plan? So shout out to our
winner last week, Marvin of Madisoncorrectly answered, it is actually a five
to twenty nine plan. So thankyou for listening. Listen carefully to today's
question, and if you missed anypart of that program, you can always
listen back at Class financial dot com. That's k LaaS Financial dot com com.

(03:20):
Same deal this morning. You've missedany part of the show, you
can always head on over the websiteI mentioned the website I did mentioned some
of the great features online you canlearn more about Colss Financial. You can
learn more about the team. There'sseparate divisions. You can also sign up
online at cossfinancial dot com for theweekly Market Pulse newsletter. It's a fantastic
weekly snapshot of what's been going onin the markets. And of course the
link to the most recent podcast thatavailable to you at Cossfinancial dot com.

(03:45):
As mentioned, of course, asidefrom helping folks with the retirement investments,
I know Class Financially you work inthe capacity as financial planners and of course
help folks explore areas such as longterm care and how those costs could potentially
affect retirement assets. Correct. Yes, a large part of our job as
financial planners is mitigating the financial riskof how long term care support and services

(04:10):
could possibly impact your portfolio or yourability to remain independent and retired. Now,
as a disclosure, as we starttalking about this topic today, there
are individuals in our office who areinsurance licensed, so we certainly do understand
these products quite well. However,we do not sell long term care insurance,

(04:30):
health insurance, life insurance extinuities,things like that. We are licensed,
but we do not sell those products. And therefore, while we can
speak to them, we would referout our clients or any prospects for that
matter, to somebody else who wouldactually execute on that sale. With that
disclosure out of the out of theway. If there is a single unsolved

(04:54):
problem in retirement planning for many middleand upper upper middle income adults, it's
what to do about the long termcare cost that happened later in life.
So when you hear the words longterm care, everyone has their own mindset
regarding its purpose and relevance in theirretirement plans, and many times that mindset

(05:15):
is driven by their own experiences.There are some misconceptions about who will pay
for what and how much they willpay for in terms of long term care,
and one of those misconceptions that alot of people have is they think,
oh, it's no big deal,Medicare and or Medicaid will pay for
my long term care. That isnot fully true. So Medicare does help

(05:38):
to pay for your recovery in askilled nursing care facility after a three day
hospital stay, and it will coverthe total cost of nursing care for the
first twenty days, but only forthe first twenty days. Between days twenty
one and one hundred, you willpay a co insurance amount each day that
is currently set at two hundred perday as of twenty twenty three, and

(06:02):
then after a maximum of one hundreddays, Medicare will no longer assist with
these costs at all, and thenyou will have to pay one hundred percent
of the expenses going forward. Soas it relates to Medicare, the answer
is kind of well, it helpsa little bit, but not much if
we are talking about a long termskilled care need. And what this is
true whether it be in a nursinghome or in your home. By the

(06:26):
way, so some people go,oh, well, no big deal,
I'll be in my home and Medicarewill pick it up. Then nope,
it's the same kind of a thing. If you need long term skilled nursing
care, Medicare is not going tocover that whole bill. And then as
far as Medicaid, so this isanother kind of program that people think will
cover things. And what we wouldsay is it's unlikely you'll qualify for assistance

(06:48):
of Medicaid unless your assets have beendepleted to a very very low level.
This is what is known as thespend down phase. So for the person
needing long term care assistance, theirassets will generally need to have been spent
down to around two thousand dollars beforeMedicaid kicks in. And if you have
a spouse who's still living at home, so think of this as you know,

(07:11):
husband and wife living at home.Your spouse goes into a facility,
they won't require you to spend itdown to two thousand if you're the healthy
spouse still living at home, butthey do require you to spend down your
personal assets to about one hundred andtwenty thousand with one car and one vehicle
and a minimum amount of monthly incomegoing to that healthy spouse. So this

(07:31):
whole concept of getting your personal assetsdown to a certain level so that Medicaid
can start paying. It's called theCommunity Spouse Resource Allowance. This is again
for that spouse and it does varystate by state. And this whole concept
is called the Medicaid spend down.So you will hear this from advisors or

(07:54):
people in the industry insurance agents.They'll say, oh, you're talking about
the Medicaid spend down, And whatthey're really referring to is the state by
state level at which you must spenddown your personal assets before Medicaid will start
kicking in. So here's the takeaway. If you think Medicaid is going to
cover your long term care costs,you've got to be spent down to such

(08:15):
a level at which you're at thepoverty line. And that's not a great
goal or plan to put in place. I feel like we need like a
like a buzzer or something ant togo when we talk about that. I
think a lot of people do thinkthat and very important, very important distinct
distinction there. And of course,as we talk with CJ Class and mole

(08:35):
ecuavis our retirement planning professionals from classfinancial, it is very important to have
these conversations. If we can learnmore about class financial on their website class
financial dot com that's k l Aasfinancialdot com and their telephone number six oh
eight four four two five six threeseven. No charge for that initial gets
to know You appointment dech costs financial. It will be complementary to you.

(08:56):
Again, they're telephone number six oheight four four two five six three seven.
And to get on the air thismorning with your question. Love to
hear from you A six'h eight threetwo one thirteen ten at six oh eight
three two one thirteen ten. So, maliya, how expensive have long term
call? I think how much havethey risen? And on the other side
of things, how expensive are thepolicies to help with these costs currently?

(09:20):
Yeah? So everything I mean hasa plus on this right everything. I'll
understand that. But obviously more andmore people, because people are living longer,
are needing the care. So welooked back at a twenty twenty one
study of gen Worth gen Worth's costof care and so they estimated the national

(09:41):
average monthly costs for long term carerange from almost seventy eight hundred dollars per
month for a semi private room toalmost eighty nine hundred dollars for a private
room, so you know, thisbecomes really real when it's one of your
family members. And again, asCJ said, sometimes people think, oh,

(10:03):
if I just use in home care, it'll be much less expensive.
I can guarantee you it's not alwaysthe case. I had clients last year
spending for in home care because theyneeded care at night. They were spending
at least ten thousand dollars a monthjust to have care in their home.
So it can be very, veryexpensive. It depends on the level of

(10:28):
care. We looked at Wisconsin becausea lot of Wisconsin listeners average price for
a semi private room is approximately ninethousand dollars ninety seven hundred for a private,
so semi private nine thousand, almosta thousand more for a private room.
So obviously the cost of long termcare varies depending on the level of
care necessary. We're not talking aboutsomeone just coming in to clean up your

(10:52):
house. We're talking about sometimes peopleneeding assistance with some of the daily living
activities, maybe also need care withtheir medications. As I said, the
level of care, so many peoplehonestly don't have the resources to budget for
those kinds of expenses, and noone knows how long the expense can linger.
So we're going to talk statistics ina little while, how many people

(11:15):
are affected and cost levels. Butthen when we shift and we talk about
okay, I hear there's long termcare policies available. What are those and
how much do they cost? Again, this varies. It's dictated by your
age, your health, the carrier, and the type of policy you're looking
at. So long term care insuranceis designed to help pay for the cost

(11:39):
of necessary care when you can't performthose activities or ADLs of daily living,
or you're some a cognitive disorder,so ADLs include things like bathing, dressing,
eating, and using the toilet.Obviously, cognitive disorders would involve Alzheimer's
and et cetera. So the typesof pology see out there, and there's

(12:01):
a whole a disease list these daysof insurance policies to address these needs include
the traditional long term term care policiesmaybe you've seen even your parents had.
And when we look at the costof those, the premiums you pay for
a couple age fifty five today we'relooking at premiums at around five thousand dollars

(12:22):
per year combined. But many peoplewait till they're in their sixties to get
these policies, and so due toage and obviously health considerations, premiums may
be much higher. And I willtell people that the longer you wait,
you know, underwriters are seriously lookingat what cognitive situation you're currently in.

(12:45):
And you know the people will say, well, I don't want to I
don't want to even apply because youknow I don't want to pay the premium.
Well guess what they are going todecide if you're even going to get
a policy. So sometimes you're goingto want to at least play it through
to see if you even qualify.The one thing that people resist with the
traditional long term care policies is thatif you don't use it, you lose

(13:09):
it, so to speak, andso many people have shied away from that.
They're thinking, if you know I'mhealthy, I'm never going to need
it. Why am I paying thispremium and I'm never going to see a
return on it. The flip sideis there's a lot of good policies out
there today as well that are hybridsso their life and their long term care.
So what that means is you're notjust qualifying as far as needing future

(13:31):
care. If you don't need futurecare and a long term care facility,
a portion of that can come backto your estate as a life insurance benefit.
So those tend to be a littleeasier to qualify, but sometimes the
premiums can be more expensive. Soas CJ mentioned, we would suggest you
talk to your financial advisor or longterm care specialists that can be referred to

(13:54):
you to figure out have you evaluatedall the risks for you, your family,
your retirement portfolio, et cetera.Because this is this can become a
serious financial nugget that you you haven'tplanned for. So plan now real important
things to start that conversation and startnow as we talk with Malia Quavis and
CJ. Closs, our retirement planningprofessionals from Class Financial love to have you

(14:16):
join us this morning telephone I'm gonnaget on the air six oh eight three
two one thirteen ten. That's sixoh eight three two one thirteen ten.
You can learn more about Class Financialall on their website Coss Financial dot com
that's Klaasfinancial dot com. Great resourcethere and their telephone number six oh eight
four four two five six three seven. No charge for the financial get to

(14:37):
know Your appointment at Loss Financial.It will be complimentary to you again.
Their number six oh eight four fourtwo five six three seven. We'll continue
our conversation with CJ and Malia andtake your call next as Money in Motion
with Coss Financial continues here on thirteenten wib A. This is Money in

(14:58):
Motion with Class Financial, a funand informative show designed to help you get
answers to all your retirement questions inone place. The gold mines are open
for you right now at six oheight three two one thirteen ten. That's
six oh eight three two one thirteenten. Love to have you join us
with our retirement planning professionals from ClassFinancial. You can learn more about them

(15:18):
on the website class financial dot com. That's k l aa S Financial dot
com and the telephone number six oheight four four two five six three seven.
No charge for the initial gets toKnow You appointment dech Coss Financial.
It will be complementary to you again. They're number six oh eight four four
two five six three seven. Talkingthis week about long term care and things

(15:39):
to consider when it comes to thatinsurance. And you know, if I'm
looking at getting long term care insurance, and my understanding doesn't just kind of
cover nursing facilities. What if Idon't think i'd ever need that care CJ.
Yeah, it is true that someof the older kind of traditional long
term care policies that are still inthe books, maybe for parents or grandparents,

(16:00):
just cover a stay at a nursinghome. So it will be important
for you to check your policy,talk with your insurance agent and get the
details on what your policy covers ifyou currently have one, be proactive on
this before you end up needing thatcare, just to be clear on kind
of where that care can be receivedand what is covered and what's not.

(16:21):
However, with that being said,most new long term care insurance policies,
about ninety nine percent of them,generally cover home health care, hospice care,
respite care, and traditional long termcare facilities and even Alzheimer's care facilities.
So, in short, a longterm care policy allows you to seek
the type of care that you'll needwithout taking too much from your retirement portfolio,

(16:44):
whether the care be in a nursingfacility or in your own home.
Do you want to circle back tosomething that Malia was saying in terms of
if you think it's going to becheaper in home. In your home,
you might have a surprise. Listen, we've actually seen if you need round
the clockcare in your home, itcan be significant leave more expensive, which
if you actually think about it,it doesn't take that long to figure out

(17:04):
if if you have somebody staying atyour place round the clock. First off,
they are coming to your home.These are skilled nursing care experts who
are there twenty four hours a day. I mean, just do some math
on that. That's going to getreally really expensive. Whereas even if you're
in the round the clock care facility, they may not have somebody necessarily who's

(17:27):
getting paid round the clock. It'smore of like a grouping or a bunching
of that cost. So long storyshort, be cautious thinking that the in
home care is going to be lessexpensive. So one of the questions some
of you might be thinking is whatif I I'm not going to need care,
right because everybody in my family washealthy and nobody ended up needing long

(17:48):
term care. Well that may be, but let's talk about that a little
bit. So no one can saywith certainty that they won't need long term
care. And it's certainly possible thatyou may end up needing some sort of
care, but the odds that youwill end up requiring some form of long
term care may be higher than youthink. So here's some data. According

(18:08):
to the US Department of Health andHuman Services, the average sixty five year
old today has a seventy percent chanceof needing some kind of long term care
services in their lifetime. Of thosewho need it, women generally need care
a little bit longer, which isan average of three point seven years,
and men need it for two pointtwo years, but around twenty percent will

(18:32):
require it for more than five years. With the cost of care exceeding six
figures annually in some parts of thecountry, it's obvious to see why addressing
this will could be important for yourfinancial plans. Another common question we get
is, am I too young tobuy a policy and so to avoid paying
premiums before making use of the benefits. The temptation is to put off purchasing

(18:56):
a policy for as long as possible, and this makes some sense, but
it opens you up to the riskof seeing your premiums greatly inflate, or
worse, becoming unable to get anycoverage because you have some sort of cognitive
decline or physical function decline. Soif the possibility of securing a long term
care policy makes sense for your situation, we would recommend reviewing what's available in

(19:21):
your fifties and sixties. Now,notice we're not saying in your twenties and
thirties. Although some people get soconcerned about long term care they'll buy it
at those ages, but now you'retalking about paying that for a really,
really, really long time. Soto us, the kind of age ranges
where you should be focusing on thiswould be in your fifties and sixties.
Once you get into your seventies,that the likelihood of having a physical or

(19:45):
mental problem that greatly increases those premiumsor makes you unensurable goes up dramatically.
So there's some feedback really important notesthere to keep being mindful of. As
we talked this morning with Sea J. Closs and Malia E. Quavis,
our retirement planning professionals from COSS Financial, don't forget about the website costsfinancial dot

(20:06):
com that's k l aas Financial dotcom. You can learn more about the
team at co Loss Financial, theirseparate divisions, how they can help you
or if you're a business owner aswell. Also, you can sign up
for the weekly Market Pulse newsletter rightat the website Class Financial dot com.
It's a great weekly email snapshot ofwhat's been going on in the Market's also
linked to the most recent podcast.Again that available to you at Cossfinancial dot
com. Telephone number six oh eightfour four two five six three seven.

(20:30):
No charge for the initial get toknow you appointment at Loss Financial. It
will be complimentary to you again theirnumber six oh eight four four two five
six three seven. I want aholdout of telephone number. Coming up to
the next segment, we'll do ourCloss Quiz question in the week. We'll
also talk about what if you chooseto maybe self fund? What are some
of the things to think about therewe'll get the details. Do the Class
quiz question in the week next asMoney in Motion with Coss Financial continues here

(20:53):
on thirteen ten. WIBI is Moneyin Motion with Class Financial, a fun
and informative show designed to help youget answers to all your retirement questions in
one place, chatting with our retirementplanning professionals from Class Financial, CJ.
Closs and Malia Quavis. Don't forget. If you missed any part of the

(21:15):
program, you can always listen backonline class financial dot com. That's k
l aa S financial dot com.You can subscribe to the podcast right there
and of course listen back to thisin previous shows off the website Telphy number
six So eight four four two fivesix three seven no charge for the initial
gets know you appointment Tech Loss Financial. It will be complementary to you.
Before we get to the class quizquestion, leak something I think probably a

(21:37):
lot of folks maybe popped into theirhead it's been talking this morning, which
is what about self funding our ownlong term care costs? What's some of
the thinking on that, Malia,Yes, so we're going to talk about
that and also, you know,the the idea of self funding or other
methods to help manage this whole situation. So, first of all, current
stats and how much is spent onlong term care during one's lifetime. So

(22:03):
you know, when we look atpercentages, we see that about sixty percent
of individuals who are over sixty fivewill spend less than twenty five thousand today's
dollars on long term care during theirlifetime. However, over fifteen percent are
going to spend more than two hundredand fifty thousand, the remaining percentage obviously
fall somewhere in between, and nobodyknows which side you're going to fall on.

(22:26):
So that's where we're really talking about. Okay, if it really is
the worst case scenario and you're havingto spend more than two hundred and fifty
thousand dollars, that is where thiscould take a big bite from your retirement
savings. And when we talk aboutlong term care insurance policies, we have
to remember that we're not if infact, that's the direction you do choose

(22:48):
to go. We're not looking tocover the entire expense of that long term
term care on a monthly basis,But certainly if we can put you know,
a nail in it and get halfof it or more covered with a
policy, that could definitely help asituation. So many times we see high
income or high network people successfully planto self fund their long term care costs.

(23:15):
Sometimes middle income earners may choose touse non portfolio assets. They might
say I'm going to sell my hometo cover any long term care costs.
There are a lot of creative directionsyou can go. So what are your
choices if you want to help managethis risk to your portfolio. Well,
I'll tell you what. The numberone way, number one option that everybody

(23:37):
defaults to is to depend on family. Now, part of it is really
because of expense. However, aswe said, that could be you know,
a different scenario once it plays out. But obviously we defer to family,
default to family because who would weprefer to take care of us more
than anyone else. It's certainly notthe nurse that we don't know at the

(24:00):
at the hospital. It's our lovedones. So sixty five percent of adults
needing long term care today, theydo rely on their family or their friends
to provide it. And it's importantto realize though, which of those family
members are likely to provide this careand impact is going to have on them
and their lives. And we've discussedthis in prior shows about the realities of

(24:22):
who shows up to care. Itdoesn't mean all your kids don't care.
It's just that some live across thecountry, some are raising children, and
it can be really tough. Sowe looked at the statistics and about a
quarter of the caregivers today are consideredpart of the sandwich generation, so they're
providing care to their own children andalso to older adults at the same time,

(24:45):
and so that situation obviously can bedifficult to maintain. About a third
of those caregivers are actually sixty fiveor older, so we see this playing
out amongst our own clients. Clientswho are in their eighties are having their
kids in their sixties care for them. So, you know, maybe those
people are retired. However, thosepeople maybe don't have the physical abilities to

(25:11):
be picking up mom or dad anymore, so that becomes a really difficult situation.
And finally, two thirds of allcaregivers are female. So if you're
thinking your sons will be able toleave their job to care for you,
you know, maybe they can ormaybe they can't. But generally we see
the females being the ones who say, I'll take a you know, separate

(25:33):
from work for a while, takea leave of absence so they can go
care for mom or dad. Thenext option besides family is certainly self funding,
as we mentioned, using savings,investments, retirement accounts if necessary,
you know, even using non portfolioassets like homes or something to that effect.
You'll want to make sure your assetsas you enter retirement, are sufficient

(25:57):
to cover ongoing living expenses based ona reasonable withdrawal strategy, and that's what
you sit with your financial planner todraw that out. But then you're also
going to figure in potential long termcare costs. Again, we don't know
if it'll happen, but if itwere to happen, what are you doing
to manage that risk? And thenfinally, third option is securing long term

(26:18):
care insurance that we've been discussing.So again, you know, if you
have a well funded retirement plan,you may be able to also fund future
care needs, but we want tomake sure that you're weighing the pros and
cons. Does it make sense tobe looking at long term care now,
because obviously, as CG mentioned,you know, looking at it in your

(26:40):
you know, fifties and sixties,the ability to actually secure a policy is
more likely than in your mid seventiesor later. Ironically, this is when
we hear people call us and say, you know, I'm seventy five,
I'm thinking I should probably get one, And that's when we're seeing premium is
really really expensive and often times there'ssome already some physical issues going on,

(27:03):
and that's where people get nervous andthey're like, Okay, I guess I
should get one right. So youwant to sit down and look at the
whole picture with a competent financial professionaland a long term care specialist, perhaps
really important information this week. Asalways, if you missed any part today's
show, don't forget. You canalways listen back right at Classfinancial dot com.

(27:23):
That's k l Aasfinancial dot com.You can also subscribe to the podcast
right at the website and learn moreabout Class Financial as well. Again that
site class financial dot com that's kl aa s Financial dot com. And
the telephon number for the office righthere in Madison six oh eight four four
two five six three seven. Nocharge for financial gets to know you appointment
dech loss Financial. It will becomplementary to you again their number six oh

(27:45):
eight four four two five six threeseven. Come on hold on to that
telephon number. Also, it's timenow for the Class Quiz question of the
week. It works like this.In just a moment, I'll ask you
the class quiz question of the week. You will then have thirty minutes from
the interday's program to call the ClassFinancial office right here in Madison at six
oh eight four four two five,six three seven. If you are the
first call with correct answer to winthis week's prize, which is a twenty

(28:07):
five dollars gift card to Sephora.This week's closs quiz question the week is
this my favorite kind? True orfalse? According to the US Department of
Health and Human Services, the averagesixty five year old today has a seventy
percent chance of needing some kind oflong term care services in their lifetime.

(28:29):
True or false. Telephone number sixoh eight four four two five, six
three seven. First call correct haswin that twenty five dollars gift card two
Sephora. Don't forget as well.That's Class Financial's office right here in Madison.
No charge for the initial gets toknow your appointment Deck Claws Financial.
It will be complimentary to you againtheir telephone number six oh eight four four
two five six three seven. CJ. Molia. It's always great chatting with
you guys. Have a great Thanksgivingand we'll do it all again in a

(28:52):
couple of weeks. Thanks Sean,Sean. And of course, speaking of
Thanksgiving, Amy Hok with Goodman CommunityCenter, she'll be checking in next talking
about their Thanks thanks Giving, bestbasket, progress being made and how you
can help out. We will dothat next as Madison in the Morning continues.
Right a year on thirteen ten WIBA. This is Money in Motion with

(29:14):
Coss Financial Asset Advisors, LLC,a registered investment advisor registered with the SEC.
The content of this show is forinformational purposes only and should not be
considered individual investment advice. Coss Financialdoes not offer tax or legal advice.
Any opinion offered during the course ofthis show is the opinion of that particular

(29:36):
investment advisor representative, and not necessarilythe opinion of Coss Financial