The Strategic Wealth Hour
The Strategic Wealth Hour is a dynamic and engaging radio show designed to help listeners take control of their financial future with confidence. Hosted by experienced advisors, Tom Hadican, Charlie Sottoriva, and Arron Bockman, the show breaks down complex topics like retirement planning, wealth and investment management, and protection strategies into clear, practical guidance you can actually use.
The Strategic Wealth Hour
Long-term care and Retirement costs.
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In this episode of The Strategic Wealth Hour, Tom Hadican, Charlie Sottoriva, and Aaron Bockman discuss one of the most overlooked threats to retirement income: rising healthcare and long-term care costs. The show explains why Medicare may not cover everything retirees expect, how long-term care can affect income, assets, and family decisions, and what planning strategies may help protect a retirement plan. Listeners will hear common myths, practical examples, and key questions to consider when preparing for healthcare expenses in retirement.
To learn more or schedule a complimentary retirement income analysis, call 314-548-4866 or visit www.chesterfieldfinancialgroup.com.
Now it's time for the strategic wealth hour. Take control of your financial energy with breaking it all down. Here's your host.
SPEAKER_01Welcome to the Strategic Wealth Hour. I'm Tom Hanikin. Joined again today by my colleagues Charlie Satareva and Aaron Bachman.
SPEAKER_03Subfellas.
SPEAKER_01Good morning. What do we think, guys? The heat wave broke a little bit.
SPEAKER_03It's nice outside today.
SPEAKER_01And uh golf tournaments in town. A lot of things happening this week.
SPEAKER_00Mm-hmm. I had dropped off. We've been talking about this. I dropped off Audrey. And I got it on video crying like a little baby.
SPEAKER_01First visit at the college drop-off.
SPEAKER_00Yeah, and then my my wife, she she looks at me and I was like, it was like she could tell the dam was about ready to break. And she goes, she goes, Are you okay? And I literally looked at my wife. I said, Don't talk to me right now. Don't you look at me one?
SPEAKER_01Well, I'm dropping one off this week and I'm kind of looking forward to it.
SPEAKER_00Uh but this is what this is like your third trip around the sun?
SPEAKER_01Yes, it's the third time. It's the third time, second one for this child with the third child.
SPEAKER_00Yeah.
SPEAKER_01And uh yeah, I'm excited when they come home for the summer. I get a little excited when they leave and get to go back to school. They can wear you down after a while. I've got three college-age girls living in the same house.
SPEAKER_03Alex drove himself this year. I was like, what do you need me for? He's like, nothing.
SPEAKER_01I'm like, all right, man, have a good time. Good luck. That's the best way to do it.
SPEAKER_03Today's the first day of class. They're gonna send me a picture. Uh him and all the knucklehead roommates take uh first day of school pictures for the moms. Hopefully, I get one.
SPEAKER_01That's the difference between boys and girls. Boys go up with a backpack and uh, you know, maybe a computer. Girls go up with a uh two car loads worth of IKEA bags.
SPEAKER_03Yeah, he loaded up his own stuff in his car, and that was that.
SPEAKER_01All right, guys. Well, today I wanted to kind of cover a topic, you know, it's a retirement planning topic that doesn't always get enough attention in the retirement planning game, I guess. Um it doesn't get enough attention. And it it is these expenses that can throw off a retirement income plan. These are those health care expenses, those long-term care costs, right? When most people we talk to think about retirement planning, they focus on the size of their nesting, how much money they've accumulated, their Social Security income payments, the returns on their investment portfolio, and whether they'll have enough income. But today we're gonna delve into one of the biggest threats to the retirement income success that they can have, and it often gets overlooked, and that is health care expenses and your long-term care costs that can arise in retirement. As you know, these expenses can dramatically change a retirement income plan and may become some of the largest expenses retirees face. The challenge here isn't just saving enough money for retirement. The challenge is actually preparing for these expenses that can become more significant as we age, right?
SPEAKER_03No, you're right, Tom. I think this is one of those subjects that uh you know people know is important, but more than often, you know, more often than not, push it off because it just feels uncomfortable to talk about. Nobody really wants to imagine you know a future where healthcare becomes a major line item or where a spouse might need care.
SPEAKER_00And I think that most people, when they think about this, they just think, well, if I have enough money, if I've saved uh well enough, quote unquote, or that I have Medicare, or fill in the blank, everything's just gonna be fine. Government's gonna take care of me, uh, it'll be okay, it's never gonna happen to me. And unfortunately, this is what I tell clients when we talk about this. I say, we're gonna talk about something that you don't want to talk about, and quite frankly, I don't even want to talk about. So buckle up and uh let's talk about long-term care. And um, it's not a fun discussion, but unfortunately, it's something that uh we've all been touched by at least one point in our life. And I think that uh I think it's something that we need to talk about today, which is why we're gonna talk about it.
SPEAKER_01Well, health care costs, as you know, they can grow over time as we age, right? Many retirees will assume their expenses decline once they stop working. And some will. Maybe your transportation costs, you're not putting gas in the car to get to and from work, maybe your wardrobe, your clothing costs, because you're not buying new clothes to go to work. But health care usually won't. As we age, healthcare becomes a larger and larger part of our budget. Prescription medications, right? Doctor visits, supplemental policies that we might have to purchase, dental work, vision care, hearing aids, maybe home health services. The list grows and grows. You know, many of those expenses are not optional, right? You can postpone a vacation and you can spend less on entertainment, but if you need medication, dental work, or home health care, those expenses move to the front of the line. That's what makes health care different from many other retirement expenses. It can be unpredictable, it can increase with age, and it can affect both spouses at different times. Aaron, I believe you have some statistics you wanted to share on health care costs in retirement.
SPEAKER_00Yes, I uh printed out a bunch of stuff. As you guys know that uh AI is a great gem of treasure trove of information. So I just simply said, I'm getting ready to do a radio show. Can you give me some long-term care facts? Aaron Ross Powell, Jr.
SPEAKER_01Put it in the AI?
SPEAKER_00I did. And here's what uh AI says. And to be specifically, I used a Microsoft Copilot. And it says about 70% of Americans turning age 65 will need some form of long-term care, and that is from the CDC. And it says half will require uh require will require long-term care paid services, not just help from the family. And here's something I think that we all know uh intuitively is that women tend to need long-term care more than men. Uh women on average are 3.7 years as opposed to men. And I think the reason why, and I I don't really have any evidence other than just what I've seen with my own eyes, but I think that the reason why men need care less than women do is to typically speaking, women are the primary caregivers. They take care of that spouse or partner, and then what ends up happening is they kind of wear themselves down, and then uh they pass away, and then uh what ends up happening is that other spouse, or in this case uh female, needs care themselves, which again is uh typically 3.7 years as opposed to uh 2.2 years. And it's estimated, and this is the part, guys, that you're gonna find uh fascinating, it is estimated that we have in the United States 53 million unpaid family caregivers. But that's sinking. The population of the United States is roughly 325 million. Trevor Burrus, Jr.
SPEAKER_01And that's typically a member of the family that's providing that care. Trevor Burrus, Jr.
SPEAKER_00Right. And if you think about it, one of the things if you talk to people um who are uh in uh benefits, they'll often tell you that one of the main reasons that people are missing work is because of long-term care. They're taking care of a spouse, they're taking care of a loved one. And so what ends up happening is um it really does have an economic cost not only to the person who's receiving care, but to the person who is um taking care of them. And so uh today we're gonna go over a couple myths, and I think we've got uh the first myth, myth number one. Charlie, you want to go ahead and take myth number one here?
SPEAKER_03Yeah, let's uh let's knock out one of the most common ones we hear, and it is once I have Medicare, healthcare will not be a major expense. And that just simply is not true. You know, Medicare can help significantly, but you might still need a secondary or a supplement, you know, depending on meds, doctors, history, etc. Um Medicare was never really designed to cover every healthcare expense that the retiree may face.
SPEAKER_00Yeah, and I think that what makes healthcare different from any other type of retirement is it can be completely unpredictable. We can plan for it, but the reality is that no two people's situation will look the same. And so uh it can affect one spouse or both spouses. And what's yeah, I I think the worst case scenario is if both spouses at the same time need it, and then what happens? So um Medicare was never designed to absorb all of this cost. And so what ends up happening is that people think that, oh, Medicare that'll take care of me. And the reality is that Medicare will only take care of you in some certain situations. It's a very narrow band. But if it's a person who needs care in their own home or God forbid a nursing home, Medicare typically isn't covering that. So um we've got uh some pretty big misconceptions about Medicare. And so uh if you don't know about this, we can go on an entire episode of just how does Medicare work with long-term care planning. But I would I would urge you, I I mentioned AI earlier, but go into Google or Anthropic or uh co-pilot chat and just simply say, can you explain to me how Medicare works when it comes to long-term care? And again, this is I will give you the 10,000-foot view. It is really only for people who are at the very, very, very end. And guys, I apologize. It's escaping what do we call that at the end of life care? Um Palliative care. When somebody's turned to palliative care. Yeah. So what happens is that's pretty much what you're what you're looking for. And and that's just not that's the end. Hospice. Hospice. It's gonna cover hospice, yeah.
SPEAKER_01We're gonna cover Medicare a little bit in the next segment, Aaron. But right now, let's give a kind of overview of how health care affects retirement income, right? How do how does those health care costs you may face affect your income retirement? Think about it. If your healthcare expenses increase by just a few thousand dollars per year, where does that money come from, right? Does it come from your investment portfolio? Does it come from additional withdrawals from that portfolio? I mean, could it reduce your travel plans to visit your grandchildren? Does it affect your gifts and the legacy you want to leave the children, grandchildren? All this is connected, right?
SPEAKER_03Yeah, for sure. And you know, for the listeners out there, this is where the conversation really becomes real. Um, healthcare is not just a medical issue or a medical topic. It can become a cash flow issue, tax issue, investment issue, and more often than not, like Aaron said, you know, a family issue.
unknownAaron Ross Powell Yeah.
SPEAKER_00So if somebody is building a retirement income plan and they leave health care out, they may be leaving out the biggest expense that they will ever face. And again, not something we want to talk about, but it's something that uh we need to talk about.
SPEAKER_01Did we get any emails this week, Charlie?
SPEAKER_03We did. We have a stack of emails. Um let's start with one here. I think this is pretty pertinent. Um this one is from Karen in St. Charles. Karen, thank you for the email. And she says, I've saved diligently in my retirement savings plan. I assume it's a 401k, um, but I've really never planned for health care expenses. Am I behind?
SPEAKER_00A lot of our listeners are probably wondering the same thing. Are you behind? And the reality is, is you're very, very, very normal. Most people focus on accumulation. Very few people estimate health care costs as a part of their retirement plan. And the important thing to recognize is you have to plan for this before it happens. Oftentimes, if you wait until it happens, uh like they say, it's too late.
SPEAKER_03Yeah, and we we've covered a lot of words, we said a lot of things. Um if you've never actually analyzed how health care expenses could impact your retirement income, feel free to give us a call at 314-548-4866, or you can visit us at Chesterfield Financial Group.com to schedule a retirement income analysis, including Medicare, health care, long-term care.
SPEAKER_01When we come back, guys, we're going to focus a little bit more on Medicare. What does it cover? What doesn't it cover? And why so many retirees are surprised by the expenses they still may face in retirement. Remember, you are listening to the Strategic Wealth Hour on the Big 550 KTRS.
SPEAKER_02You're listening to the Strategic Wealth Hour on the Big 550 KTRS.
SPEAKER_01Welcome back to this to the Strategic Wealth Hour. Charlie and Aaron, today we're covering health care costs in retirement, long-term care costs of retirement. But in this segment, what I want to focus on is Medicare. Let's talk about it a little bit.
SPEAKER_03Let's do it.
SPEAKER_01Everybody knows they have it, probably. They know they need it. Um, but far fewer people even understand how it actually works.
SPEAKER_03Yeah, and that's because Medicare can be confusing. You know, people hear different things from friends, coworkers, neighbors. Aaron even mentioned Chat GPT or AI, uh, even television commercials. How many of those do you see every morning while you're getting ready?
SPEAKER_01Late night uh channel 11?
SPEAKER_03Yeah, it's a whole thing. Shout out channel 11. Channel 11. By the time they reach retirement, most are not sure, you know, what's fact, what's sales language, uh, which ex-retired football player is selling some advantage plan on TV. It's very confusing.
SPEAKER_00And most of these decisions aren't just healthcare decisions. They affect your monthly retirement income. And one of the things that people do not plan for is when you start to take out more money, it could actually make your Medicare premiums go up if you're taking out money out of a qualified retirement plan. So we've got some Medicare basics, and we're going to throw it back over to Tom here for our Medicare basics.
SPEAKER_01Yeah, I wanted to talk about the basics of Medicare. I mean, generally speaking, Medicare consists of part A. Part A is that hospital coverage. Everybody has it. Typically doesn't have a premium, right? It just covers those hospital stays or those emergency stays. Part B is the one we have to enroll in before we turn, just probably before we turn age 65, and that is your medical coverage or the preventive care visits, part B. Part D, just what it sounds like. Part D for prescription drug coverage. And that has some unique features to it, but you need to understand part A, Part B, and Part D. But many retirees will also choose a Medicare supplement plan, or even what they call a Medicare Advantage plan. By understanding the parts, I mean this is only be the beginning. Uh I've gotten thrown into that a lot lately to figure it out.
SPEAKER_03Yeah, this can be a nightmare, as you know, I've dealt with it as well. Um, but this is really where the listeners probably need to slow down. You know, it's not enough to say, I will go on Medicare. You just laid out three parts plus two or two options, right? You have to understand what kind of coverage you're selecting, what premiums may apply, what costs may still come out of pocket.
SPEAKER_00Yeah, and this is especially important for couples because one spouse may be have very different health care needs than the other, and a plan that looks fine for one person definitely may not fit both of them. Both of them?
SPEAKER_03Both of them. Interesting. Uh let's jump into a myth. I know we love the myth section because we hear these all the time, and I think it's important that we address it, right? We're gonna call this myth number three. Myth number three. Fact or fiction. Medicare is free. Well, that's fiction.
SPEAKER_01Uh we know that many retirees are surprised to learn there are some premiums, co-pays, deductibles, and other out-of-pocket expenses, right? Your Medicare Part B does have a cost. Trevor Burrus, Jr.
SPEAKER_03And this is what surprises people. You know, during the working years, the employees help pay a large portion of health care costs. In retirement, the retiree may feel like those, you know, may feel those costs more directly.
SPEAKER_00And when you're no longer receiving a paycheck, every recurring quote unquote bill or premium starts to matter and it becomes part of a monthly income discussion. So how about this one, guys? Medicare covers everything. Yep, not no, it is definitely not true. Medicare, as I said in our previous segment, was never designed to be a long-term care wellness uh or long-term care uh insurance plan. So it does help, but there are rules. And so um I would say just some highlights of that is that what does long-term care pay for? Limited short-term care. So like a skilled nursing facility, generally up to 100 days. But as I said earlier, if care is in the years, 100 days is just a drop in the bucket. So what does Medicare uh what doesn't it care for?
SPEAKER_01What doesn't it cover? What does Medicare not cover? Well, many retirees are surprised to learn that Medicare doesn't cover expenses related to dental care or even vision care. How about hearing aids? Certain prescription drugs are not covered. And the big one, long-term care cost. Those expenses often need to be planned for separately outside of the Medicare conversation.
SPEAKER_00I think this list is important because those are the expenses that people tend to discover one at a time. So a dental procedure here or a hearing aid there, prescription changes happen later, and suddenly the retirement budget is feeling squeezed.
SPEAKER_03For sure. And anybody that's listening that's you know, five, seven, ten years from retirement, this is exactly why you don't want to wait until the end of the month, you know, or the the month you retire to start asking these questions. You gotta have a plan, you gotta work, you know, work ahead of that. Um I think one of the biggest surprises is that people spend decades preparing to get Medicare, but they understand very little of what it covers, what it doesn't cover, and how it works.
SPEAKER_00And Charlie, I think you had a uh a conversation here with a uh a client uh recently about this. And actually, no, and uh you know what? Actually, I think it was Tom. You you were the one who said that you had a a situation with a client here recently.
SPEAKER_01Well, as Charlie said, one of the biggest surprises is people spend decades preparing to get Medicare, but they don't understand what it covers, right? Um those gaps become an expense issue, not necessarily an insurance issue, an expense issue. So every gap shows up somewhere in that income budget. Uh Charlie, we have another myth we want to hit?
SPEAKER_03Oh yeah, we've got uh I've got a hundred of them. Hopefully we can squeeze them all into the show here. Um so probably one of the biggest Medicare myths we have is that Medicare pays for nursing home care.
SPEAKER_01Nope, it's not true. Um this is the most dangerous misconception in retirement planning that we hear. Medicare is not designed to pay for extended custodial long-term care. That's where retirement plans become extremely valuable. Every plan that we seem to do, Aaron, we're going to have that long-term care what-if scenario, we like to call them, right? The a Slido what-if scenario. What happens if you need care for four years at age 82 to 86? How does that handle, how does your portfolio handle that stress?
SPEAKER_00Mm-hmm. And I think what you also have to take into consideration is that you said the Slido for those who are listening at home, that is uh office speak. So we have sliders that that will take the uh they'll take the plan from two years, four years, six years, eight years. Unfortunately, some we even plan for ten years. What what would happen if you needed ten years of uh of care? And I think that that is something certainly that would be uh awful. We got a listener email from uh Dave in O'Fallon. If Medicare doesn't cover long-term care, who pays for that? So, Charlie, why don't you take that?
SPEAKER_03Yeah, thank you. Uh is it Dave? Do you say? Thank you, Dave, from O'Fallon. We're number one in O'Fallon. Um Dave, ultimately it made us. Which one? Which one? Illinois or Missouri. Well, it's gonna be both of them. Okay, ultimately, Dave, it's probably gonna come for personal savings, investment assets, um, home equity, line of credit, family support, insurance, or quite honestly, a combination of those sources, and that's why we always encourage people to plan ahead so that we know where it's gonna come from. We're not surprised, we're not taking out loans against things that we never intended to.
SPEAKER_00Retirement income should include Medicare planning. But it should also address the expenses that Medicare does not cover. Remember, if you need to talk about this very, very important issue, please call us at 314-548-4866.
SPEAKER_01All right, guys. Next we're gonna tackle the biggest wild card in retirement planning. It's something we touched on a little bit, and that's long-term care. What happens if you need that custodial long-term care if that monkey wrench is thrown into your plan? We'll see you on the other side. You're listening to the Strategic Wealth Hour on the Big 550 KTRS.
SPEAKER_02And now back to the Strategic Wealth Hour with Tom Haddecken, Charlie Satariva, and Aaron Bucklet from Synergy Wealth Solutions on the Big 550 KTRS.
SPEAKER_01Welcome back, everybody. Today we've been talking about those health care costs in retirement planning and how they can change a retirement plan. In this segment, we want to cover long-term care. It's kind of a wild card that changes everything. I mean, Charlie Aaron, health care expenses. I mean, they're kind of a leak in the boat, something we don't always plan for. But that long-term care cost could be the hole in the hall, something that sinks that retirement plan. It's one of the largest financial risks that retirees face.
SPEAKER_03Yeah, and I talked earlier about why people may avoid it, right? It's because this is where the conversation can become emotional. That long-term care is not just about paying a bill. It affects independence, dignity, spouses, you know, adult children, family members, and more importantly, you know, the whole family dynamic and decision making.
SPEAKER_00It can change an entire family dynamic. It can change the roles that family members uh have to uh have to play. And one day someone has a spouse or a child, and the next day they're also being a care coordinator. They're helping with transportation, they're helping with medication, and they're helping with uh with finances.
SPEAKER_03Aaron Powell Aaron, who's taking care of you if you need long term care? Which of your kids?
SPEAKER_00I used to say it was going to be my oldest, but I think it's now gonna be the uh the the middle child.
SPEAKER_01Yeah. That's why I have four daughters. Yeah. That's my plan. Right. What is What is long-term care? Uh long-term care isn't just nursing home care. That's kind of a a misconception that when they when we talk about long-term, everything, oh, it's a nursing home, you know. But no, it can include many things. And the definition matters because many listeners picture long-term care as one thing, a nursing home. But today, it can happen in stages and in different settings. For example, home health care. When your health maybe starts to deteriorate, where is the first place you're gonna r want to receive that care? And that care may just be personal assistance, helping you perform some of those, what do we call them, Aaron, the activities of daily living.
SPEAKER_00Bathing, dressing, toileting, transferring from bed to chair, maintaining continence.
SPEAKER_01Well, pretty good, Aaron. Put them on the spot. How about assisted living? Maybe we need a little bit of additional help and you have to go to an assisted living center or memory care, a memory care facility. Or if you're you're really you know moving down that path, you know, your health is getting worse, you're gonna have to entertain a skilled nursing facility.
SPEAKER_00Aaron Powell And the type of care matters when you're planning. Care at home is gonna have a completely different cost and a different approach, and staffing needs are gonna be different than an assisted living facility or at a memory care facility. Your plan needs to be flexible enough that it's gonna handle every single one of those stages that uh that Tom just mentioned. So, Tom, we've we've got a a a myth here that I I hope is true, and I think you gentlemen I'm not sure it's only a myth.
SPEAKER_01I think it's just some so maybe sometimes it's a sentiment or a view that a client may have. And that is I'll never need long-term care. Yeah. Why are we talking about it? Why are we planning for it? You know, I I'm not gonna make it that far. Right? I mean, unfortunately, none of us know that. You know, long-term care planning isn't about certainty, it's about managing that risk. And in what we do, I always share with my clients is we learn with from the successes of our clients we work with and also from the failures of others. Because we've seen people get to that point where they're like, uh-oh, we we have this situation. How are we going to plan for it?
SPEAKER_00And I think risk management is really the key phrase. We ensure our home, we ensure cars, income, and our lives because the consequences can be too big to absorb that risk in such a short period of time. And long-term care, it belongs in that exact same situation.
SPEAKER_01Aaron Powell What's another one you hear, Charlie?
SPEAKER_03Oh, I've been saving this one for you guys. This is probably my favorite. Um my spouse will take care of me.
SPEAKER_01I'm not sure I can count on that.
SPEAKER_03I've met your spouse. I'm not sure you can. I hope you guys got your plans in order. Toby's lovely. You might be in good shape. Yeah, maybe. We'll see. I'm just kidding, I love you, Tina.
unknownAll right.
SPEAKER_03So, you know, many spouses do provide care, right? I know that's kind of the joke. Like my spouse is gonna not take care of me, right? Um the challenge is that caregiver fatigue. They may think that they can do it, they may not be you know skilled physically or um you know from a health care directive, but that physical and emotional demand can certainly become overwhelming and it can happen fast. You know, even when the spouse wants to help, right? Love does not eliminate that workload, right? Caregiving is a it affects sleep, health, income, the ability to maintain a normal routine, especially if you still have kids in the house.
SPEAKER_00Mm-hmm. I think another myth that we have here is that long-term care means a nursing home. No, not necessarily. It doesn't necessarily have to mean that you are in a nursing home. Many situations begin at home, then they progress through certain stages of care. It's not uncommon to see somebody start at home, and then they even have something now called adult daycare, and then maybe they progress to that, then they might go to an assisted living facility, then maybe go to a memory care, then they ultimately, let's hope not, end up in skilled.
SPEAKER_03Yeah, there's just a lot more options now than there were, you know, kind of back in the day during old long-term care policies or the and here's something that's completely random.
SPEAKER_00You see this in uh in Japan. One of the ways that they're trying to deal with this because they have a shrinking population and at the same time a very an aging population, and so they actually have robots that are projected to be doing a lot of this work. So I mean, maybe that's uh maybe that's where we'll end up too. I don't know. But uh Tom, what's the real cost?
SPEAKER_01Well, the real cost, I mean, it's not just financial, right? It's also emotional, mental, etc. But imagine a retired couple. I mean, they've built this retirement income plan. They may have paid off the home, everything looks great, the plan looks great. All of a sudden, one spouse develops dementia. And then suddenly income needs rise, expenses rise, investment withdrawals increase, family members become caregivers, and legacy goals can change. I had a situation recently, guys, and Charlie knows it very well, where a client of ours kind of had this happen. Diagnosed with early onset dementia, and uh the spouse was providing as much care as she could until it got to the point where she said to me it was becoming overwhelming, and she was a uh you know, a prisoner in her life to maintain this level of care. So, what we did is we did some planning, and we did some deep level planning where we analyzed the cost of the care, whether we started at adult daycare, which we did, and then moved into a memory facility, and we stress tested their plan based on if they entertained this care for two years, four years, six years, eight years, how would the income plan handle it? And that was the power of planning because it gave her the peace of mind to make the decision that I'm not in this alone, and I can get the care I need from my spouse that I love because I can no longer do it at home. It was powerful, I mean there were it it was emotional, but I feel the planning process gave her the confidence to make the right decisions.
SPEAKER_00Yeah, I I think this example also shows why long-term care can disrupt more than one goal at a time. I mean, it's not only just the income, it was her standard of of of life, as you said, being a prisoner. Um and I think that nobody wants that uh for themselves or for anybody that they uh love or care about. So uh this will affect tax planning, estate planning, and the survivor's uh surviving spouse's lifestyle.
SPEAKER_03Yeah, Tom, I'll throw you a bone live on air. They were lucky to have you, and I know that that case was emotional and close to home and you did a great job. Um but but that right there is why it's not enough to just say, hey, we're gonna figure this out later, right? Later later may be exactly when the family has the fewest choices and the most stress. Let's jump into one more myth here in this section. Um this is a good one, we hear this a lot. Long-term care planning is only for wealthy people.
SPEAKER_01Uh uh-oh.
SPEAKER_03Yeah. So actually many middle income retirees um are impacted the most because they're trying to protect assets that they've spent those decades building. It can be a larger chunk of what they planned on.
SPEAKER_00Yeah. And I also think that if you are a middle income individual, as you said, um the asset can get spent down much more quickly. And so it even becomes I would say I don't want to say more, but equally as important for somebody who's um quote unquote just a middle income earner.
SPEAKER_03Yeah, and if you math it out, it could be more important to those people because like you said, it's a larger chunk of maybe what they've saved or what they have access to.
SPEAKER_00Absolutely. We've got a listener email from Linda. I don't think this is my mom. My mom's name is Linda.
SPEAKER_03Shout out Aaron's mom, Linda.
SPEAKER_00Shout out, mom. If I buy long-term care insurance and never use it, was that money wasted? We hear this question a lot. And I think that insurance should be evaluated as am I willing to cover this risk? Am I willing to cover this risk? That is what insurance is for. We're gonna talk about our next segment some ways that we're not just quote, unquote, throwing money away. Um, but uh I I I I I've always felt this is kind of, I don't want to say disingenuous, but a lot of times when when we were learning about long-term care and when we were newer in the business, that was uh we would say to individuals, well, you insure your house, you insure your car, and if something happens to you, um you're not gonna get any money back there. Same thing happens with long-term care insurance. Um there used to be ways that you could get money back, but it just became way too expensive to add that writer on there at effectively doubling your premiums. So if the goal is protection, it's something worth having a conversation about.
SPEAKER_03Um there are certainly more solutions available than I think most people realize. Um give us a call. We're 314-548-4866, or you can find us at Chesterfield Financial Group.com.
SPEAKER_01All right, guys, when we return when we return for the final segment, I want to discuss the actual long-term care solutions available and how you can incorporate long-term care planning into your retirement income strategy. You are listening to the Strategic Wealth Hour on the Big 550 KTRS.
SPEAKER_02This is the Strategic Wealth Hour with Tom Haddeckett, Charlie Satareva, and Aaron Boxman from Center T Wealth Solutions on the Big 550 KTRS.
SPEAKER_01Welcome back to the show, everyone. I'm here for our final segment with Charlie and Aaron, and today we've been talking about health care costs and retirement, long-term care costs in retirement. We've discussed the risk, the risk that we face to our retirement income plan. Now let's talk about some solutions, right? The question isn't whether long-term care is expensive, right? We know it is. The question is how will you pay if it happens to you?
SPEAKER_00And I like the the way that you frame this question, Tom, because long-term care it's a scary topic, uh, we'll admit it. Uh, and we're not trying to predict the future perfectly, but we are trying to decide in advance which assets, which resources we are going to have available if we need care.
SPEAKER_03That's exactly right, guys. And you know, as with most things, the worst time to uh try to design this strategy to cover for long-term care, whatever crisis you may find yourself in, um, is actually during the crisis, right? When the family's emotional, your options might be limited, and decisions have to be made very quickly.
SPEAKER_01So, what I want to cover, guys, is a couple different options that people have when they're doing planning for health care, planning for long-term care costs in retirement. And the first one we see is self-funding, right? Some retirees may choose to self-fund. Last time we talked about a thing that says long-term care planning is only for the wealthy. No. I think some wealthier people may choose to self-fund. They may say, look, I have enough assets. If we hit that our hit that need, our portfolio might be strong enough to handle those care costs. Well, I'm gonna self-fund that risk.
SPEAKER_00And I think self-funding sounds attractive because there's no premium and there's no underwriting. But listeners need to understand what they are really actually doing. You need to be honest with yourself, and that is you are deciding to keep that risk on your balance sheet. That's what you're deciding to do. And for some individuals, they say, I'm willing to do it. But for others, you need to be aware that's what you're doing.
SPEAKER_03Yeah, and we just made it sound really simple, but we know that there are challenges. What are the challenges?
SPEAKER_01I mean, it's challenges, the person is assuming all that risk on themselves, right? The risk or the longevity of the stay. A lengthy care event can significantly impact retirement income, right? The longer they're in there, the more it costs and can hurt that portfolio and what they may have chosen to want to leave behind.
SPEAKER_03Yeah, and that might be accept you know acceptable for some families, like you said, we're going to self-insure, but that has to be intentional. It can't just be like an afterthought, right? If the answer is we'll use the portfolio, the portfolio really should be stress tested for that possibility.
SPEAKER_01And we do that stress testing all the time as part of the retirement planning process. If that scenario happens, what type of stress can this portfolio handle? Another option uh we talked about, and it I guess it probably got popular in the early aughts 2000 time frame. Uh maybe just right when I was entering this industry. You never know.
SPEAKER_031934.
SPEAKER_01Uh traditional long-term care insurance is still an important planning tool, right? Its sole purpose was to cover expenses, you know, when they were needed. However, you know, it it gained in some popularity, it ran into some rough patches, which I think we'll talk about, Aaron. But uh it's it's something that's still out there, something so we still talk about.
SPEAKER_03Yeah, this is the one guys that most people probably recognize. This is the option that they've heard of, or they may even have, right? Remembering the old version of those long-term care insurance policies. Um, they may have some concerns about rising premiums, policies that were never used, et cetera, et cetera.
SPEAKER_00I'd say it still deserves consideration because this leverage can be meaningful. And I oftentimes will tell clients when they come in, if you knew that you knew, that you knew that you knew that you were going to need long-term care, you absolutely knew you were going to need it, long-term care insurance may be the best option. Um, but again, there are no solutions. There are only trade-offs. And what we're going to talk about today are some of those trade-offs in this in this uh section here. So the advantages are uh it's designed for specific care. It can provide more leverage. You're you're using your dollar and multiplying it by a factor. It helps protect your retirement planning assets. Here are the considerations, though. The premiums are most of the time gonna be ongoing. You still have to qualify, meaning you have to uh usually it's two out of six activities of daily living that you need substantial care. What is substantial care? Typically 50% of the time, or a lot of them it would be a mental or nervous exclusion. Um not an exclusion, but it would be that you needed uh something to do with mental or nervous issues. So for example, if somebody has Parkinson disease or Alzheimer's or something along those lines, typically that they're they're going to be uh care uh qualifying for long-term care even if they can still do all the activities of daily living. But some people dislike the use it or lose it structure. So we've got a uh uh a myth that I'd like Tom here, I'd like you to cover, and that is that long-term care insurance is always too expensive.
SPEAKER_01Aaron Ross Powell It could be, right? It could be considered expensive. But the better question is it's expensive compared to what, right? Compared to the potential cost of the care you're going to incur, or compared to the cost of liquidating your retirement portfolio assets, compared to the cost of changing a spouse's retirement lifestyle, meaning if you've spent down your assets, how is your spouse going to continue their lifestyle, right? That's the real comparison. How does that cost of care compare to the cost of protecting against that care?
SPEAKER_03And you guys know we answer a lot of questions with, well, it depends. So for you know, the answer for this long-term care, you know, option or expense is definitely not going to be the same for every family. There's going to be those trade-offs. Some folks want maximum leverage, others are going to want some guarantees, right? Aaron mentioned flexibility. You know, the right design depends on the goal.
SPEAKER_00Tom, we've got uh some hybrid life insurance solutions to talk about. You want to go ahead and take that one too?
SPEAKER_01Yeah, the this is another, the third option I guess we look at in coverage those long-term care expenses, and it's the one that's probably gained a lot of popularity lately. And that popularity is for a number of reasons. And it's because it's a life insurance policy combined with long-term care benefits. And what I will get into here, Aaron, is say that this, you know, people would consider long-term care, and their biggest fear was what? Never using it.
SPEAKER_00What if I never needed it? And this is designed to take care of that, because if you have a life insurance policy with a long-term care writer, well, here's the quote unquote truth, and I hate saying that. Um you're gonna die. We know that you're going to die. We don't know that you're gonna need long-term. You're gonna stay.
SPEAKER_01Who dies?
SPEAKER_00No, everybody. Everyone, all right. Everybody dies. Not a mistake. And so what happens is this basically says this if you don't need long-term care, someone, obviously other than you, is going to receive a uh tax-free death benefit. And I think some people like these benefits because there's a benefit uh anyway, whether you live, whether you die.
SPEAKER_03Yeah, that's exactly right. You know, if care is needed, um those benefits can be used for care. Should care not be needed, like you mentioned, the beneficiaries may receive a death benefit. So the conversation is definitely less about whether someone wins or loses with the policy necessarily, but whether the dollars can create protection, that flexibility that we mentioned, and a benefit for the family either way.
SPEAKER_01Yeah, it takes care of that. What if I never use it, right? It's it it's almost that two birds with one stone, right? I I have a tackle the death benefit problem, I've insured my life, but that has a benefit I can access if I have a care need. And simply you can access a certain percentage of the death benefit for a certain number of months or years that can help alleviate that care cost and still have a death benefit remaining. Another option we have available to us or people have available to protect against long-term care costs is asset-based long-term care strategies. So these are things you can own. Asset-based solutions, you know, basically you reposition existing assets to create leverage for future care expenses. A couple examples of these are maybe an annuity. An annuity out there that has a long-term care rider or benefit built in where maybe your income payment can double and increase if you have a care event.
SPEAKER_03Yeah, those asset-based planning solutions can also be used for people who may have money sitting in conservative accounts, you know, low-yielding accounts, but they want to explore whether those dollars can do more than one job, you know, do something more for their family or for their planning needs.
SPEAKER_00And we've also seen some ones that are kind of like a hybrid CD. So, for example, if your interest rate, let's just say it was 5%, maybe you get 4%, but there's a long-term care quote-unquote kicker on there that says we'll we'll help cover the cost of long-term care, uh, but you're taking a little bit less on your interest rate. So if someone uses those dollars or somebody has a pool of money, they may be able to uh create potential benefits.
SPEAKER_01Aaron Powell That's right, Aaron. Some families in some family situations that can create flexibility and efficiently efficiency.
SPEAKER_00So for our listeners, a takeaway isn't that uh there's just one solution. No, again, you you you you hear you you're hearing only one thing today. Hear this. There are multiple solutions. There's not just one solution. They all have their place, and you need to consider which one makes the most sense for you. Charlie, we've got uh I think our last myth here.
SPEAKER_03Yeah, this is the last one. I tried to pull some of our favorites, the ones we see. This is a great one here more often. I'm too young to start planning for long-term care. So ironically, younger and healthier individuals often have more planning options, you know, maybe why there's not a diagnosable illness or they don't actually need the care, they're just they're pre-buying it as part of that planning process. Waiting can definitely limit those options, and I know we've seen that before.
SPEAKER_01Yeah, I think uh a lot of people when we start this process, we we talk about that long-term care, whether it's the traditional long-term care insurance or even a hybrid solution. And by the time they have that conversation, I'm like, well, we're kind of late in the game because the longer you wait, the less benefit we can purchase based on the you know the time to need expectation. So it's something we probably want to address sooner, not too soon, but sooner in the retirement planning conversation. But let's look at that, you know, how that affects our retirement income, right? Long-term care planning is really a retirement income planning conversation because it will affect your retirement income plan. The question isn't should I buy insurance, right? The question is if I need care in my retirement plan, where will the money come from? Right? And that's part of that retirement, comprehensive retirement financial plan. We can just test that. Every family should have an answer. And I always say to people this the greatest fear is the unknown. What's behind door number two? I don't know what happens when I open it. What happens if my income stops? What happens if my income is reduced? What happens if those long-term care expenses are there in retirement? How will they affect my retirement plan?
SPEAKER_03Yeah, and you mentioned every family should have an answer, and you know, we believe that that that answer should be written into the retirement plan. You know, if care happens, everyone should know whether the plan is to self-fund, use insurance, reposition assets, you know, rely on the current income sources, create income sources, or honestly combine you know a lot of those things into several strategies. Trevor Burrus, Jr.
SPEAKER_00Yeah, I think that also reduces stress on adult children because they're not just guessing what mom and dad had intended. The family has already thought through the plan, and I think that having it written down and talked uh talked through with the family is uh important. But uh I think uh we're coming to uh our our close here. So if you've never stress tested your retirement plan against health care and long-term care expenses, give us a call at 314-548-4866. 314-548-4866, or visit us at Chesterfield Financial Group.com and we'll evaluate whether your retirement income plan is prepared for one of these retirement one of retirement's biggest risks.
SPEAKER_01All right, guys. Today we talked about a topic that probably isn't the most pleasant, right? But it's it's one we have to address in every retirement income planning discussion. Healthcare and long-term care expenses have the potential to significantly impact your retirement and your retirement income plan. But with the proper planning, the proper education, and the right strategy, these risks can be managed, right? So remember, the right plan doesn't happen by accident, it happens by design. So for Charlie Satareva and Aaron Bachman, I'm Tom Haddecken. Thank you for listening to the Strategic Wealth Hour. You are listening to the big 550 KTRS. Stay tuned for more financial education next week.
SPEAKER_03Thanks, guys.
SPEAKER_02This has been the Strategic Wealth Hour with Tom Haddecken, Charlie Satareva and Aaron Bachman from Tennessee Wealth Solutions. Two minutes every Sunday morning at 10 right here on the top of the lowest of 550 APRS.