Liz Windisch financial advisor denver colorado logo

Let’s see. Where did we leave things?

Oh, yes! In our last piece, we talked about your options for Long-Term Care Insurance and the importance of protecting yourself and your loved ones from the burden of long-term care.

Now, let’s talk about the issues surrounding being the caregiver and ways you can discuss options with a loved one.

An Ongoing Issue

The vast majority of millennials have boomer parents, who have an average of only $147,000 in retirement savings. Even though millennials generally are better at saving for retirement than their predecessors, according to the National Institute on Retirement Security, the majority of working Americans have no retirement savings at all. For all the ink spilled between the 2008 recession and now about millennials living at home, in the coming years, it’s millennials who will be helping to care for and support their parents as they age. (The Washington Post)

As our parents age and some of us decide to have children later in life, more and more women are finding themselves part of the “sandwich generation” of caregivers: caring for parents and children at the same time.

This isn’t something to be taken lightly. “Overall, caregivers who experience the greatest emotional stress tend to be female. They are at risk for high levels of stress, frustration, anxiety, exhaustion and anger, depression, increased use of alcohol or other substances, reduced immune response, poor physical health and more chronic conditions, neglecting their own care and have higher mortality rates compared to non-caregivers.” (Source)

The Time to Talk About this is Yesterday

It’s important to start this discussion early and know your loved one’s plans for aging; listen to their wishes and reassure them that you are determined to make sure their requests are followed. You don’t want to wait until cognitive decline is present to find out what kind of care they would like (such as in-home care or a facility if that’s an option).

Something else that’s crucial is planning while they are still healthy enough to qualify for coverage and when you begin the discussion, it’s also important to be ready with their options. Before you start the conversation, learn the basics so you are all well informed. (CLICK HERE [link to previous blog] for your options.)

And don’t go it alone if you don’t have to. If you have siblings, have a discussion, and make a plan for how parental care will be shared. Care disproportionately falls on women, and often only on one child. Being clear that parents will be everybody’s responsibility ahead of time can help alleviate misunderstandings and resentment later. One child may not be able to help with day-to-day care because of geographical restrictions, but perhaps that person can financially contribute to caregiver assistance to help the main caregiver.

I’m Here to Help

If you find yourself unsure of how to move forward with your own planning or planning for a loved one, let’s talk about it. We can discuss:

Most importantly, I can help you look at how having Long-Term Care Insurance will affect your overall financial plan, as well as the financial future of a loved one.

Aging is something that most of us will experience if we’re lucky – that’s not a choice. But we DO have choices regarding how we go about it. As with most elements of planning your financial future, it requires knowing your options and creating a plan that fits your specific lifestyle.

CLICK HERE to let me know how I can help.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

When it comes to long-term care, many women assume that the need for it is likely far down the road. But the truth is, planning for it might need to start now.

Sure, you might be in your 30s or 40s and in good health, but the need for long-term care – especially when it comes to women – isn’t just about your own needs. It’s about the needs of loved ones as well.

According to PubMed.gov, “Women comprise 75 percent of nursing home residents, 97 percent of professional caregivers, and the vast majority of family caregivers for elderly relatives at home.” This means that those who are personally in good physical condition could still feel the effects of taking care of a loved one.

I’ve even seen this in my own office. I had a client who had to turn down a promotion that she had been working toward for a long time because her mother developed dementia. In the end, the client needed to care for her which meant she wouldn’t be able to travel for the new position.

So, let’s talk about your options, both for yourself and the people you care about.

Do YOU Need to Invest in LTCI?

When it comes to your own long-term financial plan, it’s all about preparing for your future. However, when most people think of “financial planning,” they only think about retirement funds and investments. Creating a strategy around your healthcare should play a big part of this plan as well.

When I sit down with a client, we discuss several things to determine if she is a good candidate for LTCI:

It’s also important to note that women usually outlive male partners, which means they’re in the position of taking care of their significant other but are then left on their own as they age.

We also model scenarios where long-term care is needed, and then create models with and without LTCI. We ask questions like:

What are Your Options?

I know many people are reluctant to purchase LTCI because they think that if they don’t need it, the money will be wasted. But plans have really evolved over the last several years and there are many options now, including hybrid policies that combine long-term care with life insurance.

But It’s Not Just About You

At the beginning of this piece, I mentioned a client who had to postpone her career development because it was necessary for her to take care of a loved one. And this is a big deal – many of us have worked too hard for too long to have our careers derailed by something that could have been planned for and prevented.

In the next piece, we’ll discuss your options for aging parents and how you can start the conversation about long-term care.

Have questions so far? Let’s talk about them. CLICK HERE to schedule a call!

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

For anyone who has dealt with an aging parent or grandparent the concept of long term care is likely a familiar one. Those unfortunate enough to suffer from Alzheimer’s or other cognitive illness can end up requiring nursing care that can reach and exceed $80,000 per-year depending on the quality of care. With modern medicine it’s entirely possible to live 10+ years after the diagnosis of a permanently disabling illness, meaning that a protracted period spent in a nursing home or with care for the basic activities of living will rapidly deplete your nest egg.

Who does this impact in the family?

Of course the family members suffering from illness are impacted physically, emotionally, and financially. Running out of money due to long-term illness is the last complication that anyone facing a health battle needs.

Unfortunately it’s often the children of those needing long-term care that are often most hurt by these costs and their associated impact on inter-generational family finances. Adult children may be raising children of their own at the same time as a parent begins needing nursing care. This is known as the “sandwich generation” phenomenon, and many baby boomers are currently finding themselves in this situation as their children head off to college and their aging parents face the prospect of potential long term illness or disability.

What is the worst case scenario?

In the worst cases the nest egg of the individual needing long term care is completely wiped out. This may necessitate any adult children dipping into their own savings to preserve their aging parents lifestyle and prevent them from ending up in a Medicaid facility. This in turn can cause grandchildren to lose out on attending the best possible education institutions as family funds are diverted to health care needs.

Those with substantial enough assets to avoid outliving their money, even in the event of a lengthy nursing home stay, still face the prospect of watching a life time of savings eroded in a few years as their estate is unnecessarily diminished. In the case of long term illnesses with heredity-linked causes this leaves less money for children or grandchildren to deal with their own possible care needs in the future.

How can you avoid contributing to the “sandwich generation” phenomenon?

Today there are myriad ways to insure against costly long-term care. Whether it’s a simple long-term care policy or a more complex strategy the one consistent message is that the younger you start planning the better. Not only is it easier to qualify for coverage with the best possible rates while you are young and healthy but it’s also possible to take advantage of investment and insurance strategies that can take years to properly implement. 

While there is no one size fits all approach it is possible to work with a financial planner who understands the risks of long-term care costs and how to utilize available savings and investments, long-term care insurance, and life insurance in a way that provides the best coverage mix for your circumstance. 

Insurance policies contain exclusions, limitations, reductions of benefits, and terms for keeping them in force. Your financial professional can provide you with costs and complete details.

*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2014-2015 Advisor Websites.

Pat and Kelly, new parents, made a couple monthly budget adjustments upon the arrival of their first child. First, due to the added cost of day care and dependent health insurance, they decreased the amount they were saving for a house. And second, they agreed to review their life insurance needs. Pat’s sister suggested they buy $500,000 life insurance policies like she and her husband did when their child was born.

Given the disparity in their incomes, Pat and Kelly were not convinced they each needed another $500,000 of life insurance.

Here’s what they learned from talking to their agent.

In two income households where one income is significantly more than the other, the cash and income needs for the surviving spouse will vary.

Their agent explained the three primary areas for concern are the:

Pat and Kelly indicated they would continue to work in the event the other died. That’s important because replacing both incomes would dramatically increase the need for life insurance. Plus, the surviving spouse’s income impacts the amount of the Social Security Survivor Benefit.

If Pat died, Kelly would have to replace Pat’s $75,000 income whereas Pat would only have to replace Kelly’s $35,000 income. That $40,000 difference would result in a significant difference in the income replacement analysis.

When they got married two years ago, they bought $250,000 life insurance policies in anticipation of buying a house. Pat had a $75,000 group life insurance benefit but Kelly’s company did not provide any group life insurance. This extra $75,000 of available cash to Kelly at Pat’s death would affect the net cash available calculation.

They asked their agent if the recommendation by Pat’s sister seemed reasonable. The agent created the following analysis for them.

PatNet Cash AvailableKelly
$325,000Current Life Insurance$250,000
$500,000Proposed Life Insurance$500,000
$825,000Life Insurance Total$750,000
$35,000Savings$35,000
$860,000Total Cash Available$785,000
-$25,000Debt-$25,000
-$200,000Mortgage Fund-$200,000
$635,000Net Cash Available for Beneficiary$560,000
Pat Income AvailableKelly
$75,000Annual Income$35,000
$28,000 1Interest Earnings$31,750 2
$103,000Income Available$66,750
1. (5% x $560,000 Net Cash Available)
2. (5% x $635,000 Net Cash Available)

Reviewing the analysis, Pat determined the analysis did not factor in their son’s Social Security Survivor Benefit (SSSB) and without a mortgage payment or any other debt, $103,000 was more income than needed. With that in mind, the $500,000 policy on Kelly seemed to be excessive.

On the other hand, Kelly believed the $500,000 of life insurance on Pat only provided $66,750 of income which, even with the SSSB, was inadequate.

Upon the birth of a child or any other life event, it’s likely that you will receive advice from friends or relatives on how much and what type of life insurance you should buy.

But remember, if there is a significant difference in income and current life insurance coverage, determining the amount of life insurance for each spouse, is best resolved by considering your individual cash and income needs.

*This is a hypothetical example and is not representative of any specific investment. Your results may vary.

*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2014-2018 Advisor Websites.

Unquestionably, disability insurance is more complicated than other forms of insurance. There are a lot of moving parts to understand in order to create the right kind of coverage, which may be one reason why many people are reluctant to look into it. No one likes to pay for something they don’t understand; however, once you understand the risk and your need for protection, purchasing a disability insurance policy becomes much more straightforward. Then you just need to know what to look for in a disability insurance policy to best suit your needs.

The Definition of Disability

You might think you are unable to work due to an injury or illness, and therefore, eligible for disability benefits, but the insurer may not agree. It depends on how it defines a “total disability” which is the key trigger for paying out the monthly benefit - the broader the definition, the better, while, the more narrow the definition, the less chance you may receive benefits.

An example of a broad definition is the “own occupation” definition that applies to certain occupation categories, such as physicians, dentists, attorneys and certain other professionals, which is:

“The inability, due to an accident or illness, to perform any of the material and substantial duties of your own occupation, regardless of whether you are able to work in another type of occupation.”

In this case, a doctor may not be able to perform surgery or emergency room duties, but he may be able to do consultations. So, he can qualify for disability benefits.

A more limited definition might say:

“The inability to work in any occupation for which you are qualified.”

That means that, if you are a teacher, and you are unable to stand all day in a classroom, but you can sit at desk and do research, you would not be considered “totally disabled” and, therefore, ineligible to receive benefits.

Another type of disability definition is based on a “loss of earnings” which will pay a benefit, if you are unable to work and your earnings drop below 80 percent of your pre-disability level. If eligible, you would then receive a benefit proportionate to your earnings loss. But, with some policies, you would have to be unable to work in any capacity in order to receive benefits.

The bottom line is that you should look for the broadest definition of “total disability” and have your disability insurance broker fully explain the circumstances under which the policy would pay benefits.

Elimination Period

The elimination period of a disability insurance policy is like the deductible on your auto insurance – it’s the financial risk you assume before the insurance company begins to pay the benefit. As with auto insurance, the more risk you are willing to assume, the lower your premium cost. Choosing the longest elimination period – up to 6 months – could save you hundreds or thousands of dollars in premium costs over time. The best course of action is to accumulate a cash reserve equal to six months worth of living expenses that can be used to replace your income and then choose the longest elimination period for your policy.

Guaranteed Insurability Option

A Guaranteed Insurability Option allows you to increase your disability benefit without evidence of insurability. With this option, you are offered the opportunity to increase your benefit at specified intervals, and you can choose to use the option or pass (some policies limit the number of passes you can take before you have to exercise the option). If you anticipate your income to increase substantially over the years, the Guaranteed Insurability Option will protect your ability to add coverage even if you become uninsurable.

Cost of Living Adjustment (COLA) Rider

Should you become disabled and begin receiving benefits at a younger age, you could find the value of your monthly benefit gradually eroded by inflation. The COLA rider will ensure that your disability income increases with the pace of inflation at a minimum.

Work with a Disability Insurance Specialist

With fewer insurance companies offering disability insurance, it has become a specialty insurance product over the years. It is strongly recommended that you work with an insurance broker who specializes in disability insurance and who has access to disability insurance products from the top disability insurers.

*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2014-2016 Advisor Websites.

Get in the know on info that impacts your finances

Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through GPS Wealth Strategies Group LLC, a registered investment advisor. GPS Wealth Strategies Group LLC and Aspen Wealth Management are separate entities from LPL Financial.

The LPL Financial registered representative associated with this website may discuss and/or transact business only with residents of the states in which they are properly registered or licensed. No offers may be made or accepted from any resident of any other state.
Studio One44
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram