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Old 09-27-2017, 01:14 PM
 
Location: LTCShop.com
236 posts, read 113,188 times
Reputation: 151

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Quote:
Originally Posted by eliza61nyc View Post


I actually have another meeting. I remember you said to skip AARP so I've got a meeting with state farm.

I have to say, I do hate the fact that they just wont do phone meetings.

I did get this in my email today from oblivious investor.

Should I Buy Long-Term Care Insurance?

http://www.naic.org/documents/cipr_c..._insurance.pdf (fair warning, a long read and I haven't finished it yet)

As far as whether or not itís possible to pay out of pocket for a long-term care cost, itís helpful to remember that long-term care cost isnít purely in addition to current living expenses, as the cost of such facilities typically includes some things that are currently a part of your normal budget ó meals, for instance. Plus, other expenses (e.g., travel and possibly housing) naturally disappear or nearly disappear when a person enters a long-term care facility.

According to a 2016 report from the National Association of Insurance Commissioners (with credit to Christine Benzís excellent ď75 Must-Know Statistics About Long-Term CareĒ for directing me to the report), for people turning age 65 in 2015-2019:

48% are expected to have no long-term care costs during their lifetimes,
15.4% will have costs of up to $50,000,
9.7% will have costs of $50,000-$100,000,
11.7% will have costs of $100,000-$250,000, and
15.2% will have costs that exceed $250,000.
Another noteworthy point: people with lower incomes are more likely to have an extended need for long-term care. (See Table 5 on page 35 of the NAIC report.) This isnít surprising, since people with lower incomes are often in worse health than people with higher incomes. But it certainly makes planning even more challenging for lower-income.


So I will be honest and I still am most comfortable with the plan my FA and I came up with.


Well, Eliza, you could have called me and I would have been able to give you all the quotes right over the phone (even for State Farm and AARP and Northwestern Mutual and about 10 more companies, etc...)

I get a chuckle whenever I see statistics like this. If I looked at the statistics for "hospital stays" I would NOT spend $20,000 per year on medical insurance, like I do. I don't own medical insurance because of the "average cost of a doctor's visit" or the "average cost of an emergency room visit." Every November as I'm looking over the new plans on the ACA exchange, I don't think to myself, "the odds of my wife or I having a major hospital stay this year are about 100 to 1. Therefore, we will not buy medical insurance this year." I own medical insurance because of the possibility of a catastrophic event and the effect that would have on my family.

I've had MANY clients need long term care for more than 6 years. I have one client who has been on claim for 8 years now and will receive about $100K from his long-term care policy this year. He was diagnosed with Alzheimer's only 7 years after buying his long-term care policy. He surpassed $250,000 of home care expenses a loooooooooooooong time ago.

Most people are inconsistent when they think about long-term care. If someone has 1.5 million dollars to invest will they choose a safe investment that earns 4% per year or would they choose a risky investment that could earn 4.3%.

Of course any reasonable person would choose the safer investment earning 4%, rather than the risky investment earning 4.3%. But people who choose to "self insure" are choosing a 4.3% return that could result in losing hundreds of thousands of dollars of their principal.

LTC insurance is logical, once you remove all the emotion from the decision.
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Old 09-27-2017, 01:25 PM
 
71,548 posts, read 71,712,424 times
Reputation: 49125
if self insuring the problem is that money should not be in the general risk pool. it needs to be there at all times ,ready to go ,safe and sound . that usually means low returns .

we got a policy just because rather than tie up a big chunk of dough set a side to self insure i can invest normally ,and not separate money outside of our main portfolio .

just a small piece of the returns on that money that i can keep invested pays for the policy .

those who self insure have to remember that big chunk of dough should not be lumped in with the money producing their income . it is assumed that a safe withdrawal rate can leave you with a buck left 30 years later and it counts as successful . so you can not count that insurance money as an asset for setting your portfolio draw .
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Old 09-27-2017, 02:33 PM
 
29,779 posts, read 34,863,854 times
Reputation: 11705
Self insured can also include combined pension and SS income. Couples with dual pensions will often take the reduced spousal benefit so that along with the higher SS benefit their after tax income exceeds nursing home costs for a surviving spouse. That doesn't include the use of their nest egg etc, which provides a cushion. Read carefully the post of folks who talk about self insuring and you will see some using that calculation. Because of circumstance I am aware when folks suggest that as it catches my attention.
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Old 09-27-2017, 04:34 PM
 
11,127 posts, read 8,537,739 times
Reputation: 28094
Quote:
Originally Posted by TuborgP View Post
Self insured can also include combined pension and SS income. Couples with dual pensions will often take the reduced spousal benefit so that along with the higher SS benefit their after tax income exceeds nursing home costs for a surviving spouse. That doesn't include the use of their nest egg etc, which provides a cushion. Read carefully the post of folks who talk about self insuring and you will see some using that calculation. Because of circumstance I am aware when folks suggest that as it catches my attention.
You would risk self insuring upon the shifting sands of SS? For my retirement planning, I take all government money out of the equation.
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Old 09-27-2017, 05:11 PM
 
Location: Philadelphia/South Jersey area
2,875 posts, read 1,403,268 times
Reputation: 10085
Quote:
Originally Posted by mathjak107 View Post
if self insuring the problem is that money should not be in the general risk pool. it needs to be there at all times ,ready to go ,safe and sound . that usually means low returns .

we got a policy just because rather than tie up a big chunk of dough set a side to self insure i can invest normally ,and not separate money outside of our main portfolio .

just a small piece of the returns on that money that i can keep invested pays for the policy .

those who self insure have to remember that big chunk of dough should not be lumped in with the money producing their income . it is assumed that a safe withdrawal rate can leave you with a buck left 30 years later and it counts as successful . so you can not count that insurance money as an asset for setting your portfolio draw .
mine is not so no worries there. my money set aside for ltc is in a separate account very safe and producing enough for me to draw 5000 a month without infringing on any thing else. AND if I don't use it I don't lose it.

why do you find that so hard to believe. when we saved for our childrens college tuition we did it separately. we didn't touch it and we invested it according to time left. both kids graduated student loan debt free.

we saved for a beach house the same way. not the entire cost but we set a goal, kept in safe moved on

Last edited by eliza61nyc; 09-27-2017 at 05:53 PM..
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Old 09-27-2017, 05:14 PM
 
Location: Philadelphia/South Jersey area
2,875 posts, read 1,403,268 times
Reputation: 10085
Quote:
Originally Posted by LTCShop View Post
Well, Eliza, you could have called me and I would have been able to give you all the quotes right over the phone (even for State Farm and AARP and Northwestern Mutual and about 10 more companies, etc...)

I get a chuckle whenever I see statistics like this. If I looked at the statistics for "hospital stays" I would NOT spend $20,000 per year on medical insurance, like I do. I don't own medical insurance because of the "average cost of a doctor's visit" or the "average cost of an emergency room visit." Every November as I'm looking over the new plans on the ACA exchange, I don't think to myself, "the odds of my wife or I having a major hospital stay this year are about 100 to 1. Therefore, we will not buy medical insurance this year." I own medical insurance because of the possibility of a catastrophic event and the effect that would have on my family.

I've had MANY clients need long term care for more than 6 years. I have one client who has been on claim for 8 years now and will receive about $100K from his long-term care policy this year. He was diagnosed with Alzheimer's only 7 years after buying his long-term care policy. He surpassed $250,000 of home care expenses a loooooooooooooong time ago.

Most people are inconsistent when they think about long-term care. If someone has 1.5 million dollars to invest will they choose a safe investment that earns 4% per year or would they choose a risky investment that could earn 4.3%.

Of course any reasonable person would choose the safer investment earning 4%, rather than the risky investment earning 4.3%. But people who choose to "self insure" are choosing a 4.3% return that could result in losing hundreds of thousands of dollars of their principal.

LTC insurance is logical, once you remove all the emotion from the decision.

I sent you a pm. just got back from New york life. premiums ridiculous sorry I did remove all emotion from my decision. the premium cost make not financial sense for me.


LOL, and I always chuckle because I come to find that everyone "knows" the proverbial person who spent decades in nursing care.

So my dad died at 87 after having a steak and a Jack Daniels while watching the giants. went upstairs and died peaceably in his sleep. His older sister, my aunt queen just turned 100 last November, we took her to Disneyworld to celebrate. lol
my husband. died at 55, acute myloid leukemia, died 7 months after diagnose. so go figure.
My mother in law is currently 83. She did sell her town home and move into a condo but that was mainly to get rid of stairs.
so nope, not one person in my family that I know of spent any time in a nursing home.

I think I said before my best friends mom had dementia but they actually purchased a condo for her and paid for two in home care nurses. said it was much cheaper.

the people I know who invest a million bucks and more break it up. that's what a good Asset allocation does. they have a little risky stuff, the have very conservative stuff, they have stuff that produces dividends. No one I know would stick their entire portfolio in one allocation.

that's not emotional that's math. math is always dependable ~Katherine Johnson, first African American Nasa mathematician.


Thanks for the information. I've hit 3 different insurance companies, bounced it off my cpa and my financial advisor and have not seen any thing to make me change my mind. appreciate the views

Last edited by eliza61nyc; 09-27-2017 at 05:44 PM..
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Old 09-27-2017, 07:18 PM
 
29,779 posts, read 34,863,854 times
Reputation: 11705
Quote:
Originally Posted by charlygal View Post
You would risk self insuring upon the shifting sands of SS? For my retirement planning, I take all government money out of the equation.
We also each have very good benefit LTCi and portfolios sufficient to pay for a number of years not including home equity which by normal standards is above average. My comment was in response to another poster and simply stating that some are using their fixed income Pension and SS to self insure.

It is planned redundancy or just the way it is, but we ain't complaining.

Also at our age and almost ten years in retirement, planning is as much reality as anything.
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Old 09-28-2017, 10:00 AM
 
Location: LTCShop.com
236 posts, read 113,188 times
Reputation: 151
Quote:
Originally Posted by eliza61nyc View Post
mine is not so no worries there. my money set aside for ltc is in a separate account very safe and producing enough for me to draw 5000 a month without infringing on any thing else. AND if I don't use it I don't lose it.

why do you find that so hard to believe. when we saved for our childrens college tuition we did it separately. we didn't touch it and we invested it according to time left. both kids graduated student loan debt free.

we saved for a beach house the same way. not the entire cost but we set a goal, kept in safe moved on

What kind of investment is that that guarantees you $5,000 a month? Some kind of annuity, I guess? To guarantee you $5,000 per month for life you must have put A LOT of money into, right?
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Old 09-28-2017, 12:55 PM
 
Location: Philadelphia/South Jersey area
2,875 posts, read 1,403,268 times
Reputation: 10085
Quote:
Originally Posted by LTCShop View Post
What kind of investment is that that guarantees you $5,000 a month? Some kind of annuity, I guess? To guarantee you $5,000 per month for life you must have put A LOT of money into, right?
sent you a pm with the details. My point I guess is that there is a whole range of choices between expensive LTC insurance and doing nothing. Just because some one chose to not get the insurance doesn't mean there is not a plan in place.
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Old 09-28-2017, 02:51 PM
 
3,089 posts, read 820,707 times
Reputation: 1744
Quote:
Originally Posted by mathjak107 View Post
if self insuring the problem is that money should not be in the general risk pool. it needs to be there at all times ,ready to go ,safe and sound . that usually means low returns .

we got a policy just because rather than tie up a big chunk of dough set a side to self insure i can invest normally ,and not separate money outside of our main portfolio .

just a small piece of the returns on that money that i can keep invested pays for the policy .

those who self insure have to remember that big chunk of dough should not be lumped in with the money producing their income . it is assumed that a safe withdrawal rate can leave you with a buck left 30 years later and it counts as successful . so you can not count that insurance money as an asset for setting your portfolio draw .
mathjak, that's true only if you want a guarantee of adequate funds to self-insure.

But the problem is that there are NO guarantees about most of this. Not of future health. Not of nursing home costs. Not of future LTCi premiums or payouts. Not of Medicaid programs.

My understanding is that your policy is for 3 years, after which Medicaid takes over. Sure your underlying assets are protected under the NY Partnership Plan - and that's a great benefit for an heir and the main benefit of the Plan. Both of us can easily self-insure for 3 years regardless of the economy. But after 3-years, you're potentially in a Medicaid bed.

Not my goal, well no one's but that's a different issue. What if a self-insurer loses the health coin toss? Need the care. Is there a certain chance that there may be a prolonged bear market with the fully-invested assets no longer adequate? Sure. But if we lose, the end result is the same. A Medicaid bed - or whatever passes for one 20 years or so from now.

Your portfolio sounds way larger than mine (a single mom in a high cost area) so for me diverting profits (and paying the taxes on those profits) would impact future growth to a greater extent that I'd like. Ideally, I would like to leave a substantial estate for an heir.

So what to do?

Me? To begin, my numbers are somewhat eased because of a substantial COL-adjusted pension with (a few years from now) no one else to support. So already there's no risk pool, with the assets that I normally keep as a hedge against a market downturn already filling in the gap.

Regardless, instead of focusing in the INCOME for LTC I'd rather focus on controlling the COSTS. We've made this a family decision - with a couple of options depending on how life plays out. What's positive is that the options are not ones forced by healthcare needs but are preferred first-choices.

This will be implemented over the next few years. In the interim, should there be an immediate long-term emergency - stroke with demise several years out, for example - I may take out a cheap life insurance policy to "replace" assets spent. And here, sure, I could be hit by a car tomorrow but still be in a nursing home brain-damaged 25 years from now. Again, it's all about the odds with multiple stages of planning.

A continued strong market will be a plus certainly for plan A - B - C, but diverting money into LTCi would not. For me, LTCi costs are *high* enough that they could preclude other options.
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