Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I've got a friend who recently retired.
He is worth about 2.5 million.
He and his wife both have pensions and social security that cover all of their living expenses.
Most of their net worth is in retirement accounts.
He asked my advice about an investment.
He said it would require a one-time $500,000 deposit.
The investment would guarantee a $4,000 per year return.
The $4,000 per year return could increase in the future, but it might not.
The principal is not guaranteed.
It's not likely the principal could be lost, but it's possible.
Should he do it?
Sounds like a Ponzi scheme. Whenever I hear “guaranteedto be X , but could be more” I’m out...
Back in 2008, when everyone was being foreclosed on, a friend tried to convince me to do what he did, and “invest” a minimum 200k for a guaranteed 15% return, in a real estate flipping scheme. Put the money up, let the “pros” buy houses at auction, rehab, and flip.
Nope. Never did ask him how it turned out for him, but he’d be the type of guy to show it off if he’d made any amount of money.
Isn't the poster LIVING in the house? There's a certain return there. Plus as discussed, the real estate value is judged to be stable. Real estate doesn't generate income to be taxed. Helps with tax and Part B brackets.
Sure, the house would have to be sold to generate LTC payments but given its size that probably would be the preferred decision regardless. The kids are fine with the plan - no need for LTCi to possibly protect assets.
Many plan for their LTC in this manner. It's the common way used to fund CCRC entry fees.
the difference is when you need the money to pay the snf . being down like that is not a problem if you don't need the dough .
getting caught in an extended down turn and having to shell out 120k ADDITIONAL a year in these parts on top of what the community spouse needs could be killer.
anytime you increase a draw like that , sequence risk sky rockets and even the best of times can't help later on when things recover .
This just doesn't work (for me) by looking at only worst-case financial comparisons. Granted it's all a gamble of sorts - but the "break-even" point has to be the product cost versus some measurement of likelihood.
Depending on lifestyle, family structure etc. / possible desire of a community spouse left alone in a big house to downsize regardless ... what WILL be the financial impact on a specific person's lifestyle? Individual..
Too, chronic illness tends to begin relatively slowly with lower initial costs, providing time to recover from a market downturn.
A serious event like a stroke in an elderly person that calls for a SNF off the bat statistically reduces lifespan - a lot - leading to the short stays in SNF that are reflected in the use-data.
Too, in these types of illnesses MANY cycle in and out of hospitals and rehabs (covered by Medicare) - never approaching 120K in interim home care costs.
Chronic conditions like dementia that steadily worsen over time blow through LTCi policies.
If you can buy LTCi cheaply enough that it's a no-brainer, buy it and forget about it.
Otherwise ... just don't think's there's a simple "financial formula" that can be applied to make it appear to be a no-brainer.
as i said , in our case we will pay in about a years stay in an snf in premiums 15 to 20 years from now .
that is really a small price to pay because with our plan we have a partnership with ny that goes on forever once the 3 years insurance runs out . all assets are protected 100% , the stay at home spouse has full income protection and medicaid will pay the bills . it is a sweet deal . our exposure to long term care is just about known and covered . .
my dad spent 6 years paralyzed and speechless from a stroke . it impoverished his wife . (not my mom) .
Last edited by mathjak107; 10-13-2017 at 05:06 PM..
Sorry about your dad, mathjak. That's bound to influence your concerns just like my history of never having a parent, grandparent in any kind care facility probably changes my take. There was some nursing care along the way, but no agency involved and costs were low. No need to touch any asset.
The math, though, for me is completely different than your situation. No spouse. I'm more concerned about long-term asset protection for my heir that survives my death - and years ago had decided on a irrevocable trust for the condo, probably some assets.
That amount more than makes up for any asset protection from LTCi in our dollar-for-dollar state. And doesn't tie me into Medicaid.
Too, I'm more interested in a wonderful CCRC where LTCi (for THIS facility, they all differ) doesn't seem like it would help with the Type A contract that 80% opt for.
I may well use a hybrid policy to handle an early, unexpected care need. No (real) relevant opportunity cost issue. Only need to generate enough to supplement income. Not planning on supporting DD. Premium returnable if I do go the CCRC route.
If a lose the "gamble" and spend through the rest of my assets in some fashion - well, I love my kid but she'll be fine.
Too, if income plus RMDs remains high (not full-pay SNF high, but higher than the average state Medicaid reimbursable) it's possible per some reading that SNFs may well negotiate once assets are gone offering a better deal than that available to former self-pay patients switched over to Medicaid. It's on the research list.
actually, it's oldsoldiers plan for long-term care.
Wow, incredible the moderators allow someone to mock another person's plan.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
