The Long-Term Care Problem SC Retirees Can't Afford to Ignore

7 out of 10 Americans over the age of 65 will need some form of long-term care. A multi-year stay in a skilled nursing facility could easily consume a significant portion of your retirement savings. And most people don't have a plan for any of it.

If you've been putting off this conversation because it felt too expensive, too complicated, or too uncomfortable, this episode of ClearPath Retirement Radio is for you.

Stewart Smith, LUTCF®, RICP®, and Mitch Davies walk through the real costs of long-term care, why traditional long-term care insurance is failing people, and what a newer hybrid solution can do that the old approach never could. Stewart also shares his own experience watching his father's health decline — a man who signed a power of attorney convinced he would never need it, only to spend the last six years of his life in memory care. It is a story that brings this topic off the spreadsheet and into real life.

In This Episode: 

→ What long-term care actually covers — home healthcare, assisted living, skilled nursing, and memory care 

→ Why the cost of care compounds faster than regular inflation and what the national averages look like today 

→ The hard truth about self-insuring, Medicaid spend-down, and what it really costs the surviving spouse 

→ Why traditional long-term care insurance is failing people — rising premiums, strict underwriting, and the use-it-or-lose-it problem 

→ A newer hybrid product — an indexed annuity with long-term care benefits — that may address nearly every problem with the old approach 

→ How a single premium could potentially give you a meaningful multiplier for long-term care benefits with no use-it-or-lose-it risk 

→ The 1035 exchange strategy that may turn an old non-qualified annuity into a tax-free long-term care payout 

→ How this product may allow you to pay a family caregiver tax-free — replacing their income while they help care for you 

→ Mitch's Market Minute: volatility, the market recovery, and why your allocation matters more than the headlines

Call 864-775-5033 or visit clearpathretirement.com to schedule a conversation.

Ready to stress-test your retirement plan?

ClearPath Retirement Planning helps retirees and pre-retirees in the Upstate SC and Columbia areas create tax-efficient retirement income strategies. 

📍 300 Executive Center Drive, Suite 104 | Greenville, SC 29615
 📞 (864) 775-5033

Schedule your complimentary consultation today at www.clearpathretirement.com

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Important Disclosure:

Investment advisory services offered through Alphastar Capital Management, LLC, a SEC-registered investment adviser. SEC registration does not constitute an endorsement of the firm by the SEC nor does it indicate that the adviser has attained a particular level of skill or ability. Fixed insurance products are offered through Clearpath Retirement Planning, LLC and Alphastar Capital Management is not involved in the offer, recommendation, sale or management of commission-based fixed Insurance products. Alphastar Capital Management and Clearpath Retirement Plannin...

Transcript

SPEAKER_01 0:00

Welcome to ClearPath Retirement Radio. From retirement income and tax planning to protecting the savings you've worked a lifetime to build, this is Real World Financial Talk designed for real people. People who want clear answers, not sales pitches, so you can make informed decisions and plan for retirement with confidence. Now, here are your hosts, Stuart Smith and Mitch Davies.

SPEAKER_02 0:22

Hello, welcome into Clear Path Retirement Radio. I am your host, Stuart Smith, with Mitch Davies here. Good morning, guys. And we've got a great show today. Have you ever sat up in bed at night and thought to yourself, what happens to me if I have a healthcare event and all of a sudden I need skilled nursing care in a facility and knowing and understanding the cost of what that entails today, and does that worry you? Do you worry how am I going to afford this? And if I can afford this, what happens next?

SPEAKER_00 1:09

You know, Stuart, in today's environment with the cost of health care, you know, cost of everything, but cost of health care even more so, this might be the most common question we hear. Must be the most common thing. You know, we people sit across the conference room table and they say, I don't we talk about it all the time, but we don't really know what to do, what options there are. Everything seems so expensive. They've been through it maybe with a family history. It's it's a lot.

SPEAKER_02 1:30

It is. And we're gonna talk about that today and some options that we see that are very viable options for folks nowadays, and you know, how those have differed from from products of the past. And we're gonna kind of talk through that, but I can tell you that this is one of the major concerns and one of the things that can really throw a monkey wrench in your retirement plans if you aren't thinking ahead and planning for this type of event. And I can tell you that the chances of either you or your spouse needing care at some point in your life are pretty high statistically speaking. One or both are going to need it eventually. And I can tell you that personally, you know, my father at age 70, you know, we we I had a power of attorney for him. We were talking through it, and he was getting to the point where he wasn't making the best decisions anymore. And at age 70, we sat at a table and I said, Dad, I think you need to sign this power of attorney. I think it's time for you to do this. I think I need to be stepping in here and making the decisions for you. And he said, Son, I trust you and I will sign this document for you, but you will never need this document. And it was only eight months later that he had a massive stroke and ended up in a memory care unit for the last six years of his life. And I had to sell all of his assets and um, including his his home, and to make sure that he got the care that he needed, and you know, thank the Lord that I did was able to get power of attorney at that point. Um, but you know, most people feel like he did, Mitch. Most people feel like this is never going to happen to me, and I can tell you that it it you know it happens every day and to people that didn't never expect it to happen to them. And, you know, there are very, very, you know, creative ways to deal with and address this that that aren't going to leave you financially destitute. And we're gonna go through that in in real detail today, but one of the solutions that we're gonna talk about today is is one of the most you know forward-looking cutting-edge solutions I've ever seen to address this type of issue. And it's one that our clients have all latched onto and really feel great about because it addresses a lot of the problems with some of the products that addressed this in the past. So, you know, what is long-term care, right? Yeah, long-term care can be so many things. It can be, you know, home health care where you're paying people to come into the house and and help you with your daily activities. It can be, you know, adult daycare where you you drop someone off at a facility and they spend the day there with people that can help them and to to you know have you know activities for them to do and that sort of thing. It can be uh assisted living where you are in an assisted living facility where you can do most things by yourself, but you need just a little help here and there and someone to kind of keep an eye on you. And that is, you know, a lot of people are are in assisted living facilities. Or it can just be full out skilled nursing care where you need, you know, skilled nurses to be watching you and taking care of you around the clock, and that has different levels to it. So, you know, there's your basic skilled nursing care, and then you have, you know, specialized units that people can be in where it's you know memory care type units where people are having real cognitive issues like my father had, where they can't remember to take their drugs, they can't remember to, you know, how to get to the dining hall to eat, and they can't remember real basic things like that. So they really need that extra help. And I can tell you from personal experience that none of these solutions are cheap.

SPEAKER_00 6:07

No. No, they're certainly not. And I'm glad you mentioned that, Stuart. You know, now that we understand the different types of long-term care, if we look at just the raw numbers here in, you know, the Americas, roughly seven out of ten Americans over the age of sixty five will need some form of this, whether it's the assisted living, whether it's full out skilled nursing care. Seven out of ten. And those numbers are staggering, and this is either way you cut it, it's not cheap. Assisted living is going to be a little cheaper than uh full out skilled nursing care, but either way it costs a lot. And it's something that we have to plan for because this increases on top of inflation. You know, we have our ordinary inflation rate, which is running in the two to three percent range, right now a little bit over three, and this increases another three percent over the past 20 years on top of inflation. So we're looking at a extremely compounding rate on health care. And with roughly seven out of ten people over the age of sixty five needing it, it's something we have to plan for. It's something that's really concerning.

SPEAKER_02 7:04

Yeah. National averages right now run in the neighborhood of sixty to seventy thousand dollars a year for assisted living and well over six figures, well over a hundred thousand a year for a private room and a nursing home. And home health care is is not cheap either. Home health care, depending on how much you need it, you know, some people just need a few hours a day, some people need it around the clock, and I can tell you, you know, we had a client that needed it around the clock that passed away here recently, and it was in that, you know, $12,000 a month range to do that, which is just a staggering amount of money when you think about it. And, you know, a lot of people say, well, what if I can't afford that? What are the options and how does that work? And, you know, honestly, let's have a real candid discussion here for a minute. You know, if you can't afford it, basically what happens is whatever assets you do have, you will be forced to spend down, meaning you will just be forced to pay for this expensive care down to a certain threshold of assets, and those depend on whether you're married or whether you're single, but um you will be forced to spend the money you do have until it gets down to a certain threshold, and then you will need to qualify for Medicaid going forward after that, and then once you qualify for Medicaid, then you will be um only choice of for care will be a Medicaid-approved facility. And you know, that is you know where the state's gonna pick up the tab going forward. But I can tell you, many, many, many of our clients, that is they just that is that scares the death out of them to be, you know, forced into a Medicaid-approved facility and have the state pay the bill because that is typically not your best care that you're gonna get in those facilities, and you know, the workers there aren't real invested in your well-being and so to speak, and you know, so it's you know, that's your options. So you can either go that route where you're forced to spend on your assets and qualify for for Medicaid, or you can, you know, plan ahead and use your own assets to try and you know hedge this off the best you possibly can to try and make sure you get the best care you can get. Because, you know, the other the other option is that it lands directly on your family. And when we say that, we mean usually a spouse or a daughter or a you know, a son, and you know, that can be physically, emotionally, and financial financially devastating to them, and I'm not sure that a many people want to cause that kind of you know uh stress to their family members when the time comes and they do need that type of care. It can just, you know, it can be really, really tough. I had a client who, you know, we were discussing, and I said, What is your plan? And she said, Well, my daughter's built an in-law suite on the back of her house, and she's agreed that when the time comes, she's gonna move me in there and she's going to quit work and take care of me. And I said, Okay, well, you have a plan, so I feel pretty good about that. But, you know, what happened is when the time came, and it was uh shortly after that, within a year, they moved her into the in-law suite, and you know, they were caring for her, the daughter was caring for her, had had quit her job and was caring for her mother, and I pulled up to the office one day and her daughter was in the parking lot waiting on me, and she was in tears. And I remember she looked at me and she said, This is not at all what I thought it was gonna be, and I would pay any amount of money to just be her daughter again because she hadn't thought through all of the you know the details on toileting her and showering her and all of that. So it can be really, really tough on family members. So you really need to think that through if that's your plan, and you really need to understand all of the emotional things that are gonna go into that type of care. So it's a it's an extremely important conversation to have. It's an extremely important thing to address, and we're just now getting into this, guys. When we come back from the break, we're gonna talk really, we're gonna take a deep dive and get real clear on what your options are. We'll be right back. Hey, are you approaching the distribution phase of life where it's time to turn the assets you've worked so hard to accumulate into a reliable retirement income? And are you unsure how to do that in the most tax-efficient way possible? At Clear Path Retirement Planning, we help retirees and pre-retirees design income strategies that aim to reduce taxes, manage risk, and create confidence in retirement. Visit ClearpathRetirement.com to schedule a complimentary consultation.

SPEAKER_01 12:27

Thanks for tuning in to Clearpath Retirement Radio with Stuart Smith and Mitch Davies. Let's get back to the show.

SPEAKER_02 12:34

Hey guys, welcome back into Clear Path Retirement Radio. I'm Stuart Smith here with Mitch Davies, and today we are talking about long-term care and you know the need for that type of care, whether it's you know, home health care, assisted living, um, skilled nursing care, even memory care, and those type of units that provide even a deeper level of care for folks. You know, how do people pay for that? How do they plan for that? And what are your options, right? So, you know, one of the the things I want to to kind of go through here with you, Mitch, is you know, the why traditional options are failing, right? So traditional long-term care insurance, and a lot of people have have looked at this, a lot of people have talked about this, they've gotten quotes, and you know, what we see is premiums are really, really tough on those policies. Not only are premiums high for the long-term care insurance policies, but they, you know, underwriting is very, very strict, and those policies are very difficult to get. And, you know, common, very common conditions can lead to you getting decline for that type of coverage. So, you know, the other problem with with long-term care insurance, and this is probably the one we hear of the most, is even for those people who can afford it and are healthy enough to get it, that use it or lose it problem is really, you know, a hard one to overcome because the number one people, number one reason people walk away from standalone long-term care insurance is you could pay premiums into that thing for 20, 30 years, and we're talking significant premiums, and then just honestly just keel over one day and be gone. And never use that policy. And if you never use that policy, all that premium money is gone. You know, it's use it or lose it.

SPEAKER_00 14:45

It is, sir. And you know, the most common outside of that, the most common issue we see, how it really plays out is somebody gets this insurance, you know, maybe in their 50s, and it's not terrible. You know, the price isn't awful, maybe it's a couple thousand dollars a year, it's nothing crazy. But as you get into your late 50s, 60s, every year they're hitting you with that renewal letter, and the price can jump any really, any really amount. And they see these huge jumps. So what happens is they pay into it for through their 50s, through their sixties, maybe into their 70s. And then they get to a point where they're like, these premiums are so high. Do I just cut my losses and walk away now? Or do I keep paying into this hoping, not hoping, but you know, betting in that aspect that I'll need it? And you end up at this awful turn point where you're like, wow, I've invested thirty, forty thousand dollars into this. I'm never gonna see it if I don't use it. Can I justify continuing to pay these premiums or do I just cut the losses and walk away? So it creates a real conundrum, and that's how we've seen it play out so many times.

SPEAKER_02 15:40

Man, that's an awful, awful decision to have to make. And I tell you, a lot of people are forced into, you know, paying six, seven hundred dollars a month premiums on this stuff as they get older and closer to using it, because they just can't stomach the fact that I've paid in, you know, thousands and thousands of dollars, um sometimes, you know, sixty, seventy thousand dollars of premiums on this, and I'm just gonna walk away and with nothing and and just stop paying for this stuff. So it really, like Mitch says, it's a conundrum that that nobody wants to be have to deal with, and we see it a lot. So, you know, the other option you have here is, you know, to self-insure and to to basically just know that, you know, a five-year, you know, stay in a skilled nursing facility, which is pretty average there, you know, that that two and a half to five years, you know, in that range is pretty common, that could easily consume four to six hundred thousand dollars of your portfolio and you know, money that would would otherwise be creating income for the surviving spouse or possibly going to your heirs that is just just you know evaporates because you need this care. And you know, that is certainly an option. And one of the things that we do at ClearPath is we do a retirement income plan where we model through that scenario, that exact scenario for folks, and we're able to see just based on the amount of assets that you have, could you possibly manage through this situation with just pure assets? And, you know, we in and a lot of times we see that that is a possibility for them to manage through it, but we just have to go ahead and swallow the fact that it's probably gonna leave the surviving spouse and their heirs little to no money if that does in fact happen. And then I think what that does is it really stresses people out because they're like, I don't I want to put off this care as long as I possibly can so that I use as little of this money as possible. And that's an awful place to be in too, Mitch. I mean, to have that feeling of I really need this care, but I don't want to start spending this money down and and just, you know, at a rate of you know, ten thousand dollars plus a month and watch it go away, so I'm gonna just, you know, lean on my spouse and lean on my kids as long as I possibly can, putting stress on your spouse and your children and everybody else. It's just not a great, you know, place to be juggling those options either. So that, you know, self-insuring is is is an option, but if you are gonna self-insure, let's make sure we have zero problems when the time comes in pulling the trigger and you know, spending the money that we need to get the care that we that we so desperately need at that point.

SPEAKER_00 18:55

Yeah, it's very important. And you know, it's not just what catches people off guard when we run through that analysis, when they say, hey, we're gonna self-insure, you know, it's $8,000 a month, we're fine with that. What we see all the time is, you know, we look at that and we're like, okay, it's you say it's $10,000 a month at this example. It's $10,000 a month, $120 a year to pay for the care, right? So you're say you're a married couple. The other spouse still has bills to keep up, right? They still have to eat, they still have to drive around, they still have to pay the mortgage, whatever it is. So what ends up happening is now we're looking at $15,000 a month. And what we're doing is drawing from our investments that we're lived that are our whole retirement bucket. So we're spending way three times, four times what we were spending every month in retirement. We're drawing from the bucket that, like Stuart said, needs to be growing to fund that retirement and to fund our heirs and to fund our legacy and to fund all the things we want to do. So it's again, it's feasible for a lot of people. But you have to understand that it's much deeper than just the pure cost of the care because this the opportunity cost of not having the money and the investments is vast. And the outside expenses, there's a lot that goes into this kind of thing. So you really have to make sure you have a plan for this and not just look at, okay, I have X amount of dollars and the care costs ten thousand a month, I'm good. Yeah.

SPEAKER_02 20:07

Yeah. And then the the you know, your final option is to do nothing. Right? And that is the most dangerous option that you have. Because to do nothing leaves it just kind of in the hands of fate. And I can tell you that even if you're a person of faith and and you do believe that, you know, that that God is going to take care of you and and and that sort of thing, I I can tell you that, you know, when the rubber meets the road here, it it's it's either your assets, Medicaid, family members, I mean the options are what they are. And you just want to have a plan and have at least look, if if if your if your plan is to spend down your assets till you hit Medicaid and then to go into a Medicaid-approved facility, at least you have a plan. At least we've thought about this, at least it's all, you know, on the table and that everybody in the family understands that. But, you know, a lot of people really don't want that as their plan. And so they really want to understand what are my options outside of, you know, traditional long-term care insurance, which we just gave you, you know, four or five reasons of why that really isn't the best option nowadays. And so what we're seeing and what I've seen, you know, the transition over the last 10 or 15 years into kind of these new products coming available that are, you know, really um a neat way to address it would be, you know, these hybrid type products that are going to be either, you know, a life insurance process. Policy with long-term care benefits built into it or an annuity, an indexed annuity with long-term care wellness benefits built into that. And the reason why these products tend to be a much easier solution is first of all, they do away with that whole use it or lose it problem. So if you fund, you know, you single premium dump some of your assets into an an indexed annuity with long-term care benefits on it, you know, you're you're basically carving out a small amount of your your retirement funds to address this issue. And if you do fund that product, then you know, first of all, those products are principal protected. So once you move that money into this product, there is no losing money going forward. Those products are really interesting in that for one thing the underwriting is much easier on those. And it is really a much simpler process. And if you've been turned down for long-term care insurance in the past, this is something you really, really need to be listening to as far as this might be an option for you that wasn't available in the past when you looked at that long-term care insurance, but is available today. And I can tell you, one of the ones that we're working with the most at this point, you cannot be turned down. So this it's going, you're going to get approved for this product. And even more so than that, you know, rather than using your own dollars dollar for dollar to pay for your care, what you're able to do is get a multiple of what you fund this product with to pay for long-term care should you need it. And we're going to get into the details here in the next segment into a lot deeper dive on this. But I can tell you, if you've been turned down for long-term care insurance and you want to know some other options, give us a call. Go to our website, clearpathretirement.com, and let us sit down and have a conversation. Guys, we will be right back. Retirement planning isn't just about growing money, it's about using it wisely, generating income, managing taxes, planning for health care costs, protecting your legacy. At Clear Path Retirement Planning, we specialize in helping retirees and pre-retirees transition from accumulation to distribution with confidence and clarity. If you're approaching retirement and want to plan, not just opinions, discover the Clear Path difference. Visit ClearpathRetirement.com today.

SPEAKER_01 24:58

Welcome to Clear Path Retirement Radio. From retirement income and tax planning to protecting the savings you've worked a lifetime to build, this is Real World Financial Talk designed for real people, people who want clear answers, not sales pitches. So you can make informed decisions and plan for retirement with confidence. Now, here are your hosts, Stuart Smith and Mitch Davies.

SPEAKER_02 25:20

Welcome back in to Clear Path Retirement Radio. I'm Stuart Smith and Mitch Davies is here with me, and it is time for Mitch's Market Minute.

SPEAKER_00 25:30

Thank you, Stuart. I'm uh excited as always. We're having a great discussion today about long-term care and different options to address that that have been working uh really well in today's environment. Uh we'll just take, as always, just a quick minute to talk about state of the market, where we're at today, what we're watching. Uh so as we talked about last week, the market has recovered all of its March lows. As we've been talking through, a lot of this is just leaning on this geopolitical headlines. Um the biggest factor driving this right now is the, of course, the ceasefire that was announced yesterday. Uh we've seen a couple back and forth on this with the straight of war moves opening and closing, but basically what's going on is there's a you know back and forth debate, war, you know, battle between the parties, uh, you know, the U.S. and Iran, and trying to figure out how we're going to resolve this. And while this happens, the market is uncertain. There's a lot of uncertainty. So we've seen these, we've seen the last week and a half a huge green push, you know, pushing all the way through all-time highs on the SP, the NASDAQ. We've seen oil come down a bit. We've seen the volatility index retreat a bit. So we've seen we're seeing a lot of volatility still. Volatility is still higher than normal. So what we're watching here is for markets to be choppy for the next couple weeks. Uh we're still trading well, still recovered those whole losses, and we're pushing again through all-time highs. So, but while this plays out for the next few weeks, uh, we're thinking things are going to continue to be volatile. So the biggest thing in retirement, we always talk about this, is to understand how you're allocated ahead of time to address this kind of volatility. If you're if you look at your portfolio in retirement and you know, one percent move on the SP because of some red news is freaking you out, you're probably over-allocated in retirement, right? And this is the biggest takeaway through all of this is if again, if you're in that retirement phase, you can't afford to be stressed and freaking out at red days in the market because of some news. Because the underlying factors are good. We have earnings season coming up, stocks are earning very good money, companies are doing well. We've got a lot of exciting IPOs this year, which are initial public offerings. We've got some huge companies coming into the market. The biggest is SpaceX. I'm sure you guys maybe you've heard about SpaceX. It's uh one of Elon Musk's companies, and it's coming in, it's gonna be valued at a couple trillion. So we've got a lot of exciting stuff going on in the stock market. So the takeaway here for today, guys, is don't make sure you understand how you're allocated in retirement. Make sure you've got money. Again, we always talk about have a couple years of money set aside in a safe manner, safe allocation that you know is gonna return three, four, five percent, you know, consistent returns, but not be directly correlated with the market so that we see this kind of volatility, we're not freaking out and stressing out in retirement. But that's all I got for you guys today. We'll uh we'll jump back into this here.

SPEAKER_02 28:12

Okay, great advice, Mitch. And I tell you, if you are freaking out right now, then you are not allocated correctly. It's just that simple. You need to give us a call, we need to have a conversation and tell you and explain to you our philosophy on how to do that and put you in a much, much calmer place where you can enjoy retirement in the way that you should be. All right, so back to the topic of the day. Today we are talking about long-term care, the need for it, how expensive it is, and what your options are to try and address this issue. I know clients come in all the time and they're losing sleep over this. They've had to care for a family member, or they've, you know, had to put a family member into skilled nursing, and they realize how expensive it is, and they realize the implications of what that could do to their retirement, and they are starting to understand that this is a real serious issue and that it has to be talked about and addressed. So what we're kind of going into, and we already talked about the you know, why traditional long-term care insurance is failing and and doesn't really work for folks, but you know, what is working right now is these hybrid products, and we're gonna focus in on, you know, there is life insurance with long-term care benefits, and that is a great product, but we're gonna focus in on the annuity, the indexed annuity with long-term care benefits, because we have one that we've been working with here recently that is just the best option I've ever seen, Mitch, when it comes to addressing this matter. And why it's so good is because this is a single premium product, meaning you can carve out some money. Let's say you have a CD sitting around not earning very good interest. Maybe you've got an old life insurance policy with some cash value in it that you're not you don't really need anymore. Or maybe you just have a brokerage account with some good cash in it, and you're just you're you're afraid to invest it and you're you're not really making much money on that. You know, you can take some of that after tax money and you can fund this product just a lump sum, and you can carve out, you know, I'm gonna use a hundred thousand dollars as my example, but let's just say you carved out a hundred thousand dollars and you put it into this product, and you know, basically the underwriting is just very simple. They're going to have a a Zoom meeting with you for about 30 minutes where they're going to, you know, put you through some some funny um you know exercises basically um trying to you know remember things and name fruits and vegetables and things like that, which has been entertaining for our clients. But if you you know, most of our clients have surprisingly qualified for preferred under under that those circumstances, they it really is a very easy underwriting and nobody can be turned down for this product. The only difference in this product is it if you get preferred, then it's a higher multiple of what you put in there that you get to address long-term care with. But you can, you know, it you can get standard, um, you can, you know, get a lower multiple, but you're going to be approved. And even at the lowest, you know, approval rate on this, it's still, you know, 133% of what you put into the product depending on how old you are. Um and but it preferred, which is, you know, we've had 99% of our clients have gotten preferred on this product. You know, you put in $100,000 and they're going to give you over $300,000 right off the bat to pay for long-term care should you need it. And that benefit's going to grow based on the performance of the of an index that you that you choose, and most people are doing like the SP $500 on this, where you're going to get, you know, it at least half of the upside of that SP no matter what. And then if the market is doing poorly, you can't lose money in this product. So it is a principal protective product. So you're going to get three times what you put in there right off the bat, and then that benefit's going to grow over time. And, you know, if if if you're in a situation where you're trying to decide, okay, maybe I self-insure for this and use my own money, and we've already said that could easily be, you know, four to six hundred thousand dollars of your portfolio if you stay for four or five years in a facility. But rather than to do that, if you're if you're relatively, you know, young, meaning, you know, in that fifty to sixty-five, seventy range, and you want to address it now and you're in relatively good health, wouldn't you rather take a hundred thousand of your money and if it were to happen down the road, you get, you know, three hundred thousand of the insurance company's money to pay for long-term care benefits. And the way they do that is they basically break that down to, you know, it's a pool of money that they pay out over five years on a monthly basis or 60 months. And, you know, that's a significant benefit to help you pay for it. So you get three dollars to every one of yours, which, you know, why not use the insurance company's money as opposed to just using all your money? So basically, you could spend, you know, $100,000 of your money and cover this need now, as opposed to maybe four to six hundred thousand of your own money down the road if you were to need this. And the caveat of this is that if you don't use it, then a couple of things. First of all, you can just walk away with your cash, the money you put in it, plus the return of the SP 500, you know, 50% participation rate, meaning half of the returns of the S P 500 for whatever length of the contract you've had, which is honestly has has outperformed CDs over for a long time, even at 50% participation rate. So you can walk away with your money with a decent return if you don't use it, if you just get down the road and you decide you don't need this product anymore, you can simply walk away with your money plus whatever return you made. But if you let's say you pass away, right, you that that every penny of that contract goes to your beneficiary. Um and and you know, there there is no use it or lose it here. You either use it for long-term care, you walk away with your money at some point, or you leave it as a death benefit to your beneficiary. So that is a really nice alternative to the old school long-term care insurance policy route that a lot of people took. And a lot of people really like that, you know, that those options and feel like, you know, this kind of addresses everything I need it to. You know, again, I I'm either going to use it for long-term care and get three times what I put into it. I'm going to walk away with my cash with a nice, you know, return, probably a bond-like or better return, or I pass away before any of that and my my beneficiary gets you know every penny, including the returns, as a death benefit. And I can tell you, like, that's that's a pretty attractive deal, isn't it?

SPEAKER_00 36:15

That's powerful, Stuart. And you know, the conversation we have a lot of the times around this product, again, this long-term care product, is that a lot of times people were thinking of taking some money and getting safer anyway, right? It's retirement planning. So the conversation is often, okay, the you know, the client's like, oh wow, so I could either use this for long-term care, pass this on to my beneficiary, or I just had a safe place to put some money, get some upside of the SP, again, beating bonds, beating CDs historically, even at 50% of the SP. So I'm getting half the SP. I I can't lose any money. So absolute worst case, which is the best case, is I don't need long-term care. I live a healthy long life, and I had a safe place to put a portion of the money. You know, we wouldn't put all of it in there, but we'll put a portion in there. And if we need to take it out in 10, 15, 20 years, we've enjoyed some nice growth, some nice tax-deferred growth, and you know, had a safe place to park some money, which often fits well with the retirement plan anyway.

SPEAKER_02 37:11

Yeah, and not to mention there is the tax benefit of having money in a tax-deferred product where, you know, as opposed to CDs where you're going to, you know, be be paying the taxes on the interest that you earn in those CDs. So here you would just be deferring that, which leaves more money in the contract to earn, you know, interest and returns on and helps you out with tax deferral in the long, long run and makes you a little more tax efficient there. So, you know, it it is just a really wonderful product and a wonderful way to address this without really, you know, all you're doing is repositioning some assets that you already have and you're not giving up much at all, if anything, to address this situation, which is a very, very serious situation. And, you know, so we're gonna take a little deeper dive and talk a little deeper into this product and some of the benefits and how it works here. But if you if this sounds interesting to you and you are wondering, is this something that I might be really, you know, wanting to pursue here, go to ClearpathRetirement.com, click on the get started button today, and let's set up a time for us just to have a conversation. We're gonna talk a lot more about this in a few minutes, guys. We will be right back. Are you a business owner with an email list you are not sure is actually growing your business? Most business owners are just guessing, sending emails, hoping for a click. At Kathy Farah Consulting, we take guesswork out of your email marketing. We help you identify what's working and fix what's broken, turning your list into a reliable engine for better leads and consistent sales. Stop wondering, start growing. Visit KathyFarah.com to book your free email clarity call today. Let's make your email marketing work smarter.

SPEAKER_01 39:08

Thanks for tuning in to Clear Path Retirement Radio with Stuart Smith and Mitch Davies. Let's get back to the show.

SPEAKER_02 39:15

Welcome back in, guys. This is Clear Path Retirement Radio with Stuart Smith and Mitch Davies. Welcome back. Today we are talking about long-term care and you know the options that you have on the table to address this. And we're actually talking about one of the most cutting-edge products that we've ever seen in the industry to address this with. And it's one that we really love, our clients have really loved and embraced, and it is the indexed annuity with long-term care benefits built into it. And, you know, it's like we said in the last segment, it's the first time we've ever seen a product that addressed all of the issues that people have with old long-term care insurance policies. First of all, you would put a single premium into it, it's going to give you a multiplier of whatever you put in there to pay for long-term care down the road if you need it. And it's going to, you know, it's basically going to provide a pool of money to pay for those benefits, typically over a 60-month or five-year period, which is your average stay. So that's why statistically that's a that works and that's very good that it does that. But you know, if you decide at some point I don't need, I'm not going to need the long-term care coverage, and you want to just start pulling your cash back out to to pay for retirement, you can walk away with, you know, your not just the money you put in, but some really nice returns that you, you know, w well, I'll say um some, you know, not guaranteed returns, but some s you know, some very um consistent returns over time that you should have received based on what the S ⁇ P 500 does. And, you know, as far as, you know, maybe I don't use it, maybe I don't pull the cash back out, but maybe I pass away, then your beneficiary gets every penny of that you put in plus the returns. So whatever the account value is at that time goes to a beneficiary. So it kind of does away with that whole use it or lose it thing that scared people on the long-term care insurance. But not only that, it's it's got a simplified issue underwriting process that is just based on a video interview that you do with underwriting. And, you know, they don't really even look at medical records here. Um there is no, you know, there's a s maybe a health some health questions that are asked of you, but it is so much easier to qualify for than the old long-term care insurance policies. And, you know, sometimes people got turned down for long-term care insurance policies because of things like high blood pressure, weight, uh, prior surgeries, um, some medications maybe that they were they were on. You really need to take a look at this product if that happened to you, because you could easily qualify for this product. And if you're between the ages of 50 and 80 and you're still thinking about this and it really, really, you know, bothers you and you wonder what would happen, then you need to take a look at this product. This is also, you know, a cash benefit product. And what I mean by that is, you know, once you qualify, and and let me just clarify how you qualify to to receive benefits on these policies, it's something it's based on something called activities of daily living. So if a licensed healthcare pro practitioner certifies you cannot perform two of your activities of daily living, and those include bathing, dressing, getting dressed, eating, toileting, transferring, which is the ability to get in and out of a chair, and you know, general cognitive impairment, meaning I can't remember how to take my medications and that sort of thing. Um, any two of those are interrupted for at least 90 days. So the first three months, you know, you you um you're kind of on your own here. But once that is has been interrupted for 90 days, then you are on claim and it starts to pay out a monthly benefit. And the nice thing is is it just pays the monthly benefit cash to you. And you know, that that is not it they don't you don't have to provide them receipts, you don't have to, you know, answer a bunch of questions. Um it can be used for home care, assisted living, nursing home facilities, adult daycares. It can even pay family caregivers depending on the contract. So, you know, that's a big deal. And, you know, the other there there is some tax benefits once those benefits start getting paid out, Mitch.

SPEAKER_00 44:37

There is, Stuart. And this is uh one of the best parts about this product is the tax-free element to the long-term care payouts. So something to understand here is when if you're if you are in the situation where these activities of daily living are interrupted and you qualify for long-term care, the payments from the insurance company to pay out this long-term care benefits are tax-free. Now, compare this to self-funding, right? If you're self-funding, this is another aspect we didn't even get into. If you're self-funding your long-term care and you're having to take these huge withdrawals from your investment portfolio, you're paying taxes on that, right? You're paying taxes, whether capital gains or pre-tax money, whatever it is, you're paying taxes to fund this. So there's the these payments are tax-free for the qualified long-term care, which is a huge portion. So we're taking this money, we're tax deferring it as we grow the account, and then the payments are actually tax free. So that's a huge component here. And and you know, one one huge tip here is you know, we talked about if you have lazy money, if you have CDs, if you have, you know, old accounts sitting around that aren't doing too much. Another really good one to take here is if you have a other annuity, if you have an old annuity, a non-qualified, you know, after-tax annuity that's sitting around and you're not sure what to do with that, we can do what's called a 1035 exchange, where we exchange this annuity into the brid into this product, and we can we don't have to realize any taxes, and then we can continue to defer the taxes and actually turn this into a tax-free payout for long-term care. So that's one sneaky tip that we've been able to do for a few clients, and that can turn what's, you know, an old annuity that's sitting there just, you know, not doing much into a long a tax-free payout for long-term care, which is extremely beneficial.

SPEAKER_02 46:20

Yeah, because if you have big gains in that old non-qualified annuity and you just start pulling money out of it at some point, the the first money you pull out of that is considered the gains and is all taxable. And if you 1035 that, like Mitch said, into this product, into this annuity with long-term care benefits, then you have to pull it out for long term care to pay for long-term care. That is all tax-free money. That is gone from taxable to tax-free money, which is a huge deal. Okay. And again, any tax efficiency, any tax breaks you can find yourself in retirement can make a huge impact on your overall care and and and and how you do things. So, you know, it's it's a you know, it's a great way to to get some some tax advantages by doing that. What makes that a possible is something called the Pension Protection Act of 2006. And it's, you know, under the PPA, qualifying long-term care benefits paid from an annuity can come out income tax-free when used for long-term care expenses. So that is a big deal. That is a loophole you need to understand, and we can help you with that. We can help you get this figured out and make sure that you are, you know, you are addressing this issue, and what that's gonna do is that's gonna give you independence, it's gonna allow you to control your own fate, it's gonna allow you to, you know, if you do have to have family members take care of you, you know, depending on the contract here, you could pay potentially pay your family members for caring for you tax-free money to them, and that is a big deal because let's say you have a a daughter that wants to care for you and she has to quit work to do that, you could replace her income with this type of product by paying her tax-free money to to help care for you. And I can tell you, it's a lot different when you're able to pay them as opposed to just expecting them to quit their job and and care for you full-time. It definitely takes a lot of the stress out of the situation and and makes it a much, much more palatable for both parties. So, you know, again, guys, there's some really unique options out there that just weren't available, you know, five years ago even, that, you know, are are really cutting-edge, you know, design products to address this issue. If you've been turned down for long-term care insurance, or if you just haven't addressed this and it's but it's in the back of your mind and you're laying in bed at night, and it does come up from time to time where you're like, man, what if that happens to me? You know, can how am I gonna what am I gonna do here? Like, how am I gonna address this? What's um give us a call, 864-775-5033. I mean, look, we might be able to simply just reposition some of your assets, go ahead and address this issue now, and give you the peace of mind of knowing that should this come you know to fruition and should you need this type of care down the road, you're not stressed about it. You know, you've got a plan, it's already in place, you know what you're gonna do. Medicaid, that that option is taken off the table. You don't you don't have to deal with all the you know, qualifying for Medicaid with the five-year look back period, it you're you know, and all of the the the stuff that comes along with that. Let us help you, let us sit down, let's have a conversation, let's talk about your options, and I think you might be really surprised at what's available out there and how much the environment that landscape has changed here in the last five to ten years. And we'd love the opportunity to do that with you. Come visit us at ClearpathRetirement.com. Hit the get started button today. Let's just set up a one hour meeting. If if this is important to you, an hour of your life shouldn't be a big deal. And let's sit down and let's talk through it and see if we can come up with some options that that work for you, and at least, you know, if we can't address the whole thing, maybe we can address a good portion of it, and let's just have a conversation and see if we can help you going forward.

SPEAKER_00 51:01

Another you know huge situation is if you are doing your income planning and you're concerned about this and you know there's money that you're gonna be leaving behind. You know, if you're looking, hey, I'm not gonna spend all of this, I know that. I know there's a portion that we're gonna leave to the kids. I've already got it earmarked in some way. Why not kill two birds with one stone here? Why not set this aside for them? We know it's either gonna pay for long-term care or go to the beneficiaries, or we're going to, you know, use it ourselves.

SPEAKER_02 51:28

So it's been a great show, guys. Thanks for tuning in, and until next week, you guys have a happy retirement. Are you anxious to see what retirement might look like for you? Do you feel like you have the pieces of the puzzle, but you're not sure how they fit together or where to start? At ClearPath Retirement, we help you bring clarity to retirement by organizing your income, taxes, healthcare decisions, and legacy planning into one cohesive plan. Retirement doesn't have to feel uncertain, it just needs a clear path. Schedule your complimentary consultation at ClearpathRetirement.com.

SPEAKER_01 52:06

You've been listening to Clear Path Retirement Radio with Stuart Smith and Mitch Davies, helping you make informed decisions so you can plan for retirement with confidence. To learn more, visit Clearpathretirement.com. That's Clearpathretirement.com. Investment advisory service is offered through Alpastar Capital Management LLC, a SEC registered investment advisor. SEC registration does not constitute an endorsement of the firm by the SEC, nor does it indicate that the advisor has attained a particular level of skill or ability. Fixed insurance products are offered through Clearpath Retirement Planning LLC, and AlphaStar Capital Management is not involved in the offer, recommendation, sale, or management of commission based fixed insurance products. AlphaStar Capital Management and Clearpath Retirement Planning LLC are separate and independent entities. This is for informational purposes only and is not intended as legal tax or investment advice or a recommendation of any particular security, investment product, or investment strategy.