Your Health and Long-Term Care Planning In Retirement during a Bear Market

Mark Elliot: Glad you’re with us today for The Retirement Income Show with Troy Sharpe, the CEO and founder of Oak Harvest Financial Group. You can always go to the website to learn more, oakharvestfg.com. A lot of great information on there. The whole team is there. There’s all kinds of information on the website. It’s a phenomenal website, oakharvestfg.com. Of course, the office of Oak Harvest located at 920 Memorial City Way, right off I10 and Bunker Hill. Of course, the YouTube channel, just search Troy Sharpe and Oak Harvest. If you subscribe, you then get informed of the new ones that are out as well. That’s just search Oak Harvest and Troy Sharpe and you’ll find that on YouTube.

If you have any questions though, you want to chat with the team, 1-800-822-6434. I’m Mark Elliot. Final segment today. We touched on a lot of ground today, and certainly, the theme was all right, how in the world do I retire in a bear market? Is it even possible? Well, certainly it is, but everybody’s situation is different, and that’s really where the Oak Harvest retirement process starts. It’s about you. You think about the planning process, the pillars that are important to Troy for you would be you need an investment plan, you need an income plan, you need a tax plan, you need a health plan, and you need an estate plan. You don’t skip any of those because they’re all really, really important.

We don’t put them all in place right at once, but it’s really a step-by-step, a methodical way to go through this for each and every single person and family that comes in to chat with Troy and the team. Let’s go to that fourth pillar, which is really, to me, why you got into this business in the first place, and that is the health plan. It’s one of the biggest reasons people file for bankruptcy is a health issue with themselves or a family member, and they didn’t have the proper coverage for it and it just buried them. Health planning, long-term care planning, how important is it?

Troy Sharpe: One of the biggest fears of my grandparents who raised me and probably one of the biggest fears for many of you out there is not having enough money or income later in life to help pay or to pay for those expenses we may need. Nobody wants to receive poor care or be put into a government-run institution and be 1 of 60, 70 people in a wing with one or two nurses working. What I experienced with my grandparents was life-changing for me. I’m not going to go into this story right now because I want to focus on what I’m going to talk about in this segment and really provide some value here for you and your retirement, but it changed my life.

They spent a lot of money, a lot more than was in anticipated, but the biggest thing that I saw in regard to the impact that it had was how my grandmother was willing to do whatever it took, spend whatever it took to provide comfort and security and hang onto the hope that my grandfather would one day be back to how he was prior to getting sick. Now, she just wasn’t rational. Now, think about right now with what we’re going on in a bear market, the market’s down 20%, 30%.

Do you know anyone, your parents possibly, maybe someone at church, maybe someone down the road, their parents going through a medical condition right now, long-term care, assisted living something later in life in retirement? Now, even if they thought when the year began that they had plenty of money because we’re coming off this very, very long bull run, now think about the feelings, the emotions that maybe they’re going through when the portfolio is possibly down 20, 30%. Because even if you’re in that traditional 60, 40 stock-bond portfolio, your bonds are getting crushed this year. The stocks are getting crushed this year.

If you have not planned for healthcare, that’s why we make this such a big emphasis in our retirement planning process for you and your family, if you haven’t planned for it, you’re depending on the market to perform well, stocks and bonds, while you’re not feeling well, or while you need long-term care, while you need home healthcare, whatever your situation is, maybe it’s assisted living later in life or, God willing, we maybe just pass away in our sleep and we don’t have to worry about that, but again, we don’t plan for retirement hoping on the best case scenario. We plan for retirement in that lower range of outcomes.

Not necessarily the worst case, but we want to know, “Hey, worst case scenario, where are we going to be at, how are we going to be?” In that lower half, that bottom 50% percentile, where are we going to be in this type of scenario? A lot of times people will come in and they’ll say, “Troy, I have some money on the sidelines. I don’t really know what to do,” or as part of our process, once we go through and we’ve built the investment strategy for you, the income plan for you, and the tax plan for you, typically on that first review, some people it’ll happen maybe a week or two later once those things are done. We do go in a sequence.

We go in a sequence for a reason. We’re going to talk about healthcare. Just to give you an idea right now, long-term care insurance premiums, your traditional long-term care– I’ll give you a great story, just why we don’t necessarily believe in it. We’ll quote it for you and we’ll show you it as an option, but I don’t believe in it. It’s probably seven or eight years ago, had a gentleman call-in to The Retirement Income Show, came in, sat down, and he said, “Troy, I don’t want to waste your time, but I wanted to get your opinion on something, but I don’t think you can help me.” He was 87 years old. He slid across the table this statement from I think it was maybe John Hancock.

I’m not quite certain, but I don’t want to single out John Hancock just because all of the long-term care insurance companies have been forced to do this due to economic circumstances, as well as increased longevity in the rising cost of care. He slides it across the table to me, and it’s a long-term care premium increase notice. It says, “Dear, sir, we’re writing to inform you that your long-term care premiums are going up 100% this year.” It gave him some options.

If he didn’t want to pay the increase, he could take a reduction in benefits. I said, “Yes, sir.” I said, “This is actually pretty common, especially at your age. You’ve survived or out-survived a lot of people in that long-term care pool, so you have to financially support the ongoing costs of the people in your pool.” He said, “Troy, that’s not the point.” He said, “The point is, I’ve got this notice three years in a row, 85, 86, and now 87. My long-term care insurance premiums have gone up 100%.”
He said, “If I get sick, they’re going to give me 3000 a month, 36,000 a year.” He said, “To keep this policy in force, I have to pay $30,000 in annual premium.” To keep the policy enforced, he had to pay 30 grand, but if he got sick, he was going to only receive 36,000. He says, “I’m healthy as a horse.” He says, “I go to bed every night and I pray the good Lord takes me, but I just don’t see it happening anytime soon.” Knowing that dynamic and having seen it dozens and dozens if not hundreds of times over the course of my career working with people in retirement, we decide to focus on fully guaranteed long-term care strategies.

Now, there’s two types of long-term care. You have what we call reimbursement, which means you pay up out of pocket, and then you get reimbursed once you submit your receipts, a bit more of a pain. Then, we have the indemnity style plan. That’s what we want to go with. We want to go with something that’s indemnity. You receive a check, you can do it for whatever you want, you just have to prove year after year that you’re unable to perform two out of six activities of daily living. Those are bathing, eating, dressing, transferring, toileting, and being incontinent. If you can’t perform two out of those, two out of those six, you qualify for long-term care.

Just to give you an idea here, right now, someone comes in and they say, “Troy, I’m concerned about long-term care. I don’t want one of those non-guaranteed policies that I’ve heard you talk about on the radio,” or if you’re a client or you become a client and we go through this planning process and we get to the healthcare side, just to give you an idea of what’s out there, 100,000 right now will get you, if you’re a male age 60, I just ran it to age 85 to prepare for the show today, $100,000 will get you a fully guaranteed 9,500 per month or 114,000 per year of long-term care benefits for six full years. That’s over $740,000 of potential benefits for a male age 60 needing care at age 85.

There’s inflation right around that, so if you need care at 90 or 92, it’s an indemnity style plan. They just send you the check. Maybe it doesn’t all go towards long-term care or assisted living. Maybe some of it’s going towards the caregiver, your son, or your daughter, or someone from church, or someone who’s actually taking time off work to take care of you at home. These are the things we need to think about when it comes to long-term care planning. If you’re 65 needing long-term care at age 85, that same $100,000 premium, 84,000 per year for six full years, $544,000 of total coverage.

Now, there’s some additional benefits and terms and conditions, of course, but these types of policies, they’re called asset-based long-term care, this is about as clean as it gets. Your doctor says, “You need long-term care,” you usually do have to re-certify every single year, but you receive a check to your name, it’s an indemnity-style plan, and if you’re talking about a good way to put 100,000 if you have it sitting in cash and you’re concerned about long-term care for you or your spouse, something like this makes a lot of sense because it’s fully guaranteed.

Under current tax code, most of that benefit if not all of it would be 100% tax-free. If you put 100,000 in the market, to be able to grow it to 544,000 or 740,000, those two examples, I didn’t do the math on that, but I would assume it’s somewhere around 15% to 20% per year you’d have to average. That is before taxes. If you take taxes into account, somewhere probably between 20% to 30% a year, maybe 20%, 25%, somewhere in that range. 1-800-822-6434 if you don’t have a long-term care plan.

If you don’t have a retirement plan that looks at all these different components and then ties them together in one comprehensive plan that you understand where you’re at if certain things happen, where you’re getting your income from, what you’re doing from a tax perspective, where your long-term care or healthcare money is coming from, if you don’t have that, please give us a call, let us sit down, see if we’re a good fit for one another, and let us start with those building blocks of putting that comprehensive plan together for you and your family. 1-800-822-6434. Oak Harvest Financial Group. Reach out to us through the web, reach out to us through the internet. Visit the YouTube channel.

Just go to YouTube, search Troy Sharpe, search Oak Harvest Financial Group, tons of videos for you to learn. Give us a call, leave a message, we’re going to call you back on Monday. Let’s have this conversation about a retirement plan for you and your family. 1-800-822-6431, Oak Harvest Financial Group.

Male Speaker: Investment advisory services offered through Oak Harvest Financial Group, LLC. Oak Harvest Financial Group is an independent financial services firm that helps people create retirement strategies using a variety of insurance and investment products. Investing involves risk, including the loss of principal, any references to protection benefits, or lifetime income generally referred to fixed insurance products, never securities or investment products. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.
Oak Harvest Financial Group LLC is not permitted to offer and no statement made during this show shall constitute tax or legal advice. You should speak to a qualified professional before making any decisions about your personal situation. We are not affiliated with the US government or any governmental agency. This radio show is a paid placement.