This is the Truth Network. Welcome to Finishing Wealth, brought to you by CardinalGuide.com, with certified financial planner, Hans Scheil, best-selling author and financial planner, helping families finish well for over 40 years. On Finishing Wealth, we'll examine both biblical and practical knowledge to assist families in finishing wealth, including discussions on managing Social Security, Medicare, IRAs, long-term care, life insurance, investments, and taxes. Now, let's get started with Finishing Wealth.
Welcome to Finishing Wealth with certified financial planner, Hans Scheil, and today's show, comprehensive financial planning includes long-term care insurance. And so, you know, I was thinking about this whole topic of, you know, it's not easy to admit that our bodies aren't all that strong, but at some point in time, you know, we kind of end up like Paul, where he says in 2 Corinthians chapter 12, he said, when he was asking for God to take the thorn out of his flesh, he said, my grace is sufficient for you. My power is made perfect in weakness, and therefore I'll boast all the more gladly about my weaknesses so that Christ's power may rest on me. In other words, what's happening there is Paul is getting humble enough to say he's got weakness.
He needs grace, and he needs wisdom in this particular situation. And so when it comes to this idea of comprehensive financial planning, when you think about it, as we'll talk about in today's show, that long-term care insurance is sort of a hinge pin in the deal, that without that, everything else can kind of fall apart. And since it's all for our families, you know, it's a big issue that's right in front of us when it comes to this comprehensive financial planning, right Hans?
Well, it is. And, you know, it's pretty universal, the rejection that I get from people when I bring up this topic, is people are either going to tell me, oh, my financial advisor told me that I have enough money, I'll just pay for it myself. Those are people that have a lot of money. Or, you know, enough money that the financial advisor would tell them about. Or I get, oh, I can't afford long-term care insurance, it's too much. I mean, so it's always around the money, but it's not really about the money. It's about that people really, this is the most difficult subject we deal with, is that people, you know, it's dealing with your own morbidity, or your own weakness, or your own, people just don't think it's going to happen to them.
And most people, especially Christians, are not afraid of dying, but they are afraid of this. And so, this is a particularly difficult subject to bring up, and it's potentially the most important one that we bring up within financial planning. That's why we're doing this show today.
So, respond to me a little bit. Well, you know, that's my example. The old idea of you can't take it with you, but by the same token, you know, your family is sitting there in spite of your financial resources trying to deal with these issues. And unfortunately, as we talked about before the show, a couple of my friends got really difficult diagnoses here in the last few days, and all of a sudden the family is faced with all these, you know, difficult decisions. And when there was no planning involved ahead of time, you know, it's the worst possible time to go, oh, we should have done something about this, and that's why we use the word planning, right?
Well, it is. And, you know, if this event happens to you or your spouse, I can tell you right now is that money is going to dominate the whole discussion unless you've planned well for it. You know, in other words, these people that say, oh, I have enough money, I'll just pay for it myself, I'll just sell this asset or I'll just pull it out of my IRA or whatever I'll do, and that may well be, but I'm telling you, when their family is sitting around trying to solve the crisis and give them money, it's going to be the number one discussion. And what I'd really like is to have the money taken care of or at least significant amount of money taken care of and the tax implications so that we can talk about something else, which is really what does this family need right now? What does mom or dad need right now from me and from resources and what kind of care does mom? And so the problem is if you haven't taken care of the money, the care becomes second fiddle and people start making compromises.
Oh, we can just have dad at home and we can come sit, you know, they just, they're going to make bad decisions if this isn't planned. So another point that I wanted to make up about long-term care within the context of financial planning, there's almost zero demand for long-term care insurance. Okay. I mean, I've been in the business, this is going to start my 50th year in July, so I've been doing this a while and I've been selling long-term care insurance for probably 40 years. And I can tell you there is zero demand for this product.
Very seldom do we get people that really request it. So it's all on us to bring this up. And, um, I just want to make that point. Yeah, I mean, I love that you do bring it up because again, if you've, you know, got yourself in a perfect position to make your taxes work with the Roth IRA and your social security, you've maximized it and all these different things that we talk about every single week. But then all of a sudden, you know, somebody, you know, starts in Alzheimer's or something, you know, horrible like that. And now, you know, all that stuff is going to be kind of sidelined by the immediate crisis of what's going on in your life. And your family's attention is no longer on all those other things, but on the crisis in the moment. And like you say, that's the last possible time you want people to be worrying about the money.
Exactly. And I, uh, let's just go on the video, which you can find on YouTube, um, about comprehensive financial planning includes long-term care insurance. I just on the board, on the video, I went through the seven worries of the seven subjects and I put how long-term care planning relates to them.
So let me just go through that quickly. I mean, social security, that's the first money they're going to use to pay the long-term care bill because it comes in every month and it's going to keep coming in as long as you're alive. Um, Medicare pays very little for long-term care and it mostly pays for skilled and acute care.
It doesn't take care of custodial care, which is the stuff you need for a very long time. Long-term care itself, um, you know, the way the policies pay is you got to meet two of the six activities of daily living or you need to be cognitively impaired. Um, the fourth, uh, one is IRA 401k and hybrid life long-term care. You can purchase that with money out of your IRA. It's a really cool thing and we talk about it a lot on the show and we can take a hundred thousand or $200,000 of your IRA and move it into a policy with the insurance company and then slowly liquidate it and purchase a long-term care policy.
It's really cool. Um, if you're self-funding long-term care, so in other words, this has just happened to you, you don't have long-term care insurance and you have some IRA money, uh, you know, please by all means call me and I'm going to help you deplete the IRA first and I can get in later to the reasons why we're going to do that. Um, as far as income planning and income, you're going to have a sudden need for 60 to $120,000 a year and that'll take an income plan and just blow it right out of the water because it's a sudden need for cash and it really, if you don't have long-term care insurance, it becomes a huge reallocation of cash flow. Um, as far as estate planning, one of the things I wanted to point out is that you can buy this hybrid life long-term care insurance where, you know, a lot of people's gripe about this is they put all this money in it and then they may die without ever needing it and which is really a blessing if that happens, but with the hybrid life long-term care policy, then the money you paid into it is going to go to your beneficiaries after you pass. Um, and then we want to talk about the surviving spouse of estate planning. That's usually our first concern in a financial plan in the estate planning section is we're going to, you don't know which of the two of you is going to go first, but the survivor, we got to create the estate plan around them and certainly it's great to have long-term care insurance, but they're not left holding the bag. And then the last piece is taxes is that, you know, a long-term care insurance, you can set up the payments or the benefits that come out of the policy are going to be tax free.
So it's a, it's a very good tax move or another way to put it is you can set up the benefit payments where you're getting that 60 to $120,000 a year paid by the insurance company and you're not going to have to worry about paying taxes on that money. And that kind of goes around the whole circle. So respond to me a little bit. Yeah, it's, it's as we've talked about, you know, that when you got the whole package and you're making a long-term plan, uh, the one piece of the puzzle is, is obviously, you know, this issue, although we don't know, nobody wants to face the fact that we might have, you know, some long-term disability, we may have some, you know, ailment that keeps us where we're mentally unimpaired or, you know, there's dementia, there's all sorts of things like that where you're sitting around and just requiring those things from somebody. And you know, if you've had the experience like I have of doing that, you know, where you're taking care of a loved one and they have to lay their, their life aside at the time where their life is getting really, really busy based on the way that generations usually happen.
And so it's really something, a way to care for those people, you know, that are surrounding you. But as we are ahead of this direction, it's a good point time to point out that the show is brought to you by Cardinal guide, cardinal guide.com. And there you're going to find the seven worries tabs when you get to cardinal guide.com, which are the seven things we've been talking about all through the show that are all connected, of course, to long-term care. And there, you're going to also find the show notes on this particular show, which we talked about. It's a fairly long title, comprehended comprehensive financial planning includes long term care insurance. But there, you're going to see some extensive notes on all the things that we've talked about today, as well as a wonderful video right along the same lines. If you're, you know, thinking about God's put it on your heart to check this kind of stuff out. It's all there at cardinal guide.com, as well as the complete cardinal guide to planning for living retirement.
That's Hans book, and the contact Hans are top. It's all there again at cardinal guide.com. We'll be right back with a whole lot more comprehensive financial planning includes long term care insurance.
We'll be right back. Investment Advisory Services offered through Brookstone Capital Management LLC, abbreviated BCM, a registered investment advisor. BCM and Cardinal Advisors are independent of each other. Insurance products and services are not offered through BCM but are offered and sold through individually licensed and appointed agents. Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency. Welcome back to Finishing Well, certified financial planner, Hans Shile and today's show comprehensive financial planning includes long term care insurance and boy does it Hans.
It does. And so frequently when we're talking about this subject, people, you know, we use a lot of big words and different things and we're mixing it in with money and so what I like to do on both my videos and on the radio show and podcast is try to simplify things. So to me, when you have the need for long term care, what's happened is you have a compromise in your ability to get through a daily routine. If you look at my daily routine, probably similar to yours, you know, I got up in the morning, I did some exercises, I need to get a shower and I need to get dressed, you know, I need to get out and walk the dog and then I got to get some breakfast which I have to make myself and get out and get dressed and get my stuff together for the day and get out to the car, drive the car to the office, get in, blah, blah, blah, blah, blah. And most of that stuff I never even think about, I just take it for granted. Even getting up and down the stairs because our bedroom is on the second floor, you probably don't either. You don't think about that stuff but when the long term care, the need for it hits you and you need for another person, hopefully a trained professional to help you through all of that, that's what we're talking about when we talk about long term care. Does that make sense? No, absolutely. Because, you know, that's what we're looking forward to is having some resolution to the issue. When this happens to you, you know, in your 70s, in your 80s, in your 90s, whenever that is and, you know, if you're fortunate enough to still have your spouse living and the two of you are together and this happens to one of you, the other is typically not in a very good position to start doing this stuff for you.
And if they start doing it and acting in this role of helping you with your daily routine, I mean seriously helping you, we're going to have two sick people before too long and this is where we call in professional health hopefully in your home. Yeah, it's expensive. So and long term care insurance pays for. Right, and that whole story of Gene Hackman recently, right?
Oh my. And if anybody had enough money to plan for this, I mean it was him. I mean money really wasn't the issue and I'm almost betting that somebody was managing his money or their money, he and his wife and they're living on this ranch out in New Mexico or whatever but I'm sure he has an agent and somebody somewhere along the line was responsible for turning down the idea of long term care insurance, okay?
Somebody said, oh he's got plenty of money, we'll just pay for that. And so the guy has millions, why didn't they call in some home health care professionals to come in there every day, take away the burden for her and at the very least they would have discovered that she just died and he's in there needing help. Maybe would have saved his life.
Yeah you know it might have saved two lives, right? Because it's just a tragic, tragic story of here's this poor woman, you know the caregiver for him and it makes no sense that she wouldn't have you know somebody coming in every day helping him and then you know he's left not being able to take care of himself and like you said left all alone and it's just a tragic story but it points all too well to what we're talking about that you know that the caregivers that you think they're going to be capable of doing it but I can tell you having you know both my mother-in-law and my father having to try to pick them up off the floor and I'm a pretty big strong guy. I can't even imagine a wife trying to do something like that. Well if they have long-term care insurance, if somebody that advises them about their money or manages their money had made this a serious point they would know that they have long-term care insurance especially the younger wife and she would have been called upon by somebody to say why don't you get some help in here and it's paid for and so this stuff serves a role even if the people are rich enough to pay for it on their own because they don't do it and that's an extreme example so let's move on to something else. So next bullet point that I had in my video is this creates serious if not irreversible consequences for your family. I mean once this sets in and all the people get sick, all siblings get in disagreements in terms of who's going to take care of mom or dad, how are they going to be taken care of, what's right for them, what's right for the family, what money are we paying for it for, it just there are risks that happen in families over this. Oh I can tell you I mean I don't know how many of my friends do I hear stories of you know they never helped me that you know I'm left to do all that you know it goes on and on and on and on when you have several siblings.
And then the one that's in the other town that's not doing the work if you get them on the side they say their brother is there leeching off of mom you know he complains all the time about doing all the work but he doesn't pay any rent there. I mean it's just it's awful and mom used to be the mitigator of all that and now she's not capable. So the next point is taking care of the chronically ill makes healthy caregivers chronically ill.
So Peter talks about this all the time, the Delta doctrine is that when you're taking care of the chronically ill yourself you are going to become chronically ill if you're not careful and you don't have some support. Tell me what choice your kids will have when they get the call. I mean it's just so I mean people will say all my kids are going to take care of me you know and my answer to that of course they will. I mean what choice are they going to have but do you really want it to be that way and is it necessary to make it that way and what are they going to do quit their job? So and then many people say we want to make sure that our children never have to put their lives aside. I mean when people are doing these plans planning for long term care planning for the later part of their retirement I hear that out of a lot of people I just want to make sure my kids do not have to set their lives aside to take care of me.
I mean sure I want them around but I don't want them putting their whole life on hold just because of me. So and I think that connects with a lot of people. I think that connects with you.
Absolutely. Yeah that's exactly the reason why we did it. So when there is no plan your loved ones become the plan and that's about the truest statement that I've made today. So if you have no plan for this your loved ones are going to come to the rescue and they are going to become the plan.
It's just kind of that simple. Yeah and that's so it fits right in almost hand in gloves what you just talked about that you know they're going to have to lay their lives aside at whatever level and again you know you obviously want them to care and you obviously want them to be engaged and all those kind of things but obviously you don't want them to you know having to drop their career or whatever the situation may be. Obviously they will become the plan. We have insurance called short term care insurance, home health care insurance. You can buy what some would call a smallish policy that's going to pay for a year of home health care and pay for a year separately in a facility. So potentially giving you two years of coverage but let's just call it a year and a year is a long time to have the financial part of the problem taken care of when you're in a crisis. So if you're short on funds and you know you don't really know if you can budget for this or you don't have a bunch of assets somewhere you can throw at this, we have compromises.
So we can talk about that. If most of your money is in an IRA to the extent that you do have money, there's ways to use IRA money to fund the long term care policy and then pull it out of the IRA in such a way slowly that it's not going to blow your tax return in any given year. And then there are traditional long term care policies where you pay by the month or by the year that will pay for several years of care. So there's a lot of ways to work out a care plan and a long term care insurance plan to support that and it may be the most important thing we do in the financial planning that we do for retirement. Maybe second to life insurance but there's a way to combine life insurance and long term care insurance in such a way that it's going to pay either way.
Yeah that's the genius one. I love when we talk about it and again that's one of those things that the sooner you apply for it, the easier it's going to be for you to qualify. Because if you wait until you're 75 it's not going to be so easy but if you go for that hybrid long term care plan when you're in your 60s, it's a whole lot easier and what an amazing thing that here you've got this long term care insurance, you paid for it with your IRA money that essentially helping you with your taxes and at the same time if you do die without needing it, the heirs get the life insurance and everybody wins. Yeah it's a really cool thing. Yeah absolutely well as always we're run out of time before we ran on a show but we want to remind you that you can get so much more information at cardinalguide.com so if you go to cardinalguide.com there you're going to see the seven worries tabs which we've been through all of those today as we've been talking about the comprehensive part of the financial planning that includes all these things including long term care insurance and of course if you go to the long term care insurance button there at the seven worries tabs you're going to find a video on this as well as show notes all sorts of details and of course one of my favorite resources is also there at cardinalguide.com is Hans's book the complete cardinal guide to planning for and living in retirement which includes a whole lot on this whole idea of what we're talking about a comprehensive plan includes all these seven things that we're talking about and of course there's my favorite the contact Hans and Tom page it's all there at cardinalguide.com cardinalguide.com great show Hans thank you thank you and god bless you. The opinions expressed by Hans Scheil and guests on this show are their own and do not reflect the opinions of this radio station all statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such any statements or opinions are subject to change without notice investments involve risk and unless otherwise stated or not guaranteed past performance cannot be used as an indicator to determine future results any strategies mentioned may not be suitable for everyone information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for you before acting on any information mentioned please consult with a qualified tax or investment advisor to determine if it's suitable for your specific situation finishing well is designed to provide accurate and authoritative information with regard to the subject covered investment advisory services offered through Brookstone Capital Management LLC abbreviated BCM a registered investment advisor BCM and cardinal advisors are independent of each other insurance products and services are not offered through BCM but are offered and sold through individually licensed and appointed agents cardinal advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency we hope you enjoyed finishing well brought to you by cardinal guide.com visit cardinal guide.com for free downloads of this show or previous shows on topics such as social security medicare iras long-term care life insurance investments and taxes as well as hans best-selling book the complete cardinal guide to planning for and living in retirement and the workbook once again for dozens of free resources past shows or to get hans book go to cardinal guide.com if you have a question comment or suggestion for future shows click on the finishing well radio show on the website and send us a word once again that's cardinal guide.com cardinal guide.com this is the truth network.
