0:00

Hello and welcome to Choose a Fie.

0:02

Today on the show, we have a

0:04

really interesting episode. This is another one

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of our mailbag episodes, and it's focused

0:08

on an issue that I think we

0:10

haven't spent a lot of time talking

0:13

about, largely because it's very complex, and

0:15

honestly, it's a little bit scary. It's

0:17

dealing with elderly parents and their finances

0:19

and all the complications that can arise

0:21

from that, whether it's long-term care, assisted

0:24

living, them potentially running out of money,

0:26

and how that could impact your own

0:28

Fie journey. Plus another question of how

0:30

do I plan for long-term care in my

0:32

own Fie journey? I think this is gonna

0:35

be really, really interesting, and to help me

0:37

on this, I have a true expert. I

0:39

have Danielle Miura here to join me, and

0:41

she is a CFP, and

0:44

the founder of the financial planning firm

0:46

Spark Financials, and when I

0:48

set up this mailbag, I actually had

0:50

asked our good friend Cody Garrett to

0:52

look over the questions, and he said,

0:55

Danielle is the perfect person to help

0:57

with this, because she has her own

0:59

experience as a family caregiver, and

1:01

she focuses on this in her financial

1:03

planning firm. So absolutely perfect. I think

1:06

this is gonna be really useful. With

1:08

that, welcome to Choose Out Fie. ["C

1:17

D.A.D.D.D." music plays in the background.] Danielle,

1:19

thank you for being here. Thank you for joining me. This

1:21

is really an important conversation, and it sounds like you are

1:23

the absolute perfect person to have this with. I'm so excited

1:26

to be here, and I'm so thankful that you're

1:28

highlighting such an important key

1:31

topic that doesn't get discussed as

1:33

much as it should be. Yeah,

1:35

it doesn't, and I mean, obviously,

1:37

I can take a lot of that blame. I

1:39

don't know if it's that it's just scary. It's

1:41

one of those things like almost like healthcare, in

1:44

the sense that like the answer is so bad,

1:46

you almost would rather not face it, which

1:48

is frankly like a pretty terrible way to go through

1:50

life. Like we need to face these things head on,

1:53

and we just need to understand the reality of, okay,

1:56

this is complex and it's expensive,

1:59

but... having some certainty reduces stress.

2:02

It doesn't increase the stress, right?

2:04

It's like the three D's like

2:06

death, dying, and divorce. If only

2:08

we could switch long-term care to

2:10

a D word, then we can

2:12

fit it in there. The

2:14

fourth D. Oh

2:18

man. And yeah, before we hit record,

2:20

you had some just absolute gems that

2:22

I want you to touch on here.

2:24

So you talked about maybe some

2:26

of the issues being who's left to

2:28

pick up the pieces if

2:30

family members run out of money and

2:32

potential roadblocks. And before we get into

2:35

the the actual mailbag questions, I was

2:37

hoping if you could just give us

2:39

an overview of why is it so

2:41

fraught with peril and why

2:43

is it so important that we start talking about it now?

2:46

I think that when we

2:48

think about our financially independent

2:50

journey, we're thinking about retirement

2:52

or maybe accomplishing our passions

2:55

so that we don't have to work the nine-to-five anymore.

2:58

That's the beauty of being financially

3:00

independent, but we're often not thinking about

3:03

some of the roadblocks that may come in

3:05

the way of that or may

3:08

limit us from opportunities when

3:10

we're financially independent. It's not

3:12

like being financially independent. It's

3:15

just us anymore. Unless you

3:17

decide to totally exclude your family out of

3:19

the equation and just say you're on your

3:21

own, which is very unlikely for

3:23

many people, your parents might

3:26

be included in that financially independent

3:28

journey. Yeah, that's interesting.

3:30

That's right. I don't suspect many people

3:32

are that heartless, certainly, that they're just

3:34

gonna say, oh, fend for yourself. But

3:36

I also assume there is some limit

3:38

as to how much, you know, it's

3:41

almost like the, hey, when

3:43

you're planning for your own kids, in

3:45

terms of, do you cover 401k contributions

3:47

or 529 contributions first,

3:50

almost to a person, financial

3:52

experts say you have to take care of

3:54

yourself first. So there is some balancing act

3:56

here, right? Yeah, I love the

3:58

example you gave. Like sometimes we

4:00

tell clients, instead of putting money into a

4:03

529 account, you need to

4:05

make sure that you're okay. It's like

4:07

putting the emergency mask on yourself in

4:10

the airplane before you're putting it on other people.

4:13

So the same goes for taking

4:15

care of aging parents or it may

4:17

not even be an aging parent. It

4:19

may be you become pregnant

4:22

and you give birth to

4:24

a lovely child, but unfortunately that

4:26

child has disabilities. And

4:29

that's the scary thing about

4:31

caregiving is that it's not

4:33

just aging parents anymore. There's

4:36

such a wide variety of different caregiving

4:38

and being able to prepare for those

4:40

types of moments is crucial because it's

4:42

not just you anymore. It's

4:45

more than just you. Yeah.

4:47

And I know you have personal experience

4:49

as a family caregiver and part of

4:51

your platform now is to advocate and

4:54

educate others who are either

4:56

on this journey or are imminently on

4:58

it. I'd love to hear

5:00

how that experience has shaped you and your

5:02

own financial independence journey. So

5:05

I'm really grateful. My husband and I

5:07

are financially independent. We are

5:10

both only children, so we kind

5:12

of expected caregiving to occur sometime

5:14

within the timeframe. We just didn't

5:17

wish it to be this early,

5:20

nothing against my family, but I

5:22

didn't think at 25 that I would be a family

5:24

caregiver. And so

5:26

that kind of in a way put a little

5:29

bit of a wrench into our being

5:31

financially independent because we

5:34

had to kind of adjust our

5:36

timeline and change kind of our

5:38

expectations about what F.I.

5:40

meant to us. The

5:42

priority that we put was my family

5:44

at that time and taking care

5:46

of my family. And so we

5:49

had to adjust some of our expenses to

5:51

meet that during that timeframe. About

5:54

a third of family caregivers dip into

5:56

their savings to care for their aging

5:58

loved ones. something

6:00

that is uncommon for

6:03

caregivers to do. And

6:05

usually on average, according to the AARP

6:07

study, family caregivers are spending about $7,200

6:09

per year to take care of their

6:14

loved ones. Wow. So,

6:16

if we can just go on averages,

6:19

you may be pulling some of your money per

6:21

year to take care of your aging loved one.

6:23

And then it goes back to, are you going

6:25

to leave them to fend for

6:27

themselves? Or are you going

6:30

to take care of them? And that's a

6:32

difficult decision to make. And that's why financial

6:34

boundaries are so important, where you know that

6:37

you are only willing to give up

6:39

a certain amount. You are only willing

6:42

to contribute to the pie this certain

6:44

amount. Maybe you have other siblings who

6:46

can contribute. Maybe you have other resources

6:48

for them to care for themselves. But

6:51

at the end of the day, there

6:53

needs to be some type of a line

6:55

drawn on what is your life? How are

6:57

you taking care of yourself? Yeah,

7:00

that is an incredibly interesting term, financial

7:02

boundaries. I think I would love to

7:04

come back to that. And

7:06

I think while this is an explicit in

7:08

the first question, I think that topic of

7:10

financial boundaries probably will come up again as

7:13

you answer this. So why don't I read

7:15

Cheryl's question and we'll kind of just jump

7:17

off from there. So Cheryl asks,

7:20

would you have any suggestions around dealing

7:22

with elderly parents who may not have

7:24

made the best retirement plans? I've

7:26

been extremely stressed about my parents' situation. They

7:29

are in their early 80s and I'm worried

7:31

that they will run out of money. They

7:33

have little understanding of finances and my father

7:35

has dementia. Their expenses are $100,000 a

7:38

year. They have about $250,000, all in individual stocks, and they

7:40

just ran out of cash. They have

7:45

no mortgage on home that's worth about $500,000. How should

7:47

I advise them to move forward

7:50

besides trying to get them to reduce

7:52

expenses? Should we move part or all

7:54

of their stocks to cash, index funds?

7:57

Should we use the stocks first, then

7:59

get them to pay? get a reverse mortgage, I'm

8:01

really worried. I know this isn't the

8:03

usual topic for your show, but thank you for your

8:05

ideas. So Danielle, this is

8:07

really interesting and I suspect

8:10

Cheryl's situation is something that

8:12

many people out there have

8:14

some variation of, right? That

8:16

worry about their parents as

8:18

they get older, both their physical

8:21

and mental state, but really the

8:23

interaction of that and their financial

8:25

state. Where would you start with a question like

8:27

this? So when I'm tackling

8:29

something like this and listening to this type

8:31

of scenario, many people would

8:33

first think about what the primary

8:35

issue is and that's just

8:38

the first layer. The first layer is eventually

8:40

they're going to run out of money if nothing

8:42

changes. Their expenses are 100k per year,

8:46

that's a lot for most

8:48

people to consider. Like you're just looking from a

8:51

stereotypical way of looking at things

8:53

and just a broad perspective. That's

8:56

what most people are going to look at is

8:58

eventually they're going to run out of money. But

9:00

from an expert point of view or someone who

9:02

specializes in caregiving, I'm also thinking of just

9:05

because they have $100,000 worth of expenses. What

9:09

are those expenses consisting of? Because

9:11

that may be just

9:13

from healthcare expenses. Taking

9:16

care of someone with dementia

9:18

can be very expensive and

9:20

getting proper treatment and

9:22

caring for someone is

9:24

very expensive. So I

9:26

don't want to just assume that that $100,000 is just

9:28

spent on going vacations every

9:31

year because

9:34

that probably isn't the case for

9:36

these parents. Then if I'm

9:38

unpeeling the layer, I'm thinking of if

9:41

eventually the father passes away, what is

9:44

going to be left for the mother if

9:46

there's nothing left over? Dementia can

9:48

last for a really long time. I

9:51

think people when they think about aging

9:53

parents and someone having the diagnosis of

9:55

dementia, I think they'll just die very

9:59

quickly. usually not the

10:01

case. Someone with dementia can need

10:03

long-term care for eight years on average.

10:06

So the father may live

10:08

past the mother. There's a chance

10:10

of that. The mother may

10:12

be taking care of her

10:15

husband, doing the caregiving duties and

10:17

her health may decline over the years. About

10:20

65% of family caregivers,

10:22

just to drop some statistics, have

10:24

a decline of health over their years

10:27

of caregiving. So it might

10:29

be, just hypothetically thinking

10:31

here, it might be that the mother

10:33

passes away before the father.

10:36

And then if I unpeel another layer, I'm

10:38

thinking about if that really does happen, who

10:40

is left to pick up the pieces? Is

10:43

it going to be the daughter? You that is going

10:45

to pick up the pieces? Or is

10:47

it going to be the government who's going to pick up the

10:50

pieces? Who is going to pick

10:52

up the pieces because someone's got

10:54

to help? Yeah, who's

10:56

left to pick up the pieces? That's

10:58

yet another just really important question. And

11:01

obviously, we can never answer this question

11:03

fully because we don't have every piece

11:05

of information. But there's a bunch of,

11:07

to me, interesting questions of, okay, where

11:10

is the money coming from? They're in their 80s. Where has

11:13

the money been coming from to cover this $100,000

11:16

a year lifestyle? I, Charles

11:18

said something about they just ran out of

11:20

cash. But it sounds like, I guess, they

11:22

still have about a $750,000 net

11:25

worth, as I'm seeing it, right? So they have the 500k in

11:27

home equity, and $250,000 in stock portfolio.

11:33

But nevertheless, at a burn rate of $100,000 a

11:36

year, that's going to go away fairly quickly.

11:40

So I guess, just from

11:42

a very concrete, I know this is

11:44

almost beside the point, Daniel, but in

11:47

terms of just covering their lifestyle, share

11:49

a last reverse mortgage, selling the stocks,

11:52

like, what's your quick hit thought on

11:54

just like the actual like, grass tax

11:56

portion of it? So if

11:58

I'm thinking about How do

12:00

I, if I'm not even thinking about the

12:02

expenses of $100,000 a year, I'm just thinking

12:05

about asset allocation. If

12:08

they're really burning through cash

12:10

that quickly, having individual

12:13

stocks is very risky. Like,

12:16

we're not looking at a five-year

12:18

or more timeframe. We're looking at

12:20

probably two to maybe three years

12:23

maximum. And that's very risky. So

12:26

the first thing I would do,

12:28

if I'm just giving like basic

12:30

financial advice, I would just be

12:32

saying that I'd probably talk to

12:34

a financial advisor and find a

12:36

way to allocate that

12:38

$250K from investments

12:41

to somewhere else that's safer. It's

12:44

a really good time to put

12:46

your money in high-yield savings accounts because the

12:49

interest rates are so high

12:51

right now and have less risk involved.

12:53

Yeah, Daniel, that is a great point.

12:56

So clearly, when we talk about

12:58

time horizons with individual stocks or

13:00

even just mutual funds, we understand

13:02

there's volatility over a short-term period.

13:04

But most of us have a

13:06

30, 40, 50-year investing time span.

13:11

And we say, we don't really care about

13:13

the volatility. But clearly, this is not the

13:15

case for Cheryl's parents, obviously. So

13:17

they have a couple of year

13:20

timeframe. So yeah, what would

13:22

probably make sense, and of course, there are

13:24

always factors. And I think it's important that

13:26

we say the normal disclaimer is

13:28

that this is not financial advice. You

13:30

are a CFP. I am a CPA. But

13:33

we are not giving financial advice to anyone.

13:35

And we're just having a conversation here, how

13:37

we would think through this. So I think

13:39

hopefully our thought process of how you and

13:42

I chatting about this, because frankly, this is

13:44

on my mind too, long-term care and

13:46

my parents, my father specifically. So this is

13:48

a conversation that I wouldn't mind selfishly having.

13:50

So we're doing it here on the podcast.

13:53

But yeah, I mean, they have a couple of

13:55

year time horizon. So if this were me, this

13:57

was my parents, I would say, hey, guys. there's

14:00

some drop in the stock market or

14:03

something, you probably want to think about

14:05

maybe selling those stocks and obviously depending

14:07

on what kind of unrealized

14:09

gains they have, there might be separate

14:11

issues but I just would hate to see

14:13

their $250,000 nest egg cut 20, 30, 40 percent because that stock happened

14:15

to go

14:20

down or the stock market in total and

14:22

like you said with high-yield savings accounts now

14:24

at 5%, if you dumped a quarter of

14:26

a million dollars in a 5% interest-bearing

14:30

account, that's over $12,000 a

14:33

year in interest which is a not

14:35

insignificant amount of their expenses obviously like

14:37

you said Danielle, clearly and we'll come

14:39

back to that like cutting expenses that

14:41

might be really the most important thing

14:43

but that's an interesting little strategy which

14:45

again then protects the downside and

14:48

reduces volatility also so I think

14:50

there's really something there. Yeah I

14:52

think the suggestions that were coming

14:54

up and we're collaborating on are

14:57

unfortunately just the tip

14:59

of the iceberg. Yeah this is maybe lipstick on a

15:01

pig on the $100,000 expenses. But when we're thinking about

15:06

the reverse mortgage, I'm

15:08

thinking about who do you want to transfer the

15:10

risk to? Do you want to

15:12

transfer the risk to an institution which is a

15:14

reverse mortgage or do you

15:17

want to transfer that risk within the

15:19

family? So for example, this is kind

15:22

of like an outlandish idea that many

15:24

financial advisors don't bring up but

15:27

if there's a

15:29

possibility for siblings to get together

15:31

and pay for those

15:33

monthly expenses with the

15:36

potential that they would inherit

15:38

that house in the

15:40

future, that may be a better

15:43

route for some families than transferring the

15:45

risk to the institution with the fact

15:47

that they may not be able to

15:49

get as much money from

15:52

the institution. Just because the house is worth

15:54

$500,000 doesn't mean

15:56

that the reverse mortgage is going to

15:58

give them $500,000 worth. They're

16:01

retaining the risk. So your

16:03

return is going to be more

16:06

conservative. Interesting. Okay, so

16:08

reverse mortgages are something that we

16:10

have not covered in 600-plus episodes

16:13

of Choose a Vai. Can you

16:15

give a one-minute overview of, at

16:18

the very high level, what is a

16:20

reverse mortgage and what kind of fees

16:22

or expenses are you paying on it?

16:24

So obviously, it is based on your

16:26

home equity, but why don't you jump

16:29

off from there? Yeah, so

16:31

there's many different types of reverse mortgages,

16:33

just like there's many types of life

16:35

insurance. It's never just like

16:37

one simple reverse mortgage anymore. That would

16:40

be too easy, right? That would be

16:42

too easy, right? But there's two main

16:44

usually options. There's one where it's

16:46

you're taking the equity of the home and

16:49

you're turning into like a credit card, a

16:51

credit line for yourself to use and you

16:53

can pull money when you please. The other

16:56

one is just taking the

16:58

home's equity and then they

17:00

are able to give you an annuity style

17:02

payment each month. Okay. So

17:05

there's also other costs associated with a

17:07

reverse mortgage, just like you would when

17:09

you sell a house. There's going to

17:11

be some fees associated with the policy.

17:14

My suggestion is that that's the route

17:16

you want to go is to meet

17:18

with a reverse mortgage specialist and see

17:20

what policies they have available and have

17:22

someone review it with you so that you know

17:24

what your family is getting into

17:26

because at the end of the day, what's going

17:29

to affect your parents is probably what's going to

17:31

end up affecting you. Yeah, now

17:33

that is a brilliant point. One other

17:35

thing, and this might not be a

17:38

palatable solution for most people because with

17:40

aging parents, you probably don't want to

17:42

upend their living situation, but is it

17:45

conceivable option to sell the

17:47

home, pocket the entire equity, and

17:49

then let's say rent an

17:51

apartment or rent a home at some point when

17:53

we just talked about like I'm just brainstorming off

17:55

the top of my head of like, hey, we

17:57

just talked about high yield savings account. You

18:00

could pocket $500,000 in equity, put it in a 5% interest-bearing

18:02

account. That's

18:07

another $25,000 in interest income, which

18:09

is not insignificant. That can cover

18:11

a $2,000 a month apartment just

18:13

from the interest. So again, putting

18:15

aside maybe the fact that that

18:17

would be unpalatable for a lot

18:19

of people to move, is that

18:21

something that you've ever seen people

18:24

advise in the range of options?

18:26

Yeah, as I said, it's like you can just

18:28

look at the face value of this

18:30

is the main option. But as you

18:33

start unpeeling the onion, there can be

18:35

more than one option available to you.

18:38

The only thing from a dementia like

18:40

home care point of view is sometimes

18:43

when dementia patients move

18:45

locations, sometimes they have

18:47

more difficulty. And on

18:49

average, they don't excel as well in other

18:52

environments. Not saying that this

18:55

parent would not, it

18:57

just usually is best to keep them in a

18:59

home for as long as possible. Yeah,

19:01

no, that surely makes sense. And yeah,

19:04

I tried to go out of my way to

19:07

put all the caveats of like, I'm not a

19:09

heartless, crazy person here. I'm just saying like, is

19:11

this even conceivable? Because right, they basically have $750,000

19:13

of net worth, which yeah, right now doesn't provide

19:18

them any cash flow or any

19:21

accessibility. But is there a world where if

19:23

you had that in 5%, you could get $37,000 plus of income?

19:28

You know, that's not nothing. So it's

19:30

something to consider. But yeah, it just

19:32

might not be viable based on on

19:34

life situation, obviously. So yeah, clearly, we

19:36

need to have a better understanding of

19:38

their expenses. Like you said, if a

19:41

significant portion of it is based on

19:43

health care, then I mean, clearly, that's

19:45

essential. Are there other areas of their

19:47

spending that could be cut out?

19:49

I mean, to spend eight plus thousand dollars

19:52

a month, when your mortgage is paid off.

19:54

And if we assume, let's even put aside

19:56

the healthcare, like, it's hard to imagine that

19:58

they're spending that much like if it's

20:00

not healthcare, but I imagine

20:02

there is some fluff in

20:04

the budget and if this is going to come

20:06

down to, hey, you are literally going to run

20:08

out of money, that might be one of those

20:11

uncomfortable conversations you want to have with your parents,

20:13

right? Just sit down at

20:15

the table, pull out all the

20:17

bank statements and figure out what's

20:19

going on, which as a child, it's

20:21

not an easy conversation. I've had that

20:23

conversation with my parents because

20:26

we go back to whatever is

20:28

going to affect them is going to

20:30

affect me and that's not to

20:32

be the person who's, I'm a detective trying

20:35

to figure out what their expenses are, but

20:39

if they get to a point where

20:41

they're spending a lot of expenses and

20:43

can't afford to live that lifestyle, then

20:46

it's beneficial to you to really

20:48

figure out what's the root cause. Yeah.

20:51

How did you broach that conversation with your

20:53

parents? Because that is uncomfortable. How did you

20:55

approach that? I

20:58

would say don't do what I

21:00

did. Good question,

21:02

Mary- I'll

21:07

tell you what I did. Hey, more took it

21:09

from a more, I care about you point of

21:11

view, but then I kind of twisted it to

21:13

I'm fearful that if you don't take

21:16

care of yourself, then I

21:18

will not have any other options. Like I will

21:20

have to cut you off because I don't know

21:22

what I'm dealing with. I don't know what I'll

21:24

have to deal with in the future and I

21:27

love my parents. I'm an only

21:29

child. So obviously saying like

21:31

I'm going to cut you off like

21:33

was obviously a hard decision for me

21:36

to make, but at that time I

21:38

didn't really know what else to do. They

21:40

weren't willing to have open money conversations and I

21:43

was fearful that if I didn't cut them off

21:45

that I would be having to dip

21:47

into my funds to take care of them. Yeah,

21:50

and that's incredibly uncomfortable obviously in

21:52

every way. So with the benefit

21:54

of hindsight, you said don't do what I did,

21:56

but it sounds like it might have been like

21:58

the shock therapy that actually- helped in your

22:00

situation. But like with the benefit of hindsight, what

22:02

would you have done differently or how would you

22:05

advise somebody else to have that conversation? I

22:07

think I would get a third party to assist

22:09

with it. Oh tell me more about that. I

22:12

think me being biased as

22:14

a financial professional and also

22:16

the emotional, you know, having

22:19

your parents and caring for them.

22:21

Sometimes you let your emotions get

22:23

carried away through the conversation, having

22:25

someone who can be there as

22:28

a third party who's unbiased, who

22:30

doesn't have those emotional ties and

22:32

make that conversation easier. Yeah, no that

22:35

makes sense. Like where would you even

22:37

start to find that person to have

22:39

that conversation with? Yeah, so you

22:41

can either ask a financial advisor, you could

22:43

do a financial coach, you could do a

22:45

financial therapist. The great thing nowadays is that

22:48

there's more than one person you can reach

22:50

out to for help. Yeah. And it can

22:52

be your, you know, maybe you're working with

22:54

a financial advisor or even a third-party friend

22:56

that doesn't know really either of you too

22:59

much. I really suggest going the professional route

23:01

but if you have no one else to

23:03

turn to, you can use a

23:05

friend or other family member. Yeah, Danielle, I

23:07

like that. I think it's it is important

23:09

to have that third party. That's

23:12

something that I just would not have thought

23:14

of. I just that uncomfortable conversation. I would

23:16

have thought that I would have to have

23:18

it myself. But yeah, like just finding somebody

23:20

you can trust, I think would be better

23:22

probably in person but a lot maybe a

23:24

lot of these financial coaches or planners you

23:26

can even hire for an hour online. You

23:29

know, again that probably might not work with aging

23:31

parents but you never know. Thanks

23:34

for listening to Choose a Fi and for

23:36

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24:00

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24:02

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24:15

So, okay. I have a bunch

24:17

of questions that even though Cheryl

24:19

didn't explicitly ask about actual different

24:21

care options, but I think that'll

24:23

be better served for us talking

24:25

about in the next question. So

24:27

this came in from Joshua and

24:30

Joshua said, I'm

24:32

33 and I'm a nursing

24:34

home and assisted living administrator. Residents I serve

24:36

spend an average of $8,000 to $12,000 per

24:38

month for some type of

24:42

long-term care. How did the five

24:44

models account for the last three to eight

24:47

years of an older adult's life needing to

24:49

spend double or triple their regular expenses? How

24:51

do I know if I get to a

24:53

place for five in my mid to late

24:55

forties that I will have enough when I'm

24:57

in my mid to late eighties and still

24:59

live the life I want without working 60

25:02

hours a week now and in the

25:04

intervening years? So yeah, Joshua, this is

25:07

a heck of a question. Danielle, this

25:09

is the perfect launching point for I

25:11

think the all important conversation of long-term

25:14

care. I think a lot of us

25:16

are coming out this from, okay, maybe

25:18

our parents generation are getting to need

25:20

it, but I think Joshua's reframe of

25:22

this of, Hey, I'm in my thirties

25:24

or forties. How do I think

25:26

about it for myself a couple of decades from

25:28

now? So I'd love it if you could just

25:30

kind of run with this. I know you've put a lot of

25:32

thought into it. Yeah. I first want to

25:34

applaud you for taking the

25:36

initiative and asking these questions and

25:39

understanding the importance of long-term care. I

25:41

would even say people in their fifties

25:44

and sixties just brush off this topic

25:46

like it's nothing. So

25:48

for a 33 year old to

25:50

understand the importance, I

25:52

wish I could come there and give you a

25:54

pause in person because this is

25:56

what I've been trying

25:59

to do. That's what I advocate

26:01

for. so thank you! So if

26:03

I'm. Starting. To tackle your

26:05

question, you've probably already seen what

26:07

long term care looks like or

26:10

at least part of the long

26:12

term care system. You're an administrator

26:14

for Assisted Living Facility. So

26:16

you seen what your patients

26:18

go throw. And what that

26:20

looks like. But what does that look

26:23

like for you? Branching. Off

26:25

from your life experiences and memories. What

26:27

do you want on term care to

26:30

look like? I remember as a young

26:32

kid. My. First memory of

26:34

my grandfather was him be

26:36

in a wheelchair and not

26:38

been able to actively participate

26:40

in activities. My. Second memory

26:42

of on term care was seen my

26:44

grandmother on hospice after stretch and scene

26:47

without looks like and so I could

26:49

go on and not by trying to

26:51

point those memories together and think of

26:53

what does look like for you and

26:55

for them. And figure out what

26:57

kind of cared to you Walked. Yeah,

27:00

do a lot of options I

27:02

think yeah Joshua is perfectly place

27:04

for you said having Seen as

27:06

Sin in his real life but

27:08

for lot of us I think

27:10

a lot of a different options

27:12

as users will sit there. It's

27:14

like an intellectual understanding but not

27:16

microbiome. Visceral. Understanding that and maybe

27:18

frankly not even an intellectual missed any make

27:20

you hear these term can you give with

27:23

a high level overview of like what even

27:25

are the different options like just against super

27:27

at thirty thousand for view of and. Yeah.

27:30

It's amazing how much long term care

27:32

is expanded in the choices that are

27:35

available. There's in home care

27:37

services. so my grandmother had twenty four

27:39

hour care in her own. She was

27:41

able to eat in place. And.

27:44

That required working with care workers

27:47

and cure agencies. You. Have

27:49

senior adult daycare so.

27:51

During. The Day. Just like he takes

27:53

your child to daycare, you're taking your.

27:56

your love one to a senior day care

27:58

at all day care center and

28:00

they take care of them during

28:02

the day and then when you

28:04

get off at work, you're able

28:06

to provide care for them. So

28:08

that's the main in-home services. There's

28:11

nursing facilities, there's assisted living facilities,

28:13

there's memory care facilities and then

28:15

there's retirement communities that will just

28:17

based on your treatment need and

28:19

that's a contract in place. So

28:21

depending on what your Pacific need

28:23

is, is what you'll be able

28:25

to receive. So for example

28:27

someone who just let's say had

28:30

a hip surgery and now

28:32

they're going to an assisted living facility

28:34

because they need extra care to complete

28:37

the rehab needed to take care of

28:39

themselves. The thing

28:41

that most people don't understand is that they

28:43

think that the government's just going to save

28:45

them and Medicare

28:48

is just going to take over and

28:51

cover everything and I

28:53

wish that was the case but

28:56

not so much. So Medicare

28:58

only covers a hundred days

29:00

in assisted living facility. Really?

29:02

Okay. And there's also some speculation

29:04

as well. So example if you're

29:06

feeling better within those 100 days, they

29:09

have a potential to kick you out

29:11

because they're saying you don't need coverage

29:13

anymore. So using

29:16

government insurance, using Medicaid, Medicare, there

29:18

are some risks that even though

29:20

you're using those services and those

29:22

services can be great, there also

29:24

may be times where they may

29:27

not feel like you need coverage.

29:29

Okay. And that may inhibit your way

29:32

of having care. Gotcha.

29:34

So it sounds like right the government

29:36

programs are not coming to the rescue

29:38

for most people. So I mean does

29:41

that mean that the vast majority of

29:43

people who take part in any of

29:45

those long-term care choices that you listed,

29:47

in-home care, senior adult day care, nursing,

29:49

assisted living, memory, are paying for this

29:51

out of their own pocket? I mean

29:53

is it truly as simple as that?

29:56

Yeah, most are. If you don't

29:58

have long-term care insurance, so... it's likely

30:00

that you're paying it out of pocket.

30:02

Okay, interesting. Now, I'm not expecting you

30:04

to have these facts memorized by any

30:06

means, but do you have just a

30:08

general sense of how long people stay?

30:10

Let's say in one of those, the

30:12

nursing facilities are sets of living, on

30:15

average, how many months or years they stay

30:17

and even just a rough cost just to

30:20

give people who have no idea, are we

30:22

talking $500 a month, $5,000, $10,000 more?

30:24

Just some rough back of the envelope. Yeah,

30:29

as what was stated before is

30:31

assisted living facilities, nursing homes are

30:34

very expensive right now. And depending on

30:36

which state you live in, they might

30:38

be even more expensive. For example, California

30:40

versus Texas, Texas is going to be

30:42

one of the lower end states for

30:44

care. For cost of care. For cost

30:46

of care, yes. So

30:49

if you're one of those people who

30:51

are thinking, I'm just going to move

30:53

to Thailand, it's much cheaper for long

30:55

term care go you but most

30:57

people that's not going to be the case, they're going

30:59

to have to find a way to cover

31:02

the cost of care in the United States,

31:04

which usually can roughly

31:07

range from in cost per

31:09

month, anywhere from eight to

31:11

12, as was stated

31:13

for assisted living facilities. And

31:16

if you're looking for in home care, you can

31:18

range from 16 to 20,000 per

31:20

month, depending on how many hours are needed

31:22

for in-home care. Okay,

31:24

so in-home care is actually more

31:27

expensive than a full

31:29

year round, 24 hour day facility,

31:31

right? On average. On average, but

31:33

if you're, for example, let's say

31:35

you're only doing 10 hours per

31:37

day, you're just having someone cover

31:39

you for the 10 hours, it might be

31:41

cheaper than assisted living. So that's when you

31:44

kind of have to weigh the pros and

31:46

cons of what do you want your comfortability

31:48

to look like? And how much money can

31:50

you afford to pay for these costs? Right.

31:52

And like you said, aging in place was

31:54

the term you use, which is, yeah,

31:57

I mean, there's, there's obviously a lot of, a lot

31:59

of value. to that, but clearly there might

32:01

become a point where that's just not an option

32:03

for some people depending

32:05

on the type of care and the level

32:07

of care they need. Okay, so this is

32:09

clearly an extraordinary amount

32:12

of money. So this is one of

32:14

the most important factors that we need

32:16

to be considering for our financial lives.

32:19

I mean, not to ask a really uninformed question,

32:21

but we have an aging

32:23

population, I mean, with tens of millions of

32:25

people of this age, and you always hear,

32:28

again, as a financial podcast, like, most people

32:30

can't cover a $400 expense. How

32:33

on earth are millions upon millions of people

32:35

who need this type of service covering $8,000,

32:37

$10,000, $15,000 a month for care when, I

32:39

think most people actually do think the

32:44

government is going to ride to the rescue on

32:46

some level, but you're here to say that's not

32:48

the case. Like, how are people doing this? At

32:51

least it's not the case right now. I

32:54

can't say for the future. Yeah, we do

32:56

not prognosticate what's going on. Most

32:59

people are just dipping into their savings. Okay.

33:02

If they're not having a

33:04

product like long-term care insurance, they're

33:06

finding some other way to supplement

33:08

it. The way I think about

33:11

paying for long-term care is kind

33:13

of like picking out ice cream.

33:15

You have many different types of flavors. We'll

33:17

just go with the basic ones. We'll think

33:20

of chocolate, vanilla, and strawberry. So

33:22

chocolate is self-funding. Let's

33:25

say vanilla is

33:27

products, annuities, long-term

33:30

care insurance, and then you got

33:32

the strawberry, which is government funding,

33:34

which is Medicaid. Depending

33:36

on the state, we'll have different requirements. But

33:39

you may have a beautiful long-term care

33:41

insurance policy, but you may need to

33:43

double up on that scoop of ice

33:45

cream. The long-term care insurance policy

33:47

may not cover it all. It may just

33:49

cover 80%. So

33:51

you may need a scoop of

33:53

chocolate, such as dividends. You

33:56

may need rental income or other sources

33:58

of income to supplement. that

34:00

long-term care insurance. So what

34:03

I'm telling most people and clients is

34:05

that even though we may think that

34:08

the basic flavors of chocolate, vanilla,

34:10

and strawberry is going to be

34:12

enough for us to survive in

34:14

long-term care, having multiple sources of

34:16

income that you can use to

34:18

pay for these cost of care

34:20

is essential. Yeah okay

34:22

this is super interesting and right I

34:25

wonder in some of our financial independence

34:27

modeling softwares if you can essentially game

34:29

out like okay what's my fine number

34:32

if it's based on my current expenses

34:34

but if I game out hey it

34:36

might cost $100,000 $200,000 a year for

34:38

my care facility from and

34:45

again you can never know but you could

34:47

pick X number of years like that might

34:49

impact your fine number because that's I mean

34:52

that's yet another way to do this is

34:54

like you said essentially you're self-funding it but

34:56

self-funding it through a FII calculation.

34:58

It goes back to what we talked about before

35:00

are you the one who's taking on the risk

35:02

or somebody else taking on the risk because

35:05

for many people especially if you're you're

35:08

starting to save already at 33 I

35:11

commend you and maybe you might be

35:13

able to self-fund based

35:15

on how much you're saving for

35:17

your FII number but if

35:19

you're someone who's in their 40s 50s or later

35:22

and trained to save you

35:24

might have a much harder time self-funding

35:27

than others. Yeah no that

35:29

makes sense so okay you've mentioned long-term care

35:32

insurance a handful of times and you also

35:34

said something about other products and annuities I

35:36

want to hear a little bit

35:38

about about all of them but very

35:41

specifically long-term care insurance I think some

35:43

people here just in the ether like

35:45

oh long-term care insurance it's a gimmick

35:47

they're never gonna pay out like you

35:49

know I've heard these horror stories and

35:51

frankly I'm in the age range where

35:53

I'm like oh okay Joshua was thinking

35:55

about this and in his early 30s I'm

35:58

44 at this point Daniel I

36:00

think it's probably time that I start

36:02

understanding is this something real? Is this

36:04

something that's worthwhile to start thinking about

36:06

now? Or am I a little

36:09

too late frankly? But is now a good time

36:11

to start thinking about it? So can you give

36:13

me an overview of long-term care insurance from your

36:15

perspective? Yeah, I have a

36:17

love-hate relationship with long-term care insurance.

36:19

Full disclosure, I don't sell any

36:21

insurance or investment products. I love

36:23

it in the way that it's

36:25

provided my family comfort. My

36:28

grandmother had an old policy, a

36:30

general policy back from the 90s.

36:34

And so it was when I

36:36

felt like long-term care insurance was kind

36:38

of fairly priced. Now

36:40

it's very expensive, but I

36:42

love the ability to not have to worry

36:44

about paying for a long-term care. That

36:47

definitely brought comfort to our family

36:49

knowing that it was fully covered.

36:51

The $20,000 worth of

36:53

expenses per month was about

36:55

70% covered. So I

36:58

felt comfort and insurance knowing

37:00

that. Do I think that it's

37:03

best for everybody? No,

37:06

there's a lot of different policies now. It's

37:08

not just the strict. I

37:10

pay into it monthly and I

37:13

get some benefit down the road. My

37:15

suggestion if I'm you is

37:17

to research all your options,

37:20

get your FI number and figure out how much

37:22

it's going to cost for care. Figure out what

37:24

kind of care you want and then from there

37:26

you can research different options. Look

37:29

into policies. Don't be afraid to just

37:31

call up an insurance specialist, a long-term

37:33

care insurance specialist and just say, I

37:35

want to learn about policies. Educate

37:38

me about these policies, how they would

37:40

help me and then

37:43

I can review it and decide from there. I

37:46

know insurance agents are

37:48

looked at as a sales position, but

37:50

if you can find someone who truly

37:52

has your best intentions and can educate

37:54

you rather than sale

37:56

you, then you can really decide

37:58

what options are best for you. because now is

38:00

the time whether I'm something

38:19

akin to a term life insurance policy

38:21

where you have this policy if you

38:23

choose to keep paying on it each

38:25

year and it stays in place for

38:27

like a contractually obligated amount of time.

38:29

So basically I'm thinking like can the

38:31

insurance company just say when you're 70

38:34

like hey we're not this policy is done and

38:36

you've been paying in all of these years like

38:38

is that something to be concerned about or is

38:40

this something that stays in force for X number

38:43

of years? If I'm understanding

38:45

what you're saying sometimes there's

38:47

speculation regarding filing a claim

38:50

within the insurance policy sometimes

38:52

not everybody is

38:54

able to receive and get

38:56

the coverage based on their health.

38:59

It really depends on what

39:01

we call ADLs which is assisted

39:04

living activities. If you meet two

39:06

of the six at

39:08

least then you're covered but

39:10

for some people if they're not filing

39:12

the claim process they may not

39:15

get the coverage needed. For

39:17

example it's not just like money just

39:19

comes into your lap. I

39:21

wish that was like okay I can't

39:23

feed myself I can't babe myself which

39:25

is two of the ADLs that I

39:27

can just automatically just get money that's

39:29

not how it works. Just like disability

39:32

policies for example there's a period

39:34

of time where they want to

39:37

make sure you actually need care

39:39

and that's usually called elimination or

39:41

waiting period. That can be up to

39:43

90 days. So for my grandmother she

39:45

had to wait 90 days to receive

39:48

benefits then she had

39:50

to go through an assessment. So we

39:52

had a nice sit-down conversation I told

39:54

her you're not doing well just

39:57

because it's a stranger don't act

39:59

better. like don't sugarcoat

40:01

things because you're

40:04

really in a wheelchair, you are really sick,

40:06

you cannot take care of yourself and so

40:09

we had that conversation of what the assessment

40:11

would look like so that she's not sugarcoating

40:13

just because it's a stranger like she can

40:15

just walk miracles or something like that and

40:18

then you file all the paperwork sometimes

40:20

they ask for doctor's letters and

40:23

they review the claim and then

40:25

the long-term care insurance policy the company

40:27

decides whether or not to accept

40:29

you or not. Gotcha okay that

40:31

makes sense and then going back

40:33

to somebody getting this policy in

40:35

their 30s or 40s what's

40:38

the benefit of having

40:41

this policy in place when there's a extremely

40:43

high probability that you're not going to need

40:45

it for 30 or 40 years is it

40:47

just literally

40:50

that you won't be able to get a

40:52

policy of this type in your 60s and

40:55

70s and beyond is it dramatically

40:58

less expensive per month if you're paying

41:00

this for in your 30s 40s 50s

41:02

but you're actually but you're locking yourself

41:04

in like how would someone think about

41:06

like when is even a good time

41:08

to get this am I just wasting

41:10

money or am I shutting myself

41:13

out of it in the future like I

41:15

think that's like the real heart of this

41:17

like that people just don't have any sense

41:19

of where to start with that. Yeah I

41:21

think it's scary as a young person because

41:23

you don't want to assume

41:25

you're not going to need long-term care but you're

41:27

not able to tangibly see what

41:29

that benefit is or you

41:31

may not even ever be able to

41:34

see maybe you just get hit by

41:36

a car and automatically die you never

41:38

need the long-term care insurance policy and

41:40

that's the risk you're taking when you're filing

41:42

the policy is one I'm not able to see

41:44

the tangible benefits right away it's not like the

41:46

stock market where I can see it go up

41:48

and down every and then the

41:51

second is majority of people seven out of ten

41:53

people need it but you may just be the

41:55

three out of ten who don't need it and

41:57

that's why a lot of people are instead looking

42:00

at life insurance policies with

42:02

a long-term care writer. But you have

42:05

to make sure that that long-term care

42:07

writer actually covers enough. So

42:09

at least you're getting the tangible benefits of the

42:11

life insurance policy if you die and you

42:14

still have the long-term care policy available

42:16

to you. Okay. So

42:18

that's like a hybrid option. So now I'm

42:21

assuming that's not just a simple term life

42:23

insurance policy. So that's going to be something

42:25

like a much more expensive type of, I

42:27

don't even know if it's whole life or

42:30

whatever it would be but that's

42:32

something else to consider. But right,

42:34

like you're saying, it could be

42:36

both of those long-term care and

42:38

traditional life insurance as well. Yeah.

42:40

That's why it's so important to really

42:42

meet up with someone who specializes in

42:45

insurance policies so that

42:47

they're able to educate you about what

42:49

your options are and really lay it

42:51

on the table for you because if

42:53

you don't know what your tangible benefits

42:56

are, it's really hard to pay into

42:58

something like that. Yeah. One

43:00

other thing I wanted to talk about is who's

43:03

going to help be your self-care system when

43:05

you need care? For many, that's

43:07

going to end up being your children but

43:09

for some who don't have children or other

43:11

support systems around you, you may need someone

43:14

to help you out. You want someone to

43:16

be there and be your advocate for you,

43:18

not only to be

43:20

your friend but to be that person

43:22

who holds you accountable. And this may

43:25

decrease the amount of expenses that you

43:27

have during long-term care because you

43:29

have that support system available

43:32

to you. Like for example,

43:34

if you do adult daycare during the

43:36

day which is a lot less expensive

43:38

than assisted living facilities and have

43:40

someone take care of you during the night, then

43:42

you can kind of substitute cost. But

43:45

you have to ensure that the person is going

43:47

to be willing to take care of you during

43:49

the nighttime. So it's finding

43:51

that support system. When we talk about

43:53

aging in place, I think about it's

43:55

not a long-term care solution. It's

43:58

a way of living. of

44:01

wanting your life to look like. And

44:03

creating an Asian play solution

44:06

would be creating an environment

44:09

around yourself that can take care of

44:11

you. Who's going to be able to pick

44:13

up those newspapers in the front of your doorstep

44:15

when they come? Who's gonna be walking

44:18

your dog when you can't? Who's

44:20

going to be giving you the meals when you

44:22

just had surgery and can't make your own meals?

44:25

Having your support system is

44:27

crucial for getting through long-term

44:29

care as well as helping

44:32

you reduce your expenses. Yeah,

44:34

Danielle, that is such an important

44:36

thing. And I think that's probably

44:38

the perfect way to end the

44:40

episode here. I suspect strongly this

44:42

is part one, and I would

44:44

love for you to come back.

44:47

I think the audience is gonna have a lot

44:49

of questions and a lot of very specific targeted

44:52

questions. So for you out there in our

44:54

community, this is something that's important to

44:56

you. Send me an email, feedback

44:58

at chooseify.com, or really the easiest way

45:00

is get on my newsletter, chooseify.com/subscribe, and

45:02

then just hit reply to any of

45:04

the emails that I send every Tuesday.

45:07

And send in very specific questions that

45:09

you'd like us to do in around

45:11

two. I think this is so important,

45:13

it's long overdue. And yeah,

45:15

Danielle, thank you so much for being here.

45:17

Yeah, I had a lot of fun, thank

45:19

you. I'm happy to answer any questions in

45:22

the future. That's wonderful. Danielle, I mentioned earlier

45:24

that you're the founder of Spark Financials, and

45:27

you're a CFP, but how can people get in touch with you? If

45:29

you'd just like to pop in and see what

45:32

I'm doing on social media, you can. I usually

45:34

focus on Twitter and LinkedIn. Feel

45:36

free to DM me if you're also

45:38

going through caregiving or worried about long-term

45:41

care, I'm happy to support you. Nice,

45:43

and we will have those links in

45:45

the show notes. And yeah, until

45:48

next time, Danielle, thank you again, and thanks for

45:50

being here. Thank you. Thank

45:53

you for listening to today's show and for

45:55

being part of the Choose If I community.

45:57

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46:30

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46:32

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46:34

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46:59

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47:01

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47:03

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47:06

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47:08

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47:10

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47:12

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47:14

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47:16

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47:30

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