Preparing for the Retirement Marathon

Our 2 Cents – Episode #119

Preparing for the Retirement Marathon

Inspired by Steve’s recent visit to NYC during the New York City Marathon, we’re looking at preparing for retirement as one would prepare for a marathon. From all the preparation to do in advance of the race, to maintaining a proper pace, and making it to the finish line, we’re covering the entire journey on this week’s podcast episode.

1. Preparing for the Retirement Marathon:
   • Things you do ahead of time to set yourself up for peak success during the race.
   • Once the race clock begins, you can’t start it over. Why having a plan ahead of time can help you finish the race.
   • You’ll undoubtedly face different, and sometimes unexpected, conditions throughout the race. So how can you plan for those?
   • Remember: it’s a marathon, not a sprint. Pacing yourself, and your spending, is important.
2. End-of-Marathon Planning:
   • Join us for a quick walkthrough of the important elements of Estate and Long-Term Care Planning.
   • First items you should get in place, e.g. a trust, wills, POAs.
   • Creating a communication plan for your wishes, your intentions, and the documents you’ve prepared.
   • Should you have LTC insurance? And if you should, what kind is the best to have?

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Podcast Transcript

Announcer: You’re listening to Our 2 Cents with the team from SGL Financial, building wealth for life. Steve Lewit is the president of SGL Financial and Gabriel Lewit is the CEO. They’re here to discuss all the latest and financial news trends, strategies, and more.

Gabriel Lewit: Welcome, welcome and good morning, good afternoon, good evening. This is your host Gabriel and your other host, Steve. Say hello.

Steve Lewit: Hello. Hello. Good morning.

Gabriel Lewit: Good evening.

Steve Lewit: And good afternoon.

Gabriel Lewit: Whatever time of day you’ve got, good day to you.

Steve Lewit: Yes. So I hope you all went out and voted and I hope you got the results you wanted since we can’t talk politics here. Gabriel, I don’t like politics anyway.

Gabriel Lewit: Well, I think it’s something that everybody loves to hate.

Steve Lewit: Yeah, exactly.

Gabriel Lewit: I don’t know, everyone just talks about it, but no one’s ever happy talking about it.

Steve Lewit: Yeah. It’s the quickest way to lose friendship.

Gabriel Lewit: Can I tell you what I’ll be excited about though?

Steve Lewit: Yes.

Gabriel Lewit: Not getting text blasts bombarded to my phone-

Steve Lewit: Yep.

Gabriel Lewit: Over and over and over again.

Steve Lewit: Yep.

Gabriel Lewit: Because I’ve been getting a lot of those.

Steve Lewit: Send us your money.

Gabriel Lewit: Well, not just that. Just vote this, vote that, or So-and-so is great and So-and-so sucks.

Steve Lewit: Oh, my goodness. My goodness.

Gabriel Lewit: Yeah, I’m tired of those.

Steve Lewit: For sure. Yeah. Back to the real work.

Gabriel Lewit: But anyways, yeah, so today’s Wednesday, it’ll be the dawn of a new political era, one way or the other in the House and the Senate. And of course, what does that have to do with your retirement planning? Well, we don’t know yet because it could shape the future laws that are created or not created or changed or not changed. So it’ll be interesting to see how that progresses. And of course, we’ll be right here to give you the news and updates as they occur in the future. But with that in mind, we’ve got a show lined up for you here today, as we always do.

Steve Lewit: I hope we have a show lined up, folks, otherwise we’ll be sitting here and telling jokes.

Gabriel Lewit: Yeah. I probably should have said our show. It’s our a show. But yes, we’ve got our show lined up for you here today and I think we’ve got a good one as I always hope that we do. And so thanks for tuning in and let’s go ahead and dive in. And dad, you wanted to talk about marathon running today?

Steve Lewit: Yeah, because I was in New York over the weekend and I didn’t know this, but I get there and New York’s always crowded, but it is like mobbed. I mean it’s like a sea of people. You go into a restaurant and it’s mobbed. Everything is mobbed and I have no idea why it’s mobbed. I figured it’s just busy weekend, but it was Marathon weekend in New York, so there are 50,000 runners and they each probably brought family and friends so it’s like 150,000 people piled into Manhattan right around Central Park where I was staying, where the marathon is. And it was crazy. It was crazy. But it was amazing because so many people and the police and queued and they lined up on, I think, the horizontal bridge. I saw a picture of it.

Gabriel Lewit: Did you go watch it?

Steve Lewit: No, you can’t.

Gabriel Lewit: You can’t even?

Steve Lewit: You can’t get into the park unless you have a pass. So the families get a pass, but I wanted to go watch and I couldn’t watch, so I just roamed around, watching the people.

Gabriel Lewit: People watched.

Steve Lewit: Yeah, so I was thinking about marathons, and I was thinking about a lot of investors think that short term runners, but life is a marathon. It’s a short term trip and it’s a marathon.

Gabriel Lewit: Well, so I think what you’re saying is you can use that concept of a marathon for thinking about your investing and also your retirement.

Steve Lewit: Yeah. It’s like how do you train for a marathon? People think you just train by running a run.

Gabriel Lewit: I think you just show up and run, right?

Steve Lewit: Right.

Gabriel Lewit: You just go.

Steve Lewit: Right.

Gabriel Lewit: How is it, 26 miles?

Steve Lewit: 26 miles. I don’t know what the winner-

Gabriel Lewit: It sounds about 25 more than I want to run.

Steve Lewit: Yeah, I think the winner was running under a five-minute mile. I mean, they’re sprinting for 26 miles. It’s insane.

Gabriel Lewit: Yeah, that’s crazy.

Steve Lewit: It’s insane. Short story, so I was on a track team in college, I don’t know if you know that.

Gabriel Lewit: I think you’ve told me this before.

Steve Lewit: Yeah. For two years, I didn’t do very well. I was pretty fast, but not really fast enough. But when I started on track team, the coach takes me out and he assigns me a guy and he says, “Hey, Joe, run Steve at a four minute mile.” Now we hear about four minute miles all the time. So this guy starts running and he is sprinting. And I’m like, “What?”

Gabriel Lewit: Yeah. Well, I remember when I was in high school, I wasn’t on the track team, but I was in gym class and they had us do a mile run one day to test everyone’s fitness level and I was a middling back of the pack man. I was fast, but I had no endurance. I could go fast, but just then I’d peter out after about half of-

Steve Lewit: You got that from me.

Gabriel Lewit: Half a mile.

Steve Lewit: Yep. Yeah.

Gabriel Lewit: But these guys can do that for ultra-long distances.

Steve Lewit: For hours. Yeah. It’s insane. But New York was great. I will tell you, everybody, I love New York. It’s a great place to visit.

Gabriel Lewit: A lot of energy there, I bet. Hundreds, thousands of extra people.

Steve Lewit: Chicago’s like New York on Zoloft or something like that.

Gabriel Lewit: I still prefer Chicago.

Steve Lewit: Well, it’s a little-

Gabriel Lewit: Very different though.

Steve Lewit: It’s a little laid back.

Gabriel Lewit: I like our alleyways. Good for trash.

Steve Lewit: So anyway, back to our topics.

Gabriel Lewit: You do know that, right? New York has no alleyways.

Steve Lewit: Yeah.

Gabriel Lewit: All the trash just goes on the front.

Steve Lewit: I used to hang out in the alleyways.

Gabriel Lewit: Well, where?

Steve Lewit: In the Bronx.

Gabriel Lewit: Well, I mean the city, the city.

Steve Lewit: Oh, the city, city has no alleys.

Gabriel Lewit: Yeah.

Steve Lewit: No, all the garbage is on the street.

Gabriel Lewit: Yeah, that’s what I’m saying. So it’s a clear winner for Chicago.

Steve Lewit: Clear, clear. So can we get back to the topic.

Gabriel Lewit: Somehow, we digress, right?

Steve Lewit: Well, I did that talking about the marathon. So I was thinking that planning for retirement is like a marathon, you have to eat right, you have to train right, you have to sleep right, you have to do all these things as you’re getting ready for retirement. So what is that? I mean, saving money.

Gabriel Lewit: So, let’s unpack that maybe into a component part. So step one is you’re not even running or sprinting. Before you even get to the race, you’re meal planning, you’re designing what you eat, you’re doing it very conscientiously. You are taking care of your health. You’re not taking crazy risks by going out and drinking the night before or other things.

Steve Lewit: You’re stretching.

Gabriel Lewit: Yeah. You’re doing all these important things to set yourself up for when you do race to be in peak condition.

Steve Lewit: Right.

Gabriel Lewit: So, what is that similar to in your investing in retirement planning?

Steve Lewit: Well, a lot of people we meet Gabriel are not prepared for the race. If you think of retirement as the beginning of second part of a race and the first part is getting there, which, I don’t know, I don’t think of that as a race, but maybe it is. But retirement, you retire, your paycheck stops and it’s a 25 to 35 year marathon because your money has to last that long.

Gabriel Lewit: Or if you’re one of our younger clients listening and you are saving for retirement, you might be 20 years away. That’s also a marathon.

Steve Lewit: Exactly, exactly.

Gabriel Lewit: Followed by another marathon once you’re in retirement.

Steve Lewit: I’m getting exhausted from life here. So the first part of this is, which is why planning I think is so important, is that all these marathon runners have a plan. They have a training plan, they regulate themselves, they’re consistent, they practice, they do the right thing. So when they get on the starting line, they’re ready to go. Now, some of them will run slow and some of them will win the race, but they’re all ready. And it’s the same thing in retirement. If you’re not ready at the starting line, you can’t run 10 miles in the marathon and say to yourself, “Well, I’m really not ready, I better go back and start all over again.” And retirement is the same thing. You can’t go back and say, “Hey, let me start all over again.” You’re 10 miles into the race.

Gabriel Lewit: Well, now speaking of being prepared and making sure you show up for the race, I have to because it just popped in my head, because you said New York City and Marathon, and I’m an avid Seinfeld fan, you know this about me, there’s a great Seinfeld episode where there’s a marathon runner that comes to stay with Jerry. And the whole thing is about the fact that prior to him showing up, he had missed a race in the past because he slept through his alarm clock. So the whole show’s about making sure he gets to the race because he is supposed to win the race, this guy, the best marathon runner. He stays with Jerry and then Kramer puts a hot tub in his apartment. It’s really good, if you like Seinfeld. Trips the circuit breakers at night, the whole power goes out and the guy misses his marathon.

Steve Lewit: Yeah, again, right?

Gabriel Lewit: And shows up late for the race. So that’s similar. You got to have a plan to make sure you get there, first and foremost. And then of course once you’re there, we’ll get into things like how do you pace yourself through your retirement instead of just sprinting the entire way as we continue forward with our analogy of marathon running and retirement.

Steve Lewit: Yeah. So you get there, now you’re ready to race. You reach retirement and you’re down at the starting line and the starting line is, “Hey, I just retired,” or, “Hey, my paycheck just ended.”

Gabriel Lewit: Yep.

Steve Lewit: Or “Wow, what do I do now?” Kind of thing. Bewilderment, “What will I do? Will my day be filled up?” You’re going to have to stay home and see miles all day.

Gabriel Lewit: You know what you might do, maybe you’ll go for a run in your retirement.

Steve Lewit: Yeah, maybe I’ll go for a run. So you’re looking down, you’re looking out at the starting line and you’re looking at this 26 miles in front of you and then you go. Now the question is, Gabriel, do you start fast, do you start slow? How do you negotiate this race?

Gabriel Lewit: Well, I think, like anything, you as an individual racer probably have a plan that’ll depend on all sorts of factors. But some people I think like to sprint and get out ahead initially and then pace themselves down a bit, maybe then sprint closer to the end. Others want to do a steady pace the entire way. And then there are other marathon racers that know full well that they are not going to win and they don’t care about sprinting at all and they just want to complete the race and do it at a leisurely pace.

Steve Lewit: But I think where you started is so important, that everybody that is in that marathon has run 26 miles and they have a plan. They know how to get through that 26 miles.

Gabriel Lewit: They don’t just get there and figure out, “What am I going to do? Am I going to run? Am I going to sprint, am I going to walk?” They’re all going there typically with a plan, especially like a high end marathon like the New York City marathon. But yeah, so I think that parallels to your retirement. As you think about yourself, what kind of spender do you want to be? Do you want to sprint out the gate and spend a lot of money up front, slow down later on? Do you want sprint, sprint, sprint, spend, spend, spend as much as you possibly can? Do you just want to have a low pace leisurely run versus sprinting, just kind of spread your money out evenly?

Steve Lewit: You could walk fast 26 miles.

Gabriel Lewit: So, when you think about your retirement, it’s similar, but what you want to make sure you don’t do, I think, is really important is over-sprint and then you’re so tired that you’re then standing on the sidelines huffing and puffing with your arms on your sides because you ran out of gas.

Steve Lewit: Well, here, so I’m listening in on a conversation to two folks that completed the marathon. I’m in a coffee shop and they came in to relax and they’re talking to each other and they said, “Well, it was overcast at the beginning and that was really cool, literally cool. And then the sun came out and all of a sudden they could hardly breathe.” So what happens in a marathon? You have different conditions that you meet during the marathon. You might be going uphill and it’s hot or you might be going across a bridge and it’s windy and cool. And it’s the same thing in retirement, Gabriel. There’s always a different condition that you meet.

And these folks have plans for this. They know, “If it gets hot, this is what I’m going to do. If it rains, this is what I’m going to do. If it’s windy, this is how I’m going to handle it,” because they’ve been through it before. But when people retire, they’ve never been through retirement, they have no experience in retirement and yet they don’t have a plan. They think they know what’s going to happen based on working life, when they’re getting a paycheck and everything. They think it’s going to be the same in retirement and it isn’t.

Gabriel Lewit: Yeah. So folks, moral of the story here is go run a marathon.

Steve Lewit: Definitely.

Gabriel Lewit: Right?

Steve Lewit: In New York.

Gabriel Lewit: And make sure you have a plan.

Steve Lewit: Meet me in the bookshop.

Gabriel Lewit: And SGL Financial can give you your nutrition plan and your practice schedule and then your race day plan. But seriously though, we can help you with your financial plan especially. I mean I could give you some sort of running plan, I don’t know if it would be any good, but the financial plan on the other hand, we can do a terrific job with. And so if we can help you in any way there, of course, or if you’re a client of ours and you want to review your plan, which we’ve been doing as we always do, a handful of client reviews recently with each client and we’ll update and review your plan, if you want to see how will the storm coming in impact you or any changes you want to make, give us a call. (847)-499-3330. Go to sglfinancial.com.

Steve Lewit: Gabriel, before we move on, there’s one more point I want to make is that they have all kinds of medical facilities built up there. As you go through the park, you can see them and why? Because near the end of the race, some people really get sick, some people don’t make it, some people faint.

Gabriel Lewit: I’m trying to figure out where you’re going with that one.

Steve Lewit: I’m going that near the end of the retirement race where you are more apt to be ill or sick, that brings in the whole idea of long-term care insurance or things like that.

Gabriel Lewit: Oh, I see what you’re doing.

Steve Lewit: You see what I’m doing?

Gabriel Lewit: You’re stealing my transition is what you’re doing.

Steve Lewit: Oh, was that a transition?

Gabriel Lewit: You just stole it right out of my hands.

Steve Lewit: I am getting so good at this. I’m so proud of myself.

Gabriel Lewit: I’m proud of you because that was a great transit… I didn’t see where you were connecting the two.

Steve Lewit: Well, yeah, you have to have more faith, folks.

Gabriel Lewit: If this is the first time you’re tuning in, we sometimes joke about who has a good transition into the next topic.

Steve Lewit: No, no, let’s-

Gabriel Lewit: And who steals who’s thunder?

Steve Lewit: It’s Gabriel’s job to transition.

Gabriel Lewit: Yeah, that’s okay. You can have this one. That was a good one.

Steve Lewit: Yeah. Okay, you can take over now.

Gabriel Lewit: Well, actually, funny enough, I was going to say one thing. So I was in Key West over the weekend for a short three day getaway. You were in New York, I was in Key West, a little different vibe. And we were driving around there, we went to visit some friends and the four of us were driving around in our car, went to visit a little beach area. And as we’re driving to this beach area, there’s an usual large amount of traffic and it turns out there’s this super speed boat race that’s organizing in Key West and these boats, not the same as a marathon, obviously there’s a pure sprint all the way but these speedboats, man, are insane.

Steve Lewit: They’re fast.

Gabriel Lewit: I mean just… Oh my gosh. They just look like they are rocket ships on water. And I didn’t see any racing because the race wasn’t until the following day we were leaving, but we got to see all the boats and there was hundreds of them there all with their friends and families, looked like a kind of NASCAR of the water with all the stripes and numbers and all that kind of stuff. It was really cool.

Steve Lewit: Cool, yeah.

Gabriel Lewit: But a different kind of race is where I was heading with that. So yeah, you’ve got to figure that part out and what kind of race you want to be in. But let’s go to your transition there to our next topic, which is estate planning, long term care, the end of marathon, if you will, and making sure you’ve got a care plan prepared for that because at some point, you’re going to reach the end of the marathon.

Steve Lewit: Exactly. And look, at the end, everybody’s tired, some people are sick, some people… I don’t think anyone died here, but some people do. But I hope nobody died. But the facility is there to take care of you and you have a plan. These folks have a plan. When they finish the race, they put that silver thing around them, they drink a certain amount of… I mean they have a plan at the end of the race and if they’re not well, there’s a care taking facility that they can go to. And if you’re retired and you’re not well or things are not working out or you’re in long term care or you have dementia, god forbid, or any illness, what is the facility that is going to take care of you?

Gabriel Lewit: Correct. Yeah, that’s a good question. And so what we want to focus on here is basically a quick walkthrough of the estate and long-term care planning process, if you will, or communication flow. Actually a couple of things. All the above, process, communication flow, key items here. Just giving you a quick overview of what are the most important elements. And actually there’s a great article here that inspired us on this from Morningstar. I’m a big fan of Morningstar’s email newsletters, as a side note, if you ever subscribe to any that are out there.

Steve Lewit: Yeah, they are pretty good.

Gabriel Lewit: Christine Benz, a few other of their writers, they just do a terrific job. Non salesy, educational, well thought out. I’m just a very big fan. And so this is one of their interviews. They oftentimes have interviews and then they give written transcripts, which I like as I prefer to read than listen. And some very interesting points came out of this and inspired us to do this episode here today. And so one of the first titles here really of the first segment of the show that they had was what are the key elements of the estate planning first and foremost that every adult should have?

Steve Lewit: Yes.

Gabriel Lewit: I was asking.

Steve Lewit: Oh, you were asking.

Gabriel Lewit: I know you know the answer, so I was just lobbing you the tennis ball.

Steve Lewit: First and foremost, I believe you need to have a trust and you need to have your powers of attorney.

Gabriel Lewit: And can you explain, just in case somebody listening isn’t sure, what is a power of attorney?

Steve Lewit: There are two types of powers of attorney, there is a financial power of attorney and a healthcare power of attorney. So if you are incapable for some reason of making decisions on your own, your power of attorney says, “I give Joe over there the power to make my decisions for me.” So you would find somebody that you trust, a spouse or a child or a friend, you say, “If I’m incapable of making decisions, you are going to make those decisions for me.” Financial is one set and healthcare is another set.

Gabriel Lewit: Now somebody might ask or wonder, “Well, if I’m married and my spouse can’t take care of themselves, won’t they just come to me anyways?”

Steve Lewit: Well, here’s the deal is that let’s say you go to a hospital, and you don’t have a power of attorney for your husband and he’s in a coma, the doctors will ask you what you want to do, but at the end of the day, they have the final decision because you don’t have the power of attorney. And what doctors will do is they will try to keep a person alive as long as possible because that’s what they’re charged to do, to protect life. So if you want to pull the plug, the doctor might say to you, “Well, no, we can’t do that yet,” or, “We won’t do that yet because you don’t have the power of attorney.”

Gabriel Lewit: And what about financial power of attorney? What if you have an IRA account that’s yours, but your husband becomes incapacitated, he has his own IRA, then can you access his account there without a financial power of attorney?

Steve Lewit: No, you can’t. So your husband has to give you the right to access his account.

Gabriel Lewit: Now a joint account would be different.

Steve Lewit: But you can’t have an IRA joint account because that’s always in the name of just one person. Now for a trust, the idea behind the trust, a lot of attorneys will say, “Oh, you don’t need a trust, you don’t have enough money.” But here’s the deal on a trust that I think is really important is that when you pass away, you want your money to go to your kids, let’s say. That’s where it’s going. You don’t want somebody else to get it, but if your kid is in the middle of a lawsuit or your kid has become a drug addict or your kid is in jail or in trouble somehow, in the middle of a divorce, you don’t want that money to go to the outlaw. You want it to stay in the family. And that’s what a trust is really all about.

Now there are estate planning things for a trust, which have to do with taxes, but for most people, it is, “I want the money to go to my kids. I don’t want it to get sidetracked somewhere else.” That’s why I think everyone should have a trust, almost everybody.

Gabriel Lewit: Correct. And I think some people think a will is sufficient and a will is not a bad thing to have.

Steve Lewit: A will is great.

Gabriel Lewit: But a trust is going to give you a little less concerned about contestability. It’s going to give you a little bit more control if control is important.

Steve Lewit: No probate.

Gabriel Lewit: No probate. So there’s some advantages to the trust over the will in case you might have been wondering what’s the difference between the two. So those are some of the basics. Now, one of the other things that we’re going to transition into a little bit here in just a moment that is, depends on how you feel about it, but I call it a basic as well as what kind of long term care insurance do you have.

Steve Lewit: Or should have.

Gabriel Lewit: And a lot of people-

Steve Lewit: Or should not have.

Gabriel Lewit: Should or should not have or have at all. And of course as planners, as advisors here focused on risk reduction and protection for you and your hard earned assets, we do believe in long-term care insurance if you can afford it. Of course, we’ll get into that here in just a moment. So those are some of the basics. The powers of attorney, financial healthcare, will or trust or both. You’ve got the long-term care insurance, those are some of the things that you want have in place. And I think the last thing that I would call a basic component, which is a little more intangible, is a communication plan.

Steve Lewit: Yes.

Gabriel Lewit: You could have all of these things in place hidden away somewhere in your house and something happens to you, and nobody can find it, it will not do you a whole heck of a lot of good.

Steve Lewit: I had clients in a month ago, Gabriel… It’s a great point. Boy, that is a great point. I had clients in the other day. Well, the dad had passed and now the mom passed and they couldn’t find any documents. They eventually found them, but they couldn’t find any, they didn’t know what to do. So how do you communicate with your kids what your wishes are? Not only what your wishes are, but where to find all your documents and how you want to be treated after you’re gone.

Gabriel Lewit: Yeah. And so the interview that was being done here by Morningstar, one of the ladies that was doing the interview, one of the other people that was on the conversation here was just emphasizing how important it is to have that conversation. And I echo that statement, how important it’s to have that conversation with your family members. Number one, just where are these things located? And I do think if you have a trust or a will and your naming somebody specifically in that, why make it a surprise so that they get surprised with this, “Oh, out of the blue I’m a X, Y or a Z,” or, “I’m the state administrator,” or, “I’m going to get this and my brother’s not going to get that.” So these things ideally would be well communicated if you feel like that’s acceptable in your family structure, will help to ease any issues or concerns with that transition down the road.

Steve Lewit: A lot of parents put that conversation off, they don’t want to have it. You’re talking about your death. It’s not a comfortable conversation and a lot of kids don’t want to have it. “No, I don’t want to talk to you about you dying, mom and dad. I just don’t want to talk about it.” But you really need to figure out how to have that conversation.

Gabriel Lewit: And what they talk about in the interview here that we’re referencing is a lot of the kids don’t have that conversation because they’re worried that their parents are going to think that all they’re thinking about is the money, right? “What am I going to get? What am I going to get? When am I going to get it?” And to be fair, there are some children out there that-

Steve Lewit: Yes, there are.

Gabriel Lewit: That is all they seem to care about. In fact, I’ve encountered a few that have been beneficiaries of certain clients of ours that have passed unfortunately, very first question one day later is, “Where’s the money and how quick can I get it?” And so those are some valid concerns, but by and large, you want to try to have those conversations, whether you’re a child or a parent or a combination of the two so you can have that communication plan well organized.

Steve Lewit: Okay. All right. Okay. Well, now the question-

Gabriel Lewit: Yes.

Steve Lewit: Should I buy long-term care insurance?

Gabriel Lewit: Well, the first question I would say is, what do you feel about it? A lot of people have different opinions. Our opinion of course is it’s a good idea if you can afford it. But for some reason a lot of people out there think otherwise, think it’s a scam or it’s a really bad deal or they’re never going to need it so why pay for it? So maybe we can talk just briefly about that thought that’s very common in a lot of folks’ minds. And why do you think that might be the case?

Steve Lewit: Well, I had clients in yesterday actually, talking about their mom who has long term care insurance, but the company’s not paying. She’s very old. It’s an older policy and they’re fighting for every nickel that they’re requesting in return. So some people have bad experience with it. A lot of people own long-term care insurance where the rates have increased. And then some people say, “Well, you know what? I’ll cross that bridge when I come to it and I’ll just pay out of my pocket.” Now here’s the thing, Fidelity did a study. It said insurance costs for an average couple 65 years old over their lifetime will be $352,000 I think was the number. And then that doesn’t include the possibility of any long term care in a facility or at home, which could add on another three or $400,000. So an average 65 year old couple today couldn’t wind up spending six, seven, $800,000 just on their health insurance and long-term care insurance. Now you can deplete your assets, but if you want to protect your assets for your kids, that’s why you buy long-term care.

Gabriel Lewit: I was just going to mention that. It is why I mentioned it’s one of the key components of estate plan, because typically the goal of estate planning is to maximize obviously wealth transfer, maximize wealth transfer, as well as stay organized and keep things really organized and efficient. So if we pick on that first point there, maximizing wealth transfer, that’s what long-term care insurance is designed to do. Without that, you are going to have a much higher likelihood of spending down through all your assets, which depending on your finances, if you have a spouse that’s maybe going to survive you and is counting on those dollars to be there, that’s a big challenge for that person. That’s one example. Or if you just want to make sure you leave a legacy for your kids. And so I think we look at these things and there’s an example in the interview that’s here, and if you’d like a copy of this, I’m happy to send it to you.

But the person they’re interviewing was talking about how his or her, I don’t know if it’s a man or woman, actually I can’t recall, but they said here, “I thought my mom was in pretty good health, but she ended up being diagnosed with Alzheimer’s disease at the age of 65.” And if you read the rest of the interview, proceeded to say that they spent over $500,000 taking care of his or her mom over that period through in-home care for a while, and then eventually assisted living then a nursing home. $500,000 is a lot of money that could have been covered by a long-term care policy.

Steve Lewit: Easily. Easily.

Gabriel Lewit: Yeah.

Steve Lewit: So, it’s is a hard decision because in old time… So folks, there are newer types of long term care insurance, which is done through life insurance. It’s an option that most people are taking now. And if you take that approach, if you never use it, at least you get your money back. An old time insurance, in traditional insurance, you could pay the premium all your life and never use it, you never see your money, which is another reason people don’t like it. But these policies will protect and preserve your assets if that is a goal for you.

Gabriel Lewit: Yeah. Well, and I was just going to say, it’s funny, I just got an email last week about… New companies come out with new products all the time and I haven’t had a chance to dive into it yet to learn it because it’s brand new. But in the promo pieces they were sending out there were saying get the long-term care benefits without underwriting, which maybe there are lesser benefits, I’m assuming, not as good as maybe full-fledge-

Steve Lewit: Yep.

Gabriel Lewit: But there might even be some options if you prior to this thought you were uninsurable, maybe there’s even some new options now that we can explore that we could spend some time talking about.

Steve Lewit: And there are other things. If you’re uninsurable, there are annuities that have income doublers if you go into nursing home. There are ways of getting help if your priority is to, “I want to keep my assets and have the odds in my favor that I’m not going to give them away to a nursing home or to a healthcare facility. I want it to go to my kids.” Then you look at long-term care and see if it fits.

Gabriel Lewit: Yeah. And maybe we’ll do a deeper dive in a future show about the actual specific kinds of long-term care insurance with some numbers and examples and things that would be-

Steve Lewit: Yeah, it’s a good idea.

Gabriel Lewit: Kind of a neat idea. But hopefully, folks, this gives you a quick guide through the world of estate and legacy planning as well as long term care. And if you have any questions, you can certainly give us a call here, (847)-499-3330. But remember that this should be incorporated as an overall part of your financial plan.

Steve Lewit: Marathon plan.

Gabriel Lewit: Marathon plan.

Steve Lewit: The marathon plan.

Gabriel Lewit: The care plan at the end of the marathon. Well, folks, that’s our time here for today. Thank you for joining us and we appreciate your listenership and if you have anything that we can help you with big or small, give us a holler and we are wishing you a wonderful rest of your day, week, or weekend.

Steve Lewit: Yes, we are. Stay well everybody.

Gabriel Lewit: Bye now.

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