10 Tips for Current Retirees – Tip 4- Have a Game Plan for Long Term Care

Wealth Advisor

In this video, Jamison Smith, wealth advisor at EWA, discusses the importance of having a solid long-term care plan in retirement. He highlights the significant costs associated with long-term care and the potential impact on one’s net worth, especially for those who aren’t high-net-worth individuals. Jamison emphasizes the need for long-term care planning for tax efficiencies and suggests considering options like long-term care insurance or life insurance policies with long-term care provisions to help cover these costs and avoid higher tax brackets in retirement. Individual circumstances should guide the choice of a suitable long-term care strategy.

Video Transcript

Hi, I’m Jamison Smith, a wealth advisor with EWA, and this is another video continuing our series on 10 tips for retirees or anybody that is entering retirement. This tip is to have a sound game plan for long -term care planning. So long -term care need, women’s stay on average three and a half years in a long -term care facility and men’s stay on average two years.

And in the state of Pennsylvania, which is where we’re located, the average long -term care cost is about $8,000 a month, so almost $100 ,000 a year. If you have not planned properly, this can drastically eat away at your net worth and assets once you’re in retirement, especially if you are not a super high net worth individual that is self -insured.

Many of our clients that we work with, they end up becoming self -insured, but there is still sufficient long -term care planning that needs to be put in place, and one of the main reasons is for tax efficiencies. If you have accumulated a high net worth where you’re able to be self -insured, you’re most likely going to be in the highest tax bracket, especially in the distribution phase.

And so if you have to pull an additional $100 ,000 or $200 ,000 a year out of your portfolio to pay for a long -term care cost, all of that’s going to be taxed at the highest tax bracket on top of all of your other income. So having some sort of long -term care policy or life insurance policy with a long -term care option on it will allow you to draw on that tax -free and avoid getting clipped at the highest tax bracket on any distributions for retirement.

So there’s a number of different ways and situations that you would want to fund long -term care. This is all situational, depending based on net worth, goals, and a number of other factors. So if you have any questions on your situation, feel free to reach out.

Show Full Transcript

Playlist

10 Tips for Current Retirees

10 Tips for Current Retirees - Tip 1- Have a Team of Trusted Advisors
10 Tips for Current Retirees - Tip 2- Recognize Your Investor Bias
10 Tips for Current Retirees - Tip 3- Be Aware of Annuities
10 Tips for Current Retirees - Tip 5- Track Monthly Spending
10 Tips for Current Retirees - Tip 6- Don't Base Investment Allocation on Your Age
10 Tips for Current Retirees - Tip 7- Consider How You Will Spend Your Time
10 Tips for Current Retirees - Tip 8- Have a 7 Year Spending Back Up
10 Tips for Current Retirees - Tip 9- Have a Game Plan Around Social Security
10 Tips for Current Retirees - Tip 10- Plan Your Travel

Recommended Videos

Backdoor and Mega Backdoor ROTHs
5 Tips to Remove Stress From Your Finances: Tip 1- Healthy Tracking vs Unhealthy Tracking
Why a Buy-Sell Agreement is a Necessity for a Small Business?
10 Tips for Current Retirees - Tip 2- Recognize Your Investor Bias
Cash Balance Pension Plans
Buying vs Leasing Your Car