Al Smith of Golden Eagle Financial sheds light on the intricate details of elder care planning. Joined by Bob Neal, they discuss personal experiences with long-term care and its financial ramifications. The discussion emphasizes the necessity of strategic estate planning, understanding Medicaid’s role, and considering alternatives like home care versus institutional care. The episode serves as a vital resource for anyone looking to safeguard their estate against the high costs of elder care.
Welcome to Retirement Unpacked with Al Smith, owner of Golden Eagle Financial. You want a retirement plan that alleviates your fears about the future so you know your money will last. As a chartered financial consultant, Al Smith will help you find a balance between the risk and reward of the market and the safety of your retirement income. And now, here’s your host, Al Smith.
SPEAKER 03 :
welcome to another program of retirement unpacked i want to thank you for tuning in i’m sure there’s other things that you could be doing we have some good information for you today and before i dive into that and before i introduce my guest i want to invite everyone who’s listening to downtown littleton this coming Saturday. It’s Western Welcome Week. There are parades. There are many different booths, including my own. We’ll be giving a lot of things away. Some of them are very nice gifts, and all you have to do is show up, register, and participate in one of the games that we’ll be having. And if you haven’t ever been to Western Welcome Week, we’ve had it I say we. The city of Littleton has had it for, I think, almost 80 years. It’s a real tradition. There are bands, and it’s really a gala event that the city looks forward to every year. Main Street is completely blocked off. There’s music. It’s a lot of fun. Today, I’m blessed to have a guest whose name is Bob Neal. And I often talk about part of retirement planning is planning for unforeseen events and needing long-term care or needing support. Additional care beyond what one might normally require in retirement is not necessarily an unforeseen event because the statistics are very strong. About 40% of the people who reach age 65 will need care for 90 days or longer. And in Bob’s case, he has specific experience in his family for both his grandmother and his mother. Bob, thank you for coming. And tell us a little bit about your grandmother and your mom.
SPEAKER 04 :
All right. Thanks, Al. I guess we start with my grandmother. My grandmother and maternal grandmother and grandfather lived in a place called Cape May, New Jersey. It’s on the tip of New Jersey. They had lived with my parents and myself until I was two and then moved down there. in 1958. My grandfather passed in 1969 and my grandmother lived on her own until 1977. She came out for cataract surgery and following the cataract surgery, she had a stroke and lived in a nursing home for the next 10 years. So she’d been living independently at age 81 in Cape May, and then she lived to 91 in a nursing home. So she spent 10 years in a nursing home. My mother had sinus surgery in 1993 and got a sinus infection that got into the frontal lobe of her brain and caused her dementia. She wound up being in a nursing home for six and a half years. So between the two of them, they were in a nursing home for 16 and a half years.
SPEAKER 03 :
Well, what I find interesting about that, and not that it’s a positive type of interest or anything like that, but it sounds like for each of them, the onset of their difficulties that caused them to have to go to the nursing home had to do with the medical care they received, which sounds like it left quite a lot to be desired.
SPEAKER 04 :
Yeah, I think you could say that. I think both of them were very independent. My mother and father traveled a lot. He was a retired Air Force person, flew in World War II, and they’d go to Hawaii all the time. So her disease was very sudden, and she was very healthy at the time. Grandmother was a little older, but again, still living very independently and very happy.
SPEAKER 03 :
And what changes and what things did your family have to do, like your father and other family members, in order to make this work financially so that hopefully there would be some modest amount of an estate remaining after these long stays in the nursing home? What was that like?
SPEAKER 04 :
Well, my parents sold my grandmother’s house in 1977, or 78, excuse me, and they used that to pay for nursing home care. She was on Medicaid, I think, the last three years of her stay in the nursing home, but her entire property value went to her nursing home care.
SPEAKER 03 :
Wow. And I think when we had a longer conversation, Medicaid required that property to be sold prior to its appreciating and value. And correct me if I’m wrong, but you said it was because it’s so close to the beach there in New Jersey, it was designated a historical residence? Yes.
SPEAKER 04 :
Yeah, they live four blocks off the ocean, and right after they sold the property, the town got a historical designation. You did ask me to look up the property value, so there’s no property on her block that was listed for under $1.35 million. Most of them were in the one and a half to two range, so… When my parents sold it, the second property owner, he popped the top right away. So it’s the oldest one on the block now. But certainly worth a lot of money in current day dollars.
SPEAKER 03 :
Well, looking back, I guess hindsight is always clearer than foresight, so to speak. What would you recommend if you knew someone who had a mother or a parent that didn’t have a spouse remaining that maybe doesn’t have a lot of assets but is sitting on property that’s $700,000 or a million and any more in the Denver area? For a property to be worth a million dollars, that used to be some kind of a really special property. But anymore, it’s just going to be a reasonable size home in a good neighborhood. So what would you suggest if you knew someone whose father or mother lived in a home like that?
SPEAKER 04 :
I’d suggest you transfer the title of the property to one of the, who’s ever going to inherit the property. the estate when the person dies.
SPEAKER 03 :
And I think that makes sense, but I also think that it’s probably a good idea to visit with an attorney because transferring the property to someone else certainly saves it from Medicaid. But as I understand it, there’s about a five-year look back that they can require the value of that property to come back into the person’s estate, so there needs to be some long-range kind of planning to be done. And I know Michael Bailey, who is our estate planning attorney, who comes on the radio right after me, part of what he does is planning for people so that some of their property can be maintained once they end up in either assisted living or a nursing home. And I think this is something that if people don’t plan for it, then you end up doing things sort of at the spur of the moment. I know my father became hospitalized and then in a nursing home. when he was in his 90s and my mother scrambled to get with an attorney to do a bunch of work since it looked like he was going to be in a nursing home for quite some time. It turns out he was only there for a few months before he died. But in the case of both your mother and your grandmother, the statistics are that women end up needing care for a much longer period of time. And so the planning can get kind of much more extensive. Now, with respect to your mother, how did that work, Bob?
SPEAKER 04 :
My mother went in a nursing home. In 1994, we weren’t able to get her long-term care because it had been such a dramatic thing. My father had taken care of her. He died soon thereafter. He died of mesothelioma, so she didn’t have any plan. So her assets from the house were going to pay for her nursing home care also. Fortunately, my father had gotten pretty good cash flow for her, so she was still positive cash flow when she first went in the nursing home. But over time, with nursing home costs inflating at 8% a year and Social Security or pensions going up at 1%, it doesn’t take long before you’re in the red.
SPEAKER 03 :
No, you’re absolutely right. And when I talk to people about unforeseen events, an unforeseen event is when you have maybe your parents and your son or your daughter living in your home at the same time. That’s an unforeseen event. But having a parent or a sibling or a spouse going into the nursing home, that is almost an event that could be anticipated. What’s not anticipated is the length of the time they may be there because the examples that you’ve experienced, 10 years for your grandmother and six years for your mom, have you ever sat down with a calculator and taken a look at what those numbers might have totaled?
SPEAKER 04 :
No, I haven’t. I really don’t want to go back and look at that again. You know, we just know what the value of the properties were in current day dollars that they gave up.
SPEAKER 03 :
Well, sure. And my understanding with the cost of care is It’s between about $8,000 and $10,000 a month, and memory care is on the higher end. It’s closer to $10,000 a month because they have to have a better ratio of workers to the folks who are in the facility. And I know when you visited, any of those. It was a bit different than the rest of the facility. What was that like when you visited your mom?
SPEAKER 04 :
I told you that example of you’d walk in and there’d be 10 people sitting around the TV, watching TV, but none of them knew what show was on. They didn’t know there was a TV there. And also, once in a while, you’d have somebody that would want to come up and kick you in their wheelchair all the time. So it was different. It was a very different experience. And the people that work there are saints.
SPEAKER 03 :
Yeah, they really are. It takes people with an enormous heart and a real penchant for, you know, giving back and helping other people because the folks who are in nursing homes, you know, they depend on the kindness of others. And every now and then you hear bad stories because when When bad things happen, a lot of times the folks who are in those facilities don’t have the capacity to report those kinds of things. And that’s unfortunate. So one of my clients spent about seven or eight years not taking care of her mother, but being her mother’s advocate. And at this time, her mother received care in her home, and she had like a different caregiver each time. And she was basically her advocate. And I’ll talk a little more about that after the break.
SPEAKER 01 :
Al Smith of Golden Eagle Financial can help you protect the estate you’ve built so your assets don’t disappear in paying for long-term care. As people are living longer, there’s a 40% chance you’ll need care later in life. That’s more likely than your house burning down. Yet we all buy homeowners insurance without question. Life insurance is useful for much more than paying for funeral arrangements. People don’t talk about life insurance because they assume it doesn’t apply. But in retirement, your income may literally depend on you staying alive. What happens to the pension, Social Security, or your overall plan if you pass on? Al Smith at Golden Eagle Financial is not just a financial advisor. He knows how to evaluate your specific needs and build a plan that takes the right steps at the right time. He’ll ask questions you haven’t thought of and help you leverage what you already have. Sign up for a free no-obligation consultation with Al Smith of Golden Eagle Financial on the kozradio.com advertisers page. Investment advisory services offered through Brookstone Capital Management, LLC, Registered Investment Advisor, BCM, and Golden Eagle Financial Limited 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.
SPEAKER 03 :
Welcome back to the second half of Retirement Unpacked. We’re talking with Bob Neal, who is a listener to KLZ. And I learned that his mother spent six years, six and a half years in a nursing home and his grandmother died. 10 years and one of the things that I end up talking to people a lot about is if people end up receiving home care whether it’s from another family member or if it’s a home health care service or one of these was that ever spoken about as far as an alternative to going into a facility Bob?
SPEAKER 04 :
Yeah, we would love to have kept them at home, but they were both incontinent, incapable of walking. My grandmother couldn’t speak, so they were not in very good shape, and home health care just wouldn’t have been. They required 24-hour care. That wasn’t an option.
SPEAKER 03 :
No, because 24-hour home care is about $400 a day, if I understand that right. That would make it $12,000, $15,000 a month instead of $8,000 or $10,000, which it normally costs right now. And home health care… is okay for people who need care for limited periods, people who need care in certain areas, but not necessarily those whose circumstances are severe. And the cognitive impairment that a lot of people suffer, they need to be in a And an institution, institution sounds rather unkind, but a nursing home assisted living with a memory care facility, and your description of a group of people sitting watching TV not knowing what’s on, if you had gone up and changed the channel, would that have changed any of their behavior? Yeah.
SPEAKER 04 :
No, no, they were all strapped into their wheelchairs and most of them were bent at the waist. So it’s a very sad way to see people wind up.
SPEAKER 03 :
It is, but one of those things, there but for the grace of God, go I. And the fact that we have our mental faculties is clearly a blessing because I have had the experience of meeting some folks who have had another family member in need of this kind of care. I met one gentleman who lived out in Strasburg and his wife had alzheimer’s and i believe i don’t recall her precise age but if you were to see her you would say well that’s a relatively young woman she looked like she was in her 50s And she was with us when we had our discussion. And she just had a big smile on her face and had lost a great deal of her mental capacity. And that’s something that we just don’t know about. We don’t know what the future holds. And also, sometimes that ends up occurring more quickly than it might otherwise. And I know you mentioned that you did provide care at home for your grandfather. Is that not you personally, but maybe you or some other family members?
SPEAKER 04 :
No, it’s for my father. So my father died from asbestos exposure. He died from mesothelioma. He went very quickly. His diagnosis was… It’s 99.8% probability you won’t live a year. So we kept him at home. He had nursing care come in, although my wife is a nurse too, and she took pretty good care of him. So he was capable of getting around, and he was still mentally with it. His problem was he was just in severe pain.
SPEAKER 03 :
Oh, was that, were you able to regulate that at all without opiates or were opiates required?
SPEAKER 04 :
No, he was on morphine for the last three or four months of his life.
SPEAKER 03 :
And if he is terminal, that’s kind of understandable because that’s a far better alternative than to be in severe pain. Was there any kind of one of those mesothelioma settlements that we hear about?
SPEAKER 04 :
Yeah, for what I would consider an insignificant amount of money, but yes.
SPEAKER 03 :
Yeah, I guess when you look at all the people affected by asbestos, and then you divide that with, say, oh, there’s billions of dollars, but if you divide that with the 20 million people who were affected, it probably ends up being a pretty small settlement, am I right?
SPEAKER 04 :
Do you want the specifics? Sure. So he worked for Johns Manville. They set up a trust. They valued a death at between $200,000 and $400,000, but they didn’t have enough money in the trust, so they gave you $10,000. So that worked out to, or 10%, so that worked out to $20,000, but you had to get an attorney to process the paperwork and had to give him 10% or 15% of that up front.
SPEAKER 03 :
Boy, that’s not like they make it sound. They make it sound like if you suffered mesothelioma, you’re just going to cash in and get rich. That’s the way they make it sound with the ads from the law firms on TV. And it’s unfortunate that they make it so difficult that even though the settlement has been awarded the money, you have to hire an attorney to complete the paperwork because they’ve made that legal process so complex. um now we talked briefly about if an elderly person owns real estate are there any other ideas or things that you might recommend to people who have a parent or someone who may need care in the future and possibly because of their health circumstances purchasing long-term care insurance or some other kind of insured solution’s not an option. What else might you say to someone who’s in that circumstance?
SPEAKER 04 :
I don’t know. As we get older, my wife and I get older, we’re starting to look around. We do have a trust for the family, but you need to start to look at some options that will provide that potential care if we need it.
SPEAKER 03 :
Yeah, there’s not an easy answer to this. And as we age, way back in the 1960s, if someone had a serious heart problem, they probably died. Now they have stents and all kinds of drugs that keep people alive much, much longer. And during COVID, life expectancy went down a little bit. In spite of the fact I used to talk about COVID statistics on my show, and I thought it was interesting, the average age of death of someone with COVID was 83, and the average life expectancy for a man was about 78. And so I thought to myself, well, gee, then if somebody gets COVID, are they going to live longer? I know that’s foolishness in terms of the statistics, but a lot of the people who died of COVID had those additional conditions going on, comorbidities or whatever they call them. But I think medical science keeping us alive longer doesn’t necessarily enhance our quality of life. And with many folks living into the 80s and 90s, none of us really know how those last two or three years of our lives are going to be spent. And for people who are younger, you know, there are some alternatives to traditional long-term care. Sometimes if people are healthy enough in their 50s or 60s they can purchase life insurance and you’re thinking well gee if somebody’s retired why would they want to buy life insurance? Well the death benefit can be accelerated if it turns out that they need care and that’s not an option for everyone. Sometimes people will establish a different financial product that will grow perhaps tax deferred and then when it’s time to draw that out it might be taxable but when someone is receiving care some of that is tax deductible if someone’s in a nursing home or assisted living the part of their care that’s represented as medical care is tax deductible on the tax return. So there are some things people can do. And if this is something that’s on your mind out there and you’re listening, give my office a call and there may not be a solution, but there may also be a solution. My number is 303-744-1128. And something else that came to my mind there, Bob, other than selling real estate if people own that, what would you sort of suggest to people who are maybe still healthy in their 50s or 60s that are thinking about that because they’ve seen parents or grandparents in that set of circumstances?
SPEAKER 04 :
You’re talking about transferring ownership of the real estate?
SPEAKER 03 :
Well, just general terms, having seen what you’ve seen, if somebody’s only in their 50s or 60s, I don’t know that they necessarily want to transfer ownership of real estate because you could give it to a son or daughter who gets divorced and then it ends up going to an ex-spouse or something.
SPEAKER 04 :
No question.
SPEAKER 03 :
So it’s sort of a delicate thing, I would assume.
SPEAKER 04 :
I certainly don’t have an answer for that, but I do know that for my family, when trouble hit, it hit very hard and very quick.
SPEAKER 03 :
And your circumstances between your mother and your grandmother, 16 1⁄2 years in nursing care, that’s an experience that I hope no one else would go through, but I know there’s probably people listening who have had… a spouse or parent or something receiving care for quite a length of time. Again, if you’d like to have a conversation with me, 303-744-1128. Bob, thank you so much for joining me and describing that story because that’s something that people need to hear. And those of you who are listening, thank you. God bless you for listening. Let’s continue to pray for our leaders. and for peace in Ukraine and also the Middle East. Bye now.
SPEAKER 02 :
But are offered and sold through individually licensed and appointed agents.
