19180319 - scissor and trust

Money money money , how much do you need and how much will you have as you move into your really senior years.  The term comfortable retirement may mean different things to different people.  To me it means not running out of money on a fixed income even if you live longer than the world expects you to. We put our trust in the social security and Medicare , in our private investments and  those less  than 1% interest bearing accounts that are one step removed from hiding 20 dollar bills in your mattress.

This week the definition of the word fiduciary came into clearer focus.  A fiduciary is someone in whom you  should have complete confidence that your best financial interests are the basis  for all investment decisions.  As suspected not all financial advisors are cut from the same cloth and up to recently did not have to  operate on this principle of client first. So my already low trust level has been justified.

The annual Social Security and Medicare Trustee annual report is out  and the headline seems like very bad news but the finer print is the truth of the tale. It says the find will be exhausted in 2034…what that means is there is not enough money coming in to pay full benefits.  In that year, benefits will pay out only at 77%.  So in waiting to take  social security until I am 70, my benefit would go back to paying out what it would have if I took it at 66.  Those who by age and deadline had the gate close on spousal benefits are most effected.

So if you  manage to live a longer than average life, just when you may need to hire  some decent in home care, or you need to pay for  more medications, a major part of your income could be cut about 23%. Yes, you can buy Long Term Care insurance if  you can afford it. But as they say if you can afford it (about $3000 annually if you started in your 50s!)  you probably have a enough assets to pay for things yourself. 

There are so many twist and turns in these policies that control  what services you actually can get.  Again it does not inspire confidence.  One of the major insurers who helped with a family member years ago is now out of the  LTC business because of  large losses

Is there a policy you can buy that allows for just using home care not the whole institutionalization  aspect?  There are new products out there that let you use your life insurance  to pay for your own care (so much for  inheritance for the kids!)  This is a government website but it actually explains terms like viatical, ADB clearly. 

http://longtermcare.gov/costs-how-to-pay/using-life-insurance-to-pay-for-long-term-care/

Proceed with caution but I am personally looking into converting my own policies**.   

No wonder people are retiring to Ecuador or never retiring.  Do you trust private industry to come up  with a insurance product to provide care to massive numbers of policy holders?  Or do you look to the government to refine, strengthen  the social/medicare system to integrate those services. There are reforms that can stop this shortfall in social security, medicare and home health care but will they ever happen?

Crystal balls again are in short supply.  Saving more in your go go years for your no go years seems a prudent thing. Trust that you have your own best interests at heart.

**Talked to my agent and it seems their idea is tha  you have a single large ‘premium” (100,00-200,00 or more) then you can draw from it later as life insurance or payment for  LTC or in home care.  In other words another way to sell you an annuity. No thanks!