Sounds like you made some good decisions. I have worked too long...and yet I'm only 62. Being a health nut and exercise zeolite has paid off only in some respects. It never made up for work stress and +4m miles of travel. So be proud of the fact you listened to your body.
Today's Wall Street has an article that did better justice of what I was trying to explain.
https://www.wsj.com/personal-finance/caregiving-aging-at-home-retirement-103520c7?wsj_native_webview=android&ace_environment=androidphone%2Cwebview&ace_config=%7B%22wsj%22%3A%7B%22djcmp%22%3A%7B%22propertyHref%22%3A%22https%3A%2F%2Fwsj.android.app%22%7D%7D%7D
Original Message:
Sent: 09-04-2024 19:08
From: ROBERT ADAMS
Subject: How do you define your wealth accumulation goals
Bissell,
I agree with you that aging without resources can be awful. I've served as guardian ad litem and trustee for many elderly and mentally challenged people, and I've seen the insides of all sorts of institutions. I wouldn't wish that for anyone (with perhaps a few exceptions). Planning for retirement and aging is the universally responsible thing to do, but most people don't. I'm pretty sure we agree on that.
When I express my attitudes toward long-term care (LTC) insurance, I'm not giving advice; I'm merely explaining my plan. My plan throughout my adult life, and even before that, was to grow my assets and become financially independent. I did that by being extremely frugal and buying and holding good stocks (100% equities). That put me in a position to retire "early" and be self-insured for LTC. My assets have continued to grow since I retired, and they will keep on growing unless something catastrophic happens to our entire society, in which case we're all in deep doo-doo no matter what we've done in our investment lives---and no matter what insurance company we're depending on. I'm fortunate in that my assets should keep growing even if they have to fund the expenses you've referenced (for me and the wife). So you see, I have a plan.
I probably will not even need LTC---at least not for very long. As I write this, I'm wrestling mightily with myself about whether to take up skydiving again. I sold my gear when our first child was born, but now that the young'uns are grown up enough that they can get by without me, thoughts and memories of adventure are tugging. I have a climbing buddy in South America who has been after me for years to take up mountaineering again. I miss hiking through remote jungles, scuba diving, and blue water sailing, all of which can provide fairly sudden alternatives to growing old gracefully. I miss that happy-go-lucky guy my wife married and that, sadly, my children never knew. To them, I'm just Mr. Responsible, the disciplinarian.
Another part of my plan has to do with knowing myself. A diagnosis of type 2 diabetes was the final nail in my decision to retire about 12 years ago. A sedentary, stressful occupation was killing me. For more than a decade, I've controlled the type 2 solely through diet. I take no drugs, and I will not take drugs. Thus, if I get so old or infirm that I need someone else to physically take care of me, maybe I will have the presence of mind to start enjoying donuts, French fries, and Moravian sugar cake again. I wouldn't last long on such a diet.
With all due respect to Dave Ramsey (and I do have a lot of respect for him), his blanket answer of "yes" to whether LTC insurance is a good deal does not apply to everyone. We're all different, and one-size-fits-all approaches are generally counterproductive when it comes to human beings.
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Rob Adams
Original Message:
Sent: 09-03-2024 12:43
From: BISSELL SMITH
Subject: How do you define your wealth accumulation goals
Regarding: I am self-insured for long term care. To me, the policies are indeed too expensive, and the benefits they offer are too sketchy. Instead, I've saved and invested what I would otherwise have paid in premiums so that my assets (if properly managed) will provide ample funds for caretakers without "spending down" those assets.
Have you been pricing care? I deal with it daily and what I was projecting in 2013 has more than doubled.
Unless your liquid net worth is over $1m....I'd say it "may not be" covered. 3yrs of coverage (what most people financially plan for) is turning out to be not mindful of LT aging changes. I've helped two people w/planning that are in their 9th and 11th year of ADL support needs (at home). Neither are able to do IADL/Financial support - most can't past 83ish. They are in "decent shape" for their age. Most want to stay in their home and home care used to be cheaper, but as boomers retire and saturate the care market...it's now more expensive. If you need 24hr care at home w/just 2-3 ADL's...it's $240k/yr. Nursing homes in our area are $ 110,000. Have you visited them? Is that what you want for yourself? I'd rather pay the $240k.
Here are the catches: Do you have a spouse? Is your intent to age together? That's not doable in most facilities - especially if your care needs are different. As you age the "better health" spouse can no longer support. Have you tried to get care in home for 2 people? Agencies won't send 1 person for 2 that need support. Did you know in some states HHA or CNA support can't support wound care or medication. If a nurse is needed that increases home care costs significantly. Are you aware that agencies only staff a min of 4hrs / day. Early on - you many only need 1-2hrs, but you can't get that. Now try hiring an agency for that care....and have good long-term support (meaning consistency). Elderly people can't handle people turn-over and they turn down care when it's really needed (actually fight it). These days finding good consistent care support is nearly impossible. These agencies take such a large cut of the total care bill that employee turn-over and short staffing are huge issues. Not 10yrs ago, but today - you can't hold people and only 1 in 6 are only worth keeping. Agencies charge $35/hr and workers get $19-20hr. Is that the care person you want? That's McDonald's pay. If you cut out the middle man, offer some benefits....my costs are $41/hr, and I can finally hold quality people at that rate. Impact - I run my own payroll. Who is going to manage all this churn and rotation of people, interviewing people, etc??? Do you realize that not a week goes by that these agency people have scheduling issues w/their own needs? Dependability is extremely low. You see...your burden on the family care workers just grows and grows. No vacations for them. Respite care is talked about...try getting it...and where you are able to really get away.
My own past two forecasts of cost growth have been wrong, and they included researching the best information at the time. 10-15yrs later the forecasts were way way off. No different than college forecasting. Do you know that most aged people will cut-back their care needs if it saves money for their kid's inheritance...only causing huge issues eventually - hospital stays, etc... The pide pipper gets paid every time, and the family care worker deals w/all the burden.
I often run into loving couples that have to divorce and spend down savings to qualify 1 partner in full-time nursing covered by Medicaid. Have you ever visited those places?
Until you live it...you just don't see all the issues. I recommend being self insured planning wise, but also having LTC as a backup. Odds are you'll need both...at least until 2045-50. Just trying to open your eyes.
Here's what Dave Ramsey says about LTC...
Is Long-Term Care Insurance Worth It?
Yes. Long-term care insurance is absolutely worth it. It's the best way to cover the sky-high costs of long-term care. Long-term care is not a bridge you want to simply cross when you get there. You need a plan.
Monthly premiums are well worth the benefit later on when those in-home care or assisted living bills start piling up. And your family won't be burdened with handling everything, including pitching in on the bill (that's one tab you don't want to go halfsies on).
With long-term care insurance, you'll enter your golden years knowing you have a plan. And your quality of life will be higher than if you were constantly trying to cut costs.
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BISSELL SMITH
Original Message:
Sent: 09-03-2024 07:47
From: ROBERT ADAMS
Subject: How do you define your wealth accumulation goals
Bissell, don't be too hard on those of us who are too "irresponsible" to take care of our aging parents. Some of us are simply not cut out to change our parents' diapers and spoon feed them. It's wonderful that there are people in the world who can do that, but I think we're all best at doing what we do best. For me, it's managing money, so as my parents aged and went through years of dementia, my sister and I arrived at a method of dealing with it. I took over the management of their assets, and she took over managing their physical presences. I made sure that when my sister hired people to change diapers and spoon feed our parents, the money was there to pay for it.
If I go out the way my parents did, the last thing I would want is for my children to change my diapers and spoon feed me, and I've told them so---repeatedly. I expect them to take care of their own families and live their lives to the fullest.
I've tried to groom my children to someday take over my assets, but the only child who seems truly capable is my oldest son. He will likely end up being the family trustee. I have instructed him and the rest of the crew to hire caretakers for me if necessary, to come visit me occasionally when and if they want to, but to NOT allow me to become a burden or a chore. I do NOT want to be remembered that way!
I am self-insured for long term care. To me, the policies are indeed too expensive, and the benefits they offer are too sketchy. Instead, I've saved and invested what I would otherwise have paid in premiums so that my assets (if properly managed) will provide ample funds for caretakers without "spending down" those assets.
In my humble opinion, intentionally paying FICA or self-employment tax is a poor investment if the goal is simply to maximize Social Security benefits. I've done something similar to you in generating earned income, but my reason is so that I can continue to maximize contributions to a Roth. The tax-free withdrawals I could take from my Roth today dwarf whatever I will end up receiving from Social Security---and I could take those withdrawals while continuing to grow the "corpus" inside the Roth. (In reality, I do not plan to ever take a withdrawal from my Roth. Unless something changes significantly, it will be left to future generations to enjoy.)
One thing I absolutely agree with you about is that government spending has gotten way out of hand. If the government managed money the way you and I have to, we'd all be better off. The federal government has expanded itself into areas it was never intended to be involved in. It is too big and too powerful. Unfortunately, there's nothing I can do except vote for candidates who are least likely to grow it more.
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Rob Adams
Original Message:
Sent: 09-02-2024 19:25
From: BISSELL SMITH
Subject: How do you define your wealth accumulation goals
I was starting the EI/VES program(s) and ran across this PRISM 1st. For me, it's a bit - old information, but I thought I'd take the time to go through it. Can't hurt. After goals - I found your spreadsheets and PDF files interesting/helpful. Although years ago - I built a full financial plan (WealthTrace) for my wife and I...there's been a lot of turns in our recent history that have changed priorities, and changed goals. While running several companies, albeit retired, I had to spend 9mos in Florida taking care of my mother until she passed, and my wife (a former professor) is on her 6yr of taking care of her elderly parents (91/94). We never contemplated in our planning having to dedicate so much of our time doing this, and although I've been very fortunate being an ex-Aerospace executive...w/many opportunities...I no longer want to do those things, and just use licenses I have held for +30yrs (that I did for my own education) and now do that for others - on financial planning, estate planning, elder care planning.
So I look back at my financial planning software and the plans I placed in there when I retired - and I smile. Only did we know. Yes we achieved building a lake home, but still live in the city codos caring for parents. Yes we bought a home in Spain, but we can't ever get there...caring for parents. We have a serious problem in this country caring for our elderly. Our parents never did that. I've been married 40yrs, and we never considered it either. It wasn't in our plans. My wife had to give up her job 6yrs ago as a professor at SMU, and a former director of a museum, and I use my consulting LLC (for Aerospace) and made her a partner so she can get income and more importantly get credits for self-employment income so that her Soc Security doesn't wither away. So not only do you lose your prime years of working and saving, but you also lose your years of accumulated earnings and see your Soc Security go down and down and down. I found a way to fix that....pay my wife. Sure it's my income, but the NPV of retaining her Soc Security far outweighs the added cost of self-employment tax. It has also allowed us to hire employees (I have a CSA and HHA license (which I did for my wife, & mother) to provide care support for my wife. Payroll runs me $2,800/wk. It's a hell of a retirement :). Her parents about 11yrs ago, despite me doing all their planning, investing, and taxes.... unbeknownst to us canceled their LTC plan because they thought the premiums were too high. We today, our payroll in 2.5wks covers their annual premiums. By the time I noticed, when doing their taxes, they had let it expire beyond the grace period...ohhh the lessons we learn.
Having said all of that - I made a lot of money and we are blessed to afford that, but my resolve is to figure out a way to help others and lobby our foolish politicians that blow our money on worthless endeavors and get them to see that millions of people my age are providing elderly free ADL support and nobody is paying the bill but us. At a minimum our Social Security benefits shouldn't ever suffer (during this tour of duty) and we should be granted much higher deferred savings allowances (for the 1 working spouse) to make up for the losses. Our pathetic two party system is spending our country into oblivion and that has already destroyed millions of people's retirement w/higher runaway costs. I can't tell you how many of my former employees had to go back to work....on a fixed pension.
My take away from segment 1 is - goals change. Although we have learned to bump and roll....I decided it was time to use my CFP license and others for good and refresh my investment capabilities (been a long time since my Series 7) - to teach others. So, this is all a good refresher...and you never know I may change my portfolio as I refresh myself. I do everything myself. Hopefully in a couple years we'll really be able to retire for good, but other obligations are calling.
So AAII...you need a way to educate people in the implications of being a family caretaker. Oh those siblings that pretend to be too involved in their jobs or families, live too far away...as they skirt around their responsibilities....and burden those of their siblings that are more responsible. It's time estate plans are designed to make up that difference at their expense (I say that tongue and cheek), but it's a good remedy.
Another small message - yes you can save and build your own wealth where LTC plans seem excessively expensive...but you will lose your faculties on managing your money. I've seen it happen w/both parents and now my in-laws. At some point you can't do it, and your kids are often poor substitutes. A LTC policy pays when you don't have the capacity to manage the costs and responsibilities of daily living. ADL or IADLs....so invest in LTC so others don't have to burden you may bestown on them in your time of need.
Bissell J Smith
Fort Worth Tx
Btw...my father (passed in 2006) was by far the best investor I ever me. I just sold some of his NVIDIA stock at a $700k in profit. Amazon. Home Depot. Microsoft. Apple. Here's my point...he told me about AAII back in 1982 when I was in college (he was an Engr and had an MBA from Univ of Chicago - studied under MIlton Freedman), and told me...buy a Lifetime Membership in AAII...it w/b the best investment you'll ever make. He was right. I'm still striving to be as good as him.
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BISSELL SMITH
Original Message:
Sent: 07-17-2024 11:11
From: Jenna Brashear
Subject: How do you define your wealth accumulation goals
The article "A One-Page Plan for Maximizing Long-Term Wealth" was a good read for me this week and it got me thinking about how we all define our wealth accumulation goals. The article stresses the importance of having specific goals when investing, whether it's hitting certain dollar amounts or achieving milestones along the way.
For me, defining my wealth goals has been a mix of short-term targets and long-term visions. In the short term, I focus on building up my emergency fund and saving for immediate needs like home repairs or unexpected expenses. It's all about stability and peace of mind, knowing I won't have to tap into my investments in a pinch.
Looking further down the road, my main aim is financial independence and a comfortable retirement. While I haven't nailed down an exact dollar figure, I do have a ballpark in mind that I think will sustain the lifestyle I want in retirement. Of course, I'm open to adjusting this over time as life throws its curveballs.
I'm curious about how you all approach your wealth goals. My main question for the group is this: How do you define your wealth accumulation goals, and how specific are they in terms of dollar amounts or milestones?
But I am also curious to see how you track your progress. Are you using tools like the PRISM Wealth-Building Process, or do you have your own system for staying on track?
Let's chat about it! Sharing our strategies and experiences could really help us all fine-tune our approach to building wealth. Looking forward to hearing your thoughts!
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Jenna Brashear
AAII Community Manager
Chicago, IL
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