Author Archives: Katie

Retaining a Positive Attitude

This country is in a dour mood in my opinion.  We’ve become a nation of complainers.  This is especially true when we talk about politics.  Starting fights over alleged issues seems to work better for politicians than asking voters to credit them for their achievement. There are so many things we should be grateful for, but we’ve gotten into a bad rut.

If one looks on the negative side of life, there are plenty of problematic issues.  Here’s my top ten, by no means a complete list:

  • President Trump tried to retain power and threatened our democracy;
  • Republicans vs. Democrats is splitting the country in and out of Congress;
  • Putin is a major threat to our world order;
  • Russia’s Ukraine invasion could continue for many months;
  • We are not doing enough to control climate change;
  • Inflation is eating into our standard of living;
  • Our race relations are still terrible;
  • Income inequality is huge and increasing;
  • COVID may be with us permanently;
  • Thousands of Americans are needlessly shot and killed.

There’s a great deal to worry about.  Newspapers, magazines and social media highlight these issues and keep them before our minds.  Technology has made us closer to the world’s problems than we have ever been, and we can witness horrific events.

But before these issues cause you sleepless nights, you should look at the issues that you can feel really good about.  Here’s my top ten, by no means a complete list:

  • We live in the U.S., the greatest country in the world;
  • We have freedom of speech and can advocate for our views;
  • We can do with our lives as we choose;
  • We have the richest and most robust economy in the world;
  • Two great oceans insolate us from wars;
  • Our climate is generally temperate;
  • Our country practices the rule of law;
  • We have freedom of religion;
  • We can eradicate almost all disease and increase our life expectancy.

If you’re feeling burdened by the world’s problems, depress your concerns and lift yourself up with things that make you feel good.  Listen to a beautiful symphony or a terrific rock concert.  Enjoy the beauty of the outdoors and get some healthy exercise.  Get with your family and friends and relax in their company.  Plan to travel to a place which will stimulate you and make you feel good.  Receive uplift from your religion and keep in front of mind all the advantages that God has given you.  Then go out and share your joy with others.

The bottom line is that the issues we can feel really good about dwarf the problematic issues.  We’re lucky as hell, and our mood should be upbeat and positive, not dour.

Louis Brownstone

How to think through the risk of big expenses for long-term care

“No retirement income plan is complete without a plan for potential long-term care expenses” published by MarketWatch 10-27-2021 By Wade D. Pfau

No retirement income plan is complete without a proper consideration of how to plan most effectively for potential long-term care expenses. However, this matter is often overlooked or avoided.

Many are unwilling to confront the questions and possibilities related to losing their own independence. Psychologically, no one likes thinking about the possibility of being unable to effectively handle the basic activities of daily living. It is a natural response to think this is something that only happens to other people.

The cost of long-term care (LTC) represents perhaps the most severe spending shock that can impact retirees. About half of retirees may be able to make it through retirement without facing even $1 of long-term-care expenses. But at the extreme, long-term-care costs can exceed $1 million. An expensive LTC situation involving years spent in a nursing home could derail an otherwise well-built retirement plan.

A lack of planning can create strains as long-term care expenses deplete household assets, bankrupt a surviving spouse, or add burdens for other family members who may end up making large sacrifices to provide care.

The default long-term-care plan will be to self-fund expenses until assets are depleted and to then transition into Medicaid. But there are other possibilities, including either a traditional long-term-care insurance (LTCI) policy or a hybrid policy combining long-term care with life insurance or annuities.

To better understand the options for long-term-care planning, the overall LTC cost can be defined as:

LTC Cost = LTC Expenses + LTCI Premiums – LTCI Benefits

This equation highlights that the overall cost of funding long-term care comprises the actual expenses for care plus any premiums paid for long-term-care insurance, less any insurance benefits received. For this formula, one may consider Medicaid payments as a type of insurance benefit that reduces out-of-pocket expenses. It is the net out-of-pocket expenses that matter.

Remember, Medicaid helps the poor and comes with its own restrictions and rules. Medicare, the source of health insurance for most people 65 and older, does not pay for long-term care.

Numerous considerations are involved in deciding between self-funding and using insurance. These include age, health, ability to receive help from family or friends without overburdening them, wealth levels and how they may relate to Medicaid qualifications, legacy objectives, risk tolerance related to the financial impact of unknown long-term-care costs, and the costs and benefits of different types of insurance.

This is a lot to consider, and it may be worth discussing these matters with a financial professional and possibly even including other family members in the discussion.

Developing a written plan and sharing it with family members can help to avoid misunderstandings about providing and paying for care. You should also ensure family members know about any funds set aside or any insurance policies designed to support care in case you are incapacitated when care needs arise. You may also want to discuss with your family about ensuring that any insurance premiums get paid to avoid unintentionally lapsing on a policy if cognitive decline begins to set in.


How much of a funding reserve is needed for long-term care depends on the types of scenarios you want to be financially equipped to handle in the future: When might a long-term care event happen, how long might it last, what will the out-of-pocket expenses for care be, how much might other budgeted spending drop if long-term care is needed, what is the inflation rate for long-term care as well as the overall price level, and what discount rate will be used to convert future expenses back into the reserve amounts needed today?

Again, these are matters that a financial professional can help you work through.

A silver lining that will help with budgeting for long-term care is that some of the money could come from other expenses falling away when one moves into an institution for care. If you are spending $90,000 on nursing home care, some other expenses in your budget would decline or be covered through the costs of care.

For couples there is the possibility that one spouse requires extended long-term care in an institution, while the other remains at home with a similar overall budget. But if you are projecting prolonged long-term care events for both spouses, at some point there may not be a family home and much of the existing budget could be redirected to long-term care. By redeploying some of the existing budget that way, the need for additional reserves may be less than expected.

Nonetheless, for those who want to plan for the possibility of handling multiple years of living in a nursing home, it may still be necessary to set aside several hundred thousand dollars as reserves to meet this contingency.

Wade D. Pfau is the program director of the Retirement Income Certified Professional program at The American College of Financial Services in King of Prussia, Penn. He is also a principal at This is adapted from his book “Retirement Planning Guidebook: Navigating the Important Decisions for Retirement Success”.

10 Advantages of Hybrid Life Insurance with Long-Term Care

You probably know about hybrid cars. But do you know about about hybrid life insurance?

This coverage combines long-term care and life insurance into one policy. Like hybrid cars, these hybrid policies are increasingly popular. That’s because they have some unique benefits.

How It Works

Most people bought long-term care insurance as a standalone policy in years past. Today, it’s becoming more common to buy the coverage as a policy that also includes life insurance.

The long-term care portion of the policy pays for care if you develop a health condition and need care. Meanwhile, the life insurance portion gives your loved ones financial support if you were to pass away.

You receive the long-term care benefit if you develop a health condition. And your loved ones get the full death benefit if you never use the long-term care benefit.

10 Advantages of a Hybrid Life Insurance Policy

  1. More complete coverage. A hybrid life insurance with long-term care policy lets you—and your loved ones—benefit from two very important coverages.
  2. Easier to get.  The medical underwriting for a hybrid life insurance policy is often more relaxed than for a standalone long-term care insurance policy. In fact, some hybrid policies only have you answer a few health questions.
  3. Flexible payment options. There are two ways to pay for a hybrid life insurance: with a lump sum or with annual payments.
  4. Tax savings. Life insurance payouts to your loved ones aren’t taxed. And premiums paid for long-term term care insurance can sometimes be deducted from your state and federal taxes.
  5. Less time and effort. It’s often easier to research, buy and manage one policy than two separate policies.
  6. Fewer premium hikes. Many people worry about cost. That’s because standalone long-term care policy premiums could increase dramatically. Hybrid policies typically offer more pricing stability.
  7. Possibility of a death benefit. Typically you forfeit the premium dollars you’ve paid for a traditional policy if you never need long-term care. With a hybrid policy, your loved ones receive the full death benefit if you never need long-term care. Some policies even guarantee a small death benefit no matter what.
  8. Option to lock in your premium. Some hybrid life insurance policies let you lock in your premium payments.
  9. Option of a money-back guarantee. Some hybrid policies return the premium paid if you decide you don’t want the policy after a set time.
  10. Ultimate peace of mind. Hybrid life insurance coverage erases worries about potential long-term care costs and helps ensure your family’s financial future. Who doesn’t need that?

Getting Coverage

A licensed insurance professional can help you determine if a hybrid or a standalone policy is the right fit and find one that works with your life and budget⁠.


There’s a great deal of publicity now about large rate increases on long-term care insurance policies.  Rates are now far higher than they were before the year 2000.  Why has this happened?

The long-term care insurance industry is less than fifty years old, and first grossly underpriced its products for four major reasons.  First, it assumed the high interest rates of the eighties and nineties which would give it high investment returns on the premiums it collected, but interest rates have become very low.  Second it assumed high lapse rates, but lapse rates have been under 1 %, so more policyholders become old and claim benefits on their policies.

Third, claims have been higher and of longer duration than originally thought.  And finally, for these three reasons, regulatory agencies have forced insurance companies to increase their reserves for claims and have insisted the reserves be invested conservatively.

The insurance companies have to seek approval from State departments of insurance for rate increases.  They must justify the need for additional funds to pay claims, not to administer the policies or make a profit.  This as been easy to do for the older underpriced policies, and some of the rate increases have been very substantial.

No one likes these rate increases, and in many cases, they were entirely unexpected when the policies were bought.  Many policyholders still want the protection that long-term care insurance provides.  They don’t want to lapse their policies after paying premium for many years. They have accepted these increases and have kept their policies intact or have reduced benefits to cushion the blow of the rate increases.

With these rate increases, the premiums today are far different than what they were some twenty years ago.  They more accurately reflect current interest rates, lapse rates, claims intensity and reserve requirements.  In addition, insurance commissioners have set rate stabilization guidelines for the industry to follow.

The result is that the rates of today are less likely to have substantial increases, if any.  In addition, there are many products available now where the rates are guaranteed not to increase.  It’s a far more stable suite of products, with a far greater degree of certainty for the buyer.

By Louis H. Brownstone

California Long Term Care Insurance Task Force

The California Long Term Care Insurance Task Force has been established with the support of Governor Newsom to implement a publicly funded long term care program.  This task force has a committee of fifteen members, consisting mostly of California Department of Insurance employees and representatives of caregiving organizations.

The Task Force has now met four times and must report its recommendations by the end of 2022.  It is looking at several programs elsewhere, but the main plan it is discussing is the recently enacted Washington State Cares Act.

The Cares Act will be funded beginning in January through a mandatory payroll tax of .58 % on all W-2 earners in the State.  This will give workers a lifetime benefit of up to $ 36,500, adjusted annually for inflation by Washington’s Consumer Price Index.

The concept in Washington and potentially in California is to provide a small long term care benefit and to encourage citizens to buy wrap-around private long term care insurance.  This would protect citizens and save the state many millions of future Medi-Cal dollars.

In my view, this noble effort got many things right in its design.  It’s a mandatory program.  It is funded by a progressive tax, so that the poor pay very little and the rich do a great deal of the funding.  Its benefits are far-reaching.  It has a seventy-five year vision, and the program can be adjusted to ensure its financial solvency.

However, there have been problems in Washington.  Citizens pushed back, as no one likes to be taxed.  Not all citizens are included and must opt-in.  Those employees who live or retire out of state will have to pay the tax but will not receive benefits.  Washington allowed a brief opt-out period for those who purchased private long term care insurance.  This created panic buying to avoid paying the tax, and the insurance industry was swamped with applications and could not cope with the business activity.

If California uses the Washington Cares Act as its model, which I believe it will, it will attempt to overcome its shortcomings.  Even with improvements, the benefits will be small and will not come close to covering most long term care scenarios.  Hopefully the Task Force will adopt a large marketing plan to recommend private insurance plans as a wrap-around to its public plan.

By Louis H. Brownstone

This Expense Could Deplete Your Retirement Nest Egg. Are You Prepared?

Hint: It’s an expense that many face but don’t properly plan for.

It’s no secret that retirement can be an expensive period of life. With housing, healthcare, and keeping busy, you might find that you spend more money during your senior years than anticipated. And for that reason, it’s important to come into retirement with a healthy amount of savings.

But there’s another major senior living expense that could catch you completely off guard. And if you’re not careful, it can potentially deplete your retirement savings and leave you miserably cash-strapped.

Gear up for long-term care

American men who turn 65 over the next few years will require an average of 2.3 years of long-term care, reports For American women, that estimate rises to 3.2 years.

Meanwhile, American men who turn 65 in the next few years will spend an average of $142,000 on long-term care, while women will spend $176,000. But unfortunately, Medicare won’t cover long-term care. And unless you come into retirement with a very robust nest egg, you might easily run down your savings balance in an effort to keep up with that expense.

So what’s the solution? It could boil down to long-term care insurance.

Long-term care insurance can substantially defray costs like nursing home care, assisted living, and home health aides. And while that insurance itself might not be cheap, it can, in many situations, pay for itself and then some.

The ideal age to apply for long-term care insurance is during your mid-50s. At that age, you’re more likely to secure a reasonable premium rate based on your age and health. At the same time, you’re not signing up to pay those premiums for too many years.

The American Association for Long-Term Care Insurance reports that the average 55-year-old man will spend $1,700 a year on premiums, while the average woman of that age will spend $2,675 per year. Meanwhile, the average cost for an opposite-gender couple age 55 is $3,050.

That said, long-term care insurance rates can vary, and they hinge on factors such as location and health. If you’re a 55-year-old man who’s overweight and smokes, you’re apt to pay more than a man that age who’s fit with no known health issues or risks. Either way, it pays to shop around with different insurance providers before settling on coverage.

Another thing you should know is that if you have funds in a health savings account (HSA), you can use that money to cover the premiums for long-term care insurance. That could, in turn, ease that burden.

While the idea of paying for long-term care insurance might seem daunting, your premium costs might pale in comparison to what you spend on actual care. Say you and your spouse wind up, as a couple, spending $3,050 a year on long-term care premiums for 30 years. That’s $91,500 — a lot of money. But if you both wind up needing the level of care estimated above, your total comes to $318,000 — more than three times as much. When you compare those numbers, long-term care insurance does read like a no-brainer.

Of course, such insurance might not cover all of your costs on an annual basis. But it could cover the bulk of them. And if you’re worried that an extended period of long-term care might result in financial ruin, then having insurance is a great way to buy yourself some peace of mind.

by Maurie Backman The Motley Fool has a disclosure policy.



The newly enacted Washington State Long Term Care Trust Act is a mandatory program which imposes a .58% payroll tax for all adult W-2 employees in Washington State beginning on January 1, 2022.  It will pay for long-term care services for a short period but lacks the following benefits when compared to private long-term care insurance:

  • No portability outside Washington
  • No inflation protection greater or less than the Consumer Price Index
  • No premium discounts for partners and spouses
  • No cash benefits
  • No shared care benefits
  • No Partnership protection

There is only one way to permanently opt-out of the Long Term Care Trust Act and its new payroll tax:  you must have other long-term care insurance in force before November 1st.

The Trust Act program could be less attractive to many when compared to the Washington Partnership for Long Term Care, a public/private plan.  This plan is also endorsed by the State and contains many features and benefits not included in the Trust Act.  You may want to compare the two programs, especially if your income and asset levels are above average.

For many, this Act will motivate you to create a long-term care plan now.  Learn about your options so that you can make an intelligent decision.  Contact us through this website or call 1-800-303-1527

Life Events That Trigger the Long Term Care Planning Decision

We wanted to know why people purchased long-term care
insurance when they did. What was going on in their lives
at the time? Was there an event that triggered a buying
decision? We discovered two important reasons people
bought their policies when they did – they were either
getting ready to retire or they knew someone who had
experienced a long-term care situation.
Retirement – We found that either planning for retirement
or entering retirement was a primary motivator for most
people. Those nearing retirement seemed to know it was
time to start planning for the future.
“I was retiring and I felt it was time to do it.” per policyholder
First-hand Experience – We also discovered that many
people were influenced by a loved one who needed longterm care services. This first-hand experience with a longterm care situation made many people say, “I don’t want
that to happen to me.”
“I’m going through it with my mother right
now – trying to pay her bills and make sure her
money lasts as long as possible. It just gives me
peace of mind to know my kids won’t have to
take care of me.” per policyholder