Category: Alliant Webinars

Good evening everybody. Uh thanks so much for joining us today. Uh we’re presenting the home stretch. Seven things you need to do in the decade before you retire. Uh my name is Christian Chaplua. I’m a financial consultant here at Alliance Retirement Investment Services. So we work with uh clients members throughout the United States. Uh I work primarily with folks on the West Coast. Uh so welcome if you’re joining us from California, Hawaii, um Washington State, other parts of the country. I’m going be talking about the home stretch today about saving for retirement some ideas around um you know saving for this great milestone and uh it’s kind of a marathon for many of us where we’re saving diligently and contributing to our retirement accounts and uh there’s just you know a nice checklist here to uh for you to think about in terms of the decade before you retire and um how to how to maximize your your savings, how to think about your road map to retirement and uh some other ideas. So hopefully you enjoy it.

Uh before we get started, I just want to mention this presentation intended for educational purposes only. It is proprietary. Uh we work really hard and would like to just protect the integrity of our content and um ask that you do not rec record, reproduce, distribute any part of this presentation includes video, audio, screen capture, AI tools without any consent. Uh so by continuing in the webinar participating today, you acknowledge and agree to these terms. So very much thank you for your cooperation.

Uh we’ve got a couple good webinars coming up as well. Uh so we’re going back to our regularly scheduled time 2 pm uh on August the 13th. We’re going to be discussing Roth IRA conversions. Uh so you’ve thought about a conversion want to know about uh you know how how to make that decision and all the variables to think about uh please do join us. So Thursday, August the 13th at 2 p.m. Pacific our regularly scheduled time. After that, we’ve got the tax planning changes scheduled for August the 20th. Again, 2 p.m. Pacific. Uh, so just thinking about tax planning, retirement planning, how it works together again to optimize your overall strategy and financial plan. Hopefully, you can join us there. And then uh just a quick slide on how we can potentially work together, how we can help you. So we offer uh financial planning both basic planning which is no charge advanced planning which we ask for a client relationship then there’s also estate planning available to you uh help you with your living trust your will medical directive uh as a client that’s offered to you complimentary no charge and then um of course we uh we offer investment management portfolios other product strategies income strategies whether dividends annuities market link CDs all the above. So, as you’re thinking about the presentation today and uh any areas that we can assist you with, uh give you a chance a little bit later on to uh sign up for a meeting, ask any questions or perhaps get your financial plan completed.

In addition to our webinars, we’ve also got our investy podcast which is u u about 20 20 25 episodes that are available on our website. Uh lots of different topics. Uh also we’ve got our blog uh information articles uh so if you have a chance do check it out.

Okay for many of us uh you know retirement it’s kind of like a a marathon uh a bit of a race and you get to the point in your career where uh you start to see the finish line. So today we’re going to go over the seven things that you need to do uh in that decade before you retire as you approach the the finish line. And my hope is uh that you’ll be able to identify some of the hurdles, some strategies for success uh so that you feel better prepared as you uh head towards the the home stretch and ultimate retirement. Here are the seven things we’ll discuss today. So number one, determine when the time is right. Number two, take aim at your retirement target. Uh three, maximize your nest egg. Number four, think about a portfolio checkup. create a social security strategy. Uh also, you know, think about an income stream in retirement. And then lastly, uh just looking beyond the money.

So, one of the first things you need to do when preparing for retirement is think about when the time is right. Uh we’ll look at a bit of history just to kind of get some perspective. Uh Ottovon Bismar, he was the chancellor of Germany in the late 1800s. He’s often credited with the idea uh the concept of creating uh of retirement. So to help combat pressure from opponents during a period of high inflation, high unemployment, Otto implemented what was called the old age and disability insurance law. This law provided state pension for anyone who reached the age of 70. Funny thing though is that not that many people actually took advantage of the program and the reason is because at the time uh average life expectancy was only 43 and a half years. So certainly had a big cushion in terms of uh payments and cash flows to retirees. Uh but here in the United States, social security um is a little bit different. you know it was in introduced in 1935 and initially defined 65 as the retirement age not 43. So just more you know more clos uh closely related to reality. Um you know today uh the age of retirement has remained largely unchanged. Uh but life expectancy has increased to almost 80 years. You know someone for someone born in 19 uh sorry 2026. So early on someone would have been lucky to reach uh retirement age. Today uh people will easily spend 20 years or more living uh in retirement. So uh just got to rightsize all of this um uh retirement planning. We think about what age you you’ll retire. Um the critical question you know for retirement uh it’s not that easy to answer. Uh so um there’s different research groups available employee benefit research institute. Um they asked workers over 25 to estimate when they’d retire and uh some of the results were pretty surprising. Uh over half of workers expected to retire at age 65 or later it turns up. Uh but the majority of retirees, 60% uh retire report retiring earlier than 65. So, we have a situation here where, you know, people think that they’re going to retire later, uh, but they’re retiring, um, earlier than 65, earlier than they thought they were going to. Uh, the median age of retirement is 62. Uh, so that’s kind of the middle number. Uh, 30 32% report retiring before they turn 60 actually. Uh, so there’s lots of reasons, you know, people retire early or differently than what they expect. Uh personal health issues is a big uh is a big factor there. Uh job loss, downsizing, involuntary uh work issues, that’s another reason. Um early retirement sometimes. Uh so in the end, you know, for most retirees, uh the reason for retirement is kind of beyond their control. And so that’s something just keep in mind as you plan for uh retirement later on.

It’s good to know that we might not retire exactly when we plan, but uh when question is when do people actually retire and this chart is based on Franklin Templeton retirement income strategies. Uh it was a survey done about uh four years ago. It shows the largest cohort of people ultimately retire between age 61 and 65. Uh so u as you think about the right time to retire for yourself for your family you know think use this information as a guidepost but uh don’t use it as kind of absolute numbers. Know that there’s variation in the numbers. Know that there’s variation in your forecast especially with uh time and uh the more time the more variation. So you may have to make some adjustments along the way. You know, life has a tendency to send some twists and turns our way. Uh but the you know these are some statistics on you know when people are retiring and again 44% retire kind of uh between the age of 61 and 65.

Let’s talk about couples for a second. So, one important factor to consider when it comes to deciding when to retire is whether you need to plan as a family, as a couple. Uh, so we’ll look at an example here. So, imagine um our happy couple married a few decades ago in 1984. The average man um first got married when they were 25. For women, it was 23. That resulted in marriage gap between the groom and the bride for about 2 years. Um while the average age between men and women today is um maybe a bit older, the age gap has remained uh you know roughly about the same. It’s about 2 years. Fast forward to the day um that the husband is maybe ready to retire at age 65 possibly. If his spouse is not covered by a workplace medical plan and is younger than 65, uh one thing to remember is that she won’t be eligible for Medicare. uh and the family will need to pay out of pocket for healthcare insurance. Um husband might be going on Medicare but two-year age gap uh the wife might be uh needing some supplementary health insurance until she reaches age 65 is able to go on health care also on Medicare also. So again moving uh moving ahead in time um when you know he reaches age 82 which is the average life expectancy for a 65 year old man um at that point husband possibly passes away his spouse will be living on her own. Uh so the average life expectancy for a woman uh age 80 is about um 9 years. Uh so women may live nine years or more on their own. um you know that’s almost a decade and so you know although these are just the averages it really depends on the person their health status kind of you know their longevity their family situation but these are all some just you know concepts to remember you know as we age as we hit these milestones and uh and and further into retirement into our 70s 80s and 90s

talk about some important milestones here so uh you want to be prepared for uh all these ages uh from starting ketchup contributions at age 50 to you know thinking about when you have required minimum distributions in your 70s um it’s you know a lot to kind of remember and a lot to do uh but it’s definitely possible you can manage this um we’ll talk more about some of these milestones throughout the presentation but I’ll quickly summarize so age 50 that’s when your catch-up contributions begin for your IRA and 401k age 55 5, you’re eligible for some early distributions from your current qualified employer plan. Uh you can make make uh health savings account catchup contributions. Age 60 is when uh widows are eligible for social security. Uh age 59 and a half is when your full retirement age for qualified plans occurs. You can withdraw penalty-free. Age 62 is when social security benefits begin. 65, like I mentioned earlier, that’s when Medicare starts. Plus or minus three months is when you’re going to be filing. Uh it just depends on whether or not you work for a large company or small company. Uh age 67, that’s full retirement age, when you get your full pension from social security. Age 70 is when you get maximum social security benefits. And then lastly, age 73 to 75, depending on the year that you were born. That’s when those required minimum distributions begin. So again, lot to kind of keep track of over the years, but you’ve got lots of time. So uh the first part of our presentation discussed the timing of retirement. We’re going to look at the next biggest kind of question. Uh you know, how much people uh need to retire just taking aim at the retirement target. So the first rule of thumb is that you’ll need to save around 70 to 90% of your pre-retirement income. Um you might need uh less in retirement. you know, certain costs possibly are going to go down once you retire. Um, this is a rule of thumb. It’s not for sure, but perhaps you’ll finish paying off your mortgage. Uh, less, you know, commuting, dry cleaning, work clothes. Uh, people spend less possibly on food because they have time to prepare meals. Uh, but these, uh, you know, reductions are offset by some other things, some other costs that might go up in retirement. So, um, many retirees are no longer covered by a workplace medical plan. Uh, with Medicare premiums, co-pays, they could rise as you age. You might need more health care. Um, you might be spending some more on travel or maybe at home and your utility usage is increasing. Um, and then there’s possible home maintenance u with more wear and tear on the home. So, these are all costs that can go up and down. And then, you know, there’s some costs that can go away. um that might be social security, um payroll taxes, and then um you won’t be taking any money out of your paycheck contributing to your retirement account because you’re in retirement. Uh so these are all the things to kind of think about, remember um and this is, you know, these are the biggest reasons that uh people tend to spend a little bit less in retirement. So kind of on average 80%.

Second rule of thumb is that you should save multiple of what your salary is by a certain age. So let me show you what I mean. As you get older, you should have a higher multiple of your salary save for retirement. So for example, if you’re making $100,000 at age 55, you should have retirement savings around six to eight times that or maybe $600 $800,000. Um, you know, by the time you hit that milestone. Uh so take a look on the chart, see where you fall, see what age you are, how much you’ve saved. Um you know, keep in mind these are just uh guide uh guidelines. Um if you’re ahead of this, if you’re behind, um that’s okay. Um obviously if you’re ahead, that’s a good thing. If you’re a little bit behind, that’s okay. Uh you can, you know, do different things to kind of catch up and uh put yourself in a better spot. There’s always something that you can do. uh lots of different levers ideas that uh are available to you. Third rule of thumb uh you know you want to save enough to generate a 4% withdrawal rate. So this is kind of a classic rate of withdrawal. Um this third rule of thumb is that you need enough retirement savings to generate a desired level of income with a sustainable withdrawal rate. So you know let’s look at what that means.

So, if you would like to have $25,000 in annual income, um that would take a uh retirement savings um of about 545,000 with a 1 and a half% return. Uh so, the more that uh that goes up, that rate of return goes up, the less you need uh to save. So, you know, over 20 years with a withdrawal rate of 4%. Um, you know, again, thinking about that $25,000 income. Uh, if you’ve got a 5% return, then your retirement savings required is 391,000, which is a lot less. So, this is the reason you want to stay invested, be invested. Um, you can see the numbers for 50,000 or $100,000 in desired annual income. Um, and it’s a big difference, you know, 25% difference between the two numbers. So, you know, this is a big big reason people are contributing to their retirement accounts uh because then they’ll need less in retirement uh and still maintain that uh annual income level.

Depending on the withdrawal rate, your portfolio may last longer or shorter um versus expectations. So this chart shows with uh about a 95% probability how long a hypothetical you know 6030 portfolio 603010 portfolio would last given various different withdrawal rates. So again the 4% is the kind of general rule of thumb out there. If you’re withdrawing more um then your your uh portfolio your retirement account is going to um um the lifespan is going to be shortened. Uh so again uh the less you withdraw uh the longer that you’ll have in terms of income.

Here are several different uh kind of annual withdrawal rates. Again, um you know, assume if you’re retired, you have a savings invested, something conservative, returns 3% per year. To provide that desired annual income, uh amount for 20 year, including inflation, you need to have a minimum 476,000. Um instead of a 3% return, if you get a 6% return, again, just to kind of, you know, make sure everybody is thinking about this, understand this, um you’ll need about 365,000. So again, um you know, these are all just general numbers, rules of thumb. Um but really depends on, you know, how much you have invested, how long that’s invested for, and the rates of return.

Okay, that brings us to uh topic number three, uh maximizing your nest egg. So, here we’re going to look at a hypothetical couple um looking to maximize their nest egg as they age. Um this couple um they’re 50 years old. Uh he’s an engineer. She’s a retired teacher who does volunteer work to together they earn annual income of $150,000. So, when it comes to saving for retirement, I mentioned that there’s lots that you can do um especially if you have time on your side or if you decide to work a little bit later. uh lots that you can do in terms of saving for retirement and one of the most common ways to do so is through a workplace plan such as a 401k. It gives you a bigger amount to save and often you get a match. So here are the 2026 maximum annual contributions um amounts for you know different plans 401k 403b 457 it’s 24,500 uh simple 401k 17,000 the sea you can contribute up to 72,000 if you’re se self-employed assuming that the working spouse participates in a 401k um you know they have a contribution of 24,000 and in addition many employers offer a matching So, for example, uh possible company match is 50 cents for every dollar up to 6% of your total salary. That would mean an additional 4,500 of additional contributions to your retirement plan each year. And here’s where kind of uh you know, time can work on your side uh as you get older. If you participate in that workplace plan, you’re 50 or older, you can do what’s called a catch-up contribution. So, uh, catchup in this example means that, you know, they can contribute an additional $8,000 in 2026 to the 401k plan. And many people assume that if you participate in a workplace plan, you’re not eligible to save using a IRA, an individual retirement account. This is sometimes the case, but not always the case. If your income is under the limits listed here, you can also participate in a traditional or Roth IRA, even if you’ve already maximized your 401k contribution. So, there are some income thresholds here. Um, if you’re with, you know, on the lower side of it, then you can still contribute to an IRA. So, for example, since our couple is married, has income less than 252,000, the working spouse can contribute 7500 to a Roth IRA.

And just like the 401k, those 50 and older are eligible to make a catch-up contribution of $1,100. Another way to save is through a spaso IRA. Even if one spouse doesn’t have earned income, the working spouse can contribute to an IRA on their behalf. Spousal IRA also has income limits, but as you can see, because our couple’s combined income is less than $240,000, they can add another 7500 to a Roth spousal IRA. And because both spouses are 50, $1,100 ketchup contribution can also be made. So this is adding up pretty quickly. Of course, you need the budget. Of course, you need kind of, you know, the salary kind of lower spending, but there are ways that you can uh, you know, maximize your your retirement account um contributions. And you can see here that it all adds up to $54,200.

And then if our couple was able to take advantage of every opportunity that uh we described, they could save, you know, $51,000 a year maybe in a tax advantaged account if they do that for 15 years and earn 6%. Um they would have an extra or one over $1 million in their retirement nest egg, you know, not including things that they uh contributions that they made earlier on. So you know again um this is only what they are saving in their tax advantage retirement accounts. You can save in your savings account. Uh again they might have previous savings retirement contributions. Uh but this this gives you the power uh shows you the power of saving of kind of using the um the retirement uh accounts to the maximum. And uh again a nice nest egg here of over $1.2 million.

This brings us to number four, getting a portfolio checkup. So, uh, today’s workforce kind of more mobile than ever. Um, Bureau of Labor Statistics recently found that workers, um, you know, born between the, you know, 50s and 60s switched jobs an average of about 12 times by the age by the time they were age 50. Um, you know, with that being said, you know, many people have uh accounts out there uh 401ks or workplace plans or IAS uh that they might have uh just not kept track of. So, you want to kind of just be mindful of that. Make sure that you’re keeping track of all your retirement accounts uh especially if you’ve switched jobs more than a few times. um and you know you might have been encouraged to to contribute through uh matching programs and things like that. So uh it’s important to get accounting of all these statements where your accounts are and uh and organize them so that they’re working for you uh the best way possible.

Consolidation is an idea. Um with multiple retirement accounts, it’s you know it’s hard to get a a real clear picture of your overall asset allocation. Um, if your retirement account at your current employer look something like this, you know, 40% bonds, 60% stocks, you want to compare it to what your other accounts might be. Also, um, if there’s some accounts left behind, your asset allocation might be different. Um, you want to optimize that. You want to just keep track of it. You know, those are your funds. You want to maximize that and and keep track of, you know, previous employment, pre previous retirement accounts. And uh again, you want to combine it all, simplify, make it easier to keep track of. Um you know, and then change your asset allocation possibly. Um with this example, you know, the person opted for more equities, more stocks, try to increase the rate of return. Um but again, those are the benefits of just uh you know, making sure you’re doing the accounting, the auditing, find all your accounts and and uh optimize your asset allocation. Here’s an example of just kind of uh you know what to think about and um you know where you might be at in terms of your equity or your bond allocation. Um you know deciding how how many stocks to own uh the ratio of stocks versus bonds is a personal choice. You know the worst thing that you can do is kind of jump around. Um, you know, if you have too much invested in stocks and you know, you’re nervous about that, sometimes the, uh, the temptation is to jump around. And, um, we’ll give you an example here of, um, you know, why that’s a bad idea, why you want to stay disciplined, uh, um, with your retirement accounts as a best practice um, so that you’re not kind of messing things up. So, let’s assume 1999. You’re three years from your retirement age. You have $900,000. Um, and your goal is to reach a million. You’ve done well with your stock portfolio here. Uh, but you’re getting a little bit more nervous. Uh, you want to continue contributing at the pass rate of about $10,000 per year. Um, so, you know, let’s look at this example. You know, you’re looking at a 8% uh rate of return assumption possibly. Um you might even start to think about retiring early. But uh you know if you go through a bad spell, if the market goes through a bad spell, um there might be some nervousness on on the part of the you know retirement planning because all of a sudden that $900,000 falls to um you know around $600,000 which is a $400,000 shortfall. Uh so you know kind of a you know bit of a stumble be before the end of the race before you hit that retirement. Uh but this is only one point in time you know there you know you’re going to be in retirement for many years. Um so it’s important to remember that uh not do anything harsh. So all the you know the account dropped um you know you might change your asset allocation um you know from 100% stocks to maybe a 50/50 portfolio. Um there’s different things that you can do. Um here’s you know an example of you know maybe reduce volatility by having a more diversified portfolio. Um so but this is different for everybody. Some people have the kind of stamina wherewithal to kind of stay invested even though they’ve got you know a draw down of 30 40% because you know better times are usually ahead and they’re able to recover. Um so in our example here um you know it was it took longer for the stock portfolio the all stock portfolio to recover. Uh but the important thing is that they both recovered over time and uh you know we don’t have any forecast past uh you know the um the last year but um you know the important thing is stay invested um and just make sure that your asset allocation is right for you and you can withstand the volatility.

Don’t want to jump in and out of the market like I mentioned. Um so we’re going to take another example here. Um, pretend it’s 2007 global financial crisis. Um, you’ve got your 50/50 portfolio. Um, and you decide to jump into tea bills, into treasury pills. Um, you know, that feels good for a time, but um, you know, jumping into the market in and out of the market again can be very bad for your retirement account. Uh, if you stay invested in that T bill account, you’re going to have a lower rate of return. Uh but if you kind of keep with this stock uh portfolio, you’re going to bounce back quicker and um then you’re going to be able to get to your million-doll target much more uh much sooner. So this is a kind of, you know, just a warning not to kind of jump in out of the market, stay invested, find the right asset allocation, and uh avoid going to T bills in and out because it’s really hard to kind of keep up and and catch the market when it rallies.

Let’s talk about a little bit about estate planning. Uh updating beneficiaries. Um that’s an important thing to think about when uh you know as life changes as we all age. You know maybe the family’s changed, maybe you know there’s a divorce or a new spouse. Um make sure that you’re up your beneficiaries are up to date. Um you know children come can come into the picture. um grandchildren could come into the picture. And then also you want to make sure that you’re kind of just utilizing uh any trusts that um you might need. So a living trust um is a very common thing to uh to have if you have real estate. Again, we can help you with this estate planning. Um if you’re interested

social security strategy uh you want to make mindful of that as you you approach social security age.

Uh so there might be some changes to social security in the future. Uh you know we’ve been monitoring the social security trust fund for decades. um you know from the 80s to the 2020s you know the revenues exceeded um you know the benefits paid out uh there was a surplus it was it’s called the social security trust fund and it was built up over you know those years and it’s total about 2 2.9 trillion 2.9 trillion at the end of 2021 but uh you know social security began running a deficit uh in that year and uh is using about 57 billion from the trust fund to help make up uh for those benefit payments. Uh so social security running a deficit now. Um and the trend is actually expected to accelerate into the future as more baby boomers retire. To make up for future deficits, um social security is going to continue to draw from the trust fund uh to pay for those flow benefits that are promised. Uh current estimates predict that the surplus will only last until about 2033 2034. Um, so you know, keep this in mind. You know, watch uh for headlines, keep up to date on uh the news. Um, you know, Social Security will be here for us down the road. It might change. Um, and there’s things that Congress can do. Um, you know, lots of different options. Um, one option is to make the make up the gap, increase payroll taxes, um, in order to kind of fund Social Security. Uh, it’s going to be a hot topic. Um, but again, it’s going to be there for us. It might change, but uh, or contributions might change or the full retirement age might change. Lots of different choices that are available.

You know, your full retirement age, um, it’s something that you need to know. So it’s basically defined by social security administration and it depends on the year that you were born. Uh you can see that anyone born 1956 or earlier has already reached full retirement age. Uh those born after 56 um you know there’s a sliding scale until uh 1960. Anyone born uh 1960 or after has a full retirement age of age 67. And your full retirement age is important because it’s the age at which you are eligible to receive your full social security benefits. Um you don’t have to wait until full retirement age. Um you can you can claim uh but doing so comes with a penalty. Your your benefits are reduced the earlier that you claim social security. Um and the earliest that you can claim is age 62. Um you can file for benefits anytime between age 62 and age 70. And um you know the longer you wait the more that you’ll get in 2026. These are the maximum amounts a person um could receive in social security retirement benefits from age 62 to 70. Uh to qualify you’ve needed to a very high income for a very long time hitting the social security payroll tax cap for 35 years. You can see that delaying the start of social security benefits would increase the amount of monthly income you generate. Uh it’d be nice if we all qualified for maximum social security. Uh but you know most people uh many people don’t u for someone with a history making average income in the US. You know these are the monthly average social security benefits um that one would expect in 2026. Um notice that the older that you are when you start taking social security, the higher the benefit amount. Um so that’s one kind of uh uh tactic to use. You know, wait till full retirement age or wait till later, receive a bonus uh if you decide to uh file at 68 or 70 uh and to red and to receive more income. And the more that you earn at work u the less social security will replace. So, you can see from here um that if you make $50,000 a year, Social Security is designed to replace about 50% of your pre-retirement income. If you move further out uh to 150,000 in income, Social Security will only replace about 32% of your pre-retirement income. So, how much you’re making before Social Security, what your budget is, all all these things are important in terms of retirement planning. Uh again, Social Security not likely to disappear. uh but you want to kind of work on your financial plan. You want think about social security kind of holistically with your other uh savings and your other assets or pension income, retirement, rental income, whatever you have. And uh again, put together a financial plan so that you know where you’re at. And then lastly, you want to think about an income stream um in retirement. So uh some people utilize you know CDs um money market accounts um you know there are other vehicles bonds investment grade bonds high yield bonds um you know these are some 10-year averages um in terms of monthly income um these rates look a little bit lower than they are today because rates have gone up uh you know 10-year bonds around 4 and a.5% right now um so interest rates are going to change um you The amount of income you get from these different securities and asset classes will be different. But these are some kind of perspectives. Somewhere around inflation is what a fixed income account is going to pay. So basically two and a half, three, maybe 4% is what you can expect from many of these different uh uh fixed income portfolios. Another strategy for creating a stream of retirement is to take out systematic withdrawals. Uh that’s when you sell a small portion of your overall retirement portfolio at intervals to generate income. So imagine you had about $500,000 in your retirement account, purchased a 100,000 shares of an investment, five thou $5 per share. um just uh you know thinking about sequence and uh timing of withdrawals uh withdrawing $1,500 per month um selling shares as you go and then you’re going to deplete your balance as uh as time goes on. So um you’ll have some good months, some bad months uh where things are going assets are going up and down. Um but this is an idea in terms of like uh uh generating income from growth versus uh income from fixed returns.

You know each of the kind of ideas that we present today um you know again they should be thought through in terms of your overall financial plan. Um, you just want to look at your income producing assets. Um, you your growth strategy, your your withdrawal plan, uh, combine them both. Um, and just, you know, see see what it looks like. You might have a dividend strategy, you might have an income annuity, all these different things. Um, and you might have a growth portfolio. So, in the end, um, just map it out. Look at your asset allocation. you know, work with us, work with a planner, uh, to get get an idea of what you’re going to have, you know, over time, if you’re going to be okay, u, and get that financial plan just kind of, uh, you know, in good shape so that you know what to expect. And lastly, um, you know, make sure you’re thinking about, uh, you know, not just the money. Uh, look beyond the money. Uh, you know, personal finance is more personal than it is financial. Um I know that having worked with uh clients for the last 15 years and uh this is an example of a human happiness curve. You know you can see that happiness tends to decline as you get into your you know 40s and 50s but um you know things get better in terms of sentiment and happiness as you age into your 60s 70s and 80s. um you know, lower stress, um more time for yourself, uh just wisdom that comes with age, all these reasons that people tend to get happier as they get older. Um hopefully you’re in good health, you know, maximizing, uh walking, uh going to the gym, exercising, you know, having a community, having friendships, having family around you. Uh all these things will increase your happiness. and um and just having something to live for. So, think about again, you know, what you’re good at, what you love, what the world needs, what you get paid for. Maybe if you volunteer, if you work part-time, all of these things, it’ll help you with retirement, being more content, being more happy. Um, you can contribute to a cause and volunteer, you know, spend time with family and friends, contribute to the family, have a hobby, travel, go to school, go back to school, all of these things are an option. Um, and all can be done cost- effectively and lots of amazing things are done by lots of amazing people in retirement. uh whether that’s uh starting a business or uh running a marathon, climbing Mount Everest, you know, there are simple examples. Just gardening is uh is a very worthwhile endeavor. Um and this is a great quote. You know, retirement is wonderful if you have two essentials. Um much to live on and much to live for.

So with that, it brings us to the end of our presentation today. Um, I’m going to launch a poll uh in a second in case you want to ask ask some questions. Uh, schedule a meeting. I can help you with your retirement um retirement plan uh estate planning. Um, but kind of just to summarize this is uh you know what we discussed today. Uh, number one, determine when the time is right. Number two, you know, take aim at that retirement target. Think about how much you need, what your spending is, and what you might need in retirement. uh maximize your nest egg, you know, asset allocation. Combine all those accounts. Uh make sure that you’re getting a portfolio checkup to uh optimize and uh you know, stay invested. Stay invested in the market. You know, think about income. Think about your social security that might be coming in. Um and think about your income stream, whether that’s coming from dividends or a portfolio or a growth strategy, an income annuity, rental income, all of the above. Um and then have a plan for uh enjoying your hard work uh enjoying the the money and the success um that you’ve worked so hard for. Um and look beyond the money and some you know your your family or community and all those other things.

So again my invitation to work together um these are all the ways that we can work together. So think about your financial planning questions, social security, pensions, cash flow management, Roth conversions, all of this is available to you. Um estate planning like I mentioned and then we have active passive strategies. Uh we have no fee options and strategies available to you. Uh lots of different uh combinations and and ways to uh diversify your assets and and get a good return. Then lastly, here’s a slide for the trusted will program. Um, this is available to clients no charge. Uh, get your living trust done, your will, your power of attorney. Um, very important for all of us, no matter what age you are. Uh, and update your trust uh, and your estate planning if needed. Uh, and then we could help you with that. I’m going to launch the poll now. So, if you have any questions, um would like to schedule a meeting with me, take advantage of these great u uh solutions and strategies and and product offerings that we have, then please do book a meeting. Uh look forward I’ll reach out, we’ll schedule that and uh and get together. Uh we always have a great participation, so uh hopefully take us up on it.

Okay, here’s my contact information. Uh, with that, if there are any questions, please do put it in the chat. I’ll just go over a couple things while I’m waiting for any questions. You can put in the um Q&A or you could put into the chat. We’ll give you a couple minutes. Uh, thanks everybody that’s uh signed up for a meeting. Got a great response today. Uh, so if there’s anybody else then please do sign up. Also, this is my contact information. My cell phone number 213-320860.

That’s my direct number at work. I’m a full-time employee of Align Credit Union. That’s my work number. This is my email at work. Uh first initial, last name at lioncreditun.com.

Right. Great. Uh first question that people posted, will this deck uh be sent to us? Um unfortunately not. Uh sorry about that. For compliance reasons, um this deck is proprietary. We pay for it. Uh so we don’t disseminate it. Um, unfortunately there’s other folks that use it in financial services and uh, so we ask that uh, people contact us. I could take you through any one of these uh, concepts or ideas or remind you. Um, and then the most important thing is get your financial plan done. Uh, so sorry about that. We do not uh, send out the deck. Uh, we ask that you kind of just um, participate in the webinar. We always repeat these webinars on a regular basis. So, uh, you can sign up for the next one. We’ll go through this again. Uh, but again, we’re always available. Highly encourage folks to call us and here’s my direct number. Uh, so, um, to answer your question in terms of the deck, um, I’m just going to talk a little bit about estate planning again. Um, you know, one thing to remember on top of this is, uh, digital estate planning. It’s kind of a new concept in the last 10 years, but many of us have digital assets. Um, you also want to kind of take advantage of that. So, uh, friendly reminder like your frequent flyer miles, um, you know, any digital kind of currency, Bitcoin or other, um, you want to make sure that that is accounted for in your, uh, in your estate planning and make sure that you’re working as a team when it comes to estate planning. Um, your spouse has an idea of where your assets are if you’re the primary kind of financial person. Uh, because anything can happen. uh you know working in this job uh we meet lots of folks, lots of great folks and but unfortunately every year um you know someone passes away uh unexpectedly and u you know you want to make sure that you’re prepared so that your family is protected. Uh that’s the general kind of uh message there. And then um you know lastly uh not a lot of questions tonight. Everybody wants to go for dinner probably but uh again these are all the things that are available to you. U this is our value ad. Uh you know our goal is to give you increased confidence. So uh if you’re ever interested hopefully you’ll be uh continuing to sign up for our webinars and um and then be able to uh uh set up a meeting in the future. You know with that I’ll let you go. Um and thank you again for joining us. Uh it’s uh you know we we offer these in the evening sometimes and uh get a different group. Uh but look forward to seeing you at our next event, our next webinar. Uh we offer them on a weekly basis. So really appreciate the support in the community. Uh have a great evening and see you next time.

Hey, welcome everybody. It uh we still have another couple more minutes before the top of the hour. So, we’ll uh wait until then so that uh other people that um uh want to join us that they can still join us. I hope everybody’s having a wonderful day. Uh I uh nice and sunny out where I’m at, but very very smoky. Uh I live in Utah. Um, a lion allows me to work out of my house. So, um, I live out here in the, uh, near the mountains. I love the mountains myself. So, but anyway, I hope everybody has some good plans for this, uh, upcoming weekend. We don’t have a holiday until next month, I believe. Is it uh,

Labor Day in September or Veterans Day? I always get those two days mixed up. Anyway, we’ve got those coming up here. But, uh, I hope everybody’s having a a wonderful summer. It is hot here. We are in the, uh, hundreds. Uh, I think it was like 103 recently here, but I don’t have the humidity that I used to have in the Midwest. I’m so grateful that I don’t have that humidity here. And the cool thing about in Utah is if it’s hot down in the valleys, then I can always run up into the mountains and cool down a little bit. So that’s uh that’s one of the benefits that I have uh that I love about being in the mountains here. I love the Rocky Mountains. Um so anyway, all right. With that being said, let’s go ahead and get started here. Uh before I open this up, let me just go over a couple of different things real quick. So, as I go along with this presentation, uh if there’s any questions that you might have that, uh pops up in your mind, please feel free to write those in the chat or the Q&A. Uh I will get to those at the very end of the webinar. Um, I would recommend everybody stay to those questions so that maybe somebody else has a question that uh might pertain to you that you might not have thought of and uh hopefully we can all uh learn from from this and uh share this with other people as well that um maybe not knew about this webinar. So, excuse me. With that being said, let me go ahead and get started here. Let me share my screen here.

screen one. Perfect. All right. So, the home stretch things that you need to do before uh retirement. So, let me talk a little bit about this. So, again, my name is Bernell Baker. I’m with Alliant Retirement and Investment Services, the division here at Aerys. And uh I’ve been with the company with the credit union here for about uh I think going on 14 years here uh here in a couple of months. I love working for the credit union. I hear constantly all the time on how much the um uh the credit union has helped out people and how they enjoy it. And I working for the credit union is even better. Like I said mentioned earlier, I work for my house so I’m able to do that and it’s just a it’s a great company to work for. I joke with my boss all the time that he stuck with me uh for the next uh 12 years whether he likes it or not. Uh and so far they like it. So, it’s uh it’s been a good fit uh and everything. So, with that being said, let’s go ahead and get started here. So, this presentation is really intended just for educational purposes uh and it’s proprietary here for the uh for the Allian Credit Union. So, we ask that you don’t record anything. Um unfortunately, this is not being recorded on our end either. I do get that question quite often if the slides are available um afterwards and they are not. Uh so let’s uh so with that we’ll go ahead and get into this. Here are the different websites that we have for the credit union here. You know we have these webinars that are complimentary to everybody here and even if you uh do sign up to this you can ask actually pass this on to other people that may not be a part of the credit union and we uh open these up to anybody and everybody as well. And we also so here at Alliant Alliant Retirement Investment Services, we can help out in so many different ways as far as your getting close towards retirement and things that you need to do in retirement. And we do different estate plannings to help our members out. We’re a full-fledged financial uh service uh uh division of the Atlantic Retirement Investment Services. We’re we’re proud to offer the interest rates that we we have for our savings and our certificates. Uh but there’s so many other things that we have that are available. Then some of those things you just can’t get on your own if you’re doing your own investments. And they’re really cool at that. So with that, let’s go ahead and get started here. So, if you’ve ever watched a race or participated in a race, you know, especially if it’s a long distance uh race, the last thing you want to do is get closer towards the end of the race and then uh stumble. You know, you want to build up uh momentum and speed going into the final stretch. Same thing as retirement. You’re getting close to retirement. Hopefully, uh many of you are. If you aren’t just yet, you will be at some point in time. And you don’t want to stumble and fall at the very end. So, you need to have a plan put together going into retirement so that you can enjoy retirement and um and be confident to know that you’ve worked hard your whole life and now that you have more time to be able to do things, hopefully you’ll have the money to be able to do those things as well. So, this is the seven different topics that we’re going to be talking about here. And let’s just go ahead and get into it. So determining when is the right time to retire. So the godfather of retirement was a gentleman by the name of Otto Bon uh Otto excuse me Bon Bismar sorry

and he came up with a concept of retirement. He was in Germany at the time and he put the age of 70 for retirement and that was back in 1890. Now the problem with that though was his life expectancy was about uh 43 44. So it’s easy to say okay everybody can retire when you’re at 70 when your life expectancy is almost half of that. You know here in 2026 here our retirement age depending on what uh when you were born and everything is anywhere from uh 60 uh now it’s either 65 to 67 is your full retirement age. But we have a much longer life expectancy than they did back in the 1890s. And there’s many people that uh in retirement, they are living in retirement 20 plus years. If you’re married, there’s a very good chance that either you or your spouse is going to be around for 20 25 years plus. So there was a survey that went out and said at what age do people think that they’re going to retire? Uh most people said anywhere from 60 to 65 and you can do that again with at 65 years old you can go on to Medicare and um and get your insurance. That’s one of the biggest costs that people uh take into consideration when they go to retire is where they’re going to get their insurance from. And you know if you retire prior to that then that’s absolutely wonderful. if you can, if you’re able to do that and have enough assets to be able to do that, you know, we do have the uh they they call it Obamacare, the ACA, uh the American ACA, Obamacare is what everybody calls it, um that you can be able to participate in and get some health insurance. Well, those people that thought that they could retire at 65, unfortunately, some people have been forced to retire early for one thing or another. Many people are retired early because of poor health. Um, and they, that’s my wife’s situation. My wife had to retire early because her health would not allow her to continue to work. My dad lost his job early on uh due to downsizing when he was working. was so specialized um that he couldn’t uh find another job in his field. So, he was um uh forced into retirement early as well. And then there’s many companies that offer early retirement buyouts. And some people jump on that because it’s a lot a lot more cost effective to hire somebody new than to pay somebody that’s been there for a long for a long time now. Nearly 70% of retirees retire early and and it’s out of their control. As I mentioned, my dad, my wife, those were things that were completely out of their control that they didn’t uh they could they couldn’t um make any changes or do anything like that. So nearly half of the people that do retire uh retire in the early 60s. So anywhere from 61 to 65, 44% of people retire that early due to one reason or another. You know, many people say that they’re going to reach their full retirement age of 65 to 67. Now, um if you’re born after 1960, your full retirement age is 67. Um but yet there’s not a lot of people that uh that retire at that age or even after. By far the majority of the people retire at 65 or early for whatever reason. Now, one thing that you need to take into consideration is ages of of um uh between spouses. You know, my wife and I are three years apart, but on average, there’s about a 2-year gap between uh spouses, between husband husbands and wives. And that two years is not that big of a deal when you’re young. you’re 25 to 23, you know, it’s not that big of a deal there. But when you go to retire, you know, if your full retirement age is at 60 65, your spouse could be 63. And then what do they do for for insurance? Okay, that’s something you need to take into consideration. And then not only that, at retirement, you got to take into consideration your life expectancy. you know, most uh women outlive men. And so if the husband is at 82 and the wife is at 80, if the husband passes away on that, the wife could be single in retirement for 9 years or more. That’s just it just what it is. Unfortunately, it’s just what it is. Now, obviously that’s statistics, you know, not every uh situation is like that. My wife, excuse me, my mother passed away um quite a bit um younger than my dad. And uh but she had a blood clot that broke loose. So, it wasn’t uh you know, any anything uh that she really knew about in advance, but uh yeah, she had a blood clot that broke loose. Oops, excuse me. And then my dad lived for another eight more years after that. Yeah, another eight more years. Now, here are some very important ages that you need to take into consideration when you go to retire or getting up there in age and everything. So, at at 50 years old, so anybody that has an income can contribute into a an IRA plan and or if they have a job, they can contribute into a 401k or 403b or whatever uh the company offers. Once you turn 50, you can start contributing more than when you were prior to age 50. So 49 or younger in an IRA plan currently this year here in 2026, the uh contribution if you’re 49 or younger, the maximum contrib contribution you can do in an IRA plan is uh $7,500. If you’re 50 or older, you can do $8,600. And the same thing goes towards 401k and we’ve got a slide coming up that will give all those numbers and everything. So at age 55 there are your some people you’ve got to qualify but some people are eligible for early distributions from current uh 401k plans and things. At 59 a half is when you can start taking money out of retirement accounts without acrewing an early 10% penalty paid towards taxes. So, at 59 and a half is the earliest you can do that without the penalty. At 60, some people can start to get social security. Uh, if you’re a widow or a widowerower, you can start doing that. Now, everybody can start taking out social security if you’re eligible for it. Everybody can start taking out at 62. But I, you know, unless you absolutely need it, I do not recommend that you start taking social security social security out at 62. um especially if you’re continuing to work. You know, if you continue to work and are under your full retirement age, uh you can only earn so much per year. I want to say it’s somewhere around $24,000. Um and then anything above that, there’s penalties uh that’s money is taken out of your social security if you do it early. Now, 65 is when you can, as I mentioned earlier, sign up for Medicare. And I recommend that everybody signs up for Medicare Part A when they turn 65. Doesn’t cost you anything at all and can eliminate some um some u uh uh uh issues down the road when you do go to sign up for part B or anything. Uh and again, it’s social security full retirement age if you’re born in 1960 or after. Full retirement age is at 67 years old. Now, at 70, if you aren’t taking social security out, absolutely start taking social security out at age 70, even if you’re still working. And you can take social security out at your full retirement age without any early withdrawal penalties or anything like that. But at 70, absolutely, because between your full retirement age and age 70, you get what’s called delayed credits. uh and you get about you get an 8% bump up in your social security for every year that you um don’t take out social security beyond your full retirement age. But there is no more delayed credits uh after the age of uh 70. So absolutely start taking out no matter what. Now for all your pre-tax 401k or your traditional IRAs, you have to start taking money out. currently at 73 years old. And if you’re not 73 by the year 2033, then it’ll jump up to 75 and it’s called your required minimum distribution or RMDs. You have to take it out of your traditional IRAs or your pre-tax 401ks. If you have any Roth IRAs or Roth 401ks, you do not have to do RMDs because the government isn’t going to uh uh get any taxes off of the withdrawals from a Roth account and all the money that went into the Roth accounts were already taxed. So all your pre-tax you have to start taking out at 73 and 75. Now, there’s one thing that many people are not aware of, unless you’re getting close towards the retirement age and you’ve done the research and everything. Uh, in retirement, if your RMDs are big enough, then there’s something called Irma, IRMA. If you make enough money in retirement or over a certain amount of money in retirement, including social security and any RMDs, you may have to pay extra for your Medicare Part B and your Medicare Part D premium. It’s not too bad starting out. It’s about 86 for Medicare Part B and I want to say 1450 or something like that for Medicare Part D. Uh but it jumps up quite a bit more than that. The next level up is at $22 a month for part A and I don’t remember what the part D is, but it it can be quite substantial. So, uh doing RMDs could uh penalize you down the road and paying extra on uh Medicare premiums and stuff. So, what we want to do is we want to take an aim at your retirement target. So here’s rule of number uh number one of of three is a good rule of thumb this is not required or anything but a good rule of thumb is to save enough to generate anywhere from se 70 to 90% of your pre-tax uh income. If you can do that then you can rest assure that retirement should be very comfortable for you. Now there are some costs that are going that may go down in retirement. Hopefully, you’ve paid off your house by the time that you retire. A transportation may go down because you’re not commuting as much anymore. I work from house or from my house. So, I’m guessing my transportation probably will go up because I’ll have to go visit the grandkids and all that kind of things. Clothing. I don’t have to buy these Alliance shirts anymore uh or get them dry cleananed or anything like that in retirement. And you know, if you go out to eat, you know, if you work downtown or work at a different place, often times you’ll go out to eat uh in retirement, you’ll be able to have the time to be able to cook at the house, and obviously that’s going to save a lot more money uh than eating out. Now, there’s some cost that may go up. healthare. If you have a a group health plan, it may go up now that you’re having to pay uh the Medicare premiums uh by yourself. As I mentioned earlier in retirement, hopefully you’ve got the time to uh to do different things. You might be able to travel. I’ve got a good buddy of mine from Australia and he says that, you know, going back to visit family or friends, he either has all the time in the world but no money. That’s when he’s been unemployed. or he’s got all the money to be able to do it, but he’s got no more time because that’s when he’s been working. So hopefully in retirement, you will have both money and time to be able to travel and to do the things that you want to do. Utilities may go up. You’re at home now, you got lights on, TVs going on, uh things like that. Uh so utilities could go up. And then home maintenance. I’m sure my grandkids will come over to the house uh more often in retirement. And um I actually caught my two grandsons uh earlier this uh this summer. Uh they thought it was really cool to throw dirt in the air conditioning unit as the fan was on. So the the more grandkids I have over the house, and I’ve got a total of five right now, but the more often they’re going to come over to the house, I guarantee you I will have more uh home maintenance uh uh things that I will have to pay for. But it’s worth it. They are uh they are great uh things. great great additions to a family and everything. Now, there’s some cost that’s going to go away. Social Security, uh, payroll tax, if you don’t have the income coming in, you’re not working anymore, obviously, that’s going to go away. And then retirement contributions as well will go away because you have to have an income in order to contribute into a uh into a an IRA account or a 401k or a 403b, anything like that. So income needs could be different in retirement as well. The your income needs should go down also uh for the most part. And you know if you can budget to say anywhere from 70 to 90% of your pre-retirement income again you should probably feel very comfortable to be able to live and enjoy life in retirement. So the second rule of thumb is is to save a multiple of your salary based upon your age. So, let’s take a look at that. Let’s say that you are uh 60, excuse me, 55 years old and your salary is $100,000. A good rule of thumb, again, not required, but a good rule of thumb is to have anywhere from 60 to to 8, excuse me, 600 to $800,000 saved in uh in retirement plans. And if you can do that, then wonderful. uh then you then again you should be able to go into retirement uh with a peace of mind knowing that unless some catastrophe happened you should be able to have enough money in retirement. And then the last rule of thumb is to save enough to generate about a 4% withdrawal rate. You know that’s kind of the industry standard. Although recently there’s been some controversy about that. But if you can do a 4% withdrawal withdrawal rate, then you ought to be uh pretty uh pretty well set and comfortable uh for retirement. So what does that 4% take uh look at? So let’s say that you want to withdraw at 4% over 20 years in retirement. Okay, if you’re desired income coming in from your assets are at $25,000 and let’s say you get an average of 1.5% return. Now, obviously, our Alliant, again, shameless plugin here for Allian Credit Union, our savings account is returning double that at 3.01, unless they changed it here in September. I haven’t looked at it, uh, but I don’t think so. Then, if you’re going to do that, then uh and and be able to withdraw $25,000 a year from your uh assets, then you need half a million to be able to do that. If you want to have $50,000 extra a year, getting a 4% withdrawal draw withdrawal rate over 20 years, you need and getting a a one and a half% return. You need a million dollars in there. If you want a h 100,000, you need $2.1 million to be able to do that. Almost 2.2. Now, let’s say you’re getting a little bit higher of a return, a 5% return. And a 5% return is really not that difficult to do. And it doesn’t have to be aggressive at all whatsoever. That is a very conservative uh type of a return. But if you’re getting a 5% return, you can see that the amount that you need gets drastically reduced down to 391 for $25,000. If you want $50,000 extra in retirement, then you need to have about $782,000. And if you want to have $100,000 in retirement extra, then it’s at $1.5 million is what you would need. Now, in order to save that uh to get those returns and everything, let’s say that you’re getting a 3% return. Okay. Now for again for $25,000 a 3% return at $476 a half uh $50,000 952 and uh $100,000 of $1.9 million. Now again if you’re getting a 6% return versus a 3% you can see once again that your uh assets just need to be they can be a little bit less. And again, getting a 6% return or a 5% return, it doesn’t have to be all that uh risky at all whatsoever. You can be fairly conservative and still get a decent return uh inside of it. So, what you want to do and the third thing here is to maximize your nest egg to to uh contribute as much as you possibly can. So, let’s take a a hypothetical look at a couple here. And let’s say that the wife is at 50 years old and she’s a retired school teacher. So she’s not working anymore. But so to keep busy and active, she volunteers her time. And let’s say that the husband is an engineer and they want to maximize their returns at age 50 and uh and beyond. So I mentioned earlier that there are maximum contributions into 401k, 403bs, 457. They’re all the same thing. age. It depends on the type of company you work for. So the maximum contribution here in 2026 is 24,500. If you have a simple 401k or a simple IRA at 17,000 and a SEP, the maximum contribution you could do is at 72. But since he is working and not for himself, he contributes to his uh maximum uh employer plan, his 401k. And let’s say that the company matches uh 3%. So he’s able to do those each and every year. And then you since they are both 50, they can do uh do what is called the catchup contributions. So he is over 50 and so is she. So he can do an extra 12,000 well $8,000 into their 401k plan that he has here. Now you can also add into your own IRA account depending on income and things like that. So, in a Roth IRA, there are limits on how, excuse me, income limits uh uh to be able to contribute to a Roth IRA directly into it. There’s always the backdoor Roth or the Roth conversion. They’re basically the same thing. Um but, uh let’s say that he decides to contribute into his in into his uh his IRA accounts. And since his income is $150,000 and his wife is retired, they would be able to contribute the maximum amount into either traditional or Roth IRA. Roth is a great way to go because then it’s uh the taxes are paid now and then in retirement you don’t have to take any um any it doesn’t go towards any tax consequences or anything like that. So now let’s say that his wife, you know, because the husband is working, the wife can contribute into a a IRA account as well. And since she is 50, she can also contribute the maximum amount uh into the IRA account. So again, a spousal IRA is at 7,500 and since she is 50 or older, she can do an additional $1,100 for a total of 86. Now, if you add all these up together, each year they can do a a maximum contribution here of $54,200. Now, if we just say, okay, we’re going to do $51,000 and they’ve got about 15 years towards retirement. Again, they’re 50 years old, so at 65, they want to retire. And let’s say they’re fairly conservative and they just get an average 6% return. You know, they don’t want to be too aggressive. um because they don’t have as much time to make up in case uh the market takes a uh takes a dump or anything. But if you’ve got $51,000 and you contribute that each year into a into your retirement assets for the next 15 years, averaging a 6% return, in 15 years, you’ll have $1.2 million saved up just during that time. Now, that’s up until 65 years old. And at 65, you still need to be invested or at least get some in. So, that’s just up to uh 65. And then from that on time on forward, it can still continue to grow for you, which is really nice. Now, let’s get a portfolio checkup. This is something that you want to do. The average worker switches jobs every has 12 jobs throughout their life. If you’re my son, he’s probably he’s at 30 31. He’s almost had 12 jobs just already. Uh but he’s been doing really good where he’s where he’s currently at and everything. And most companies when you start a job, most companies now have automatic enrollments. Well, they just automatically sign you up and and and contribute into a into their company 401k or anything. And then 63% of American workers have access to define contribution retirement plans, which is kind of nice, which is good. Now, one thing that you want to take a look at is you may be currently, let’s say you’re getting closer towards retirement, like myself, you know, and I want to be a little bit more conservative than I was when I was younger. And let’s say that I want to have an average kind of a balanced investment strategy of 60% stocks, 40% bonds. If I take my previous jobs when I was younger and add those up, obviously when I was younger, I would have wanted to be a lot more aggressive. If you combine those and if you haven’t moved those into your current plan or into an IRA where you only have a couple of different plans out there, if you combined all of the different IRA accounts with your 401k account, you may be more aggressive than what you actually want to be. So, I always recommend that when you leave a company, take your 401k out, again, 403b, whatever it is, take your retirement plan out, and move it over into an IRA. You have a lot more options to pick and choose from in an IRA that you just can’t do in a 401k. And then that way, you’re really only dealing with kind of two different accounts. Either your IRAs and maybe your comp your current company’s 401k account. you can just manage it a lot better uh than if you’ve got three or four or five different old 401ks out there. So, let’s take a look and see, you know, what has happened in the past. So, let’s say let’s say that you have too much invested in the stock market and this is 1999 and you want to retire in three more years and you’ve got a $900,000 in your IRA. So then you’re going to need to get about an 8% return over the next three years to to have uh one $1.1 million in your retirement account. I don’t know if many of you remember what happened in 1999, but we had the tech bubble burst and the stock market went down for three years in a row. Um and so your $900,000 could have been down to $584,000 in those three years. So half of what you wanted to have in order to retire um after 3 years. Now if you were a little bit more diversified and you were at 50/50, 50% stocks, 50% bonds, you wouldn’t have lost hardly anything. Okay? Your $900,000 would have gone down to $871,000.

But then 12 months after that, you would, if you were in the 5050 plan, you would have been up into over a million dollars. But it took almost four years for your 100% stocks to build back up again. I’ll be honest with you, that’s kind of what happened with my uh father-in-law. Uh my wife is from Ireland and uh and my my in-laws came to the States. Um basically well they were in Ireland then they moved to South Africa and then they came to the states after the aparite happened in South Africa or while that was happening I should say he couldn’t get any of his retirement money out of South Africa to come here so he came to the states um back in about the mid90s and um and had to had to start all over and so he knew he had to be aggressive. his goal was to retire at uh at at 2008. Well, we unfortunately we all know what happened in 2008, the great recession. Uh he didn’t retire until 2012, four years longer than what he wanted to retire, but he was able to retire. I give him all the credit in the world world and he’s had a very comfortable life. But these things are reality. They can happen. Now, let’s also take a look at what happens if you panic and get out of the market. So, again, let’s say you want to have you got $900,000 in retirement and uh you want to retire in three more years and we have a 2008 happen. My father-in-law’s scenario here. If you were 50/50% stocks and bonds, your $900,000 fell down to about $700,000. Not drastic as if it was uh in 2000 the tech bubble burst if you’re 100% stocks. But if you panicked at that particular time and said, “Oh no, I cannot watch it go down. I want to go ultraconervative and put everything in T bills.” then in in 2010 when you wanted to uh maybe retire, it would have gained a little bit over 2008 to 2010. But if you didn’t panic knowing that when the market goes down, it has always rebound and came back up again. If you didn’t move any of your investments out of a 50/50 uh uh stocks to bond mixture, you would have been back up to a h 100,000 or excuse me on up to a million dollars by the end of 2010. Your T bills would have you taken you forever to get back up to that million dollar uh mark. So again, get a good investment plan going knowing that it’s going to go up and it’s going to go down, but whenever it’s gone down, it has always rebounded and come back up again. Can’t guarantee that’s going to happen always in the future, but that’s what has always happened in the past. Now, I always recommend that you update your beneficiaries or take a look at those on a regular basis. As I mentioned earlier, my mom passed away in 2016. Uh my dad got remarried to a wonderful lady in 2017. And so there’s there’s there could be some different changes there. Maybe a different spouse. In my case, I got grandkids that uh that that could come up. I think I’m done at five. Not my decision, though, but I think uh my kids are done at uh at five grandkids. You know, I’ve had I had a granddaughter born in December and a grandson born in February, so they’re both less than a year old. I always recommend that you do a trust over a will. With a will, uh, your your assets are still going to go through probate. And during probate, anybody can can contest that. And a tr and probate is a public record. A trust is not and it does not go through probate. So, I recommend uh that you do a trust over a will. And there’s different online accounts that you can do a trust or go through a local attorney. Um, but I I definitely recommend you do a trust over a will. So, let’s take a look at creating a social security strategy. Now, when I talk about social security, I constantly hear, “Oh, no, social security is going to go bankrupt. We’re not going to do anything.” That is not the case. What is going on with Social Security is that up until 2021, there was more money going into the Social Security trust fund than what was coming out. In 2021, when the baby boomer started to retire, that switched away around. Now, there is more money coming out of Social Security than what’s going into it. Again, social security will never ever go away because it is a, you know, as those of us that are still working now, we’re contributing into the social security trust fund. What will go away unless government does anything is that excess that’s currently in the trust fund. Now, so it’s supposed to run out. The the excess is supposed to run out in 2033. You know, if you if you trust the government, their math never adds up. So, who knows when it will actually go out. And if the government doesn’t make any changes in that, then benefits could drop. I truly do not see a time where either party would allow the benefits to be decreased. I think that there would be a lot more riding in the street than we’ve seen in recent years if social security was ever cut down by 22% or whatever. One of the things that they could do and unfortunately government is just kicking the can down the road. Nobody wants to deal with it right now. Uh we’ve got the midterm elections coming up. I’ll be shocked and surprised if anybody runs on fixing social security. They’re all just pushing it down the street. But what they can do is they could increase the taxes that uh are are being taxed for social security. Right now it’s about half payroll taxes are about 1.8% that is going in towards social security. They could increase that to 3.65. Another thing that they could do is I want to say, don’t quote me on the amount here, but Social Security is only taxed up to like $400,000 of income. You know, we hear the tax the rich and everything. They could increase that and say it’s unlimited and it’s not going to affect by far the majority of us. I know it’s not going to affect me at all if they increase it in or uh they tax social security above that $400,000 threat income threshold or whatever. So, just a couple of things that they can do, but I I just absolutely do not see social security uh actually ever going away. Uh it could be reduced down, but it it it won’t ever go away. So, as I’ve mentioned a couple of times about a full retirement age. So, here’s the different ages and and what your full retirement age is. You know, again, if you’re born after 1960, your full retirement age is 67. Prior to 1956, you’re already retired or at least at full retirement age, I should say now. And then 57, 58, 59 is 66 and and different months uh and everything. So now if somebody were to maximize the amounts that they paid into social security, here’s what the maximum amount would be per age monthly income. So if your full retirement age is at 67 like myself, then the maximum you’re going to get in social security is four uh $4,200 a month. The average though is a lot less, the $2,600 a month. Okay? So, if you did an average income earnings throughout your lifetime, then you’re going to get about $2,600 a month. Now, depending on what your income is, that $2,600 uh or the more income that you have uh have had coming in then and if you want certain uh to to maintain that lifestyle, the more of a lifestyle you want to maintain, the less of a percentage social security is going to be to earning that. So, if you want a lifestyle of say of a hundred $50,000 a year, your social security is going to cover about half of that. If you want $100,000, it’s only going to cover about 40% of that. So, you got to come up with the other 60% on your own. And you can see at the 150 or 200 uh,000 mark, you’re going to have to come up with more uh on your own to maintain that kind of a lifestyle income. So build a retirement income stream. So let’s take a look at different income uh on what you can get here. So in a money market account, the average return of a money market account is 22%. Again, a shameless plug out there for the lion savings account. A one-year CD from a normal bank is about a half percent uh for the year. Now again, not being aggressive at all whatsoever, but if you invest in different bonds, you could and and bonds bonds can go down. Do not get me wrong. Bonds do can go down, but they don’t go down as much as the stock market. There’s a lot less volatility, a lot less uh fluctuation in that. You can see that if you invest just a little bit more into something, again, not being aggressive or anything, but if you have a a half a million dollars earning at a little bit better of an interest rate, again, not being aggressive, you can see that your that your income or the interest that you earn for the year can grow quite substantially. Now, let’s say that you want to have systematic withdrawals and that you’ve got an a stock out there that’s got a share price of uh uh $5 per share. And let’s say you want to withdraw $1,500 a month. Well, as we know, stock prices go up and go down. So, they will fluctuate. If you want to maintain that consistent $1,500 a month, you’re going to sell less shares if that stock price is increase increases. Let’s say it increases up to 6%, then you only have to sell 250 shares to get that $1,500 a month. But if the stock price goes down to four bucks, you have to sell more shares, $375 to maintain that same $1,500 a month. And then you can see that your share price uh your share balance will decrease based upon the number of shares that you have to take out to maintain that $1,500 a month. Now let’s take some turning retirement savings into retirement income. Okay. So if you do an income producing products, you know, then you don’t have uh any distributions coming out of your original savings. the original dollar amount can stay there,

but your income could fluctuate. So you if you have a dividend paying stock or dividend paying mutual fund or an ETF or whatever, those things are not consistently paying out the same amount of dividends. Uh even a savings account, savings accounts fluctuate depending what interest rates the Fed sets at. So, uh your income may fluctuate if you if you depend on that. Uh some months could be higher, some months could be lower just depending on what the uh payout is. But if you have a systematic withdrawal plan, then your income is is consistent. You know what you’re going to be taking out and so you’ll be able to get that and make a budget on a monthly basis, but it may dip into some of your original savings. depending on their returns and how much you take uh take out. So, but let’s look beyond the money. So, the good thing is is there’s a there was a study that put out there and they have this happiness this human happiness curve and most people are less happy 45 to 50 years old. But the good thing about that is the happiness curve starts to increase after that. So you’ve got some good years ahead of you where happiness is uh can be uh a lot better for you. Okay? And this is what the the average happiness curve is. So look forward uh to retirement and and I realize that happiness depends on a lot of different things. a lot of health. Health health can really uh poor health can really uh uh had some people look very uh uh depressed going into the future. As I as I mentioned earlier, my wife uh had to retire early because of health. She doesn’t have the best uh best of health. Uh but we’re we’re doing the very best that we can and everything. Friendships are a key. Um I’ve got many friends that I love to go and do different things with. Um, and so, you know, have friends in retirement and that can help lift up your your spirits and everything as long as they’ve got the they’re good friends and everything. And then family, you know, again, I love hanging out with my kids. I’ve got uh three ch three kids of myself. Uh, they’re all married. I’ve got five grandkids and I love it when uh when we’re all together and I get to pick on my grandkids and then send them home. I can give them all kinds of candy and everything like that. and then send them home and let their parents deal with it. It’s wonderful. If you’re not a grandparent, it is great. Now, the uh island of Okinawa has something called icky guy. This is basically it translate into something to live for. So, you’ve got to determine what your icky guy is. You got to figure out what you love to do and what the world needs and and supply that need to the world. You got to figure out in retirement if you can do something that you get paid for, something that you enjoy to do and figure out what you’re good at. If you can find the answers to those four different thing, four different things there, then you can find out what your icky guy is. Okay? You can create a retirement living plan in retirement. And you know, in retirement, you can contribute to a a worthy cause. Uh I’ve got an uncle that volunteers his time once a week uh building little car, little uh wooden cars, uh at a local place here, and they donate those cars to to needy kids. You can visit family and friends. Uh like I said, my buddy uh can go back to Australia and visit his family and friends there. Uh I’ve got uh my children here close uh all within uh about 40 minutes of me, but I’ve got brothers that live all over the country. You can pursue different hobbies and there’s no age limit on any of those things. You can start to travel and do the things that you want to do. If you want to start a business when in when you’re retired, go for it or possibly even go back to school. So here are some people that in retirement where they should have been retired went on went on and did some amazing things. Peter Roier, he invented the thesaurus when he was 73 years old. Colonel Sanders started the first KFC at 65. Uh Madonna Bter, she was the uh uh the uh uh triathlon nun. Um, and she she did uh triathlons up until 82 years old. I can’t even do a triathlon right now. I think that is absolutely fantastic. And Grandma Moses started painting and Yikiro Morai, he started to climb Mount Everest. And his last and and at uh 80 or at 76 um no at 70 he was the oldest person to reach Mount Everest and then he crushed that at 80 years old. That to me is just amazing that uh all these people in retirement they didn’t think that life ended but they went out and they did uh what they wanted to do. They did their passion and was able to benefit uh all of us because of that. So unknown author author said this retirement is wonderful if you have two essentials much to live on and much to live for. And again, going back to my buddy that says from Australia in retirement, he want he he’ll have the time to do what he wants to do. Hopefully, he’ll have the money. Same thing with you. You’ll have the time to be able to do the things that you want to do. Hopefully, you’ll have the money to be able to do that. So, just to kind of recap here, there’s seven different things that you need to do in retirement. You know, determine when is the right time for you. And that’s going to be very personal. Most of these things are are very personal. You got to decide when the right time for retirement is for you. Take aim at your retirement targets. Make sure that you keep your eye on the prize and keep working towards that. Maximize your maximize your nest egg. Put as much into retirement as you possibly can. If you can max it out, wonderful. If you can’t put in the most that you possibly can. Now, you got to pay your bills now. And I completely understand that. and get a portfolio checkup. You know, most people have multiple 401ks out there and if you combine it together, it’s really surprising how aggressive they are uh more aggressive than that than what they really want to be uh at that time in their lives. And create a social security strategy. You know, is full retirement age the right thing for you? Is taking it out early, taking up to 70. Again, that’s going to there’s going to be a lot of factors that goes into play on that. build a retirement income stream. Social Security is not going to be enough. Excuse me. And so, you want to have some income coming in to be able to do the things you enjoy to do. And look beyond the money. The money isn’t everything. When you pass away, the money is going to stay here, but uh hopefully your memories will be able to uh go on with you uh in the afterlife if you believe in that. I would always recommend that you work with a financial professional and that’s what we do here at Alliant Retirement Investment Services. We work with you and kind of figure out a game plan for you. Uh a financial professional has additional things that you can invest in that you just can’t do on your own uh that many people don’t uh aren’t even aware of that are available out there. You know, one of the things that we have here at Alliant Retirement Investment Services is we just have a a wealth vision plan that we can kind of put together to make sure that you’ve got enough money in retirement. Even if you’re early on, you know, you’re maybe not even close to retirement. Say, let’s say you’re 40 years old and you just want to make sure that you are on the right track, we can do this uh for you as well. So here’s an example of a report that we can run uh that can help you understand do you have enough money uh for retirement you know and this is uh you know it just comes up with overall income you know for example Bob and Mary here the dark blue uh that is their social security that they’ve got coming in the light blue there that’s a little pension plan that one of them has the red line there that’s their income and then the orange is their RMDs So, you know, based upon your assets that you have now, excuse me, uh I’ve got uh asthma and it just flares up when I talk too much and unfortunately I uh do a really good job of that. Um but uh in retirement, you’ve got your RMDs and you know, you can see that do you have enough income coming in with your RMD, social security, pensions or rental property or whatever. Do you have enough money to uh meet your expenses? And then we take a look at and see over your lifetime what’s the total taxes that you will pay and then also what will be your portfolio left to pass on to beneficiaries. Now one of the things that we really do with this is do uh Roth conversions. There’s so much talk about there about Roths. Is it the right thing for you? I never know the answer for that unless we do this plan here. So, in this scenario here, we’re taking a look at and say, “Okay, well, we just want to do a Roth conversion of say $60,000 a year. That’s it.” Uh, and it’ll last us for eight years in a row. What will that whal

uh portfolio in this particular situation? It would decrease their taxes by $140,000 over their lifetime. So, that that’s money saved for them. and it would increase their portfolio by $828,000 when they pass on uh this is the money that they would pass on to beneficiaries or this is money that they would have on later on in their life should they need to go into a nursing home or a long-term facility. And there’s other different things that we can take a look at as well. You know, again, Dave and Sarah here, and they’ve got some income coming in. And again the the dark blue is the social security. Uh the light blue is a pension and then RMDs. And then the yellow here is if they did not have enough income coming in to meet their expenses. So they would have to take money out of their current assets. So that’s also something that’s thrown in with this plan here as well. And then based upon their information here, their assets would continue to grow throughout the rest of their life. And if we did a Roth plan, this is typically what I do with these plans is fill it up to a a set tax bracket uh to see does the tax, you know, filling it up to a tax bracket and which tax bracket is the best uh does this um benefit you, hurt you or whatever. In this particular situation, if they filled it up to the tax bracket uh for five years, it would save them $16,000

overall in their lifetime in retirement, but then it would also add a quarter of a million dollar in their portfolio when they pass away. Now, one thing to take into consideration here on the far right here, the fourth column in the far right there, we’ve got one of them passing away. So, if you’re married and your spouse passes away in retirement and if you’re doing RMDs, you know, again, based upon your age and everything, your RMDs are going to be about the same still that you have to take out. But the problem is is at that point in time, you are now going to start filing as a single person. It’s what we like to refer to as the widow or widowers tax. RMDs are very similar. Now, granted, your income is going to drop by the lesser of the two. social security uh uh checks that you’re getting in. But you can see here that just by losing a spouse, your taxes could potentially go up into a higher tax bracket. Something to take into consideration. And then a Roth IRA account will will help you eliminate some of that. And then also that Irma that I was talking about earlier. So again, it could uh increase decrease taxes. Again, I never know what to do until that. Now, again, Aerys, uh that is all of the webinar here. I’ll get to the questions here in a little bit. But at Aerys here, again, we’re a full-fledged financial consulting firm. But why Aerys? Why choose us over somebody else out there? First of all, what we want to do is we want to get to know you and design a plan specifically for your individual situation. And then we use a team approach to come up with that plan to make sure that we’re covering all bases. And we want to build a lasting lifetime relationship for the rest of your life. You know, at Aerys, there is one person that you would talk to. If you if you do choose to come with me, then you would always call me for everything. Here’s my contact information. Uh my direct phone number here at Alliant uh is 7734628612.

That rings directly on my desk or my email address right there [email protected].

And um I would be glad to be able to uh make an appointment if you’d like that uh uh uh that wealth vision plan that I just uh spoke about. It’s complimentary. I don’t think I mentioned that earlier. Doesn’t cost you anything to do. Um, many other firms will charge whether you do anything with them or not. We don’t charge anything. Uh, even if you don’t do with us. So, I highly recommend that everybody does it because the problem is is if you’re going into into retirement without a plan, then all you have is a retirement wish. And nobody wants to go into retirement with a wish. So with that being said, let me get into some of these questions here. Uh right. So are you saying 60 to or excuse me 600 to 800,000 in total savings in uh is pension 401k social security. So the 600 to 800,000 that’s referring back to the slide. If you are uh 55 years old and your income is $100,000, then you want to you’d like to have again it’s not a requirement obviously, but to to feel comfortable would be 600 to 800,000 between all of your liquid assets, savings accounts, CDs, 401ks, IRA, uh brokerage accounts, anything like that. Those are all liquid assets. A home is not considered a liquid asset because it usually takes you at least a month to sell it, transfer everything. So, liquid assets or savings, uh, retirement plans, anything like that. Uh, another question here, uh, social security tax stops coming out of your paycheck for the year once your gross earnings reach 184. Oh, is it only 184? I thought it was a lot higher than that. Uh, okay. Uh the social security payroll tax is a federal tax used to fund retirement disability uh and survivor benefits for American workers. Absolutely. The total tax rate is 12.4 split evenly. Yes. Between uh you and your uh employer. If you are self-employed, you’re paying that full 12.4%. Uh as well um it applies to earnings up to a yearly maximum limit of 184. Oh, I thought it was a lot. I’m not a CPA. Obviously, I’m not a CPA. Um I don’t do taxes, but I thought it was a lot higher um than 184

on that. I uh

that’s social security. Okay. Okay. All right. Uh Robert, thank you for that information. Uh that is wonderful. Uh and that is all the questions that I had with this. Oh, let me let me send this out here. If you would like to have a uh that uh wealth vision plan ran for you or if you’d like to continue this conversation with me, uh please feel free to answer yes to this question here and then I will be glad to be able to reach out to you and um answer any questions that you might have. Again, that plan is complimentary, doesn’t cost you anything to do, and it’s just something that uh is uh I think is very beneficial. It can give you that peace of mind knowing that um that whether you’re set uh for retirement or if there’s maybe something that you need to change and add to uh contributions for retirement, uh then as well. Also the big thing about that that I think is really most beneficial is a Roth conversion. We really look at that and uh make sure that the Roth to see if a Roth conversion is the right thing for you. So with that being said, we’re right at the 1 hour mark. Again, everybody, thank you so much. For those that you answered yes to the questionnaire here, I will reach out to you. I will give you a call first and uh if I don’t get you, if I uh have to leave you a voicemail, I’ll I will leave you a voicemail and then I will follow it up with an email. And with my email uh you will have access to my calendar. You could schedule a Zoom meeting and then we can uh that way we’re not playing phone tag back and forth trying to get a hold of each other. Uh, with that being said, I hope everybody has a wonderful day, uh, wonderful rest of your week, and, uh, take care. Bye.

I’m Michael Marx, certified financial planner and a financial consultant with Alliant Retirement and Investment Services or Aerys for short. We’re the wealth management division for Alliant Credit Union. Uh if this is your first webinar or your 100th webinar, uh I appreciate you joining me this evening and I know that time is an asset, so I’ll do my best to make this worth the investment of your time. Um, for those of you that have attended my webinars in the past, uh, I know I normally talk about, you know, the market, geopolitical events, uh, but I thought this topic was important because it’s something that can have a potentially a a great negative impact on on your investment portfolio and your retirement planning. I mean, in addition to your life and health. So, you know, and frankly, if it doesn’t it doesn’t just affect you, right? It affects all the people around you. So, it’s best to discuss potential long-term care costs before they happen to be better prepared for anything unexpected.

Let’s see if our Zoom will cooperate. There we go. So before we dive in, I just want to share a quick housekeeping item. Today’s session is for educational purposes and it includes proprietary material. Uh so to protect both the content and everyone’s privacy, we ask the attendees please not to record or capture the presentation whether on video, audio, screen sharing or AI tools without prior to consent. Um we appreciate your understanding. Uh with that, let’s just move on here. Uh, and so just as I’m not sure where everyone joins us from, uh, I’m not sure if you’ve joined this webinar via an email that you received directly from AIS, uh, or signed up on Alliant Credit Union’s website. So, I’d like to just take a couple of minutes to talk to you about Aerys. Uh in addition to the weekly webinars that we host, we’re actually a fullervice wealth management and investment planning division here. Uh we have a broad range of investment options. Everything fixed rate guaranteed to as aggressive as you want to be in the market plus leverage. So we do you know the usual complimentary financial planning, some estate planning. Talk a little bit about that at the end. uh investment management, some more of the advanced planning as well. So, speaking of webinars, we offer multiple webinars throughout the week with different presenters. Each of us usually hosts twice a month. So, our team at Alliant uh Retirement Investment Service, I always call it Aerys. Uh we’re focused on helping you understand the ins and outs of investing, saving for retirement, and and much more. So if you haven’t looked at our website, I would encourage you to do that. So our website is our website is aerys a r i s.allantiantcreditun.com

and you can see a list of our weekly webinars, our podcast which is investsavvy, our blog and some other financial resources. um or you can find it right on the Allian Credit Union website in the upper right hand corner under the Retire and Invest tab. So, my next webinar will be in the afternoon and that’s Wednesday, August 12th. It’ll be at 12:00 noon central time, 1:00 Eastern. Um it’s in it’s titled the fragile decade. And what we look at is we talk about the five years before retirement and the five years after retirement. We talk a little about um some milestones, some goals where you should be uh and some expectations on the final five years or not the final five years, I guess the first five years of your retirement. H that was ominous. So, my next webinar back in the evening is Tuesday, August 25th, and that’ll be 6 PM Central, 700 p.m. Eastern, and it’s going to be uh it’s titled Life After Work. And so, it’s creating a good life in retirement, right? So, what we do is we talk a little bit about how you create monthly income from different sources, you know, being being keeping in mind as far as, you know, not having to pay unnecessary taxes, penalties, taking account inflation. We’ll talk a little about some of the strategies that can help you protect that retirement income because nobody wants to go back to work. Well, at least because they have to, right? Maybe they want to go back to work for other reasons, but if you want to make sure that’s a choice. So, um, so we have a few goals today. As I said earlier, my hope is that you have a general understanding and impact of having or not having some type of long-term care coverage as part of your plan. And it is not AIS’s goal to sell you a long-term care insurance plan. Uh, but I do hope that you have an appreciation for the need to plan for long-term care uh well before you need it. Obviously, similar to how you approach retirement planning, right? You start on that years before. You don’t wait until you retire to start planning. Uh, and I want to make sure you learn about some of the options that can help you mitigate some of the risks of that long-term care. Uh, and maybe instill a sense of confidence about your future. So, here are the topics that we’re going to be covering. the four myths about long-term care, expenses, the impact of caregiving, benefits of early planning, how to plan, and uh funding options to consider. Now, that last bullet point, Lincoln Moneyguard Solutions, we’re actually not going to talk about Moneyguard today, uh this is Lincoln’s presentation, but we’re a company that’s really product neutral. We’re we’re actually nonproprietary. So we don’t have Aerys products, you know, where Fidelity would might recommend Fidelity, JP Morgan might recommend JP Morgan, etc. They’re all good companies out there, but we are not because we use many different companies to offer solutions. Uh, but I want to make sure you leave with adequate time at the end to address any questions. So there’ll be plenty of time at the end.

So, what are we talking about when we refer to long-term care? Um, and what you’ll hear us reference throughout this is something called activities of daily living. And those are called ADLs for short. So, these six activities, eating, bathing, dressing, toileting, transferring, which is it’s being able to get from one place to another in your home. uh incontinence is referred to as activity of the daily living. Right? So if you’re unable to perform at least two of these activities for at least 90 days or you require substantial supervision due to you know a cognitive impairment or physical impairment, you can use long-term care protection to help cover some of those costs. Now, it’s important to look at these because this is a these are the basics that pretty much all long-term care is based on as far as what makes you eligible for that. So, assistance, a lot has changed over the last decade. I’ve been doing this maybe last couple of decades now. I’ve been doing this for over 30 years and

it’s it’s really it’s not that traditional long-term care. I actually have my mother was actually in a facility um for dementia, right? So her her part was memory care. Um and and frankly we we had her home and we actually had a nurse um you know assist. And then at some point it just became too much and and we we moved her to a facility. It was a really nice facility and and it was actually really good for her health actually improved uh which was fantastic to see that. Um, but it isn’t necessarily that that any of those terrible those terrible images that might because I know when it comes to that either for yourself or or the family, there’s certainly a concern, right? Are you abandoning your family or or you know, hey, maybe I’m worried about going into something like that. I don’t want to go into that kind of facility. But being able to plan early allows you to to state your wishes, right, and and come up with a plan. So anyway, so it’s a very broad range, right? And and it’s, you know, like I said, it might be home care. It it might be just some of the adult daycare services. Uh they have residential care communities where, hey, you know, I’m I’m pretty much independent. I just might need someone to check on me. I had a uh a friend that I go to church with. He moved his mom. His father passed away and they owned a a ranch and it was just too big for his mother to handle on her own. So they sold that ranch and they moved her into a facility. Um, and she’s she’s thriving, frankly. So, and obviously, just like I said with my mother, there’s specialized care, memory care. So, it’s really a broad range of what long-term care covers.

So, it’s important to view it this way as far as what you may or may not need, right? and and obviously these things go by different names as far as that care, you know, that assisted living, the licensed residential care facility, and some of those specialize in Alzheimer’s or cognitive impairment. So, you’ll find that a lot of the larger ones, I’m here in Houston, uh they cover a range where where it might be, hey, I just need some residential care community. I have my own apartment, but as my situation, as I get older and there’s some kind of decline, I might need a little bit more help. And there’s a lot of places that can help cover all the way through. So, let’s talk about a few of the misconceptions about long-term care. So, there was a recent study of a thousand

US and 500 financial professionals conducted by Lincoln. um and issues that you know the individuals and financial professionals face when they’re planning for long-term care. So we’ll we’ll we’ll talk about these findings throughout the presentation, but we find that there’s there’s basically four main reasons why people either postpone planning for long-term care or they don’t begin addressing it at all until they need it. So the first one, it has to do with the belief that people think it won’t happen to them, right? And they downplay their personal risk and believe the long-term care is for, you know, something that’s risk. It’s a risk, but it’s a risk for other people. Now I will tell you I think I think as we get older in this generation or the next generation we see our parents or other other friends parents that there’s probably a good chance that you know somebody or personally had a family member where they were in the situation where they could have used this assistance. So I think I think part of this as far as thinking that they don’t need that care is is frankly nobody wants to think about anything bad happening to them, right? It’s kind of like life insurance. You know, recognizing that you have life insurance is is also recognizing you are going to die one day. Whereas with long-term care, maybe you won’t be, right? So we hold out for that. Um but with that said, so here was here was the thing, right? So they surveyed that was really interesting. Now 33% think they will need care, 40% think their spouse will and 50% assume their parent will. Now with that said, the reality of of using that is actually much higher and we actually think it’s it tends to be something older, right? But in the world of a very high stress world that we live in with strokes and heart attacks and things like that, it isn’t that traditional nursing home care. So, so it can happen to you. Hopefully, it doesn’t. But the second misconception is that Medicare and Medicaid will have you covered. And if we were doing this live, we would do a show of hands that, you know, how many people believe that Medicare and Medicaid will help you pay for long-term care? Um, and and generally a fair amount of of hands goes up for that. Um but the reality is Medicare only pays for a 100 days and Medicaid is only available to those with limited resources and income, right? So limited assets. So if you have had experiences before with a parent or grandparent or something that you know they have you have to spend down your assets first before Medicaid will actually start covering those costs. So, it’s always better even if it isn’t the traditional insurance to say, “Hey, you know what? I need a plan. What is my plan?” So, about 65% think that Medicare or Medicaid will help you pay for long-term care. Now, Medicaid does. So, you are right in that, but most people think it’s going to be Medicare. I don’t know if you were part of that that thought that, but this is a very important reason as far as why you do that. So, let’s talk about the misconceptions about the risk of long-term care. Also, number three, that’s what your savings are for. Now, this cost can vary greatly depending on what part of the country that you live in. I can tell you here in the south, it’s still expensive, but it’s about half what it could be up in the Northeast. So here in Houston, you run about 5,5500 um for the semi-private room. That’s what we’re paying for my mother. And that was years ago. So it’s probably a little bit more than that because rarely price do prices go down. Um so up north it could be double that. So and that’s for the semi-private room. When you start looking at private rooms, obviously it can be a little more expensive than that.

Now, the reason why it’s important, right, is because having an idea of those costs will kind of give you an idea, okay, you know what, I do have in income. I do have a pension. I do have social security. And that will offset some of those costs. If you’re married, right, someone will still be in the home and they’ll still need some of that income, but it does offset some of those costs. So, normally when you do the long-term care planning, you don’t have to usually fully fund that. So, my family will take care of me. I actually just had this discussion with one of my friends. Um, and I thought this was a really interesting survey, right? So, you might be thinking this as well, and I’m sure you know your children might be happy to do that, but but I would say here’s kind of the reality of it. So this is probably one of the things you need to consider the challenge of providing that care on your family, right? It is not easy. It can it can not only be costly, you know, not just the lost hours and the earnings, but it also has emotional and physical consequences on this. So what I think is really interesting on this, so so in the survey on the left in the blue, it’s a percentage of families who had this concern and then the actual caregivers who actually experienced it. And really there’s just a couple of things that I just want to point out. So the emotional challenges of providing care, right, about 72%, hey, this was this is a concern. But what we found that once they were in it, more actually found it far more difficult. 80% 84%. The physical challenges and the difficulty 64% that’s pretty close. Uh the time involved 64% had a concern. 72% actually had that. Um and some of the other things, right, the financial, it was it was less expensive than they thought, but it was still a concern obviously, right? Because usually when you’re taking care of them, they’re living in your home. Um, now I can tell you so traditionally this is not always the case. So women in the family are particularly at risk because they’re often the ones who end up providing care. So one in four women who provide care develop health problems themselves, right? And and they could they they contribute that to the result of being a caregiver, right? the stress and the time involved. The par the daughters who care for the ill parents are twice as likely to experience depression.

The overall cost of a female caregiver is is estimated about 325,000. That’s due to lost wages, diminished working hours, etc. Whatever that dollar amount is, it’s taxing. And frankly, that dollar amount is it’s high, but I think I think the stress level on that, you know, we experienced it. I have friends who’ve experienced it. But so, who needs to plan for long-term care? Frankly, everyone.

Now, and I want to stress that you may or may not need insurance, but you do need a plan. So if the potential impact on your loved ones is not reason enough, consider a few additional reasons. So the quality of care, right? I would say one of the biggest concerns people have about long-term care is the quality of care that they’re going to receive, right? And one would say, well, I think it’s the cost. But if you have the money, the quality of care kind of goes hand in hand, right? So planning ahead can give you a choice of how you want to be cared for including your home care right at home with a professional. Family is great but and they do need to be involved with your care but nearly 3/4 of the people express concerns about being able to give to provide adequate care for their family if needed. And and that’s one of the things that we ran into with with my mother in that and that she got to a point where even with help that we hired a a private professional to help it it still became too much. She needed she needed for the most part 24/7 care. Um and you know there’s there’s an issue of dignity.

This is one of those things that do you want your children to help you shower, to help you use the restroom, to clean up after the restroom, or if you’re wearing a diaper, do you want your son or your daughter changing that? Right? So, so there is a certain level of privacy and dignity that that allowing someone else to do that, a professional, medical professional, that it might be easier on on yourself, right? Some people are fine with that, some people are not. And finally, there’s the financial challenge, right? So, um, someone’s going to have to pay for that, right? So, either with your assets or you might have something in place or some type of insurance or some hybrid in between. Um now this may or may not matter. You might have substantial assets and that’s one of the things that we do when we do planning right when we look at say hey you know you might want to self-insure. Um and others even who can self-insure they say hey you know what um I’d rather I’d rather just uh I’d rather just pay for something like that. I would say this as an example far more people need long-term care than like homeowners insurance. Okay now, the chance of your house burning down or a flood or hurricane or fire or something like that, that is a lot lower than someone who might need long-term care. Now, I will tell you for those folks who live in Florida as well as here in Texas, we know that hurricanes that storms are a very, very, very real thing. But even with that taken into account, I can’t imagine any of us would consider not having auto insurance or not having homeowners insurance, even though we probably have the assets to rebuild a house, but we would gladly say, “Ah, you know what? I don’t really want to have a plan for my long-term care.” Fortunately, you’re on here, which means it’s at least on your mind. So,

a lot of times we hear our clients, even though we talk about it, they wait until someone else close to them who actually needs long-term care. And then I think it’s that stark reality. And that’s their their springboard, right, as far as to to have that baseline or discussion on maybe I I do need that. Now, I would say maybe that’s not the best strategy for planning, but it does beg the question, right? When is the best time to start planning?

So, 91% of people think it’s really important part of retirement planning.

So sometime in your 50s is probably a good time to begin discussions, right? Not with just your professional um but with your family, right? Starting to communicate your needs or at least thinking about what you want.

And planning starts with a conversation. It certainly isn’t an individual situation, right? Because long-term care impacts families. So, it’s important that you make plans to discuss these long-term care wishes with your spouse, most certainly with your spouse and your children if you have them. Um, or a trusted person if you don’t have children. So, perhaps you’re by yourself, right? So, I would say it’s probably even more vital to have a plan at that point.

So, as you can see, many people haven’t had a family discussion. Uh, so don’t feel bad if you fall into that category. But I would say maybe commit yourself to doing something positive, no matter how difficult that may be for you or for them, right? If if you have to talk to your parents about it. I don’t know the ages of folks who are attending this. Uh

but look, have you talked to your family, right? Your spouse, your children have they may have already formed attitudes regarding your care because that’s important, right? They might have an idea and you’re like, “Hey, that’s not exactly what I want.” Are they on the same page? Would you feel comfortable having your children make those decisions for you, or would you like to have some say in it? So I would say just like the title says, right? Conduct a realistic family care assessment. The reality is you might need the support of a professional caregiver. So 70% of parents and children worry that they won’t be able to provide that adequate care. Um and 63% of family caregivers say long-term care insurance would have made it easier. And really, I’m surprised it’s only 63% because I’m not sure what part having someone else come in and help you with this difficult situation would not have made your role easier, right? Even if it’s just and you can take a break for a little bit. So, your financial professional, user, or whomever you’re working with, uh they can help you with the plan, right? include long-term care as part of your retirement planning. And again, that doesn’t necessarily mean insurance. Nine out of 10 Americans believe that financial professionals should take the lead in discussing long-term care with plans. Uh I don’t know if they have. I don’t know if yours has, but it is important, right? Because what I said before is that look, this can derail a retirement plan. um at the at at the very least, especially if you’re married, if one spouse needs that, those are assets that will be redirected and and they can be substantial. So, one of the ways that we can help is really just by facilitating that discussion, right, that you might be reluctant to have or some of the questions that you didn’t know, you don’t know what questions to ask or what things you should consider. We can start start looking at maybe some of the expensive planning, maybe look at your assets. It’s one of the things that we do as part of the uh our wealth planning, render financial planning. Uh and then we can maybe uh direct you to some of the health related legal documents that you’ll need to help prepare and have updated like that living will advance directive, right? Durable power of attorney. If you don’t have these, regardless of your age, you should have them in place. If you’re married, you certainly should have them in place. uh and and it’s important to make your wishes known. I cannot stress that enough.

So, let’s talk about some of the long-term care expense planning options, right? And there’s really a broad range of of solutions on the two extreme ends. One is self-funding, and that’s like, hey, look, I have enough assets. If something happens, I will use my assets combined with my social security or my pension, my other investments, and that’ll cover the cost. We should be fine. On the other extreme end of that is that you know what, I want to make sure the insurance covers it all if something happens. I don’t want to give that to a facility. I’d rather pay some every year um and and allow the balance of my assets to go to my spouse or to my children or grandchildren or charity or whomever right your beneficiaries at that point. I will tell you that I think many people usually live that somewhere in between where that hybrid is, right? Where you might use a different product where some types of annuities have a long-term care writer. Some of the life insurance uh with have some additional benefit writers on there like long-term care where you can draw off some of the uh the death benefit. Uh there’s life insurance long-term care combination products. Now, which one’s for you? It depends, right? So, a lot of these things, it would really depend on on your situation. Now, I can tell you what what folks dislike about long-term care insurance is that because or the traditional long-term care insurance is it’s the use it or lose it, right? So, if you don’t you don’t use it, then all that money that you spent on long-term care insurance, it’s wasted. And I’m like, well, that’s the best waste of money ever, right? Because that means your health was good. I can’t imagine somebody saying, “God, I hope I get deathly ill so I can really get my money back on those expensive long health insurance premiums that I’ve been paying for the last, I don’t know, 30, 40, 50 years.” Or, “God, I hope my house burned to the ground so I can really make that claim on my homeowners insurance.” And obviously, I’m saying that tongue and cheek. Nobody wants that. But but you are paying for peace of mind, right?

So let’s talk a little bit about some of the hybrid solutions.

So this is where they want maybe death benefit protection. So if I pass away, my heirs get that. But maybe if something happens, there’s a living benefit. If I do need those, it it might say, “Hey, I can advance some of those before.” Um, and it’s really for people who who want that somewhere in between. They’re saying, “Hey, look, you know, I do want that death benefit.” And frankly, there are people once you get into the later planning that they they don’t necessarily even need life insurance anymore, right? They have enough assets that if something happens to them, they they their their spouses will be taken care of. So now, you want to understand this so that the more things you have, right? So, if you have a death benefit on there, that that death benefit could be reduced if you end up having to use that writer for some of the long-term care, right? Which stands to reason.

But this is what I would say. Everyone needs to plan before care is needed. And planning starts with a conversation. So, include your family and we can help. And even if we’re not involved in that conversation, right, we can help you think about the questions that you might want to consider, right? Um maybe answering a question that you didn’t know needed to be asked. I think the hybrid long-term care solutions probably offer benefits at that somewhere in between. So if you don’t use it, right, it was still used for something else and there’s still assets to go to your family. Um, but I can tell you an early start obviously is usually better just like everything else, right? Early planning is usually better. Now, how can we help? So, we can help with the life planning component of it, right? Where it’s how you imagine your life in retirement, some of those headwinds that you’d want to consider, how do you mitigate that risk? So, budgeting, right? determine those income needs, right? So, not only I have this, especially if you’re married, right? I still have these expenses and if this expensive pops up, what are we going to do? What’s the strategy? What’s the plan? How do we look at this? How do we look at the tax side of it? Um, obviously the account management, those are rollovers, Roth conversions from a tax perspective. Um, and then the portfolio management. One of the things that we do at AIS now is um we actually offer trust and will services. So um some of the basic documents for trust, will p attorney, your living will, uh that hip authorization. So you really should have these in place. If you do not, uh we can help you with that. Hopefully everybody on this call already has these in place. Now, I want to thank everyone for attending. We’re at the Q&A part. So, while we’re waiting for questions, so any questions, go ahead and type them into that question and answer box or in the chat. That works as well.

Oh, yeah. Someone just verified that they paid 5,000 for their mother and they’re actually in Texas. So, that’s pretty normal here in Texas. Um I’m in Houston and it was somewhere around there. So we were a little bit more expensive than that. Um I’m actually going to put up a survey. So if so my QR code if you do have questions that will take you to my calendar and you can just schedule time. There’s my phone number. There’s my email. This is obviously in the evening. If you need to talk outside of business hours that’s fine, too. Um let’s put that. And while we’re working on the questions, let’s see what we have on the questions.

Uh, first question,

how do you know which is the best type for me?

So um what you’d have to look at so kind of generally speaking what we would look at as part of the planning process is that you’d look at your assets and you look at your expenditures in your retirement planning right so and you’d look at any overages or excess and then you’d maybe estimate cost care things like that and then you kind of narrow down some hybrids. Would I be able to post the image with the hands again? Sure. Let me go see if I can find those hands. Maybe. Was it those hands or those hands? How we can help? There’s a lot of hands. Hopefully, it’s that one. If it’s something different, let me know. Uh, someone they’re spending down mom and she’s still at home with caregivers. You say planning needs to start before care is needed. Can any planning be done when it’s already taking place? There there are some things that can be done. Um

yes. So, so the short answer is depending on how far she is and and without getting too much in the weeds. So, so what you can start doing and there’s some look back. So, so you know there’s these threeear look backs as far as your spend down. So, because the government’s trying to make sure you’re not trying to hide money, which that’s exactly what you’re trying to do, right? because you you don’t want to have the government pay for it. Um but but it can go back to a 5-year look back. So depending on how deep they are and as far as you’re giving away money uh or moving money out, that’s a possibility, but but that that’s probably it. And and it would she would have to be in there for quite some time, right, to be past that look back, but that’s just kind of an an FYI on that. So we mentioned that it cost an average of 325,000 for healthcare. No, that’s actually for lost wages. So, and if if if someone usually has to take care of a spouse, they’re usually losing that much over that period of time. And the wages uh does this include facilities where you can walk in and out of not sure the name. Uh so those are hang on that is those are the communities. We’ll go back to that. And those are assisted living communities. So, they are fantastic. I had a friend whose mother was in one and it was great. My mother was in the very same place, but she was further down the road in the memory care. So, let’s see if we can find the name of it that you were looking for. I assume it’s the the communities. Oh, there’s a lot more slides on here than I realized. Oh, there we go. the residential communities, residential care. Um, already are you spending down? Let’s see. How do you figure out what your cost would be? So, there’s a couple of things. So, again, this varies greatly on on what part of the country you live in. Um,

so, so what I would tell you is that there’s a couple of things. So, if if you have some questions on that, if you haven’t done planning, uh, go ahead and and just say, “Yeah, and and we can look at the planning for you and and kind of look at the cost in your area, you make some calls and get estimated costs in that area.” And and as far as that, you would you would basically say, “Okay, you know, that coverage, I think I’m going to self-fund or I don’t want to self-fund. Is there some kind of hybrid?” So, that’s basically what you would do. So I can tell you as far as the cost goes, oh hey, someone else asked that next question. So that was like that was just teed up. So how much the cost? How much do the facilities cost? So it depends. So generally speaking, it’ be anywhere between $6 and $10,000 depending on where you live and that’s per month. Um, and that’s usually for a semi-private room. If you’re up in the Northeast like like Connecticut or something, it’s a lot more expensive there. Um, now as far as how long you would need, so traditionally coverage is over a certain dollar amount, right? Or it covers per day a certain amount over time. Now, I would tell you the average stay, and this is one of the things that we talked to as part of our planning with the members, the average stay in in a facility is a year and a half or 18 months. Um, I’ve seen other studies where it’s about 2 and 1/2 years. We normally say if you’re buying traditional long-term care insurance, usually plan for four years, somewhere around there. Now, if you have a history of dementia, Alzheimer’s, or something like that, it can be longer. Um, but with that said though, so that’s roughly it. Now, now with the cost of that, remember, if you go into a facility, for example, you probably have social security. You probably, you may, not probably, not anymore, you may have a pension to help offset that. So you do have some income coming in. So it doesn’t necessarily have to cover the full cost of that, right? It might just be to offset some of that cost. Uh tell me about the long-term care insurance and its cost. So, normally the way that works is that traditional long-term care insurance is what I think the question is that you are asking is traditional long-term care insurance says, “Hey, I wanted to pay for I wanted to pay for X amount of days and X amount of dollars per day.” So, $100 a day, $200 a day. and I wanted to pay for two years, three years, four years lifetime. Obviously the longer out more expensive. Um, and then normally they’ll build in like a waiting period of, you know, 3 months before it kicks in or 6 months before it kicks in. So that’s the basic structure and that would be the amount is usually dependent upon what part of the country you live in. That’s one of the other things that if you’re working now and you’re thinking about it, but you’re like, “Hey, you know, for example, I’m here in Texas and I would say, oh, you know, I’m going to retire up in the Northeast,” which I would never say that because I don’t want to live in the snow, although it’s beautiful there. It’s a great place to visit. But, you know, my point is, and my family’s from upstate New York, so I can actually make that joke. They moved down here all because of the weather and they’ve been here a very long time. So, uh, let’s see, another question.

Hybrid policies. Oh, that’s kind of a range. So, what hybrid policies would you recommend for someone in their 60s? I would say if you’re not one of the yeses, just just shoot me a note or something or my QR code. And hang on, let me get to that last one again. My QR code and go ahead, schedule some time. And what we can do is go over them because they range. uh that it might just be payments, it might be double your benefit, something like that. So, just depends on what you’re trying to cover and depending on your health, right? Your current health on what you’re eligible for. So, let me get back to my QR code. Oops, there we go. Um, and then we go from there. So, let me see. If you have a long-term care policy for 20 years, it has unlimited coverage. Fantastic. I would go on claim in 15 to 20 years. Would it make sense to give this policy up for a hybrid plan? Probably not. But I can tell you this though, if if you um if you’d like, I could review that policy for you. But I really don’t think you would give that up. By the way, uh just so you know, I I assume everyone knows this, but at Aerys, we’re fiduciaries here, so we do have to work in your best interest. Uh

absolutely. So, yes. So, I’d be happy to take a look at that. You don’t have any children, nor does your sibling. Each of us has the other is a beneficiary. My guess is that each of us should plan for long-term care. For example, long-term care at a retirement home. Our local living community will charge 5 to7,000 a month. That is about right. My guess that each of us owns our own home outright. Hopefully, we don’t turn into the Simpsons.

That’s actually pretty good. Uh hopefully not that you don’t turn into the Simpsons sisters. That’s pretty good. Patty and Sama by the way for those who are not a fan of the Simpsons. Um let’s see if there’s have Fisher investments FL for my Ross. Can I still talk to you about long-term care? Absolutely. Uh legal documents. Yep, no problem. Women will. Yep, we can help you with those. Be happy to do that. Let’s see what other questions. These are great questions, by the way. It is fantastic when Oh,

are most portfolios with similar stock and bond mixes the same? Um, no. These are actually totally separate. Uh, with that said though, some of the hybrids actually could tie to the market. uh where where others just might be traditional insurance just says, “Hey, you know, it just pays $100 a day or $200 a day or whatever that dollar amount and they’ll do it for two years or a specific amount of time.” So, that doesn’t actually have to be uh obviously the long-term care can be a u a more conservative play.

Well, I use insurance for long-term care expenses instead of paying out of pocket. That is a good question. So, that really depends, right? So, we call that self-insuring. And I can’t tell you why that would be right for you or not right, but I can tell you where other people say, “Hey, you know what? I’d rather just pay for it out of my pocket. I don’t have I don’t have uh beneficiaries that I really care if they have money.” Uh so, and I do have ample assets that I’m not really concerned about that. So that’s that’s fine. Uh oh, hey, this is a good question. So, will your premiums rise in the future? The short answer is they can. What I would tell you is I would assume they will. And and here’s something different about about long-term care insurance in that traditional sense in that an insurance company can’t just up your rates for you. uh it’s governed at the state level. So depending on what you state live in, uh a company would have to go to the insurance board and say, “Hey, we need to raise premiums for this class of people, age, whatever it is.” Um and and this is a reason, right? And they would have to show a substantial threat uh for viability. So, um that’s one of the things that would actually be a a major concern uh for the insurance company for the uh department of insurance to approve that. And I can tell you some states are a little stickier than others, right? New York, Florida, Texas, they’re usually not very insurance company friendly. But, you know, for those who live in those states, uh we have seen homeowners policies and go up because of the storm. So, so it just kind of depends. I can tell you long-term care has gone up substantially over the last five years or so. And that is simply because insurance companies, one of the things when they write a policy, they make an assumption that x amount of people will end up dropping the policy just because they don’t feel they need it anymore because they passed away or something. Um, but what they found is that people are holding on to it longer. So that makes their risk pool a lot larger. Um, so if you have that risk pool that’s holding on to it, then you’re going to have to make that assumption that you’re going to be paying out a benefit. So we’ve seen we’ve seen some of those premiums actually double in price. So right now, you know, if you’re in your 50s, it’s about a,000 to,500 a year for some of the basic costs out there. And and when you think about that, that’s really I mean that’s not great, but if you’re going to make a claim for $5 to $7,000 a month, you’ll you earn your money back if if you end up needing to use that. And again, hopefully you don’t, right? Nobody nobody wants to use that. Uh let’s see what other questions do we have.

How’s long-term care different from medical insurance? um it covers it covers um it’s a different benefit right so it it covers in a facility or someone has to come into home where where uh where you might just be looking for like oh I’m sick or a broken arm or heart attack or something like that that falls under medical insurance this is this is actually separate because it’s usually the facility or at your house you don’t go to a hospital for that so I think that I think that’s all the questions. So, I want to thank everyone for attending this evening uh and very much so for your participation. It makes my job so much easier uh than just sitting here talking so and and thinking of thinking of ideas. So, anyway, with that said, thank you so much for attending. I hope everybody has a wonderful evening. Enjoy what is left of your summer and I hope to see you soon on other webinars. Take care. Be safe.

Hey, welcome everybody. We still have a couple more minutes before the top of the hour and uh we’ll wait until then to make sure that uh we don’t start too early and people can’t uh it didn’t so that people didn’t miss the beginning of it. But I appreciate everybody being on time here. I know it’s a uh something that I try and do is to be on time, but we’ve still got another minute left. Uh, I will tell everybody, and I’ll probably re-emphasize this, uh, I’ve got a pretty good thunderstorm rolling in here. I usually don’t have any issues with power outages or internet or anything like that when a thundtor thunderstorm comes in. But, um, you just never know. It’s supposed to be a pretty big one. Um, which would be good cuz, uh, we desperately need some of the rain here. But anyway, we’ll go ahead and get started here in just a little bit. Uh it is Wednesday. It’s actually I will be out of the office the rest of this week. Um normally I’m in, but it just happens to be that I am out for the rest of this week. So um I will uh talk about that a little bit later on. Um so see Lang, you’re hearing it echo. So, if if anybody has any any questions or or comments or anything like that, go ahead and put it in the either the chat, the webinar chat or the uh Q&A. And I see that uh somebody says that they’re hearing an echo. Is anybody else hear an echo?

Um let me see here.

I don’t have anybody else that’s hearing an echo. Uh, yep. No echo. No echo. Yeah, I’ I’ve Yeah, so far everybody else has got no echo. So, I um Sorry about that. Uh, and maybe you could try to resign in or something if you’re hearing an echo, but nobody else seems to hear it. You know, I do I get that quite often where one person will have an issue and nobody else does. So, I don’t know how that is. So, it seemed like everybody else is okay with it. So, all right, we’re at the top of the hour here. Let’s go ahead and get started here. Uh again, thank you everybody for joining me uh today on this webinar here. Um this is about Roth conversions. Uh before we get into that, let me uh just talk a little bit of um uh housekeeping. So again, as I just mentioned, if you have any questions as we go along through this webinar, if you have any questions, please put the questions down in the chat or the Q&A and at the end of this uh webinar here, I will answer all the questions. I will I I encourage everybody to stay to those questions because maybe somebody else has got something that might uh pertain to you that maybe you hadn’t thought of. Um but we’ll get into we’ll get into those here in a little bit. So with that being said, let me share my screen here with you. There we go. Whoop. Share there. Okay, perfect. So we’re talking about Roth conversions. This is something that is a really big topic. I I I talked to many people and they and many people have heard about them uh but they are not sure exactly how the best way to go about it is how much you should do in a Roth conversion or anything. So let me get into that here. The first slide here um it talks about the different uh websites that we have here at Alliant Credit Union. Uh the webinars, we got so many different topics and they’re all complimentary which is really awesome. and you can go to that website and take a look at all the different topics and and click on the ones that pertain to you that might help you out. I’ll be honest with you, we have our invests podcast. It’s we haven’t put out any recent uh podcast recent uh recently. Um and so the information there is still pretty important, but uh but it’s not been a a big topic for us to do. But then we also always have the Aerys website and the blog uh that talks about my division here. So Aerys stands for Alliant Retirement and Investment Services. That’s the division that I work for uh here at Alliant. I’ve been with Alliant now for almost 13 years. I love it. Um I hear quite often how much uh people appreciate our our credit union and I’ll be honest with you, working for the credit union is just as good if not uh if not better. So, and then just a little uh sidekicking. Unfortunately, this is very proprietary and we just ask that you don’t record any of the information on here. Uh we would have to get compliance all involved in everything and and we try and keep compliance out as much as we possibly can. So future the problem is is with our uh current situation with taxes and and our debt is the future of the tax environment is going to be. This slide here is quite uh quite a few months old. The last time that I look at our national debt, we were up to $39 trillion and it just continues to grow and grow and grow and it doesn’t seem like it’s ever going to uh that it ever reduces down. Uh so you know what’s going to be the future uh tax consequences on this uh we don’t know but by doing a Roth conversion it doesn’t matter because we know what the taxes are now. Our current tax code is now good until the end of 2028. The one big beautiful bill uh put it in until 2028 and then after that we’ll just wait and see what Congress does if they extend it come out with something different or if they just let it lapse and it’ll go back to whatever it was. But um our current uh national debt is at uh 36 excuse me $39 trillion last time I looked and that’s been a little while. So we could be up to 40 41 at this point in time. I’m just not sure. But you know our deficit obviously has been rising quite a bit and it just seems like it continues to grow. So over the last 10 years, um it’s just uh it’s just been out of control and and uh uh and I don’t I don’t see it changing anytime soon, unfortunately. Because if we take a look at our entitlements, you know, your Medicare, your Medicaid, uh Social Security, those are entitlement programs. At some point in time in the near future, just our entitlement programs alone are going to be 100% of what our revenue brings in from taxes. Uh and you know, and the national defense isn’t part of the entitlement program. So then where do we cut back? What do we need to do with that? Um, again, the really the only way that I can foresee us getting out of the debt that we have is by raising taxes. Now, we’re in a very low tax environment um period of time right now. We’ve had bunch higher taxes in the past and many times it’s been after World War I and World War II where they raise the taxes to pay off the debt. Uh, we just hopefully are finishing this war with Iran. Um, but I I don’t see them raising the taxes to help pay for that. They’ll just put it on the bill and and make our kids and grandkids pay for it down the future. So, the question is is how do you get out of paying the taxes so much? There’s three different ways you can diversify taxes. either either you can get taxed now um by investing in mutual funds, index funds, mutual funds, e uh EFT, uh ETFs, sorry, uh individual stocks, CDs, savings accounts are taxed now. Uh so whenever you earn interest or dividends, you’re taxed on those. Tax later is your 401k. A pre-tax 401k or your traditional IRA, meaning that as the money grows, you don’t pay any taxes on it until you take it out of that. Annuities are the same way. As the money grows over the years, you don’t pay any taxes on those, but you do when it comes out. And the tax never, those are the ones that I love. Uh the Roth IRA and MUN bonds, not a big fan of MUN bonds. Their bonds since they don’t pay a whole heck of a lot. Uh and HSA’s accounts are are taxed never, but let me put in a caution in there. The Roth IAS are never taxed as long as you meet certain require requirements. And we’ll get into those uh two requirements coming up here in a little bit. And same thing with HSAs. Now, as we move uh forward in the future, you know, a Roth conversion is something that might really benefit you, excuse me, and could really save you on taxes over the rest of your life. And we’ll get into those uh coming up here in a little bit. So, here’s our agenda. We’re going to talk about all four of these different topics here. I’m not going to read them. So, we’ll just get into the top uh the number one, and that’s uh the basics. So, what is a Roth IRA? So, with a Roth IRA, any contributions that you put into the Roth IRA are not deducted from your income for that year. Now your contributions can be taken out at any point in time without acrewing any penalties or or taxes. But any of the earnings that you uh do gain from those contributions, they have to be taken out after 59 12 and after 5 years. Now the five-year rule starts on January 1st of the first uh amount that you put in. So, hypothetically, let’s say you add you open up a Roth IRA today and add money to it. The 5-year rule started January 1st of this year. So, you basically have 6 months already under your belt. So, you really only have to hold it in for five and or 4 and 1/2 more years. Again, as long as you’re 59 and a half after those 4 and 1/2 years. So, with a Roth IRA contribution, now I just want to I want to clarify this here. There’s a difference between a contribution and a conversion. So, a contribution is money that’s not in an IRA, not in a retirement account, and being added to a Roth IRA. It’d be like money coming out of your savings account. Okay? So, there are limits on how much you can do as a contribution for the year. If you’re under 50, if you’re under 50, 49 or younger, the maximum contribution you can do into a Roth IRA is uh $7,500 this year. And if you’re 50 or older, it’s $8,600 is the maximum contribution. Now, that’s for all your IAS combined together. So, if you have a Roth IRA out there and a traditional IRA, if you put 5,000 into the Roth, the maximum you can put into the traditional is 2500 if you’re under 50 or 20 or 3600 if you’re over 50. So, again, it’s a it’s a total com combination into IRA contributions. Now, with a Roth IRA contribution, there is there are income limits. So, for example, I’m married. I’m going to look at that one. If I earn $242,000 or less, I can do the full $8,600. 80. If I earn anywhere from 242 up to $252,000, I can’t do the full $8,600, but I can do some depending on the income there. And if I earn more than $252,000 in a year, I cannot do any contribution directly into a Roth IRA. you can get around it and we’ll talk about that but in a direct contribution you cannot do that because of an income uh the income limits with a traditional IRA there are no income limits but also with a contribution you have to have an income getting a W2 at the end of the year if you’re not working you don’t have any income the government kind of frowns and says how are you doing a contribution if you don’t have an income coming in now let’s say I’m working part-time time. I’m semi-retired. I’m part-time and I only make say $5,000 a year helping out a buddy of mine. Then the maximum contribution you can do that year is $5,000. So it’s whatever your income is up to a limit of8600 or 75 if you’re under 50. Now my wife doesn’t work but because of my income we can still do a contribution for her. Okay? So even though she doesn’t have an income coming in uh W2 or anything like that, we can do a contribution based upon my income. So if uh with that being said, I I’d have to make 17,000 uh 86 $17,600 uh a year in order to do a maximum contribution into both of those. Okay, now let me jump uh slides a little bit or topics a little bit. This is a Roth conversion. So, a Roth conversion is money that is already in a traditional IRA or a pre-tax 401k. Okay? So, it’s not adding to your retirement plan overall. It’s just moving it out of a traditional IRA over into a Roth IRA. So, with that, you can do it at any point in time. There’s no income limits. There’s no uh age limits. There’s nothing like that. Now, when you do the Roth IRA, excuse me, the Roth conversion, it has to happen or you get taxed on it that year. So, whenever you do a conversion, you are going to be taxed. You got to claim that as income and pay taxes on that. I’ll give you an example coming up here where it wasn’t um the best thing for them. You don’t have to do the entire traditional IRA. You can do partial uh to fill up to a different tax bracket and we’ll get into that here. Um but uh there’s again there’s no age limit, there’s no income limit and there’s no limit as to how much you can do as a conversion. So oop I went wrong way. All right. So, as I said, any of your distributions, so any if you add money to it as a contribution, you can take that contribution out at any point in time. If you do it as a conversion, you’re still going to be taxed on that conversion amount. Even though you might think, okay, well, if I convert $100,000 over from a traditional IRA and you want to take out $5,000 later on, if you haven’t met the two requirements, the 59 12 or the 5-year rule, you’re going to be taxed on that 5,000 that you take out. So, a conversion is different than a contribution. Okay? Just want to make sure. So, who can do a conversion? Anybody can as long as you have a traditional IRA to do that. Again, there’s no age limit, there’s no income limits, high or low, and there’s no requirement that you have to be working to do a conversion. So, often times people do that in their retirement. You know, again, social security does not count towards an income limit or or or being classified as having an income. Uh so if you’re on social security uh then you can’t and that’s it. You can’t do a contribution but you can do a conversion because there’s no limits there. Now as I was talking about earlier um I’ll give you an example of how it can kind of anyway let me give you an example. Years ago prior to working at Alliance here I work for a big nationwide bank. I had some people come in to me all in a panic. The the uh the wife had lost her job and the husband thought he was doing the right thing and rolled it over into a Roth IRA. They were fairly new. They came out in the late 1990s. Roth Roths did. So, uh he thought he was doing the right thing. Well, when he went to do his taxes, his accountant said, “Congratulations, you owe the government $40,000 because of that conversion.” So, at that particular time, they that’s when they came into me all in a panic. I was able to work with the uh old 401k company. We got the money moved back to the 401k company and then they transferred into a traditional IRA with me and we and and by sewing do doing so they didn’t have any uh any tax consequences but the tax cuts and job act the TCJA stopped being able to take it out of the Roth conversion. So if you do that after 2018, you’re stuck with it. You cannot move it back and roll it into something else. If you do a conversion, it’s going to stay in the conversion into the Roth. Okay. Now again, the cool thing about Roths also since it all comes out tax-free, there’s no RMDs, there’s no min uh required minimum distributions. And also in retirement, when you take money out of the Roth uh the Roth account, it doesn’t count towards your Irma. And Irma is if you earn enough money in retirement, you will have to pay extra on Medicare Part B and Medicare Part D. And we’ll get into that coming up here in a little bit. But Roths don’t count towards taxes. They don’t count towards Irma. And they don’t have any required minimum distributions. So, the RMDs for traditional IRAs, if you were born uh um 1959 or earlier, if you’re not taking out RMDs right now, then you’re then your RMD age is at 73. If you’re born in 1960 or later, they increased your RMD age to 75. So, either at 73 or 75, you’re going to have to start taking money out of a traditional IRA, whether you want to or not. it’s just the requirement. But with a Roth IRA, there’s no requirement to take out because there’s no they’re not going to get their taxes. So they they allow you just to leave it in there and let it go. So again, as going back to our national debt that we have, we just don’t don’t know what the future taxes hold. So by, you know, being in a very low uh tax environment right now, it might be better to do a Roth conversion now versus later on when you have to do your RMDs and who knows what the taxes are going to be at that particular time. Now uh so traditional IAS 100% of that counts towards your income when you have to do RMDs or just taking it out in general. It also adds to your provisional income and again it could be uh held against you in your Medicare pricing depending on your modified adjusted gross uh income for that year. So that’s a traditional IRA. in a Roth IRA, none of that applies, which is kind of nice. So, let’s take a look and see, is it beneficial for you to do that? So, let’s say you’re in a pretty low tax environment right now and you’re paying 12% taxes and you’ve got a $100,000 in a in a traditional IRA and then you decide that you want to do a Roth conversion here and you get a in both the traditional and in the Roth, you get a 5% return. So, if you’re in a 12% tax bracket and you convert over uh um uh $10,000, and if you take the taxes out of that $10,000, you start um uh investing at $8,800 cuz that other $1,200 went towards taxes. Now, later on, let’s say that you have to start doing your RMDs and because of your RMDs, you’re at a higher tax bracket at 24%. So, if you don’t do a conversion, your $10,000 will jump up to 16,289. But if you’re paying a 24% tax bracket, then your after tax value is only $12,380 versus if you do the Roth conversion now and you start out with a little bit lower of amount at at $8,800. Again, it’s assuming the same 5% annual return. your b your uh amount value in 10 years will be at 14,334. So it would save you almost $2,000 which would give you 15.8% more in your after tax value. So again depending on where you’re at in your tax brackets it might be really beneficial for you to do that. So again, our future tax uh situation, we don’t know what the taxes are going to be after 2028 and but today we do. So you can take it in and convert it and as I mentioned earlier, you convert it up to a certain tax bracket or tax bucket here, excuse me. So when I do that, I talk to uh people to see what their current tax bracket is. And let’s say you’re at the 22% tax bracket. And so you can do some Roth conversions up to stay within that tax bracket and not affect any of your taxes. Now, if you slip over a little bit into the 24% tax bracket, you’re only charged on the amount that’s within that uh 24%. You’re not It’s not like your entire income is being taxed at 24%. it’s only for the amount that’s within that particular tax uh bracket uh and everything. So, as I mentioned earlier, you could be paying more if you have high enough income coming in in retirement. So, I’m going to again I’m going to talk about myself uh married filing jointly. If our income of everything combined is at $218,000 or less, then I don’t pay anything extra for uh Medicare Part B and part D. If I have from uh uh 218,000 up to 274, then I’m both me and my wife are going to pay extra for Medicare Part B and Medicare Part D. it’d be $28084 extra versus um uh and and then also 37.5% extra for um uh for Medicare Part D. You know what I like to say here is congratulation for being successful. The government wants more of your money. And again, if you have the income coming in in retirement, then you’re going to pay extra and Medicare Part B and Part D. Part A is free. That’s just pure hospitalization. So, it doesn’t uh it doesn’t hurt you at all. So, when you’re doing a Roth conversion, you’d kind of like to look for maybe a low income year. you know, when you if you’re a business owner and you have a little bit unusually low in sales or whatever, or if you have some high expenses that you can write off on taxes, or even if you’re not a business owner and you do have some tax deductions that you can take and drop down into a a lower tax bracket, that might be a really good idea to decide to do a a Roth conversion at that point in time. Now, let’s talk about the original IRA owner. So again, with a traditional IRA, you have to do RMDs because whenever you added money to the traditional IRA or the pre-tax 401k, the government gave you a discount on your on your income that year based upon the amount that you contributed to those. So you have to start doing RMDs at 73 or 75. I talked about that. And that has to come out. And so for, you know, the fail failure to take out your RMDs, it could result in a 25% uh penalty uh when you, you know, the next year when you do taxes. Now, the RMDs aren’t a huge amount. So, it starts out at a fairly low amount at 3.78% if you’re at 73 years old, or if you’re at 75, it’s just a little bit over 4%. So, it’s not a max uh a a a mass amount, but it’s still it’s money that you have to take out whether you want to or not. And you can see here that every single year it’s the the amount the percentage that you have to take out slowly increases. Okay, year-over-year. Okay, so item number three is the surviving spouse here. So, let’s take a look at this here, Adam and Jane. And let’s say that overall with social security and IRA and pensions and everything, let’s say that they both uh have a total combined income after taxes of $110,000. Well, that puts them in the 12% tax bracket. But one thing that a lot of people don’t understand and realize is that when one of you passes away, we’ll say statistically men pass away at first. It didn’t happen in my case. my mom passed away first and then my dad later on. But let’s say that Anne wants to maintain that $110,000. So obviously they’re going to lose one of the the lesser of the two social securities and uh but then an is going to have to start taking more money out to maintain that $110,000. She’s still going to have to do her RMDs if she’s at the age of doing an RMD, which is pretty much going to be about the same, very close if you’re close enough in age and everything. But because she’s now filing as a single filer and has an income of $110,000, instead of being at the 12% tax bracket, she’s at the 24% tax bracket. So, by maintaining the same amount, it’s going to increase her taxes and give her less overall to be able to spend on on whatever she spends it on. Now, let’s talk about beneficiaries. The rules changed. Excuse me. Sorry about that.

The rules changed in in um in 2020. So, it used to be that if you inherited money prior to 2020 from somebody who was not a spouse, so for example, mostly like a parent or whatever, the old rule is that you could stretch that out for the rest of your life. Okay? So, let’s say that you earn that you inherited a million and but you did have to take out a minimum amount every single year. And so in Carrie’s situation, she’s taking out $25,000 a year. That was the old rule in which she could do that now. But under the new rule, all traditional and Roth IRA have to be taken out within 10 years. And again, not a spouse. So a spouse, you can assume it as your own, but if you’re a non-spouse, then you have to take it out over uh everything out over 10 years. So, if she’s getting an average of a 5% return prior to taking the money out, she was at a a lower end of the 22% tax bracket. If it gives a 5% return and she wants to deplete it completely over the next 10 years, each and every year, she’d have to take out $123,000. That’s going to bump her up into a higher tax bracket. Okay? So, she’s going to pay more taxes on on each each tax bracket that she’s in because she inherited a traditional IRA from somebody who wasn’t her spouse, typically a parents. But after taxes on that million, well, she’s going to pay taxes on that million of roughly $310,000. So, that million she’s really only going to get about uh 700,000, a little bit less, 690,000. Now, Roth IRA conversions, things to consider. Again, there’s no limits uh income limits on it. So, you can do as much as you want. Doesn’t matter. And if you do a contribution, let me jump back to the contributions. If you do a contribution, you can do it for a prior year up until when taxes are due, up until April 15th, typically. Okay? Now, but if you do a Roth conversion, you can’t do it for a previous year. You’re going to be taxed on it the year that you take it out. Okay? There’s no pre-aged 59 12% tax uh penalty. So, if you take money out of a a retirement account, IRA account, and you’re under 59 a.5, you have to pay an additional 10% towards your taxes. Okay? But, you know, it it could have an unintended consequence by doing a large amount uh as a Roth conversion. Again, you’ll have to claim that as income and pay taxes on it. And again, if you do it in retirement, uh you could you could end up paying more for Medicare uh premiums because of the Irma, the IRMA, IRMA. So there’s a few limitations, potential limitations and risks of doing a Roth conversion. So there’s no guarantee that the Roth will do the same as the uh as a traditional IRA. If you invest in the same things, then yes, the accounts will grow the exact same. Um but we don’t know uh if any rules, the Roth rules are going to change down the road. So right now, and this is the way they have always been, but they’re not written in stone that there’s no taxes on the Roth as they come out. I can’t imagine that the government would ever change that, but there’s a lot of things the government does that I can’t imagine and they go ahead and do anyway. Okay. So, with a Roth conversion, it you do have to claim that as income and it can can uh you have to pay taxes on that and everything. So, the cool thing about this is, you know, as I mentioned, there’s a lot of people that do it a little bit here, a little bit there. We have a complimentary program here that we can run each each individual their particular situation to see if a Roth uh conversion is the right thing for you and for how much you should do in a Roth conversion. And I’ve ran many many many of these, hundreds of these and it it it never ceases to amaze me the difference from one person to the next. So, this is the an example of the report that we can run by doing a Roth conversion and and helping you determine to see if a Roth conversion is the right thing to do. And it does a lot more than just Roth conversions. Basically, it’s going to tell you, do you have enough money uh to last you through the rest of your life through retirement and everything like that. So, part of this report that we run here, it gives us our our uh uh our our income. So in this particular situation here, the dark blue is social security, the light blue is a pension plan that they had. And in this situation here, the orange is the uh the the uh RMDs out of a traditional IRA. The red line there is their expenses. And you can see the expenses jump up quite a bit once they do their RMDs because your taxes are going to increase because of the RMD that you have to take out. So, it’ll give you a lifetime portfolio asset that that you will be able to pass on to beneficiaries, but then it also gives you a cumulative tax on how much you will pay taxes for the rest of your life. And then when we do run the report, it can tell us how much you would save in taxes, if there’s any savings, or how much it’ll cost you extra in taxes based upon your situation to see if it’s the right thing to do or not. And it will also tell you the portfolio assets left to beneficiaries. Uh if it is a positive amount, meaning it’s higher than this 4.2 million here, or if it’s a lesser amount because you’re paying taxes at a higher tax bracket. It’s really cool how it all breaks down. Now, we can do a Roth conversions here by doing it over a set number of years. So, for example, in this one here, they want to do $60,000 a year for the next eight years. and it will spit us out a report to tell us what that will do. So in this particular situation, it would reduce their taxes over the [ __ ] accumulatively over their lifetime. It would reduce their taxes by $140,000 and it would then increase their assets to let to leave behind to their beneficiaries by $828,000. So that’s the kind of report that it will tell us. Is it the right thing to do? Was it not the right thing to do? And what I like to do here, and again, this is example. If we do say 60,000 over the next 8 years, I I think it’s more I I usually do it filling it up to a different tax bracket and filling up to the different levels of of taxes that you have. Again, this report will tell us where your expenses are and if you will need to take any extra money out of your assets or when your RMDs kick in. Do you have enough or whatever. It’s a really cool report and everything. And again, it will tell you what it will be, you know, based upon your assets, what it will be throughout the rest of your life and kind of how much you can kind of expect to to pass on to beneficiaries. Obviously, if there’s any deviation for the plan that we put in here, that’s going to affect everything. Could be worse, could be better. We just never know. But then, as I said, we can also fill it up to a set tax bracket here. So, in this example here, we want to fill it up to the 22% tax bracket, and it will kick in and tell us what the report is. So, instead of doing $60,000 for the next 8 years, we can do it up to the 22% tax bracket. So, based upon the base information of not doing any Roth conversions, this would give us by doing it up to the 22% tax bracket, it would give us uh it would save us $116,000 in taxes over our lifetime. And then it would add an additional $250,000 um to your bene to your base when you pass on to beneficiaries.

And one of the reports that isn’t on here that I really like to take a look at is what type of an account will your beneficiaries then receive. Again, beneficiaries not including a spouse. So, for example, I’ve got three kids. It will tell me at the different tax brackets and everything, how much they would be able to receive in both Roth IRA money or traditional IRA money. And, you know, then we can kind of, you know, take a look and see what the expectation is. is how if there’s any traditional IRA money left over, how much uh they will then have to pay taxes on it and everything. So again, if we do it up to the 12% tax bracket, it it would show us the different ages. And one thing that also on another report here gives us our break even age also. So up until a certain age, it may or may not be beneficial to do a Roth conversion. um you know up until like uh say ‘ 86 it would be better if you left your money in the traditional IRA for you not for your beneficiaries but for you but then let’s say 86 is a break even point and from 86 there on after it’d be more beneficial to do a Roth conversion so in conclusion here we don’t know what our future taxes are going to be so while we do know what the taxes are now it might be a really good idea to do a Roth conversion. Um because again with our national deficit going up, the debt is just skyrocketing, who knows what future taxes are going to be. Okay? And we have a very effective tool here to determine to see which is the best way to do a Roth conversion for you. if it is the best way. Uh the the longer of a time frame you can do uh the Roth conversion and leave it in the Roth, the more beneficial it is for you and for your beneficiaries, which is kind of nice. Okay, we can also take a look and see which is the most taxefficient way to do a Roth at which tax bracket. You know, I did a plan a couple of about a month or so ago and for that gentleman, it was better if he did it all at one time. Now, the unfortunate thing is if he decided to do that, he was going to pay $1.5 billion towards taxes for that year, but it would stop his Irmas that he’s currently paying and leave all that money as Roth beneficiaries to uh all that the Roth money to beneficiaries so that they didn’t have to pay taxes on it and everything. So, we’re here to help. There’s so many different ways that we can help. It’s not just the the Roth IAS. We have so many different options that are available to you. You know, how can we help is we do estate planning here. Part of this wealth vision report. That’s the uh that’s the report that I run here with a Roth conversion. It’s just part of it. It’s a wealth vision. We do estate planning here. We look at all different types of financial uh planning and and investments and everything. But you know, why Aerys? Why Aerys over say somebody down the street or whatever. So what we like to get here as Aerys is we like to get to know you and design a plan specifically for your needs and what you’re looking for. And then we use a team approach to take a look at your situation and make sure that it’s the right thing to do. And then we like to build a lasting strategy and for a rel excuse me for a relationship for the rest of your life. The cool thing here with Alliance is you would be working with me or any one of our other financial uh consultants and any question you have, you call us directly. I you’re not calling a toll-free number and hoping hoping that you don’t get somebody just fresh out of training. But we all have many many years of of experience here. As I mentioned, I’ve got 13 years of experience here at Alliance and prior to the big bank, I was there for about 10 years. So, I’ve got uh almost a quarter of a century of experience of investing and I’d love to help you out here. So, with that being said, let me uh get to some of these questions here. Um,

hold on a second.

Here we go. Okay. So, let me get to some of these questions. Let me do this here for if anybody would like to have a um contact me directly. This is my phone number here. Um and if for if there’s anybody on the uh on this webinar here on the telephone, let me give you my direct phone number here. Uh my phone number here is 773 462 861 uh 8 8 73 462 8612. Sorry about that. Um, I will tell you, as I mentioned very early on, maybe before some of you uh joined on, I uh this is my last day in the office this week. I will be out the next two days. Uh so if you call me uh and leave me a voicemail, my voicemail said will say that I’m out of the office here. Um then um I will be back in the office next week. Um and that’s my direct email address. Uh bbaker.lplantcreditun.com. lplatantcreditun.com

and let me get to the questions here. Uh we’ve got many of them here. So first question is a retirees pension considered enabling income uh for a no it is not for a contribution a pension 401k does not count as income for you to be able to do a contribution. You can again there’s no income requirements at all for a conversion but a contribution it does not count towards that. Uh haven’t inherited traditional IRA from when my father passed. The trust has me take out RMDs. Okay. For the last 20 years. Yep. I I won’t be 73 for 6 years. So I am confused. Are they already taking out RMDs? Should they not be doing that? No, that is correct. they should be taking out RMDs. So since your father passed away prior to uh 2020, you do you you have needed to take out RMDs every single year. Again, roughly about 4%. Um but again, the government then realized that they probably won’t see all that money for a very long time and that’s why they changed the rules. So since he passed away 20 years ago, taking it out every single year was the correct and appropriate thing to do. Uh I have some small 401k accounts less than 8,000 per account. Uh I understand taking any of them out and converting to a Roth will be a tax event. I have to declare as income the year converted. Yes. Can I convert partial amounts out of the 401ks to a Roth? Yes, you can. So, you don’t have to do the entire amounts. If you’ve got a a an $8,000 account, one of your many that has an $8,000 account, you could do any partial amount of that and leave the rest of it in the 401k. Uh, so you’re not taxed on it. Do you have a table showing age, income, tax brackets, and where there would be a cut off point where the conversion is no longer worth doing? Um uh if you just want to Google uh 2026 tax income brackets, you can find that again based upon whether you’re married or single. Um and the report uh that I the complimentary report that we have here um would tell us whether it’s good or not to do that. In fact, let me launch this out here. Let me send this out here. If you would like to have a one-on-one conversation with me, or if you would like to have that Wealth Vision report that talks about whether you should do a Roth conversion or not, uh please hit yes to this here. I will not be able to reach out to you until next week, but I promise I will reach out next week and uh then we can schedule a time to do to talk about the the Roth conversion or any other questions that you have with that. Uh let’s see here. I have an inherited traditional IRA from Oh, answer that. You did it in both. Uh, I have a small for Okay. Uh, Katherine, you did it in both. Okay, good. Uh, can you explain how a backdoor Roth IRA would work? A backdoor Roth IRA and a Roth conversion is the exact same thing. So, a backdoor Roth IRA, so again, if you have an income limit, well, I’ll give you an example. Back when I was at the big nationwide bank, I had a client of mine who was a an anesthesiologist for two hospitals in Chicago, made buku money, way over his income limit that he could do as a contribution. So, a backdoor Roth IRA is basically the same thing as a uh Roth conversion. He would come in every single year, add money to his traditional IRA because there’s no there’s no income limits on on when he would not be able to add to it and then we would convert that traditional IRA over into a Roth. And by doing that, you can still get money into a traditional IRA or excuse me, into a Roth IRA. You just have to do it through the back door or a Roth conversion. It’s the exact same thing. Um and with that that is all the questions that I have. So again thank you everybody for joining me today. Um again if you have any questions please feel free to give me a call. For those who answered yes on the questionnaire I will reach out to you next week and I will give you a call first and if I don’t get a hold of you I’ll leave you a message and I will also shoot you an email. And in my emails, you will have access to my calendar and uh you could schedule a time so we’re not playing phone tag back and forth. But I hope uh this was helpful uh to everybody and I hope you have a great uh rest of your week and have a great weekend. Take care. Bye.

What’s up? Two minutes after the hour. Let’s go ahead and begin. So again, good evening everyone and my name is Baptist Bruner and I’m a Texas-based financial consultant with Alliant and just a part of a team of financial professionals with the Lion Retirement Investment Services who give regular educational webinars. Again, like to start by thanking everyone for taking the time out of your evening uh join us today. Get a better understanding of Roth conversions, which can be an effective retirement tax strategy, but it can also be a great legacy planning strategy. We’ll get into that too. Uh this presentation will be about 4550 minutes long. Might be able to do it a little bit quicker. Might skip a few slides. And as always, we will have time at the end to ask any questions that you may have. When that time comes, uh, just go in the question and answer the chat section. Go ahead and take the time to identify both of those. Now, there’s two areas where you can ask questions. Q&A or the webinar chat. We’ll get to it when that time comes. Go ahead and ask away and I’ll be sure to get to them.

All right. Uh, we’ve had some problems with this as of recent. Few people have been throwing their AI notetaker in. Please don’t do that. Um, proprietary information, I don’t know. But if you want to take a photo of the slide, I can’t stop you from doing that. So, if you find some good beneficial information in this presentation, I cannot stop you from taking photos of it. But let’s just keep the AI notetakers out of here for the time being. All right. some of the upcoming webinars that I will be presenting. Uh two weeks July 9th, designing your retirement income blueprint, coming up with a strategy to maybe fill in your income, utilizing your social security, maybe you have a pension or an annuity, what are the best ways to draw your retirement income? What might be a better tax efficient strategy? What might be a better way just doing it to where you are able to grow your estate and your wealth best? bunch of different things in here. Great webinar. And then after that one, we’ll have another one that’s another evening one similar to this later in July on how to get rollover ready with IRA planning. Great webinar here as well. Maybe trying to transform your 401k into an IRA where you will have much better and a much larger um investment selection available to you. So consider that as well. And of course, our team at Alliant Retirement Investment Services. We are focused on helping you, our members, understand the ins and outs of investing, saving for retirement, and of course, much, much more. Go ahead and take a photo of this one. Nobody will get mad at you for that. But take a look at our website, aerys a r i s.alliancreditun.com, uh/events will bring you to our webinars page. Uh, we have a podcast on there. hasn’t been updated in a while, but I think Christian’s going to do another episode on there soon. Now, really great resource. And then, speaking of resources, we also have a resource center. So, slashresource center-c center. Lot of calculators in there, tips, tricks, everything. Go ahead and take a look on there just to see our podcasts, uh, our webinars, and our resource center. It’s a free tool available to you as a member.

And I’m on the investment side of things with Alliant. You know how we can help. We do complimentary foundational financial planning, investment management, management, advanced planning, you know, showing you a comprehensive range of investment choices. But a new thing that we’re offering is more and more help on estate planning. So, you probably joined us for a couple of our webinars on estate planning if you’ve been on a few of these before. Heck, I think I just did one two weeks ago. But a new thing that we have um is an estate planning tool available to our clients, those who are investing with us. Uh we have a subscription at trustinandwill.com that’s at no cost to our clients where you are able basically use the digital platform for estate planning to create your will, a trust if necessary, and they have attorneys readily available to you to can ask them questions if you do get stumped along the way or if you just need some more help. But it’s a really great digital tool for state planning. So consider that.

All right. So now we’re going to start talking about taxes and the actual subject why everyone’s here today. But let’s just start with the future tax environment and how budget deficits and titlements and taxation can affect Roth IAS. So, here’s a scary number, and that is our current debt. Over $36 trillion, over $16,000 for every single person in America. That’s including recently born babies all the way to those who are 110. And as we look at budget deficits, for example, over the last 10 years, what you’re going to find is they’re on average about a trillion dollars most years, more or less. And I’m really talking about the 2014 to current days. And when you get into 2020 20, you know what happened? Co hit and all of a sudden we go from a trillion and those types of deficits to to three trillion pretty much overnight. So you have that in both 2020 and 2021 and the deficit spiked up and so far has not come back down. And that’s caused a pretty sharp increase in the overall debt which is about 36 trillion. And maintaining that debt when interest rates are low is one thing, but with interest rates rising, the carrying cost of that debt, it’s going to become very honorous. Let’s look at how that’s affecting entitlements. So, Social Security, Medicare, Medicaid, as well as the interest payments on those debts consumes all the tax revenue that you have coming in. And according to the Congressional Budget Office, that’s actually going to happen in 2035. So, consider the impact of that in another 12 to 13 years. It leaves nothing for everything else like human health and human services, highways, defense, all those other things that becomes pretty problematic as you can see. So if you’re the government, there are really only two things you can do to counteract that problem. Number one, you can cut spending, which yeah, do we really see that happening? or what we’re more likely to see is taxes being raised probably starting with the highest earners, but at some point it will trickle down a bit to the lower earners. And then the middle and the middle high income people eventually will feel the impact and they’ll probably be the ones that get hit the hardest. And one of the troubling aspects of IRA planning is that the tax rate on your future distribution is just unknown. Even if you can project your income with relative confidence, there’s no guarantee that tax rates will remain the same. And while it’s hard to find someone who doesn’t think they pay too much in taxes now, I hope everyone on the call thinks feels that way. But the reality is that the top tax rates today are pretty low in a historical context. So just take a look at this chart. See what I mean? When the income tax was first introduced in 1913, the top rate was only 7%. But within just a few years, top rate had already skyrocketed to over 70%. And after dropping back down to as low as 25% after World War I, top rate jumped to 63% in 1932. And from there, it wasn’t until more than 50 years had passed when in 1987, the top tax rate finally dropped back below 50%, letting those in the top bracket keep more of their income than they were forced to give over to Uncle Sam. Now, of course, not everyone pays that that top rate. In fact, it’s only a very very small percentage of Americans that do.

I’m sorry, but that said, our national debt is at an all-time high. We have a budget that hasn’t been balanced in years and fiscal troubles left and right for many of our entitlement programs like Social Security and Medicare as well. And it’s possible that rates could go up across the board. And that makes coming up with the right plan just even more important. So how can you are how are we preparing our clients to guard them against that? You know, we talk about diversification of investments and that’s important, but we also need to look at diversification from a taxation standpoint. And that brings us to three areas. Tax now, tax later, and tax never. So let’s look at tax now vehicles. That’s going to be your non-qualified assets like your brokerage accounts that are in managed money mutual funds, stocks, bonds, CDs, etc. Then you t your tax later options include those tax deferred vehicles like your IRA, your pre-tax IRA or a 401k, maybe an annuity. Um, and then there’s also tax never. That’s going to be things that have a big tax advantage. And we’re going to be talking mostly about Roth IAS today in addition to that, but there’s also something like a municipal bond or an HSA would have a tax-free feature. Um, life insurance can also be another one of those as well.

So, if approached correctly, a Roth IRA conversion can be an effective strategy and effort to keep as much after tax tax-free money as possible. And today, we’re going to look at a few important issues that must be considered if you want to consider a Roth IRA conversion. So, one, we got to go through the basics behind a Roth IRA conversion. We also need to go over the considerations for the original owner of that Roth IRA. some other considerations for the surviving spouse of that Roth IRA owner should it be owned by your husband or your wife and then you inherit it and then the considerations for the beneficiaries of the Roth IRA afterwards. So spousal IRA, you know, more than likely if it is, you know, a husband, a wife is the beneficiary of it, that’s section three. Section four mainly referring to your kids, your nephews, your nieces, whoever’s getting your assets after you that’s not a spouse. So, let’s just start with the basics. And many of you probably know that there’s another type of IRA. Mentioned it a few times already, but it’s called a Roth IRA. And Roth IAS are similar to traditional IAS in many ways, but there are also some key differences. And one of those differences is that you don’t get a tax deduction when you make a Roth IRA contribution. So once your money is in a Roth IRA, it grows tax deferred like it does in a traditional. But the big benefit of the Roth though, and another key difference between it and the pre-tax IRA is that Roth IRA distributions can be tax-free in retirement. And so if you’ve had any Roth IRA for more than 5 years and you’re over 59 and a half, then all withdrawals from any of your Roth IAS will be tax and penaltyree. Again, tax and penalty free as part of what’s known as a qualified distribution. Even if you need to take a withdrawal sooner, you can always take out your Roth IRA contributions tax and penaltyree. And some of the same contribution rules that apply to a traditional pre-tax IRA contributions, they also apply to Roth IRA contributions. So for instance, that same, it used to be 7500, I think it’s 8,000 now for for, you know, the same $7,500 contribution limit applies. There’s also that same kind of catchup once you hit 50 and older. Um, and then, you know, I think it’s $1,100 more. So no, it’s $7,500. If you’re underneath uh under 50, you get an additional $1,100 and catch up to $8,600 once you hit 50 and over. And Roth IRA contributions are also subject to the same compensation rules as traditional IAS as well. So, if you have sufficient compensation, then the only thing that could prevent you from making a Roth IRA contribution is just having too much income. And there are ways around that, too, called a back door. We’re not getting into it today, but there are backdoor Roths as well. But you can see the income limits up here on the screen. And just note that if you’re a single filer, as long as your income is under 153,000, you can make a full Roth IRA contribution. Now, similarly, if you’re married and file a joint return, then as long as your income is under 242K, you too can make a full Roth IRA contribution. You know, while some baby boomer couples retire at the same time, more often than you’d think, one spouse retires before the other. In such cases, you may be able to take advantage of spousal IRA and or Roth IRA contributions. And these are special contributions that allow a spouse with compensation to make a contribution to the traditional IRA or the Roth IRA of the non-working spouse. In other words, the non-working spouse can use the working spouse’s compensation as their own, which allows them to make those contributions. So, the spouse for whom the contribution is being made, however, they still have to meet all the other contribution rules applicable to that type of IRA.

Now, a Roth IRA’s conversion is the name given to a special type of transaction where you move money from your pre-tax retirement account like the pre-tax IRA, the 401k, 403b, etc. to a Roth IRA. But when you make a Roth conversion, the amount of money you convert, it’s just added to your tax return for the year and it’s taxable whatever your income tax bracket, you know, whatever one you happen to be in for that year. So, in this example, let’s meet Jill here. And let’s say Jill has $100,000 in a traditional IRA, and she wants to convert into a Roth IRA. We’ll talk more about why she might want to do that in a moment, or why she might want to do it differently than this example, but we’re still in section one of the basics. So, if Jill moves forward with her $100,000 Roth IRA conversion, she’ll have to add $100,000 of income to her tax return for the year, which will be taxable at whatever rate Jill happens to be in. But because this is a big decision and can have a significant impact in your taxes, it’s always best to discuss this option with your tax and financial advisors beforehand. Now, in my opinion, $100,000 might be a little bit too much to convert just in one year, but you don’t have to do this in just one year. you can spread it out and stay in your lower tax bracket. We can help you figure that out, too. But why would you voluntarily choose to make one of these Roth IRA conversions and pay taxes before you even have to? Well, there’s a lot of reasons, but perhaps the most common reason is one we’ve already discussed. It’s to pay off Uncle Sam now so that you own your retirement account free and clear for life. Just remember with a Roth IRA, you have the potential for future tax-free withdrawals of everything in your account. So if you’re over 59 and a half and you’ve had any Roth IRA for more than 5 years, then all withdrawals from any of your Roth IAS will be tax and penalty-free for life. Keep in mind, like we mentioned earlier, taxes are probably going to go up in the future. Taxes are at a low right now. You know, you have a low rate right now. You could convert it now. and never have to worry about taxes again. Whereas, if you could convert at 12% now rather than if they increase the rates later to 20, it’s getting rid of some of the unknowns of our future.

But something else to keep in mind is that unlike Roth IRA contributions, there are no restrictions on who can make Roth IRA conversions. You can’t be too old. You can’t be too young. You can be working or you can be retired. There’s no minimum amount of income you need or a maximum amount of income you can have. I I think you see what I mean here. But if you want to convert your IRA to a Roth IRA, there’s nothing in the tax rules that will stop you from doing so.

So the Tax Cuts and Jobs Act, that was the first one that was passed back in 2018. It eliminates the recarerization option for car uh conversions made in 2018 and later. But if you convert your Roth IRA now or in the future, you are stuck with that decision. If you go forward with it, again, speak with the tax advisor, speak with the financial adviser to make sure. But if you’re making the conversion, more than likely, you won’t be upset with the decision.

Another big benefit of the Roth IRA and one that many retirees do in fact find attractive is that Roth IAS have no required minimum distributions during your lifetime or RMDs is how you may have heard them. So remember all those RMD calculations and potential mistakes. We talked about those earlier. You know, whenever you turn 73 or 75, depending on the year you were born, you have to start taking money out of your pre-tax accounts, you avoid that with your Roth funds. So, they’re not an issue if you have a Roth IRA. So, during your lifetime, you can take as much or as little as you want, and you’re not forced to take anything out at 72, 73, 75 if you don’t want to. So now, not only is a Roth conversion a great tax strategy, but it means doing a Roth IRA conversion can also be a great legacy planning strategy because now your Roth IRA can continue to grow and compound tax-free for your heirs, which also makes it just again a very very intriguing vehicle for estate planning. Your wife or your husband can take over your Roth IRA, no problems. That’s a spousal right. or your pre-tax, right? In this case, your pre-tax accounts, they get to take it on. There’s no um automatic 10-year that uh distribution period. With a Roth, when you give it to your children, they get to just keep it. They don’t want to touch it. They can just let it sit there and grow forever and give it to your grandkids if you’d like. It can be used to make generational wealth. And it’s not that hard to do in some cases. Just depends on your situation. But again, be happy to show you that. But the potential tax-free nature of the Roth IRA may also provide you with additional benefits such as a hedge against tax rates that more than likely will rise in the future. And when it comes to your retirement, there are just a lot of unknowns. What will the market do? What will inflation be like? What will your tax rate be? And so on and so forth. But that last one, taxes. It’s a major concern for many retirees and one we’ve already talked about a bit, but a Roth IRA conversion can just help you manage that risk by paying taxes at today’s known rates. And if tax rates rise in the future, then those tax-free distributions from your Roth IRA will be even more valuable. Of course, if you think your tax rate will be lower in retirement, then that would be an indication that maybe this strategy isn’t the best for you. It might still be again something we can help you figure out, but since Roth IRA distributions in retirement are tax-free, they typically don’t impact the other things tied to your income that we discussed earlier.

All right, we talked about the benefits of a Roth for estate planning purposes, but it also has anciliary benefits. Let me get up this other one, you know, including the impact on social benefits. And by social benefits, we’re talking about social security and Medicare. So, think about an IRA income in a pre-tax IRA. So, think about a pre-tax IRA. That income is 100% taxable. And it’s included, all withdrawals that you take out of it are included as provisional income for social security purposes and it’s adjusted uh it’s included in your modified adjusted gross income for Medicare purposes. So, if you have to pull out a good chunk from your pre-tax accounts, now you might be getting taxed more. on social security and you might have to pay a higher premium in Medicare. Whereas if you had a bunch of Roth funds, that’s not reportable anymore. You already paid taxes on it and the same incoming the same income coming out of a Roth again not taxable. It’s not included in that MAGI, your modified adjusted gross income. So, when it comes to pricing, how much your benefits, how much of your benefits are taxed, and how much your client’s um how much your government benefits might cost, the Roth is really now starting to show some serious value.

So, Roth IRA conversions can be able to they’re able to help you keep more money after all the taxes have been paid. Let’s just look at a hypothetical example of someone over the age of 59 and a half considering a Roth IRA. Um, in this case, it’s a Roth IRA conversion of $10,000. So, we’re going to assume that the marginal tax rate now is 12%, but the tax rate later when it is taken out will be at 24%. Now, if this individual doesn’t complete a Roth IRA conversion and just continue to let that pre-tax money grow, grow, and grow for another 10 years, and we’re assuming a 5% rate of return for both sides of this, they would have $16,289.

Then, if they take the money out and pay the income tax 24%, they would have $12,380 left over. However, if they chose to complete a Roth IRA conversion, they would have to pay 12% of the money in taxes and would have only $8,800 in the Roth IRA. But assuming annual growth of 5% per year for 10 years, they’d have 14,334 they can access income tax and penalty-free. since that Roth IRA owner in this case they hit the 59 and a half fiveyear rule. But that’s potentially almost $2,000 more or 15.8% more if they complete the Roth IRA conversion and pay the income tax now instead of keeping the pre-tax money in the retirement plan or in the pre-tax IRA and pay the income tax later when they withdraw the money. It’s a basic example. You’d be shocked to know how many clients of mine and how many members I’ve done these plans for. And it just shows how much more money you can save in taxes and in fact grow your account by. We’re talking about 15.8% on just $10,000. Apply that same number to your entire account. And now look at that higher number, but also look at it from being a tax-free number rather than a future Uncle Sam’s putting his pocket hand in your pocket in a few years. Think of those two different values.

And this chart can help you understand how a Roth IRA conversion might help given various tax brackets both now and later. You know, as you can see, moving across the top is where you will find the current marginal tax bracket. Let’s just say it’s 12%. Now, if we move down from there, you can see how much of a Roth IRA conversion, how much a Roth IRA conversion might help. But if later this money would be taxable at 24%, a Roth IRA conversion could help you end up with 15.8% more money than after income taxes.

There you go. You know what, folks? I’m going to just go ahead and say it. Take a photo of this slide. This is a good one. It could show you, hey, maybe it makes sense to go ahead and see if this might be a good tool for me.

And not only do we give these general educational webinars, if you’ve been on these before, you already know this, but we also have the planning tools available for you to take advantage of that can help determine your specific effective tax rates at times down the road. It’s just help we can offer to you. Again, it’s your decision. But here at Alliant, you have a lot more available to you than just banking and great CD rates. We can help you figure out what your future is going to look like financially and if we can hit your goals or if you can do a full conversion, etc. We have fantastic planning tools to help you uh decide if maybe a conversion is great for you. But whenever a Roth IRA conversion is considered, you must consider two tax scenarios. One, how the future tax situation might play out without, you know, without a conversion, but two, how the conversion will impact today’s situation. So, we don’t just need to look at the federal income tax bracket. That’s just one of three or four different things that you need to look into whenever doing a conversion. income taxes here. That’s important. But you also want to make sure that you’re not going to start jumping Medicare brackets. Those get kind of steep, especially after once you start getting into the third and fourth bracket. Medicare gets very pricey. Want to make sure that you don’t cross into that threshold. And then next, there’s also the 3.8% net investment income tax that was introduced back in 2013. It’s 200,000 for singles, 250,000 for joint. and they haven’t increased those thresholds since 2013. And obviously money is not worth as much as it used to be then 12 13 years ago. We have to keep all of these in mind whenever we’re talking about a conversion. And again, we can help you with that. We’re here to assist.

But it’s important for clients to watch for an opportunity to reduce the taxes paid on retirement plan money. You know, we encourage you to see your tax advisors for your own situation, but reducing the amount of tax paid may mean more money for retirement expenses or for passing along to beneficiaries. And here we see how much ordinary income a married couple both over the age of 65 can absorb in the various tax brackets. you know before moving to the 12% bracket it’s 5750 130150 before moving to the 22% bracket 2399 before moving into that 24% bracket and so on. Now there’s a couple different ways to approach a conversion. You might want to go just a fixed amount, whatever you’re comfortable with, but here’s a real savvy conversion strategy that might be helpful for you called filling up the bracket strategy or filling up the bucket. So, remember those tax brackets that we just looked at earlier? Well, sometimes you can find yourself in the middle of one of them or maybe even on the lower side of one of them with a lot of room to add before more income before you’re pushing yourself into one of the higher tax brackets. So, maybe you’re in the 12% bracket. You can convert $30,000 before jumping into the 22. You know, in 2021, that 22% tax bracket for married couples filing a joint return goes from about 81 to about 172. You might have a lot of space, pardon me. But suppose then that you file a joint return, your taxable income is 100 grand. That means that you could add another $72,000 of income without going into that next bracket. Making a Roth IRA conversion to that remaining amount could make sense for you. And a lot of times whenever I’m speaking with folks, I’m worried about this jump from 12% here to 22%. Or from 24% to 32 because obviously, you know, yes, 24 is larger than 22, but it’s not a 10 or an 8% jump. It’s a two. Sometimes it makes sense to do a little bit more than the 24. Again, everybody’s different. Nobody there’s no cookie cutter way of doing it. It’s just getting to know you and figure out what your goals are. But if you plan to convert a sizable portion of your IRA, this approach is often more tax efficient than converting the full amount at one time and instead you can make smaller Roth IRA conversions over a number of years, filling up your bracket each time. And this can help reduce the average tax rate you’ll pay on your converted money and also spreads that tax bill out over a very long period of time, making it a cheaper strategy for you. Now, higher income Medicare beneficiaries are not held harmless and have been paying more for their Medicare parts B and D coverage for several years in the form of income related monthly adjustment amounts, also known as IRA. So, the Medicare Access and CHIP Reauthorization Act back from 2015, otherwise known as DOC fix law, it enacted this new modified adjusted gross income brackets that went to effect starting with the 2018 Medicare premiums. So the 2024 tax return is used to set the 2026 income related monthly adjustments, those IMA brackets. So whenever you’re you want to know what you’re going to pay for Medicare, you’re going to know what bracket you’re going to be in already for two years out. Whatever bracket you are going to lie in for 2028 is going to be based off of your 2026 earnings. What you’re paying this year in 2026 is based off of your 2024 earnings. You have to prepare for these things years out. This is where a conversion can come into play. At least we know the numbers ahead of time, but it all comes down to just good planning. Now, Roth IRA conversions can be especially useful if you had a low income year. You know, for example, you might be a business owner with unusually low sales or you’re paying high non-recurring medical bills. Maybe you’re retired but not yet receive social security benefits, etc. These are questions to ask to see if a Roth conversion is a good move for you. You could do a oneoff year, take some years off from doing a conversion, get right back into it. Who knows? Everyone’s different. Again, now moving on to point number two, the original IRA owner. Once you reach a certain age, the law requires that you begin to take, again, we discussed these, we’re going to get into them now. The law requires you to take what are known as required minimum distributions or RMDs for short from your traditional IRA or your traditional 401k. And those same rules apply to just about all pre-tax accounts. But RMDs are simply the bare minimum that Uncle Sam is going to require you to take from your retirement account each year to satisfy the tax code rules. Uncle Sam says, “Hey, I let you put all this money away 50 years ago, tax deferred. you haven’t paid me on it yet. Now, I’m forcing you to start taking it out because I want to get paid. That’s how it works right now. And the specific age when you must begin taking RMDs, it depends on when you were born. So, if you were 72 or older as of the end of essentially, I’m not going to go through that. If you were born in 1959 or earlier, 73 more than likely might be 72. If it was 72, you’re already taking them, but it’s 73. If you were born in 1959, 58,55. If you were born after in 1960 or later, it’s 75 right now. Just depends on the age. They changed the rules for the Tax Cuts and Jobs Act. So, yes, you will have to take them out at 75 if you were born in 1960 or later. Final thought though before we move on, just remember that you can always take out more, but if you fail to at least take the minimum amount out that Uncle Sam requires you to take out, IRS can actually hit you with a 25% penalty. 25% penalty for any amount that you should have taken but didn’t. So, if you don’t take out 50 grand, you know, here comes a tax bill for $12,500 or a penalty of $12,500.

And you have to take them out by December 31st of the year. Don’t have to tax season to do it. December 31st. Of course, just most people don’t think about things in terms of factors or life expecties. So, here’s a chart I think you’ll find helpful. It shows the approximate percentage you need to take out of your IRA or your pre-tax accounts from 73 to 90 in order to steer clear from that penalty. So if you look, you’ll see that each year the percentage you need to take out increases. Doesn’t necessarily mean you need to take out more money each year than the last though is that also depends on how much your IRA gains or loses from year to year. But these are the more this is the mortality table right here. Oh no, this is just the percentage. You can find the mortality table on the IRS’s website. All you do is take your December 31st final statement from 2025, divide it by that number that’s next to your age. That’s your RMD for the year. Again, make sure you take it out before December 31st of the year. But if you do a Roth conversion, your Roth funds avoid all this and you can just keep your money and let it grow. Now, since the R&D age has increased from 72 to 73 and now it’s 75%, it may be tempting to simply delay all IRA with draws until then. Well, not everyone will be able to do this. Those that can should be aware of rapidly growing distributions that might move them into that higher tax bracket. So, you can see the different ones here. We’re assuming that the initial IRA balance uh at age 65, it earns 5% per year. You can see that by pushing it off and the larger growth now forces you to take out more money and you might go from a 24 to a 35% tax bracket. See it all the time again. Next webinar is going to be about your retirement income blueprint. We can find out ways to solve that too.

Now this graph illustrates the increase in RMD amounts when compared to inflation. It assumes that the initial IRA balance is a million at age 73 and earns 5% per year and an inflation rate of 2 and a.5% which is about the 30-year average. Now, this assumes the RMD is taken at the end of the year. And if we assume that tax brackets and deductions are adjusted at the rate of inflation, if the RMD amount is increasing faster than inflation, it could push the taxpayer into a higher bracket. And if this seems likely, Roth conversions and other strategies should be examined as part of a draw down strategy. Again, a financial professional and tax professional should always be consulted before taking actions to manage this too. So therefore, appropriate Roth IRA conversions before the RMD, before those distributions build too high, could be a viable strategy to help you keep more of your money after income tax has been paid off.

And so in fact, this is a snapshot from our tool. That’s just an example of a married couple that’s retired and living on their social security. And the dark blue, that light blue small amount in the middle is their pension. And that darker red, darker orange color, that represents their RMD. And that red line that’s going across is what they want to spend each year. But you can see that Uncle Sam’s forcing them to take out more money than they need to. This is one of the things that we look at whenever we’re doing financial planning is how to get rid of your RMD problem. We want to try to keep you in that 22% bracket or that 12% bracket, depends on where you are, but you can try to at least mitigate your RMDs to where you’re not forced to take out more money than you need if you don’t want to. Giving you more control over your money rather than letting Uncle Sam tell you what to do with it. And based on that info, you can see that their tax liability is going to increase based on those RMDs. This is just the cumulative amount of taxes. Um, whenever we’re doing financial planning, we’re just going to go through this real quick, but this is essentially what we can show you in the plan, but by doing the Roth conversion, you can see that red is just additional taxes paid earlier on before their RMDs come in. And then we can show you the gray, which represents less taxes they paid later on. in fact showing you how much less you’re spending in t or your how much less you’re paying in taxes and how much you can grow your portfolio by. Why is that? How do you grow your portfolio by doing a Roth conversion? I’m paying more money. I’m made my account value up smaller. If you have a $100,000 Roth and $100,000 traditional, which one’s worth more? Obviously, the Roth because it’s truly hundred grand. $100,000 traditional is Uncle Sam’s waiting to take his bite out. So, it might be worth more like 80 or 75. Same thing. Both are growing at 8%. Which one’s actually growing at 8%. Again, the Roth. Because part of those earnings that you have in this pre-tax account every year are eventually going to be Uncle Sam’s. So, by having Roth funds, by doing a Roth conversion, not only can you save money in taxes, use it as a legacy planning tool, can increase your portfolio because of tax-free growth.

All right. So, moving on to the surviving spouse spouse. In this hypothetical case, we see Adam and Ann’s income and assume they have $58,840 of ordinary income from IAS and or pensions and $60,000 retirement income. In their married filing joint tax status, they’d pay8 $8,841 in federal income tax. Now, if we look at this example with Ann filing as a single taxpayer, she would lose a social security check and need to withdraw $98,000, $99,000 in order to pay the increased taxes of $18,9345 and keep the after tax income the same. So, here the IRA withdrawal would increase 68% and the taxes would increase $ 114%. But while Adam was alive, they were in the 12% marginal tax bracket. And with Adam gone, Ann’s now in the 24% bracket. And we call this the widow’s penalty. You’re enjoying these file married filing jointly rates or basically just double of the single amount as far as the modified adjusted gross income goes. But when one of you goes, Uncle Sam doesn’t really give you any sympathy there. You’re now filing single and now you have RMDs on top of it, which they might have thrown you into the 22% bracket when you’re married, but now they threw you into the 32% tax bracket. We see it all the time.

But appropriate conversations before that first death could be a viable strategy to reduce, you know, for the surviving spouse and give him or her access income tax-free.

And this slide is demonstrating what it looks like when comparing tax brackets between married filing joint versus single. As you can see, the single filers tax brackets are compressed when compared to some married filing joint. One reason this is just very important is because after the first death, the surviving spouse often retains all the assets and the increasing RMDs as mentioned, but they’ll also be at a much higher tax rate compared to when they were married. And as a result, some of you may want to think about accelerating those IRA distributions or doing a Roth IRA conversion or maybe just taking more funds out of your tax-free account while you’re married and why you can take advantage of lower tax rates. And we’ll look at that a little closer in the surviving spouse section next to come as well.

Now, moving on to beneficiaries to finish this discussion. Let’s look at just a hypothetical example of Carrie here. She’s 45 years old. Assume she’s inherited a million dollars in form of a traditional IRA. We mentioned this earlier. This is a great example. She assume she inherited a traditional IRA from her mom who recently passed. She doesn’t need the money now and doesn’t want to increase her taxable income. Now, under the old rules, she could have stretched the withdrawals and would only need to take out a small R&D at 25K in the first year. But under the new rules, if she were to withdraw evenly over 10 years, she’d have to take $123,328 out each year. So, the old rule was preferable. You got to stretch it out over a longer period of time. In fact, many of you might have experienced these. Now, you have to get rid of it in 10 years. You have to distribute all the funds. More than likely, whenever you go, statistically speaking, I hope everyone on here lives be 120 plus, your children are probably going to be in their early in their peak earning years. So, as opposed to you converting funds at 12% 22%, your children might be make already in that 22 to 24% bracket, now their inheritance is taxed at 32% and 35%. Uncle Sam’s not spending your money wisely. I don’t care what side of the political spectrum you’re on. you know, they’re not spending your money wisely. Shouldn’t feel good that they’re your children are going to be spending 35% 32% on your hard-earned money.

So, in this hypothetical example, let’s look at the taxes on this inherited IRA, assuming that Carrie is single and she has taxable income of $90,000 a year. Without the inherited IRA distributions, she’s in that 22% bracket. But when she adds that $123,000 to her taxable income, she’s now up in the 24% tax bracket, as well as adding income in the 32% tax bracket, too. So, this is a simplistic example, but Carrie would pay over $310,000 in the inherited IRA over the 10 years on that distribution.

And one final hypothetical example to help illustrate things. Let’s assume mom and dad have an IRA that will most likely go to their son as a beneficiary and they’re thinking about converting 50k for the next 5 years or 50k a year over the next five years because they’re in the 12% bracket. Their son’s in that 24% bracket now and he’s likely going to stay there.

So in this example, we see that without the conversion, mom and dad will have access to more money than their beneficiaries because their tax bracket’s lower. If however, mom and dad do the conversions at their 12% tax bracket, their access remains the same, but the beneficiary values increase because that tax is paid in a lower bracket. And then after 10 years, the converted values for the beneficiary are about $56,000 more than the unconverted values. And then after 20 years, this increases to about 10 $110,000. But just two things to note. First, in this case, doing Roth IRA conversions did not reduce liquidity for the parents as indicated by the dotted red line and the conversion gold line. Second though, beneficiary received more because the taxes were paid at a lower tax bracket as indicated by that dotted orange line and the blue line.

So, two things to note. I’m sorry, but no, appropriate Roth IRA conversions before the owner’s death. They can be a viable strategy to help reduce the income taxes that the beneficiary must pay. Now, considerations of Roth IRA conversions. Again, no income limitations. Taxable at your ordinary income tax rate for that year. The deadline to do this too is also December 31st of the year. So many of you might conver uh contribute to your IRA come April the next year during tax season. Can’t do that here. Here you have to do it in the year that you convert. So if you make a conversion in April, it applies to that year. you want to make one for 2026, you have to do it by December 31st of this year. Again, there’s no pre-age 59 and a half additional taxes. And as we’ve mentioned previously, be be aware of unintended consequences of Roth IRA conversion. You know, increasing taxes, uh you could increase your social security taxes, you could increase your Medicare bracket. These are things to seek out help from a professional and see if this is actually worth your time in doing. And of course, these strategies aren’t for everybody. Now, as you can see here, and there’s no guarantee that a Roth conversion will achieve those intended results, but we can help you plan to see if it might be something up your alley.

Really, just a couple of slides to illustrate what our tool shows, how our tool can show you, hey, this was all orange ahead of time. There’s RMDs. We do a conversion. Boom. Now, you’re not being forced to take out more than you need in any given year. You can see how your assets would just continue to grow, etc., etc. so on and so forth.

All right, folks. In conclusion, we don’t know what our future tax rates will be. We know what they are today. We know that they are at a absolute low.

If this is something that you think would be worth it to you, again, we offer the help and the advice to do this. I just showed you our financial planning tool, some slides from it. We’re happy to run you through this to see if this is an appropriate strategy for you, if this is something that can assist you, if it’s a good legacy planning tool, if it’s a way for you to save taxes, if it’s a way for you to grow your assets, if you want to avoid RMDs, if you don’t need RMDs, we’re here to help with this. So, at no cost, at no obligation, it doesn’t cost anything. I still I get asked that even after saying it, but I’m going to repeat it again. We’re here to help you. So, if you’d like for us to do a financial plan, if you’d like to see if a Roth conversion is a good strategy for you, please click yes on this poll right here. We’ll schedule a meeting. Be happy to show you how we can help. We’re just grateful to have you as members. We’re here to assist our members. That’s why credit unions are better than banks. You are the owner of the credit union, not stockholders like it is for banks. you are the owner of this credit union. We’re here to assist. So, please click yes in the poll. You’re not going to offend me if you say no or not at this time. I would appreciate if everybody does answer the poll. That way, it shows that I kept your attention and that is one way that my boss measures me. I am currently in first place with the best retention rate or attention rate in the company. Um, so please help me look good. Click yes. No, not at this time. Doesn’t hurt my feelings. All right. And with that, we’ll start getting into some questions here. Go ahead and ask them. Chat, Q&A section. We have a couple of questions here already.

Let me start reading these to myself so I know what I’m actually talking about. But yeah, still have about 50 people who need to answer the poll. If you don’t mind answering, I would really appreciate that.

Okay. I have a concern about the Okay, I think this is something that we covered already, but I’ll just reiterate it and you probably don’t need me to answer this anymore, but have a concern about the increase adjusted gross income due to the IRA distribution. I assume you mean conversion. Won’t this increase my Medicare premium? It can. That’s why we need to do proper planning. We need to ask you all the questions. We need to understand what your income is going to be for that year. I love working in conjunction with your CPAs, too, because this helps me figure out the right number to convert. But that’s really what you do. It can throw you into another bracket. Sometimes it makes sense to go from bracket one to bracket two because of how much you can save. Generally speaking, not so often, but it it does make sense for about five of my clients were doing that where they’re going to jump brackets for about three years from ear because of how much more money they’ll save in taxes down the road.

Okay. How can I figure out myself if this conversion will be beneficial for me? Schedule a meeting with me or click yes right here and we will find that out together.

Isn’t it possible that the huge tax I may pay now in the conversion may not be much different than the smaller tax distribution with RMDs? But depends on your situation. Hey, how much money do you need right now? Are you being forced to take out more than you need? It also depends on your timetable. If you’re in your early 60s, it might make more sense than to do it whenever you’re already taking your RMDs. But again, that’s something that we can cover. Schedule a meeting with me. Don’t see poll, not in the app. Um, if it’s to schedule a yes poll with me, then please Oh, wait. Here.

Okay. If you would like to, if you don’t see the poll, that’s a problem we’ve had a few times. Schedule an appointment with me here. I’ll be sure to add you my numbers that way. If you don’t want to schedule one, you can just say it in the Q&A right there, but can’t see the poll. Didn’t want to schedule. I’ll let them know. Thank you. I appreciate that, too, folks. I really do.

Do you have to have earned income to make the conversion over to a Roth? No. To make a contribution to an IRA, you need to have income. To make a conversion, no income.

How are the funds insured? I don’t know what you mean by that, but if you’re talking about the funds that you have with the credit union, NCUA.

Okay. For those who said yes and you just didn’t get the poll, please schedule a meeting with me in that QR code. If I don’t hear from you, I’ll reach out to you via email.

It should come up. It might be hidden behind some of the other things in the brow. It might be hidden behind the browser. Thank you very much. I appreciate that. Uh I get hung up on having nondeductible IRA contributions mixed with traditional IRA funds and the pro router rules. If I want to convert to Roth, do I need to work with a CPA or financial consultant to sort this out? Work with both. You know, you’re at this time in life where CPA costs a couple hundred bucks and they can might pay their weight in gold, but doing a non-deductible IRA, that’s a contribution. That’s the backdoor Roth. So, if you are over the contribution limits with income or if you’re over the income limit to make a contribution to a traditional IRA or any IRA, you can do a backdoor one where it’s basically you make a contribution to a traditional account, a pre-tax account. You don’t deduct it. It’s converted to a Roth. It’s called a back door. It’s one way you’re able to get contribute to Roth uh IRA even over the income limit. It’s a simple process, too. But we can go over that again together. I’d be happy to schedule a meeting with me. QR code, email, click yes, whatever. Uh, we have about 15 more people that need to answer the poll. If you’re still with us, I’d appreciate that. If not, I understand. And I just hope everybody keeps joining. So, I appreciate everybody joining us today. It looks like that’s all the questions we have. Please bring bring more bring more questions. Don’t don’t be nervous. I’m here to answer them. I’m not going to charge anybody or send anybody a bill for a dollar for every question you ask. Please, we’re here to answer all of these. We’re kind of trying to differentiate ourselves from other We’re not trying, we are differentiating ourselves from other financial institutions by trying to go above and beyond for the members and offering these webinars and offering the services that we do. Apparently, nobody else does this, so we feel very special about ourselves. But please, any questions, we’re here to help with these. If you want to find out if a Roth conversion is good for you, if you want to find out if it’s not good for you, we can give you that answer. It’s a simple conversation.

No penalty. Even if it’s before the 5 years, there’s not necessarily a penalty. It’s just the Roth funds in there, not the earnings. If you start ear reaching into the earnings portion of it, then that’s where you might be taxed. But you’re more than likely not going to have to worry about that. I I’ve rarely seen that unless there was a serious life event while someone was in the middle of a Roth conversion. Um, you don’t need to worry about the five-year rule necessarily. It’s good to know though, and that’s a great question.

Okay, let me go back here.

Can the converted amount be withdrawn anytime the way contributions can? It’s the same thing 59 and a half fiveyear rule like I just mentioned, but after five years, you’re good. If you’re over 59 and a half, no penalties either. Can I contribute to my Roth IRA on a monthly basis? Of course, you can. You can contribute to it in whatever frequency you’d like. You can do all at the beginning of the year, all at the end of the year. You can put in, let’s see, $8,600 divided by 365 days of the year. You can put in $2356 every day of the year and contribute to your Roth if you’d like.

Are there better types of stock ETFs to do a conversion with? I would say to each their own for that question. That’s a great question, too, because generally speaking, hey, you’re doing a Roth conversion. You want these funds to these funds are taxfree while we’re converting. We’re also trying to draw down the pre-tax funds so there’s less of a pain to deal with later with RMDs. So, you’re more than likely not going to be reaching into your Roth funds after the conversion or really near that time because you still want to wait on that 5-year period. What does that mean? Means you can be a little bit more aggressive with your Roth funds. So, if you’re in retirement and you just want to be pretty conservative, go for a 3 to 5% return, great. But with your Roth funds, you know, 3 to 5% return on a pre-tax account. Remember, Uncle Sam’s getting his cut of those earnings. With the Roth though, you can go a little bit more aggressive. It’s kind of how I illustrate it most of the time, too. I’d like to show people that

if you convert to an existing Roth IR Oh, by the way, how’s it going? Long time. Good question. Okay. Um, if you convert to an existing Roth IRA that’s been open for more than five years, is there a restriction on withdrawal portion? Yeah, it’s the same thing. Just a five-year countdown happens with new funds. So, if you did a conver if you have a $300,000 Roth IRA and it’s been open for 10 years, but you want to convert 50,000 into it, the 50,000’s now on the five-year click on the fiveyear ticker there, fiveyear timer. the other 300,000 is going to be available, but still um you’re good in that case. It’s just you’re going to be reaching into the other funds first.

See, glad to hear.

Does the surviving spouse have to take the other spouse’s RMDs and his her arm? Yep. That’s what we’re referring to as the widow’s penalty. So, you lose the joint status and now you have both RMDs to deal with and you more than likely have the higher social security. So, you are you have money problems. Not not lack of money problems, but you got money problems or you’re going to have to worry about taxes, too. So, you do have to it’s as if it was all already your own IRA the entire time. So, the surviving spouse does have to take the other spouse’s RMDs once they pass.

All right, folks. I believe that is the end of it all right here. I have to get running. I am moving to a new spot down in Houston and I need to go meet with somebody about selling some of my old furniture. Look, if you ever have any questions, if you don’t want to do a consultation, that’s fine. We’re here to help. Like I mentioned, here’s my info. Send me an email with any additional questions if there was something that kept you up at night tonight. Here to assist you guys. Here to assist our members. For those that said yes, I will be in touch soon. I’ll probably send you an email and give you a phone call tomorrow. We’ll schedule a meeting at time convenient for you. Hope everyone has a wonderful day. Thank you very much. Take care. I’m glad it was helpful.

All right, welcome everyone. Thanks for joining us today to our webinar presented by Alliant Retirement and Investment Services in partnership with Alliant Credit Union. We’ll we will have a live Q&A session uh at the end of the presentation. Please submit your questions regarding today’s topic which is social security, Medicare and your retirement or about Alliant Retirement and Investment Services in the chat or the Q&A. The presentation is recorded and a link will be provided later by email for on demand viewing. Our speaker today is Tom Davia of Alliant Retirement and Investment Services. Tom is one of our financial consultants. He’s based in Chicago uh in the Chicago area. He holds the certified financial planner designation and has over 27 years of experience in the financial services industry, including nine years with Alliant. During the Q&A session, we’re going to launch a poll uh asking if you’d like an appointment with Tom. We encourage everyone to answer the poll uh so we can learn what’s helpful to you as members and continue to bring financial education to you. Please be sure to adjust your volume to an appropriate level as settings vary by user. Now, let’s start our presentation. Social Security, Medicare, and Your Retirement.

Hello everyone. Thank you for joining me today. My name is Tom Davia. I’m a financial consultant here at Alliant Retirement and Investment Services. Today, we’re going to be talking about Social Security, Medicare, and your retirement. We’re going to be talking about how Social Security and Medicare programs work. uh discussing some important issues facing both programs and a few effective strategies for supplementing these retirement benefits. If you’ve been concerned about Social Security and Medicare being reduced or eliminated, you’re not alone. Both programs have been in the news quite a bit lately and there’s some talks of insolveny, tax hikes, increased eligibility ages, all that’s uh created a lot of confusion around these programs. So, we’re here today to kind of walk you through that and answer some of your questions.

Some educational resources for you. Our team here at Alliant Retirement and Investment Services is focused on helping you understand the ins and outs of investing and saving for retirement and much more. So take a look at our website if you get a chance. It is a aris.allcreditun.com.

There you can see the list of our weekly webinars, our podcast which I’m the co-host of, and our financial blog and resources available to you as well.

So, how can we help you? We are a full services financial planning organization here at the credit union, a fiduciary firm. We can help you with retirement planning, we can help you with your investments, life events, and generational planning. So whether you have questions about today’s topic, social security, your 401k plans, current investments, if you’d like to do an investment review, or if you had any major life events, it’s a good time to check in on your financial plan and make sure it is structured correctly to meet your goals.

All right, today’s agenda. We’re going to begin today’s seminar with a quick look at the changing face of retirement. We’ll review the structure of both social security benefits and Medicare. We’ll talk a little bit about uh metag gap insurance and health savings account. And finally, we’ll talk about some effective strategies for meeting your financial and medical needs during retirement as well, just so you don’t have to solely rely on Social Security and Medicare.

First of all, we start by talking about the changing face of retirement. Planning for retirement now is more important than ever. Things look different today than they did for previous generations. planning for retirement. We have people living longer uh longevity concerns. We have careers that are less linear than they were in the past. And really the responsibility of funding retirement has shifted towards the individual instead of the company offering the traditional pension plan. So it’s more on the individual at this point. Retirement in the future can cost significantly more. We all hear about inflation in the news. We have inflation concerns as costs continue to rise, health care expenses, longer lifespans. Really, what all that means is you need to plan for your money to last 20 or 30 or even more years. So, help is available, right? That’s why we’re here. We’re doing these meetings to let you know we have a financial planning services of the credit union available to you. So, help is available. We have professional guidance to help you figure all this out. And really when you have these conversations, timing matters. The earlier you start planning, the more options you typically have. And today’s topic, understanding Social Security and Medicare benefits is even more important now as you make your planning efforts. Social Security and Medicare are key pieces of the retirement puzzle, but they’re often misunderstood. and knowing when to claim benefits, how those payments are calculated, and how the Medicare coverage works. This can all have a significant impact on your retirement and your income and your health care costs.

Okay, let’s first start and talk about social security.

Social Security is really a general term that describes a number of related programs. So, Social Security can cover retirement benefits, disability benefits, family and survivor benefit programs as well. It’s really designed to supplement private savings and retirement plans. And in 2024, 68 million Americans received Social Security benefits. But when you look at the numbers, Social Security benefits typically represent about 30% of income of retirees. And that’s according to the Social Security Administration.

So how does Social Security work? Well, it is mandatory funding. So you probably see your contributions coming out of your payubs either as social security taxes or FICA taxes. So it’s mandatory funding that comes out of our paychecks and the tax proceeds they go into a special trust fund that’s established exclusively to pay social security and Medicare benefits and some administrative expenses. Now to receive benefits uh you depend on your full retirement age. So some people full retirement age may be 66 and a few months. Most of us it’s turned into age 67 but you do have the ability to take what they call reduced benefits as early as age 62. So your benefit amount depends on your earnings work history. So it’s based on the highest 35 years of earnings. And you can see that calculation in your social security statement if you haven’t looked that up before. It’s available within your online account at ssa.gov.

Now, if you are receiving if you wait past your full retirement age, you could receive up to an 8% increase per year in benefits if you postponed your benefits.

Now, here are some of the issues that you might be hearing in the news about social security and the payments of the benefits. So, we have the retiring baby boomer generation right now, which is causing a lot more payments out of the system than money is being received. People are living longer than was originally calculated in life expecties. So, more money again is coming out of the system than being paid in. we have fewer workers paying into the system. It’s a pay as you go system. So all the taxes collected in a specific month would be paid out the next month. So fewer workers have less money coming into the system. And you put that all together and it’s estimated by the year 2035, Social Security would exhaust the trust fund and may not be able to meet all of its obligations as promised to all retirees. It’s currently estimated that if nothing changes that there would be a 20% reduction in social security benefits across the board by the year 2035.

Now there are some proposals on the table for improving the situation and not running out of money in 2035. So a few options here on the table raising the retirement age as I mentioned some of us it’s 66 in a few months it’s been raised to 67 there’s some discussion about raising the retirement age to age 70 or starting incrementally to bring it up to age 70 there’s also talk of means testing what that means is cutting benefits for wealthier seniors there’s also the cost of living increase every year so Social Security each year will give you a cost of living adjustment based on inflation. There’s some talks of reducing that a bit not to make it as much of an increase each year. There’s also talk about investing trust fund dollars in the stock market and possibly diverting some of the payroll taxes to private accounts which would then have some stock market exposure to it. Withstanding the market crisis of 2008 2009, stocks historically have performed better better than any other type of investment. Although past performance can be no guarantee of future results.

Next, we’re going to talk about Medicare. All right. Medicare is a federal government program that helps older and some disabled Americans obtain and pay for medical care. It’s administrated by the US Department of Health and Human Services, and it’s the nation’s largest health insurance program, which covered more than 66 million Americans in 2024. Now, Medicare is really broken down into two parts. Part A, hospital insurance. Part B, medical insurance. Part A, hospital insurance, covers most of the costs of a stay in the hospital, as well as some follow-up costs after time in the hospital. Part A pays some other outpatient medical services, including some home health care, but it does not cover the cost of prescription drugs. And under most circumstances, you do not have to pay a premium for part A. Part B, a little different. Part B is medical insurance. This optional coverage is intended to help pay doctor’s bills for treatments in or out of the hospital. It also covers many other medical expenses you incur when you are not in the hospital, such as the costs of medical equipment and tests. If you elect Part B, a monthly premium is automatically deducted from your Social Security check.

You have two options for Medicare coverage. The original Medicare plan and Medicare Advantage, a managed care plan. Each of these programs have their pros and cons. The original Medicare plan, you pay your Part B monthly premium and then you pay additional services as you use them. In 2025, the standard monthly premium was $185. Additionally, Medicare PartB deductible was $257 in 2025. If your modified adjusted gross income uh from 2 years ago is above a certain amount, you may pay more for Part B. Now, Medicare Advantage plans, it’s an optional program through private insurance companies. They provide HMO type coverage. To determine which program is right for you or for your needs, you can call Medicare 1 800 Medicare which is 633-4227 or you can also log on to www.medare.gov.

There are also some other options to consider. Metagap insurance and health savings accounts. We’ll take a look at each one of these health savings accounts. So, we have the creation of tax-free health savings accounts for anyone under age 65 who is enrolled in a high deductible medical plan. That’s defined as one with a deductible of at least $1,650 for an individual or $3,300 for families. And these amounts are adjusted for inflation. The contributions are taxdeductible. The maximum contribution to an HSA plan in 2025 was $4,300 for an individual and $8,550 for a family. There’s also a $1,000 catch-up contribution for individuals between the ages of 55 and 64. So much like a retirement account or an IRA, health savings accounts allow for account holders to select a variety of investments that can suit their time horizon or risk uh tolerance. Also, the account balance can be maintained from one year to the next. Now, distributions for qualified medical costs are tax-free, but non-qualified, right? if they don’t qualify for medical cost. Non-qualified withdrawals are taxed as income and may be subject to a 10% penalty.

Medigap insurance. If you choose the original Medicare plan, you might also be interested in receiving Medicare supplemental insurance or metagap insurance. The term metagap comes from the notion that these insurance policies will cover the gaps in Medicare payments. Metagap doesn’t fill in all the gaps, but it may help. So before you buy a metagap insurance policy, consider not only the services that are covered, but also the amount of benefits and the monthly costs of the policy. Also pay attention to how much premiums may rise in years to come. You may want to also compare Medigap with Medicare Advantage. For more information on Metagap insurance, you can again call 1800 Medicare. That is 1 800633-4227.

Okay. Now, we’re going to shift gears a little bit. We are going to be talking about planning for retirement and preparing for your financial well-being. Now, up to this point, we spent most of our time learning why you shouldn’t count on Social Security and Medicare to cover all of your needs during retirement. Now, let’s talk a little bit about what you can do to ensure a comfortable retirement for yourself. Now, fortunately, today we have more choices than ever, which we’ll discuss in a moment. But with these choices, however, more responsibility. It’s up to you to determine whether you should contribute to a retirement plan, how much to save, and what investment choices to choose. So, regardless of your age, investing for retirement should be among your top financial priorities. However, one of the greatest challenges for most people is realizing the need for a retirement investing program. According to financial experts, you’ll need 70% or more of your final working year’s salary each year during retirement.

Okay. Now, here’s some retirement savings vehicles you might be familiar with, right? Traditional 401ks, 403bs, IRA. So, we’ve established, right, since social security was never meant to be the sole means of support in retirement, you have other options for retirement savings. There’s several tax advantage investment options for retirement savings. Like I mentioned here, 401ks, 403bs, 403bs generally cover nonprofit and healthcare organizations, and IRA are your individual retirement accounts. Now, when you look at these, there’s two types of 401ks and 403bs. You have the traditional and you have the Roth plans. Traditional plans offer tax benefits. Contributions are taken out of your paycheck before income taxes are assessed. That’s kind of pre-tax. You pay taxes on a lower amount. Now, what’s more, earnings on your traditional 401k or 403b, they can potentially grow and compound without losing some of that growth to taxes each year. So, they grow tax deferred. Now, Roth plans are a little bit different. Roth plans feature after tax contributions, so you pay the taxes on it today, but qualified distributions are taxfree. Roth 401ks and 403bs, they’re really available based on the uh discretion of the employer. So, you need to ask your benefits administrator if your company offers this type of savings options. In addition, uh many other employers uh offer a match portion for these plans, which may potentially be the easiest money you’ll ever receive. If your employer matches a portion of your 401k contributions at a rate of 50 cents on the dollar, that’s an automatic 50% return on the part of the money that you’ve been investing. If your employer offers a 401k or similar plan, take advantage of it. Also, try to contribute the maximum to the plan. Remember that early withdrawals before age 59 and a half might be subject to an additional 10% penalty tax as well. Expanding on the IAS or individual retirement accounts. This is another important way to save for retirement through a traditional or a Roth IRA and they offer significant tax benefits as well. Again, with a traditional IRA, your investment is potentially taxdeductible when you make the contribution depending on your income level. And like a traditional 401k plan, earnings can grow and compound tax deferred. A Roth IRA doesn’t allow for deductible contributions. But however, earnings grow tax deferred and the big payoff comes in at the end at retirement when you could tap into Roth assets. you could tap into the earnings without paying federal income taxes provided you’re at least 59 and a half or older and held the account for 5 years. And just like the 401k plans, most early withdrawals from IAS are subject to a tax penalty. So because of the complexities involved with these retirement savings vehicles, you might want to consider using the services of a qualified financial professional to help you make your investment decisions.

Just a few final thoughts for you to keep in mind today. We’ve covered the state of Social Security and Medicare, possibly the two most important issues facing current and future retirees. We also reviewed the importance of planning for retirement and taking advantage of those investment options available to you. The next step, right, next step is yours. Perhaps you make an appointment with one of us here to sort out the wide range of choices available to you. You may also want to contact the Social Security Administration to obtain your estimate of benefits. Make sure they’re tracking your benefits correctly for you as well. Whatever your situation, keep the following in mind. Again, don’t expect Social Security and Medicare to cover all of your retirement costs, and you need to stay up with the Social Security and Medicare benefits and plan wisely. One last point to consider, you could spend more than a third of your lifetime in retirement planning for your retirement so you don’t have to rely solely on uncertain futures. Social Security and Medicare planning is time well spent.

Again, here at Alliance Retirement and Investment Services, we’re here to help you. Again, we can help answer some of the questions you might have on today’s presentation. Social Security, Medicare planning. Uh we can help you make some of the investment choices in those retirement plans, consider retirement income options for you, review investment accounts, discuss life events with you, uh and also help you out with your estate planning, beneficiaries, or generational planning as well. I’d like to thank you for joining me today in discussing these important topics. This is my contact information. Uh my phone number, uh email address, and the QR code will take you right to my calendar link if you’d like to set up a time to talk a little bit more about your specific situation or creating your personal comprehensive financial plan. Thank you for joining me today.

Sorry, my video is not coming back on. There we are. Okay. Thank you so much. Thanks, Tom, for that great presentation. Let’s go ahead and get started with our Q&A session. And if you have any questions for Tom, you can put them in the chat or the Q&A and um we’ll try to get to that. If we’re not able to answer it in the time that we have, we’ll be sure to follow up with you on it. All right. Our first question is, does Social Security estimate the amount increased um that the increases monthly before full retirement age or does it update less often, once in 6 months, uh after you’ve reach reach the full retirement age? Okay. Thank you, Brooke. Uh I hopefully understand this question. And I think I’m going to hopefully answer it correctly for you. Some of these questions are your um your questions, your thoughts maybe need to be answered on an individual basis. We can go into your specific situation. I believe the question is regarding your social security benefits, how it’s calculated over time. And I think that really falls back to your uh statement of benefits that you can access on ssa.gov. What they’re going to do on that statement is they’re going to look at your past earnings history and then they’re going to project into the future thinking you’re along the same path of continuing the same type of earnings. So they’re going to show you estimates of benefits starting at age 62 and every year till you’re 70. So there’s going to be some assumptions in there that you continue to work. There’s going to be inflation assumptions in there as well, but really that’s going to be an annual statement that they’re going to provide to you. So if you look at it on an annual basis, you want to make sure that the numbers are correct. Maybe a few years ago, make sure that the income you earned is actually reflected in there. Again, the highest 35 years of earnings. So you just want to make sure there’s no zeros in there when it should be an earnings year just to make sure those benefits are correct. But yeah, it’s going to do forward projections for you and be available on an annual basis. Great. Great. Question from Candy. I’m turning 66, but I haven’t signed up for Medicare because I’m still covered by my husband’s work plan. When should I sign up? Okay, so Medicare, you have three things you’re watching there. Uh, one is called the initial enrollment period, which Candy you’ve missed. That is going to be initial enrollment period 3 months before your 65th birthday. The month of your 65th birthday, 3 months after your 65th birthday. So, for some of you out there, the initial enrollment period might be important to you, but uh Candy, you’ve gone beyond the initial enrollment period, which is fine because you’re still covered by your husband’s group plan. And then we define a group plan is a uh a plan having company having over uh 20 employees. So, what you’re going to do is you are going to go into the next phase, which would be at some point in time your special enrollment period. And that really means a qualifying event. If your husband leaves his job, that’s a qualifying event. There’s an eight-month window where you could then sign up or you both can sign up for Medicare. No penalties, no problems for that. There is an 8-month kind of window there. But with those eight months, you really want to make sure you coordinate benefits. So, one plan stops, Medicare begins in the next month because if there’s a gap, Medicare is supposed to be covering that. So, you might have a lot of out- of- pocket expenses. So, make sure you coordinate the special enrollment period. If by chance you miss everything, the third category is called the general enrollment period. You’ve missed your initial, you missed your special period. You go into the general. If you go into the general, there’s some problems that might be involved. There might be a penalty if you don’t sign up in a in a timely manner. So, in your situation, you really want to keep an eye on that special enrollment period when your husband stops working. Excellent. Excellent. This next one I’m going to um I’m just going to summarize a little bit. I do not qualify for social security and I must fund my own retirement. Um I I don’t qualify for Medicaid as I have investments. Um and I don’t have enough to live on after this deduction. How can I maximize my spending income?

Okay. So I I just took some notes as you were talking there, Brooke. Um the one focused on there’s a few things going on and this might be one of the situations that’s kind of best addressed on a uh a personal basis. Sure. The one I really kind of took away from is the very last comment I think you said I I don’t have enough to live on. Right. Right. One of the things we do here at the credit union, we are a fullervice financial planning firm. So we do do financial planning. We do take a look at a comprehensive personal situation like this to try to help you navigate through all these bullet points or all these facts that you kind of you gave us today. But we want to find out what the best course of action is for your situation. So when we run a financial plan, we want to make sure that it has the longevity concern that you do have enough to live on that it’s going to last a long period of time for you. So we need to gather some more facts to really help you out personally. But in a situation like that, when I end on that last note, not enough to live on, we have to look at some ways to either maybe keep you working for a longer bit, get you involved in some more retirement savings. Um, look at your budget, maybe look at some areas to reduce some of the spending so everything kind of works out for you, not only today, but 5 years down the road, 10 years down the road, 20 years down the road as well. So, I’d give a little plug for our financial planning services. I think that can help you, but I also think that conversation could be helped a little bit more on a one-to-one basis if you have some time to talk with me. Excellent. Great. Thank you. Is there a deadline for the distribution of the um um of medical costs? Let’s see. For the distribution um for HSA. HSA. Okay, there we go. HSA. Yeah, that’s a good one. Uh HSA is one of my favorite investments. HSA is like a Roth IRA account, which I mentioned in the presentation, not taxed on the front side, not taxed on the back side. Uh, the only thing you need to have it not taxed on the backside is a receipt. You need some out-of- pocket medical expenses. It’s a great question. I bring this up all the time to my clients. If you have a receipt, that receipt never expires. So, there is no deadline. So you can continue saving in your HSA account. You can continue to contribute to it. Most plans will have the option if your balance gets above a certain level, you can have an investment component. So it can really grow tax-free like a Roth account. But then along all those times, along all those years, you can save all your receipts. They do not expire. So in retirement, if medical expenses really kind of spike up, you can go to that file cabinet. You can pick a receipt from 5 years ago, 10 years ago, 15 years ago. You really grab some old receipts, uh uh submit them to the HSA and get that taxfree distribution. Great question. No expiration on HSA. Got it. Got it. I’m just We have a lot of good questions coming in. So I’m taking taking them down and seeing what we can do and how we can talk about it. Um, what does it cost for estate planning?

Great question. Um, like a lot of answers in my profession, I’m going to say it depends. Right. Right. It depends. So, uh, I’m here in Illinois. Um, I’m at the quarter headquarters of the credit union. So, in the Chicago area, Chicago area, I do have some estate planning attorney contacts that we work with. You really do uh kind of take a look at what your needs are. First of all, um general answer to that is a will, a trust, power of attorney, healthc care directives. You get kind of the full estate planning package. Um some clients will debate, you know, back and forth, do I need a trust? Do I need the added expense of doing something like that? So, kind of individual conversation. So, if you go to an estate planning attorney, so I can help with estate planning, but I can’t prepare documents. But if you go to an attorney, you’re going to have some attorneys fees to get all those documents put into place. Um, it could get costly, could be in the neighborhood, depending on your state, your city, could be a few thousand or so to get all that put together. There’s also online resources. There’s some uh lowerc cost options available online to prepare some of those basic documents for you. Um, personal situation, personal budget, how you want to attack everything. Some clients will say, “As long as I’m going through the process of getting this done, I want to make sure this is done absolutely correct, tees are uh crossed, eyes dotted, that kind of thing.” So, if uh anything comes into play down the road, I I know that everything’s taken care of in in good uh good order. So, it’s important to have those documents in place. There’s going to be a cost, maybe less online, maybe more with an attorney, and it’s just kind of determining what documents are appropriate for your situation. Excellent. Good. Good. I just remind everyone that um we put up a poll asking if you want to have an appointment with Tom. Um we would love to have an answer either way. Um just so that we uh it’s how we track engagement so we can let you know uh we can continue doing these pieces um uh and provide this education to you. So, all right. Going back to the HSA conversation, Ken, and I think um maybe we can just expand on this a little bit, but can you talk about HS HSAs being used in retirement and during retirement? Yeah, a couple ways to do that. Um, so again, I’m going to relate it. It is not, but I’m going to relate it to a Roth. So, it’s going to be taxfree for you. So, you make taxfree distributions. Brooke, when you say retirement, to me, I always think of like retirement income, things like that, right? Yeah, I agree. As retirement income, we can also talk about it as uh retirement medical expenses. So, I saw a couple questions. We’re probably going to get to this, but uh there was a couple questions in there about uh under age under 65 medical plans. They’re going to be expensive, but if you’re working on your retirement and your retirement plan is under age 65, you’re not going to have the Medicare coverage that we’ve been talking about. So, you have to go out of pocket. It’s going to get expensive. So, an HSA, as you pay for that, if you built up a nice balance in the HSA, you could offset some of those under 65 healthcare cost with the HSA with those current receipts or past receipts. If you’re in retirement, you’re doing income planning. We talk about diversifying your assets between stocks and bonds and all these different things. But we also talk about in financial planning, diversifying your investments by tax treatment. You have some pre-tax money in a 401k. You have to pay the taxes on it. You have some after tax money either with a Roth or the HSA. Again, if you have old HSA qualified receipts, you could use that as part of the income distribution. just depending on what the balance is in the HSA. You could even put it at the tail end long-term planning in a plan and say I am somewhat worried based on my family history about long-term care planning needs. This can be used as part of that as well. So, a lot of functionality to the HSA just got to curtail it to uh what we what we mean by retirement. Yep. Okay. Got it. Got it. Are some of the services you’ve mentioned free to alliant clients or are some of them fee based? Can you talk a little bit about that? Yeah, I’m going to answer that where it depends. It depends. Um, so it just does everything we do here uh consultations, financial planning, discussions, answering questions, all this no cost, no obligation service of your membership of the credit union. So if we meet with you, if we talk with you, if we go into, you know, if it requires a financial plan, all that is getting us to understand your situation better and make any recommendations to you, no charge, right? We’re going to do that for you if you’re a member of the credit union. But I will say, uh, I’m also a registered investment adviser. So, as we go through that process and that journey together, I may make some recommendations to you investment wise to help you reach those goals. maybe lower volatility in the market, growing and protecting your assets, distributing your income to you. So, there’s a lot we can talk about. So, if we go into an investment relationship, I always say some investments do have a fee, some investments don’t have a fee. Uh we’re completely transparent with a fee structure, but once we get into investments, we’ll have those conversations and let you know exactly what uh what you might be looking at. Okay. question on uh Medicare. Is metagap coverage the same as original Medicare part B? Medigap uh we’re going to be a little bit different. Uh original, right? The original plan, original plan is going to have your part A hospital, part B doctor. Um original is going to allow you to choose your doctors. Uh it’s going to be a little bit more flexible. You don’t need as much referrals. uh predictable costs. Original plans are good. If you also travel state to state, it’s going to have more flexibility because you don’t have as much uh doctor referrals needed for something like that. I believe uh Brookwood advantage if we get into advantage plans, I think that’s really kind of the comparison there. Uh advantage plans going to be just a little bit different. Maybe lower upfront cost, lower monthly premium. Um, but you got to get into the referral system, into the network. So, if you have a network you’re comfortable with, if you don’t travel a lot, um, you know, you might want to look at one of those, uh, advantage plans. Yep. Okay. Um,

all right. Let’s see. Good questions coming in. Uh, question. Is there anything parents can do for their children at birth, when they’re a teenager, college age? What can um what can we do to kind of set our kids up for success? Yes. So, uh my kids, right, they are 26 and 24. And I was always frustrated in school because nobody teaches finance. Nobody teaches investing. Nobody teaches stocks. Nobody teaches the power of compounding which these kids have on their side. Right? Birth. I don’t know. I talked about retirement. So we got 40 years, 50, 60 years. Power of compounding is incredible for children. First thing I’m going to mention just came out Trump accounts. $1,000 from the government to sign up. It’s an index fund. You go in the S&P 500. You can add up to $5,500 per year in the plan. It’s really not accessible until they’re 18. Some ordinary income tax issues when they’re 18 out of those Trump accounts. Could tell you more about that if you have interest in it. That’s the new thing everybody talks about. Separate from that birth. The first thing I think of is 529 college savings programs. It’s a great way to tuck money away. It’s a great way to have friends and family, presents, gifts. goes right into the 529. Not taxable. Not taxable for higher education distributions. If their birth rate, they got 18 years grows over a period of time. But it just seems like, you know, with college planning, which we could talk about as well, it’s just everything’s not enough. The inflation rate on college expending has been so much. So, it’s good to start early, save as much as you can. The problem with the 529 plans is really based on college. Some clients will say to me, I don’t know if my grandkids are going to college. I don’t want to tie them down into that. So, our third category for kids, plain old, separate, just investment account, right? They’re young. They’re not age of majority. They can’t own an investment account, but you could have a custodian on the account, usually a parent or grandparent. You’re in an investment account. You can invest in anything you want. You could have a stock. If they really love Disney World, you could have Disney stock. If they buy that Apple stuff, they could have Apple. It could have mutual funds. They’re uh children, so they’ll have some preferential tax treatment on this along the way. Now, the good thing is with an investment account, it grows, right? But they could take it out whenever they want to. The custodian will uh uh do that for them before they’re the age of majority. You could use it for a car. You can use it for a house. You could use it for retirement. You could use it for college. You could leave it alone and let it grow. But it will have preferential tax treatment down the road if they take the money out. Capital gains rates of 15% which is better than ordinary income rates of going through the marginal tax bracket. So only three ways to uh to help kids out. But help kids out in my view is just have these conversations with them. Get them involved in investing. Let them know the power of compounding over time. I’m answering this question a long one because this one is important to me too. Yeah, if you have kids or grandkids that work, they have any kind of summer employment, anything like that, they are eligible for a Roth IRA. So, you might want to look at it and say, I’m going to gift some money into a Roth IRA for my child or grandchild. Limitations, you can only, you know, put in 7,500 per year if they make that much. But all of a sudden now we’re talking about this retirement account growing for 30 or 40 years. The numbers get astronomical. But that’s a a good way to help them out. I call it again gift gift of a lifetime. That’s great. Great. Good financial opportunities or educational opportunities. Help the children. Yes. Yes. Um real quick, there’s been a couple questions about um a replay of the presentation. So couple options there. We will be sending out an email uh later today that has a link to the presentation so you’re able to view it again. Um Tom’s information will also be in that uh email so you’ll be able to reach out to him directly to ask any questions that you have or get some clarifications. If the couple of you that um have had questions that um uh Tom said he needs to dig in to a little bit more with you, please feel free to reach out. go ahead and you can put yes to an appointment um and we will we’ll prioritize those folks and and uh make sure to reach out to them. So, couple of ways to to get those um to to um view the material again. One, um let’s see, this one I like. Is it true that a person can retire at 67 and turn around and get a full-time job with no limit on income received and still receive by full Social Security benefits? Yes, I think that’s I think a lot of people have that question because I what you know can I can I have both if I how does that work? The uh the big thing there is 67. Mhm. So at 67 you are full retirement age. So you will not have what they call the earnings offset which means if you’re younger than 67 if you’re working they may reduce your benefits because you’re making too much money. So key there is 67. So, if you’re working and you’re receiving social security benefits, it’s fine. But what you have to consider is when you work and you get your paycheck, you’re still going to have that little line item deduction FICA tax. So, you’re still going to be paying into the system. You’re going to be receiving a benefit from the system. And then when you get the benefit payment from the system, that’s going to be taxable to you as well. So, you’re being taxed when you get paid and you’re being taxed when you get paid. So you might have a double taxation going on with something like that. So you just have to watch the uh the taxes. Now it’s based on the highest 35 years of earnings. So in 35 years if you have a couple non- workinging years, zero years, lower years while you’re working, you could still increase your benefits. So that double taxation may work to your benefit, but if you never replace a lower year, you’re paying taxes when you get paid and you’re paying taxes when you get your social security benefits. So, we could kind of uh, you know, walk you through that. Take a look at the ideal times to start your benefits. One thing I would mention is if you wait from 67 to 70, benefits max out at 70. What you’re doing is you’re receiving what they call your deferred credits. Basically, that means it’s guaranteed your payments are guaranteed to grow go up 8% per year every year you wait beyond 67. Not only that, Brooke, wait, there’s more. It goes goes up by inflation as well. So inflation, just call it 2%. So 8% guaranteed, cost of living adjustment 2%. So your payments could be going up 10% per year for every year that you potentially uh defer from 67 to 70. I’m in the investment world. I’ve been in the investment world for 20ome 28 years. I have no investment that will guarantee an 8% return. So, we really want to kind of dig in there a little bit and say, you know, number one, financial need. Do I need it? Number two, can I can I take advantage of those deferred credits? Good. All right. Do you have recommended options for self-employed retirement savings? Is there anything that Alliant offers? Yes. So, um, typically if you’re with a company, you get the 401k. If uh you don’t have a 401k, you have access to an IRA. And an IRA typically if you’re over 50, you get $8,600 that you could put into an IRA. If you’re self-employed, you get the SE IRA. SE IRA is for self-employed individuals. Higher limits, right? You don’t have the 401k, you’re self-employed, but they’re going to give you much higher limits than a typical IRA. So, we have different ways we could take that conversation. And there’s different plans available depending on your situation, your company, your employees, things like that. The easiest answer is a self-employed SE IRA. Way higher uh contribution amounts than a typical IRA. We can help you through that. Um number one, when you get an IRA, whether it’s a traditional IRA, Roth IRA, a SE IRA, any kind of IRA, a lot of people when I ask them, I say, “Well, what’s your IRA invested in?” They’re like, “I don’t know. It’s an IRA. It’s an IRA. So you can have an IRA. You can have an IRA in anything except collectibles. No baseball cards, no wine, no art, things like that. But an IRA can be invested in anything else. Savings account IRA, stock IRA, mutual fund IRA, portfol. So you really want to look at those IAS whether it’s through self-employment, whether it’s a Roth and really kind of maximizing your growth potential. It’s going to be based on your goals, based on your time horizon. Uh, typically we see Roth IAS at the longer end of a financial plan just because they grow taxfree. So, we want to have a little bit more of a lean in that asset class just because it all grows tax-free. So, good question. Many ways to take it, but uh yeah, look at a SE IRA. Okay, good. Good. Um, how do you verify that social security has all your contributions correctly? Go to ssa.gov. Go to uh log in there. I think this system they use now is called my gov. Govt govt ID. Yes. Set up your user ID. Set up your password. Uh first thing you’re doing that for is to make sure no nefarious actors go in there and steal your identification and mess with your social security benefits. So you want to secure the account, number one. Number two, you want to go in there and look at your current statement of benefits, and that’s where you’re going to verify employment income. So, they’re going to show you all your employment income. They’re going to summarize some of the years. They might, if it’s a long time ago, lump them together in 5-year increments. It’s going to look like you made a lot of money 20 years ago, but they’re going to up that for inflation. But, you just want to keep checking on that periodically just to make sure it looks okay. Make sure they didn’t miss any years. You don’t want any zeros there when you’re actually working. If you see anything like that, you want to report it as soon as possible. Contact uh Social Security, let them know, hey, there’s a uh disparity here. We need to get that corrected. That goes through the uh financial planning process, right? So, you don’t want to retire uh on Monday and work on your financial plan and your retirement on Tuesday. If there’s an issue like that, it’s social security. It’s the government. It may take a long time to fix something like that. That’s why I always tell my kids, proper preparation prevents poor performance. We want to do the proper preparation, right? We want to set this up for you ahead of time. We’ll check into that. One of the first questions I ask when we do a financial plan is, do you have your statement of benefits from Social Security so we know what the numbers are? Third part of logging into that account, again, I said it before, it’ll show you your age 62 amount, 63, 64, full retirement age, and projections all the way to uh to age 70 as well. So, a lot of good reasons to get uh logged in. Yep. Speaking of consultation, what is the cost of a consultation with you? No cost, no obligation service. Happy to talk with you. Um, some people I talk to uh they have questions, financial concerns, financial questions, investment questions. Um, some people don’t require a full financial plan, comprehensive meeting that’s available to you if uh if appropriate. But, uh, we’re here to help. We always say a credit union is defined as members helping members. I’m a member. Brook’s a member. you’re a member. So, uh, we’d like to help you out with these topics. That’s why we do these presentations, just to let you know we exist. We have a financial firm here. Um, I always say we’re the best kept secret at the credit union. So, can’t help everybody. Brooke, I think we’re 900,000 members deep in this credit union. Close to a million. We do these meetings just to to get the word out that you have some resources here. So whether it’s a simple question, you need clarification, whether it’s some uh advanced planning, we’re here to help. Excellent. All right, we have time for one more question. Um we have a several questions around HSA. So um I think that’s something that we’ll we’ll we’ll take back and and and Tom have you and Brandon work out um answering some of those questions. But um this last one is what is the best way to take money out from the traditional 401k at retirement age?

What was it? The big question. Oh, is it? Sorry, I don’t I don’t I don’t like to end with a softball. You’re ending on a 20-minute answer. Uh best go. I’m sorry. Could you repeat? Best way to take money out of a 401k at uh best way to take money out from the traditional 401k at retirement age. Okay, retirement age is going to be a question mark there. So, we don’t know exactly. We’re not going to define that. So, here’s the problem with traditional 401k or traditional IRA, right? It’s always taxable. It’s always going to be taxable whenever you take the money out. it’s going to compound over time. It’s going to get bigger and you’re going to have bigger amounts that are all going to be taxable to you. So, we do estate planning, we do tax planning, we do all these wonderful things, but when it comes down to traditional IRA pre-tax, traditional uh 401k pre-tax, all that pre-tax money, there’s not a lot of fancy things that can be done. And what happens is you either have to take the money out and pay the taxes or you have to do a Roth conversion. Roth conversion, you pay the taxes, goes into the Roth, never have to pay the taxes again. A lot of wonderful points about that. There’s also a third category down the road for some people. You can actually, if you’re over age 70, you can do a uh charitable distribution directly from your IRA. So no matter what you do, you have to pay the taxes on this money. So to the question, what’s the best way to take money out at retirement age? So it depends again on your accounts, right? We want to do this in a tax efficient manner because you have to pay taxes on it. So is your best course of action doing some of those Roth conversions before retirement age. Is it best to do the Roth conversions and kind of delay taking money out of the traditional IRA? So there’s going to be a lot of options on the table for you to do that. different totally different way to answer that. I’m going to throw everything I said out the window and I’m going to say at retirement age, right? Things are different. It’s easy when you’re saving money, right? You just save in the 401k. Market goes up, market goes down, you’re adding to everything’s easy on the front side. On the back side, right, we have all those things we talked about today. Medical expenses, longevity, taxation, children, like all these things you have to consider. So when you start withdrawing funds, you have to say where do I withdraw my funds from? A good way to approach this is what we affectionately call the bucket strategy or segmenting some of those traditional 401k assets. What I mean by that is one bucket short-term nothing to do with the market. It’s there. It’s available to you. You can distribute. It doesn’t matter if the market goes down 20%. It’ll eventually catch itself up. But your bucket number one is safe, secure, and distributing to you. Bucket number two, an investment account, a lower volatility investment account. There’s greater growth potential, but if the market goes down, it doesn’t really hurt you in that situation. Long-term bucket, let it grow. Market cycles go up and down, but it’s the best performing asset class in history to have some market exposure. So, over time, what happens is as you’re making withdrawals, if you need to replenish bucket number one, right? Markets are doing great. They’re up. I’m going to take some from three. I’m gonna replenish number one so I can continuously keep this cycle and not have to sell my investments in a down market. So, that’s one way to take a look at it. But again, not a 20-minute answer, but there’s a lot that No, you did. You did great. Put it all in there. And of course, everybody add to that, everybody’s different. Everybody’s putting together their retirement with different with well, different buckets and and things. So, a consultation is always going to going to help get you to the right place. So, yes. Yes. And I always say if you’re somewhat thinking about retirement, approaching retirement age, uh it is worth the journey to explore those Roth conversions I mentioned. And I just say that because so many members of the credit union, they’ll come to me when they’re approaching required distribution age 73, 75. And unfortunately, a lot of people, it gets to be too late. they’ve lost the power of compounding in that Roth conversion story. So again, that’s something that we offer. We can model Roth conversions and see if it can help you. Excellent. Well, thank you, Tom. Thank you so much. This is the end of our Q&A and and our session today. If you have any additional questions, uh or you’d like to schedule some time with Tom, all that information is going to be in the email that you’ll get after um later today along with the link to the presentation. If you’re not currently an Alliant member, visit alliancreditun.com to learn how you can support your family uh with a gift of membership. You can view our savings rates and helocks there, too. Have a great day and thank you everyone. Thanks, everyone. Have a good afternoon.

Hi everyone. Hey, this is Mike. We still have a couple of minutes, but I just wanted to log on. Uh, thank everybody and welcome everybody. Uh, thank you very much for being here. Uh, we still have some folks logging in and it looks like looks like I have two o’clock straight up, but there’s still some folks logging in. So, we’ll give it a minute or so and then we will we’ll get started. I hope everyone’s doing well out there. Um, it seems like this is a rinse and repeat for me to say I hope the weather’s much better because here in Houston the weather has been eventful. So, I was worried for a second we might not have power in our building, but everything worked out. Storm’s passed. Everything’s good. Oh, let’s uh give it one more minute.

It is good to see

a lot of new new names. Uh some regulars, so it’s always nice. All right.

So, if you’re hearing an echo, I don’t know if that’s everyone. That is not on our side, I think. Um, I only have one mic. Let me see.

So, the person who just emailed me that it looks like you’re logged in twice. I can remove.

Yeah, it looks like you’re logged in twice. So, that might be it. So maybe close out one of your uh one of your windows when you joined us. I could close you out, but I don’t know which one. So I didn’t want to do that.

So all right. So let’s go ahead and get started. 2011. Um if you’re joining us for the first time or me for the first time, uh welcome. My name is Michael Marx, certified financial planner and financial consultant with Alliant Retirement Investment Services or AIS for short, A R I S. Uh, as I said earlier, I live in Texas, specifically Houston. Uh, I’ve been doing this for over 30 years. Um, family been tied to Alliant for well longer than I’ve been alive. Uh, for those of you not familiar with Alliance history, uh, Alliant is Continental Airlines or actually United Airlines. all me saying Continental since since I’m here in Houston. Uh United Airlines Credit Union and my folks have been with um with the airlines since like the 1960s. So longer longer than I’ve been around. So um you know I realize that some of you may have found us through different channels, right? So obviously United or Continental or maybe Google or Tesla, CVS, Suzie Orman, however you’re here, welcome. I’m glad you’re here. Just a quick bit of housekeeping. [snorts] Uh so today’s session, let me read this. So today’s session is for educational purposes and includes proprietary material to protect both the content and everyone’s privacy. We ask that attendees please do not record or capture the presentation whether by video, audio, screen sharing or AI tools without prior consent. So, thank you so much for your understanding and again we are glad you’re here and bravo to that other person who’s in Houston too. So, and again I’m not sure if you joined this webinar via the email directly from us or if you signed up via the Alliant Credit Union’s website. So, I just want to take a couple of minutes and talk to you about ARIS. So, we are the wealth management and investment planning division of Alliant. So, people say, “Hey, do you actually work for Alliant?” I’m like, “Yes, we do.” If you go to the website, you’ll see my smiling face on there. Um, our services and our product offers are pretty broad. Everything from fixed rate guaranteed to as aggressive as you want to be out in the market, strategies to hedge against loss, or maybe a multiplier on the upside. Uh, most retail places cannot do that. Most of your self-directed stuff don’t allow you to do those things. But um just some of the different ways we can help right the complimentary financial planning uh I’m a CFP uh advanced planning if it becomes a little more complicated than that you know some of the conversions cash management flow tax strategies things like that uh estate planning today this will be a very high level uh obviously the investment management which is our primary what I would say is our primary job here um and then just broad range of investments so that’s our two minutes on what We do. Uh so if this is your first webinar, we do multiple webinars on various topics throughout the week with different presenters. Uh you can find a list of our upcoming webinars on our website uh which is found right on the Alliancredit Union’s website. So you can either go directly to our website at aerys.alliancreditun.com Alliancreditun.com events. Um, or if you just go to the Alliant Credit Union’s homepage, we’re up in the investment tab or on the investment tab in the upper right hand corner and you can just click that and it’ll take you to the website and schedule and all that good stuff. So, you can find our our podcast, blogs, um, wealth of other resources. I encourage you to take a look if you have not been there already. Uh, each of us host webinars twice a month. I usually do one in the evening and one in the afternoon. So, my next webinar will be in the evening. Uh that is July 28th on Tuesday at 6:00 p.m. Central and 700 p.m. Eastern. We’ll be talking about long-term care planning. Uh so, and really of all the potential challenges, right, potential headwinds and things like that of retirement planning, I would say this is like one of the more financially devastating if it does happen and you’re not prepared for it. Uh, and it’s one of the easier ones to prepare for if you even need it. Um, and just to be clear though, this is not a webinar on on long-term care insurance pitch. It It’s not that, you know, we we’ll talk about the headwinds and the options that are out there. Um, and and frankly, why it should be part of your retirement planning or at least a consideration. It doesn’t necessarily have to be in there, but at least it’s considered on the whatifs. And we’ll talk a little bit about that. um retirement income my one back in the afternoon will be in August. So August 12th on Wednesday and that is 12 central 1 Eastern. So a little bit earlier than today’s and it is titled the fragile decade. And what this does is we look at the 5 years before and the 5 years after retirement and what that looks like. Uh we’ll put some timelines out there how you get ready. Frankly, you should already start getting ready maybe 10 years before you start to retire so you can maybe get some of those tax strategies, income strategies in place. Uh, and it kind of allows you benchmarks as far as where you should be and what that should look like.

Voila. So, I appreciate your patience with the housekeeping. So, let’s jump right in. So, what is the purpose of estate management? So estate management is about preserving your assets that you’ve spent your whole lifetime building. It’s about protecting your spouse, your children, their heirs, and ensuring that your assets are distributed how you want them to be. Um, it’s really about managing the amount of the estate taxes that may be due. Now, I will tell you, um, most of you will probably not have estate taxes, but there are other taxes that go with it. Um, so we’ll look at some of the fundamental estate management principles and how to enable you to manage your financial and personal affairs during your lifetime, right? So you can distribute that wealth after death. So there’s two objectives for estate management. First is managing your financial and personal affairs during your lifetime, right? And second, distributing your wealth after your death in an efficient manner in the way that you want it to do. So if it’s done well, it can make a huge difference, right? And you can you can be able to spell out how your health care wishes are and in ways that you ensure they’re carried out, right? Even if you’re unable to communicate, right? So you haven’t died, but you’re not you’re not where you can communicate these things. All of these things are in the in between. some of the things that we’ll just we’ll touch on today, right? You know, how you choose your heirs, um you know, how you might want to communicate that as far as what your your wishes are, right? So they can have a better idea because it is really difficult because you know, we’ve seen this with other clients where where someone passed away, you know, and and they have no idea. So it it it makes things just a lot easier for those who are frankly left behind.

So we found it helpful to illustrate the various estate management principles and strategies as a pyramid. Right? So the foundation is formed by an understanding of how estate taxes work and as we move up we encounter more critical estate management documents at the top. It’s really specific tactics for for the management of it. So let’s talk a little bit about the foundation and how how they work. So in order to understand how they work, we’re going to take a little look at the history of estate taxes. So the first estate tax was established back in the late 18th century, so 1797. Um, and it was really to fund the undeclared naval war with France. So shortly after the war ended, that tax went away. And then it happened again for the Civil War and the SpanishAmerican War in the 1800s and Congress passed the estate tax to pay for the war. Then it repealed afterward. Now we know, and if everybody’s anybody’s a politician here or has family as politician, this is all tongue and cheek and my apologies for that. But we know how Congress in DC and when they start paying taxes, it’s very hard to give that up. So in 1916, the 16th amendment of the constitution passed in 1913, right? And that one gave Congress a right to lay and collect taxes on incomes from whatever source derived. The Revenue Act of 1916 established a state tax, and it’s been modified over the years, but it’s never been repealed. So, um, there was a sunset provision for some of you who might know that that back in 2010, it eliminated estate tax that year. So, I’m going to jokingly say that was a good year to die uh if you’re worth over a certain amount, but I don’t know if there’s any good year to die on that. But, so in 2012, right, uh, the American Tax Relief Code made the estate plan a permanent part of that tax code. [snorts] Um and in 2017, this will matter, uh the tax cuts in the jobs act doubled the estate tax exemption, right? So it went from about 5 1.5 million, it was 5.49, it went to 11.18 million. And that’s why I say most people the states won’t actually pay estate taxes. There’s other state there’s other taxes, but that that matters. So in 2020 uh cuz it was graduated so it rose to the 11.58 and in 2025 it rose to 13.9 million. That was supposed to um be a sunset provision at the end of last year but the one big beautiful bill act in July eliminated the sunset provision and it increased it to 15 million a person. So you actually have an exemption of 15 million before you actually even have to pay estate taxes. And that’s per person if it’s done right. So if you’re married and you position the assets correctly, it’s a $30 million exemption. So um this is a hypothetical example uh that shows the formula for estimating the estate taxes and and it’s actually quite simple. Uh note that we’re only going to talk about the federal estate tax though, right? because about a quarter of the states in their union have their own additional state estate tax. Uh so it’s actually 12 plus the District of Columbia have a state income tax in addition to the federal estate income tax. So uh if you don’t happen to have a complete set of IRS tables laying around, you can estimate the federal estate tax just by using a quick formula. Right? So this this this slide uses I think it’s 2024 numbers but it’s the same process. So you bring up the gross value of the estate, right? And you you would ex you would subtract that exemption value, right? So it was 15 million, but since it’s 2024 it was 13.6. So you’d have a taxable estate uh of just under 1.4 million. So 1,390,000 and 40,000 is your tax rate on that. So your estate tax that would be due to the federal government would be 556,000. Now there are multiple tiers just like your income tax. There’s multiple tiers um for estate tax as well. How much over that exemption? So that top tier is for a million and over. But the tiers, they start at 18% and they go up to 40%. So after you complete your estimation, right, you’ll find your tax, the yeah the estate tax bill. And so now I will tell you if in your head you’re doing that, you’re like, “Oh, I’m going to owe estate tax or at least my family will,” you probably will benefit from like more complex estate management. But we can talk about that at another time. So again, most people aren’t going to have this problem because the average person is not worth 15 million. The average married couple is not worth 30. So if you do have this problem, there’s statistically a pretty good chance that you already have your affairs in order, but some don’t. Okay, so your most basic, it really starts with a will. So more than half of Americans don’t even have a will. All right. So I would say a greater number of people are are impacted by the lack of basic planning. And this basic planning just begins with a will. So know this, you already have a will. The difference is whether it’s your wishes or if it’s determined by the state that your assets reside. So, if you die without a will or some type of planning document, right, you’ve died in testing, right? And if that happens, state specific laws determine who inherits your assets. Um, so it’s always better for you to decide instead of letting the government decide. At least I believe that to be true. So, there’s a number of critical documents that you’ll need to be part of your estate. And the first one is a will. Uh that’s the most basic estate planning document. There are other ways to set up your current accounts like your bank accounts, investment accounts, and to where it’ll bypass probate. So you don’t need a will. It would bypass the will. Uh but a will basically tells the world exactly where you want your assets distributed when you die. So, everybody should have a will, but according to one study, CNBC, 60% of Americans don’t have one.

And what I would say is these aren’t just for the wealthy, right? Because an in if when an individual dies in testate or without a will, it’s up to the state to decide how those assets will be distributed. So, even if you have a trust, by the way, someone says, “Oh, well, I have a trust. I don’t need a will. [snorts] That will will take care of any of those holdings that are outside of the trust. Like did you put your car in the name of the trust or is it owned as you as an individual? You know, it’s things like that. So, you know, the person who did mine is a board certified estate attorney. He’s like, you know, we always run both because the reality is is that someone inevitably will forget to to title everything they have in the name of the trust. So, it’s easier. It’s a simple one. It’s relatively inexpensive to have one of those. If you don’t, we’ll talk about that at the end that we could probably help you with that. Um, so since a will is kind of the cornerstone of your estate, uh, your will names an executive who oversees the process of distributing those assets. Uh, you can name a guardian, uh, if you have minor children still. Um, [clears throat] and it allows you direct to direct how your propertyy’s distributed, right? So, not just your cash, not just your investments, but like your house, your car, things like that. Um, but really a lot of times the wills aren’t the be all end all, right? So they do have their own shortcomings. The first one is wills can be contested. So in fact that probate court will send out a notice of the will to let anyone who might have grounds to contest it. And frankly, even if they don’t have grounds, it doesn’t prevent them from contesting it. But if someone wants to contest it, there’s potential for a lengthy battle in probate court and it costs money. So sometimes it’s not always so smooth. So there might be more efficient ways to get some of those assets to the ones that you want. So wills are essential um since they’re essentially instructions to that probate court. They pretty much guarantee probate, right? The probate process can be expensive, but not always. Um and it can take many months to more than a year to resolve depending on how large your or complex your estate is or if [snorts] there is anyone who can test it. So probate so when you die right your assets go into something called probate where they’re kind of frozen and during that period of time those assets are made public they pass away that the estate exists. So if you owe money, creditors can lay claims to that. Beneficiaries can say, “Hey, wait a minute. I think I am also I should benefit from some of that.” Um, so that matters. Um, and during that time, that’s when the probate court will, you know, they’ll determine the validity of the will and everything’s good. Then they will say, “Yep.” they give you the blessing and who whoever is the executive the execut will go ahead and start liquidating assets. Um

so if you only use a will, anyone can find out how much you left and frankly to whom. So, we’ll talk a little bit more about how you can avoid some of that probate and distribute your assets um to your heirs privately, but let’s talk about some of the essential documents that most people should consider having in place in addition to that. So,

so part of this right is not just after you pass but while you are alive. So, you know, you want to really take care of your estate. A will isn’t the only document. So, there’s a set of documents that you should have in place. So, among these are called advanced directives. Uh, and this includes a living wall. And basically what that is is that’s, you know, you might have heard them as AMD, advanced medical directives. So, they’re guidance to doctors on medical treatments you would either would like to have or not like to have like a do not resuscitate. A DNR would be an example of one of those or the information that is contained in those. You’re a power of attorney and there are different types of powers of attorney where you give somebody the authority under certain situations uh to handle your affairs but while you’re alive not once you pass because once you pass that power of attorney is no longer valid. Um the durable power of attorney for health care. So they allow you to um that person who’s designated to still work on your behalf uh when you no longer have the mental capacity for example uh to make decisions on your own. [snorts] So you can kind of decide early while you can, right? So there are also financial documents and agreements like joint ownership, that durable power of attorney, living trust.

So a little bit of a story. So back in like the late 90s, early 2000s, there was this case of Kerry Shyo. if I don’t know who’s on this or where we’re from so the ages but you know some of them are old enough to remember this but but this really brought that whole advanced directives to the forefront so if you remember or if you don’t so cherry drive was was severely incapacitated right and this was from like 1990 until 2005 so was cardiac arrest and resuscitated but had severe brain damage damage and she was left in a vegetative state. So her family battled for years about what should be done. So Carrie didn’t have a living will. So her wishes could not be known, right? So the husband argued that she wouldn’t want to exist in this state, but her parents disagreed. So they went to court. So this was just a high-profile case. So most Americans at that time still didn’t have healthcare documents, right? So so that’s why it’s important to not only have these documents, but to communicate to your loved ones as far as what level of care you want if you’re incapacitated. A living will provides specific instructions about your medical care if you become incapacitated and unable to communicate. So it goes into effect immediately upon your incapacity and it doesn’t need to go through any legal proceedings or at least additional legal proceedings. So the power of attorney document that’ll authorize someone to handle legal and financial decisions when you become incapacitated but to also give your effect upon your in they also going to effect upon your incapacity right and then they can trigger on an event that you specify. So, like having a living will, a power of attorney doesn’t need to go through any additional legal proceedings, but individual states, just know they have various power of attorney laws. So, consider, you know, just kind of where you’re at as far as when you make that decision on on what you’re going to do. The durable power of attorney is uh it authorizes someone to make decisions for your healthcare on your behalf. So like it’s like a living will and the power of attorney. It doesn’t need to go through additional legal proceedings.

So this is actually interesting. So about 70% of older Americans have advanced medical directives before their death. Now I would hope that number will get higher. I think that is still a surprisingly low number after the Shybo incident. Um, but I will say from a decade ago, uh, that’s up from 30%. So, it was at 30% a decade ago and now we’re at 70%. So, we have come a long way and frankly, I think, uh, we still have a ways to go. So, you know, I mean, when we’re looking at extended life expectancy, there’s so many treatment options that are available. the chance that you or someone close to you will benefit from an advanced directive I would say is probably greater than ever and will continue to increase. So a little bit about financial documents and how we have those set that up. So joint ownership uh right of survivorship is the most common. And basically what that means if uh I would say me and my wife but it doesn’t even have to be your wife. It could be you and a friend have a joint account with right of survivorship. If one of you passes away the other person on that account automatically is takes ownership of the entire account. uh power of attorney. Uh look, you’re in this case, right? You authorize someone to read this. You authorize someone to make legal and financial decisions on your behalf in case of incapacity. Now, I know this goes without saying, but make sure it’s someone you trust and not just from an like from their moral compass side, right? And you want to make sure they’re doing the right thing, but you also want to make sure they have the capacity to make those decisions, right? Like I like them. They’re a nice person. When you look at your kids, and I’m going to jokingly say this, I have I come from a family of five. I you know, I have four other siblings. There are favorites and there are the most responsible. In my case, I just so happen to be both. I won’t tell my other siblings that, but we all know the truth. So there are different types of POAS but in all seriousness right so whenever you name that you are giving them authority to make these decisions so you want to make sure that they’re capable and more importantly they’re willing to right because it is you might have to make some really really heavy decisions so you want to make sure they’re okay with that I wouldn’t I wouldn’t just just name them without having that discussion first so they understand the scope potentially what they might they might need to do. So, um this isn’t mentioned here, but I would say I’d be remiss to not to mention the power of the TOD and POD, which is a transfer on death and payable on death. So, you know, it’s for your simple things like um like your IAS and your 401ks, life insurance things, they already have a named beneficiary, but you know, like your checking and your savings and your CDs, they don’t have a named beneficiary. So you can add what’s called a POD, which is a payable on death. So if you pass away, this doesn’t have to go through the probate process. It’s still added to the estate for estate calculation, but it automatically pays to that that that recipient. Once they show a death certificate for a to uh transfer on death, that’s used in for like brokerage accounts for non-cash. So I have, you know, a brokerage account with XYZ stock in there. Um, I have mine set up as a tod. So, if something were to happen to me, they can automatically liquidate or just take the shares as is. So, those are free to add. And that’s why that is a good thing to have on here. Uh, your accounts, it’s not a bad idea to set them up that way. If it’s simple, you know, if it’s like, hey, I got one or two people that I want to get the assets. If it’s more complicated, that’s where your wills and trusts come in.

Uh, gifting. [snorts] So um so this is for 2024 because the gifting actually increases. So it the amount changes, right? So as of this for 2024, it shows that you can gift up to 18,000 without triggering a gift or an estate tax, right? So if you’re married, you can give twice that. You know, you want to say, “Hey, I’m going to give my son or my daughter or my grandchildren some money.” you can gift up to that per person. Um, so you know, in this case, if you could give away $18,000 and you gave away $19,000, the person technically that extra $1,000, you know, that 19 that you gave away, you get $18,000 as the exemption. You’re supposed to pay gift tax on that thousand. I’m not sure actually does, but you’re supposed to do it. But you can also file that against your um lifetime exclusion, you know, like the 15 million. Um but again, I’m not sure who does that. I’m just saying that’s what the law is. So in 2026, an individual can give away 15 million over his lifetime without owing any federal gift tax. Uh couples can leave twice that amount. So, but also keep in mind, by the way, so also keep in mind that they have their own estate tax regulations at the state level. So, so even though you might have it on the federal tax side, depending on where you live, you might still have to pay something on the state side. So, trusts can be another powerful estate management tool. So, it’s a legal entity that can own property, right? So, a trust when you pass away, basically a trust is an entity that lives on Um, so these can be used to avoid probate, right? So it avoids delays and the expenses that accompany probate. They’re not a matter of public record, which a lot of folks find that very comforting. And they are a so they’re a tool for maintaining your privacy. Um, but they can also provide an effective man management tool and distribution to your heirs. I’ll give you an example. So we have some client client who passed away. Well, they had um more than one child, right? More than one beneficiary. So, so beneficiary. Well, one of their children were not um how do I put this? One not financially responsible. So, they put in, you know, it’s like a spend a spinth a spend threat provision. Basically said, look, they get x amount of dollars when we pass away, they’ll get monthly, and every five years they’ll get a lump sum. etc. And then they put an exception in there. If there’s medical or some type of emergency, they’re allowed to access. Uh it looks like someone just asked a question. Uh unfortunately, there is no they they don’t record this. So So it’s a compliance issue. We had asked about this about being able to put these out there on demand for them to listen to, but unfortunately that’s a no. Um but if you have any questions, you can always just I’ll my information will end. Um so look so even after your death right these can allow you to have some control over how those assets are distributed to children and and other beneficiaries doesn’t have necessarily your children. Um and trusts are a lot more difficult to contest than a will. Uh so using a trust it’s it’s a it’s a more complex set of of rules of tax rules regulations. So before moving forward with the trust, you want to work with a professional who’s familiar with the rules and regulations. I can tell you the person who did mine, he’s a board certified estate attorney. We have some of the basic planning available to our members and certainly to our clients um at AIS. But if you have questions, you know, give us a call.

So how does a trust work? So, [snorts] you know, the first thing is you have to look at like the value of your estate. You make this calculation. You you you include all of your property that you control, right? So, it’s not just it’s not just like your retirement accounts, your stocks, your bonds, brokerage accounts, checking, savings, CDs, etc. Right? You still have to look at like your home, your real estate, uh right? If you own a rental, if you just own some raw land out here, vehicles, uh what could be like a gun collection, a stamp collection, art, things like that, those can all have significant value. Any business interest you might have, life insurance is also included in that estate. Um including those death benefits if you don’t name them correctly. So,

you have to exceed that 15 million for you to be subject to federal state taxes. So, this is one of those reasons why, you know, if if you’re around there, you might either start giving away some things early, spending down your estate. Um, but even if you’re not, frankly, you should consider getting your estate and healthcare documents in order so those wish issues are carried out. And and frankly, I would say yes, nobody wants to pay estate taxes, but more importantly, I would think it it impacts people to be able to make sure their assets go to where they’re supposed to go. Um, the second thing is is really this helps you get your your objectives in order, right? So, you can kind of ask yourself the following questions. And this doesn’t have to be set in stone, right? You you have the right to change this later. um unless you do something like an irrevocable trust, but that’s a little more complex planning. But as a general rule, you can change your mind later. [snorts] So, what you want to know is whom do you want to have inherit those assets, right? How much of that? Who do you want handling your financial affairs if you are ever incapacitated? uh who’s making those medical decisions for you if you’re unable to make them for yourself? Um how do you want to provide support for your spouse if you should die first? Right? Because there’s married couples and there’s children, grandchildren, etc. So, how do those assets go? Right? Like we don’t have children, but we have nieces and nephews and siblings. So, we were having this discussion. Obviously, our assets go to each other, but what if something happens to both of us? Where do we really want that to go? Um, so that, you know, that’s actually a whole separate discussion where a lot of folks may not actually have that discussion. So, you do want to have that. That’s important. And if you have young children, you know, how are they provided for and who is going to provide it, right? Who’s that guardian? Make sure you want to talk to them about it. Make sure they’re okay with it. And frankly, even pets, right? Um, if something happens to me, who gets my dog? Who takes care of my dog? I’ve already arranged arrange I’ve made arrangements for that. I provided money for that. Not I can’t remember who that was. They left like millions of dollars for the care of their cat. Um, someone from New York. But anyway, great story. Great cat story. Um, but but those things matter, right? This is an opportunity to talk about what is important for you. if you are not here. So, so life insurance, right? It can play critical roles in your estate management, right? If you’re using this in conjunction with a trust and frankly even if you’re not using it in conjunction with a trust because you might have a large qualified account, right? Like a um like an IRA. I got a big IRA. If I pass away, my spouse can take it over. So, that’s really easy. But if we both pass away, then my beneficiaries get it. And if a non-spouse gets it, they have to distribute that in 10 years. They change the laws a few years back where before you could take it over your lifetime. Now, nope, 10 years. So, when that goes to those beneficiaries, it’s due federal income taxes do it in their tax bracket. So, this matters and I have this discussion with our with our clients or the members who we manage their money and that when we’re looking at beneficiaries, I ask this question, you know, it’s like, well, you’re retired now. This is your tax bracket. How are your children doing? Are they successful? Yes, they are. They’re in a much higher tax bracket than I am. So, what do we do to prepare for that? And some say, “Yes, I would like to make those preparations. What’s a more taxefficient way to do it?” And others say, “Too bad. I don’t know.” So, they have to pay taxes on it. They’re still getting money. So, there’s no right answer. There’s no wrong answer for that. But, it should certainly be considered. So, you know, when you’re looking at you might have an irrevocable trust, right, which it removes it out of your assets and that funds it. Set up life insurance and we normally do this under really big tax liabilities and it doesn’t have to be a state, but it could be a large income tax um liability. So, they take that insurance policy, move it into that revocable trust, and at the death um those proceeds offset some of those taxes. So there there’s really there’s really a lot of factors that affect the costs, right? The availability of that insurance like your age, health, and like the amount and the type of insurance that you want. Um and they can have expenses, right? So you know what happens if it’s surrendered prematurely? What happens there? So it’s there’s just a lot of things, but those are things to consider. These are things that we talk about with the members um when we’re looking at hey what’s the estrade structure look like? What does that look like for you? So

your two big questions, right? What’s the value of your estate? And what are your objectives for that estate? And you should visit that I want to say every year, but it’s unlikely that that’s something like that, but certainly every few years just to make sure all those things are still aligned or if there’s a major change with those beneficiaries like a marriage, a divorce, um not only just your own personal life, but like your beneficiary, your kids get married, your kids get divorced, they have a baby, now you have a grandchild. Is it something that you’re like, you know what, I would want money funding if something were to happen to pay for their college or care or their first home or whatever that is, right? Their first car. Um, there isn’t a right answer on whatever your objectives might be, but it allows you to get them organized and down on paper or electronically. I’m not sure if it’s on paper anymore, but um, so so here’s here’s a couple of things, right? So let’s just kind of an example of some of those scenarios. So your lower left hand side is Anthony and Selena. They’re a couple with a child. So that they might look at what’s the best way to gift assets to our children and our grandchildren, right? Because because this is a discussion that we have, right? You can wait until you pass away and get that to them or can we spend down some of those assets? Um and and frankly, they need it now, right? they might need it now. Uh and we get to see them enjoy it and benefit from it. So there is something that they benefit as well. Um if you have a blended family, right? So we have a lot of those in the United States now where we’ve come together in a union and each spouse has has children from a prior marriage. So how does that look like? Right? How do we structure for that? Um Dave, Christina, the upper right, they’re retired. So what would they want to know? So is a living trust worth the trouble and expense to set up? Depends. Depends on your assets. What’s the best way to take title of the assets? So Rebecca on the far left, she’s a single parent and business owner. Uh is there an estate value threshold that creating a trust makes sense compared to or not? So we’ll I’ll feel the questions. Oh yeah, I’m sorry. So thank you. So, for the folks who are putting questions in there, or if you’re not and you do have questions, go ahead and put those in the Q&A box and we’ll address those shortly. We’ll leave time at the end. We should have plenty of time at the end. Um, or even in the web chat. Um, so this one is very common, right? It’s very common for single parents and she just happens to be a business owner. So, how does she protect her business interest in the event of her passing? Um, do I have all the critical documents in case of a tragic change or catastrophic change in health? Now, I will tell you this. This is actually something very interesting for business owners. If you’re a business owner and you are attending this webinar, if you have a partner, right? And I’ll give you an example. So, let’s say you’re business partners and you both are married and one passes away. Well, that spouse just owns half your business. And so, now you get to do 100% of the work. and you get to share half of that revenue. So, not exciting. No one’s usually too excited about that. So, there’s there’s documents and structures that you’ll want to put in that force a buyout, right? Whether it’s um whether it’s cross purchase on the insurance, but you know, you value your your value the business. So, let’s say our business is uh worth 10 million and business owns like a $5 million policy and when one passes away, those proceeds are used to buy out the other spouse and they don’t have a say in it, right? That is something that is agreed on while you both are still alive. Um, so Isaac over there in the lower right hand with his laptop, he likes to do research online. So, are the critical healthcare documents I downloaded legally binding? So, depends on where you downloaded them from and how would you make sure to avoid probate and estate taxes. If some of those questions are, you know, give us a call. No problem on that. Um, so this is actually something that we just recently added because a lot of folks will say, hey, you know, do you have someone? And it’s like, well, depending on what you can do, there’s online that you can do. Um but we can help at least with a cost-effective solution on this. So we use a uh trust and will they provide access for legal documents right? So it’s a reduced cost for our members there. It’s actually free to actually clients of erys uh on how they do that and that’s some of the basic you know trust will power attorney etc that living will that we had talked about. If it’s more complicated than that, then we would have a um you’d have like another attorney and and I will tell you, so since we’re all over the country, I it would just kind of depend on where you’re at, but here the the person I use, the board certified estate attorney, he’s the one who actually didn’t mine. So, um so that’s just that’s just something out there. It’s just one of those things we offer. Now, we don’t actually make any money on this. So this is just something that we have so many that that we allow we have this done through a a third party at a a reduced rate. So with that we’ve come to the end. So we’re we’re actually at the Q&A part. So I want to thank everyone for attending. I’m going to put up a one question survey. And what this does is so we’re a full-ervice investment firm, right? Planning investments. We are fiduciaries. Uh, so while we’re going to do the Q&A, I’m going to put the uh quick survey whether you want to schedule some time with me or a call. If you have some questions about your specific situation, go ahead and click yes or just hit that QR code. And while you’re doing that, we’re actually going to go look at some of the questions out there. So,

let’s see. So, uh, is there an estate value threshold that creating a trust makes sense compared to not? Well, the obvious one is if you’re over that 15 million or if you’re married, if it’s over 30 million. But I would tell you if you’re under it, which most people are, trust still makes sense. And kind of the general rule on that is is if your situation is a little more complicated on how your assets are supposed to be uh dissolved and distributed. Like for example, you’re like, well, you know, I got four kids and I want each of them to get 25%. Sell it, done, we’re fine. Um, however, let’s say I live here in Houston, right? So there’s a lot of farms here. Um or saying, “Look, you know, we have a family farm. We have three kids. Two of them really don’t care about it. One of them really does. So I want it done this way. Strike some of those assets to do a buyout. If if that person wants to keep it, if it doesn’t, then just sell the farm, distribute assets accordingly.” So that’s so those types of situations where where a trust is helpful because a trust is an entity that does not die when you die. um it continues on, right? It’ll actually even file the taxes or someone will file taxes on its behalf. So, those are the situations where where you would use a trust. Uh let’s see, we have a few questions here. Awesome.

What’s the average cost of a simple will or trust? So, you know, online they have they have them as like the basic basic basic. I think I think they’re as little as like a couple hundred bucks, 150, $200 on like the basic basic. [snorts] Um, but again, a lot of those things could be or at least a lot of your assets could be removed too, right? Just by using POD and DoD. But yes, a basic trust will it’s usually for that package. Um, but usually a few hundred hours is use that and it could be a little more. or it would be more expensive depending on how complicated your your assets are. Uh what’s a ladybird deed or house will be paid off soon I want to leave to my children. Ah the ladybird deed. Okay. So a ladybird deed basically is like a it’s like a a tod for your house and and not all states have that by the way. So um I don’t know what state you’re in but Texas we have one. They’re pretty common in Florida. Uh so that’s basically what it is. So you can set up that deed and basically but you still have control of it. You’re still the owner. You are still Yeah. Okay. So you’re in Florida. So that’s probably the most common place that I think the Ladybird deed does. Um but it’s but it’s it’s I know we [snorts] use them here in Texas, too. And and they’re really common in Florida. So basically what it does, it names your beneficiary on your home. So when you pass away, it goes to them. However, while you’re still alive, you still have full control ownership of it. Um they don’t have access to any of the information on that. uh you could still sell your home if you want to move to something else and then you would just put that other home, you know, like if you said, “Look, I’m going to sell this house and move to a condo, like a something that that you would change that that asset and put that in there for your other beneficiaries.” It’s actually a pretty clean way to to do some things. Um we provide this service through trust and wills. Who specifically do we contact? Uh you can you can actually contact me and so we have a gatekeeper on this. So, it isn’t it isn’t someone that you can just click on um that will kind of get an idea. If you haven’t clicked [snorts] yes, just go ahead and click yes on this or or use that QR code and just give me a call um or take my contact information down and and we can get your information as far as what you’re trying to do and then you can say, “Yep, this is what it is.” If you’re not clients of Aerys, just clients of the credit union, um, not part of our division, then it’s a discounted rate for that. If you are clients of ours, um, like I said, we actually don’t make money on this. Actually, it’s a cost to us. So, we we offer that service or at least we’re test offering that service for right now. So, um, let’s see what else. Another question. That’s a good one. Here we go. trust which are created in the US and forcible in other countries. Uh they are not actually. So my husband and French and we have French property and live in the US with property here as well. So let me give you my disclosure. I’m not your state attorney, but generally speaking, no. And and also it gets a little weird too if if it becomes a citizenship thing. So like if you’re um if you’re married right with US assets um and and like my spouse for example your spouse weren’t a US citizen then there’s limits to how much they can actually inherit and the way they inherit that’s taxfree so it does matter. So the short answer is no assets over there they still fall under the jurisdiction of like in that case France. Um, but but I would say this by the way because because states because remember states

I don’t know if I can actually put that survey back up. I’ll tell you what. So, um, just just take my number down or something or I have you I can give you a call here. I’ll just take your information down.

We should have a way to to make that adjustment, right? So, in case you change your mind. So, I will uh I’ll give you a call. I’ll try to do it today, but it might be tomorrow. Um, so with that said though, I and I will tell you though, as far as property goes, this is the other reason. So, this is where it’s kind of matters on trusts and um because it is more complex of a of a um of a situation or or at least your will will will impact this too. So, let’s say I live here in Texas, but I love Florida, so I want to have a condo there somewhere in the Keys or something. I don’t know. Um or in Miami, cuz that’s cool, I guess. But, um it was pretty cool. So, so you know, if I pass away, so Texas has a state laws for Texas, but so does Florida. So, so these things still have to be taken care of under under those jurisdictions. So, that does matter. So depending on where your assets are and this is some of the things that we talk to when we do the planning for our clients but yes that does matter not only within countries thank you for that question but also in states where that property is. It is not uncommon for people to have a vacation home for example somewhere else. Um, let’s see. Let me go through these and make sure I got all of that. Any other questions?

State tax. Oh, this is a good one. Okay, so um, someone asked on taxation for a retirement account. So, remember when I said um most people won’t pay estate taxes, but there are other types of taxes. One of those things is income tax, right? So, let’s say I have a retirement account that my wife’s supposed to get it and if she gets it, she just steps into my shoes, but we both pass away and our children are going to inherit it or grandchildren or whomever. um that is taxable at their tax bracket, right? They have to distribute over 10 years, but they have to pay income tax on that. So, there is still taxes due. Um so, it could be property taxes, things like that. So, the the thing I think that will will get most people is probably the income tax on retirement accounts. So, there’s things that you can do to kind of structure that or start making arrangements for that. Now I think that I think those are it. I think I got all the questions on there. Thank you so much for the participation. This makes this so much easier. Um and I really appreciate the engagement. Uh if there are any questions, please reach out to me. Uh thank you so much. we are going to officially end the uh the webinar, but I’ll still be around for a couple of minutes if anyone has any questions. So, thank you so much for attending everyone. Be safe and have a fantastic rest of your day. Take care. Bye now.

Good evening everybody. Thank you so much for joining me tonight. Uh it’s just a hair after six o’clock so we will get started. I do want to be very respectful of your time. Uh tonight’s topic is estate planning basics. My name is Joe Gaspari. I am one of the financial consultants here on the Alliant Retirement and Investment Services team. Uh what I do here typically every two weeks I do a different presentation. tonight on estate planning. Uh recently the seven things you need to do before retirement, then uh social security, Medicare, all of these various financial topics that might be important to you. So uh tonight we’re going to talk a little bit about uh estate planning where it says estate planning basics. I do want to be uh to let you know this is the basics of this. This is not getting too indepth. Hopefully, this is going to make you think, do I need to speak to someone? And hopefully, I will be putting up a survey at the end of this presentation that you and I can continue this conversation one-on-one with you directly and just to kind of dig into maybe just your future a little bit. And if it’s estate planning that’s uh heavy on your heart, then we can certainly talk about that. Maybe the answer might be I think you need to speak to an attorney um and get some uh you know estate things going especially if it’s complicated if you have multiple properties and or just a complicated uh beneficiary situation. So there’s many different reasons why someone might want a trust or just a will the powers of attorney for health care and uh financial all of these important documents that we’re going to touch on today. So, uh, as we get going with that, I do want to let you know that we cannot record these presentations. That does come up pretty much, uh, uh, quite often, uh, almost every presentation. Someone might ask if we can get a recording of it. We are not able to record and neither are listeners. Um, so we had seen some um, I believe it was competition that uh, uh, other adviserss that were recording our presentations. So it’s something that we cannot do. Uh so these cannot be recorded for compliance reasons. We are not able to also not able to give out the deck or the slides on these as well uh for compliance purposes. So hopefully if you do want to dig in a little bit more, please say yes at the end of the presentation uh and then uh we can certainly uh talk about what’s important to you and to see what steps are going to be next. I do have some other presentations coming up uh which is the IRA planning different you know traditional Roth uh the different tax consequences uh moving forward into retirement of uh many of us that I’ll use the term 401k rich meaning that that’s where a lot of our savings is um that and those are things that if it’s traditional regular 401k it’s all taxable coming out so I do want to uh let you know there’s some other opportun unities and planning that can be in place so every dime is not taxed in retirement. Maybe come up with some strategies for you there. So hopefully we’ll see you on that one. That’s Wednesday the 29th at 2 p.m. Then I have the Medicare presentation August 11th. Another evening presentation. This is a pretty popular topic. Same with Social Security. uh but uh digging into Medicare A B maybe the Medicare C uh the advantage plan Medicare D which is prescription drug coverage all of these different things how much are you expected to pay for this in retirement and we’ll dig into Medicare coming up soon uh educational resources you do also have access to see what other webinars are going to be available uh for you to listen to our uh invest savvy podcast and our Aerys Aerys meaning Alliant Retirement and Investment Services. Uh that is uh our team that I work with. So Aerys website and blog is available as I go through the presentation on estate planning. If you do think of a question, just go ahead and type it in at any time. If you think of that, just type it in. They will hold until the end of the presentation, which is when I will take those. But you can utilize the Q&A box or the chat box. It doesn’t matter which one. Uh but I I’ll have them both up and ready to go to answer any questions that you might have at the end of the presentation. So, let’s dig into what is an estate plan. It’s a map. It’s a road map of here’s what you want. Here’s how to put it in place to make sure things pass without maybe going through probate. Um, we’re going to talk about that. But, uh, you know, if we can avoid probate, if we can make sure that your wishes, maybe it’s, uh, artwork, maybe it’s jewelry that you have. Document, document, document. This is what, uh, basically a will is going to do for you. Documenting who gets what. Um, maybe there’s minor children under your care. Who’s going to take care of these minor children? That would be things that are in a will. So, a map reflects the way you want your personal and financial affairs to be handled in case of incapacity or death. Incapacity mean what if you’re in the hospital? What if you’re in a coma? What if? What if? What if? All of these various things that could certainly happen. And if you’re not able to act uh maybe even paying your bills uh because you’re in the hospital, who’s going to be able to take care of those things for you? So, who needs an estate plan? Chances are you do. uh not just for the wealthy. Without an estate plan, you can’t control what happens to your property if you die or become incapacitated. It makes your wishes clear, helps avoid family disputes. I’ve seen many many many uh times or cases of when someone passes away and maybe it’s just children, maybe it’s cousins, maybe it’s nieces and nephews that are beneficiaries, but family and money sometimes does not mix very well. Uh I’ve seen many cases of that. So, uh it’s certainly something please have things in writing. Uh proper estate planning can preserve assets and provide for loved ones. especially [clears throat] needed if your spouse is uncomfortable uh with financial matters. If you have minor children, who’s going to uh take care of or raise the children legally uh based on your wishes? uh your net if your net worth if you are in this range of over a $15 million net worth then we start to dig into estate taxes not state but estate taxes which is generally a flat 40% on stuff over 20 million or 15 million. So, as an example, 20 million, if someone has a $20 million estate and they pass away, the first 15 million is not subject to the estate tax, but anything above that, so 5 million would be uh subject to that 40% estate tax. If you own property in more than one state, you’ll definitely want to. There’s different state rules uh on especially if someone passes away on how things are passed. Uh financial privacy is a concern because probate is a public record. Uh so if it’s something that is important to you that you don’t want this to be public, then have an estate plan ready to go. And uh sorry for my voice here but uh sorry uh estate planning uh concepts. So planning for incapacity.

So healthcare, property management, planning for death, wills, probate, tax basics, lifetime gifting. We’re going to talk about gifting. How much you can give away while you’re alive legally. uh life insurance and trusts planning for incapacity. Incapacity can strike anyone at any time. Uh there’s been a case, it was a very famous case back in the ‘9s. Uh Terry Shybo, if that name rings a bell at all. I believe she was about 26 years old. Um she went into cardiac arrest and she was in a coma for a very long time. Uh so now her husband this is in the state of Florida her husband after a long period of time and doctors saying she’s not going to come out of this uh said let’s remove the feeding tube her parents got involved then again in the state of Florida and said no we are we should have a say so over the husband the parents should have a say so now we have courts involved where the husband says remove the feeding tube the parents said, “No, don’t do it.” And so then there was court case, court case, court case, and they finally sided with the husband and said, “You could remove it.” It was um eventually overturned and said, “Nope, side with the parents. Don’t do it.” It was about a I believe it was about a a 14-year process uh where this dragged on, dragged on, dragged on, and they ultimately said the Supreme Court got involved and said they could remove the feeding tube and she ended up passing away some days, you know, several days later. But, uh things that are not uh written now, we’re talking about a 26-year-old uh that who would have thought we need to do estate planning at 26 years old. But uh again, it could happen to anyone at any time. Failing to plan means the court would have to appoint a guardian, especially if there’s minor children. Uh lack of planning increases the burden for the guardian and your guardian’s decisions might not be what you want. So if it’s the court appoints someone that is not uh in favor of what your wishes are, they can do what they want to do because the court put them in charge of your estate. healthc care directives. Uh living will number one, having a will. A will is going to be put your instructions in writing. Here’s what I want to have [laughter] happen. So, and I’m going to talk about my parents in a little bit. Uh with my when my dad passed away in 2015, my mother was diagnosed with cancer weeks after my dad passed away. And uh then when she passed away about a year and 3 months after my father did um she updated some things, but she didn’t get to everything we found out. Uh but uh she did update her will. Um but the will opens up probate. So we’re going to talk about even if you have a will, you can still go through probate. So but it does put instructions in writing. So this is where you would put if you have jewelry, if you have artwork, if you have minor children, all your instructions, what you would like to have happen. Sometimes it’s even the emotional things that you could put in there um you know that uh of what your wishes are. Durable power uh power of attorney for healthcare. There are two documents for uh power of attorney. The first one this health care and the second one coming up is going to be for uh property or like accounts to have someone able to pay bills for you. They are separate documents but they are both important documents to have. The first one is the power of attorney for health care. Lets you designate someone to sign for you if you need a surgery to have the say so of um take the feeding tube out or don’t take the feeding tube out. Uh like the Terry Shyo case. So someone needs to be in charge of that and it needs to be in writing. [clears throat] Do not resuscitate. This is an example of actually my mother-in-law uh had a DNR. uh do not resuscitate where when uh she passed away, she uh you know cancer and you know all sorts of things going on with her body and she went into cardiac arrest and they did some measures but it was a do not resuscitate. They can only do so much according to the instructions on there and she did pass away. directs uh that resuscitative uh measures be withheld or withdrawn planning for incapacity for property. Now having joint owners could be very uh important to have but there comes with a little bit I don’t even want to use the word risk but when I explain joint ownership means that someone has access to your property. So, if you are a, let’s say, a single person and you have adult children and you want to put one or all of your adult children as joint owners on your accounts just in case, maybe they’re trustworthy children and you want to just have them joint on your account. So, uh, if you need if you’re in the hospital that someone can act on your behalf, they have power to, you know, sign on checks and things like that. Uh, great. One of the big butts on that is what if something happened with one of those joint people. Let’s say maybe it was an accident or [clears throat] maybe it was their fault, maybe something they got sued for something. Your assets are now in play if there happens to be some type of court case and payment and your assets could be at risk on something like that. So that is certainly it’s a it’s kind of a stretch but it’s certainly something that could happen. Why someone would want joint ownership uh maybe adult children and why someone would not want uh joint ownership. Verbal power of attorney. This is also the document that someone can pay bills for you and have access to your accounts. They’re not joint owners. They can only do things on your behalf. If they ever got sued, it’s not their asset. So there’s no risk on that part, but someone can help you pay your bills and do financial things for you um on your behalf. So they can just sign your name, POA, power of attorney, and then that that person’s name. Living trusts. So we’re going to talk about trust. Maybe it’s a revocable trust or an irrevocable trust. Just so you know, most trusts that people do, most family trusts or living trusts or whatever type of trust are typically revocable, meaning you control it. You might be your own trustee of your own trust and but it is a separate entity that owns your property. It’s out of your um your personal ownership. It is owned by the trust, but you would control the trust. What happens if you die without an estate plan? Some property passes automatically to a joint owner or or designated beneficiary. So all of those accounts that if you have a 401k and you have beneficiaries named, you don’t need to have that in a will, you don’t need to have that in a trust, nothing like that. you have beneficiaries named and if you passed away uh death certificate and the beneficiary has an ID and they can open up an account and inherit those uh funds um or take control of a savings account or just move it to their own savings. So it does pass seamlessly if you name beneficiaries. Same thing if it is a joint owner and you passed away the joint owner already owns the account. All other property generally passes according to state estate and testasy laws. Probate what happens if you die without an estate intestasy. They vary from state to state. So probate rules are very different. My mother and fathers uh which I’m going to talk about here. Uh typical pattern of distribution divides uh property between uh the spouse and the children. So here’s an example of if you don’t have something in writing. Maybe you had an individual account. If you have a spouse and you have children, maybe your wishes were to say, “I’m going to just, yeah, it’s my wife’s. I’m just going to leave this, of course, to my wife first so she can move on.” And uh but some state um laws might be that if you passed away, if a husband passed away in this case, the wife gets half and the kids split the half. Maybe that wasn’t your wishes, but that could happen in certain states. So, here’s an example of even a spousal situation. You definitely want to make sure that you either have a spouse as a beneficiary or joint on that those accounts. Your actual wishes are irre irrelevant. Uh when we talk about um intestasy, it’s up to a judge and there could certainly be uh potential problems there. Wills and probate. So here’s where my mom and dad’s uh situation. Uh my father passed away in 2015. Uh my mother was happened to be diagnosed with cancer 5 weeks after my dad passed away. So 2015 still and she was going through her health issues and kind of settling my you know father’s estate. She was the beneficiary on his retirement account. So that was all smooth uh seamless on that and he was joint on accounts. She took his name off of some of the accounts that we saw and everything was pretty smooth we thought and she went to the attorney to update her will to take you know 50% of hers to her my my father her husband and uh so it was just I’m one of five kids so everything 20% to five kids is what she put in the will. Uh, so she ends up passing away a year later and now we’re going to settle her estate. So we’re at the down in Florida, all five of us are spouses. We do the funeral and now we’re starting to settle things. We see an attorney about her condo um that she owned and then some some accounts she had. We had statements. We had her her IRA account. And so we’re talking to the attorney and the attorney is going through the pile. Oh, there’s no beneficiaries on this one. Uh, we’ll talk about that. Oh, this one has beneficiaries. Go ahead and you can close these out. Anything with beneficiaries, we were able to take care of immediately. There were some accounts that did not have beneficiaries. And same with her condo. So, her condo at the time was valued at about 220,000. And the two accounts or two or three accounts that totaled about 80,000 did not have beneficiaries named. So, we had a $300,000 estate. It doesn’t didn’t count the IRA or anything else that had beneficiaries. The estate for probate purposes are just the things that are still in play, uh, which is the condo and the 80,000 accounts. So, 300,000 estate goes into probate. Now, this is in the state of Florida. And now we’re at the mercy of just waiting. Uh now this is when when people say you know is a you know shouldn’t take too long. I mean it’s pretty smooth. Everything was in the will which she did update but it’s a six sevenmon period in Florida somewhere in that range. And uh what if someone comes forward? A will can be contested. Uh which means if someone says hey she said she was going to leave me some of that you know I I get some. Now, there’s got to be documentation and proof things like that, but it can it certainly delay or add extra costs and things like that. It certainly could. So, uh we ended up going through and it was 6 7 months later we finally uh the judge says, “Yep, everything’s fine. 20% for the 80,000.” Put the condo in the kids’ names, which we ended up selling uh the condo. So, that was all it was all fine after a while, but boy, what a waiting game. And [clears throat] the biggest part of that is the attorney costs us between $9 and $10,000 for that 6 to 7 months. So probate attorney, it’s not a cheap process. So this is one of those when people say if I talk to an attorney, if I have to open up a trust, if I do, it might cost a couple of thousand, but it’s not going to be 9 or 10,000 that it could cost your beneficiaries after the fact. So in the will in our case when you see in the middle one here names an executive u uh my sister as an example was the executive of the estate and the attorney actually looked at all five of us in this room. He’s like just so you know all five of you if you call me I can’t talk to you. I can only talk to the executive. So we all met periodically and so we ended up finally settling the estate um and getting those counts. What a waiting game and what an expensive waiting game that was. Wills and probate the process. Most wills must be probated. And just so you know the term when the do when the doctor when the attorney uh had said u that you know he has this will. It’s updated. We’re going through statements and things. He said the first thing I’m going to do um you know whatever the next day or within the next couple of days is I take this to the court and file it. Now it gets filed. That’s when probate begins. So in just having the will is not enough just to say everything goes to who you say. The will opens up probate. Uh so wills filed uh with the probate court. Executive collects assets. So we had to continue to pay the association. We had to pay the property taxes. We had to pay insurance on the home still and all the different things. We still had to pay all the bills and we had to make sure those funds were available. Typically process lasts several months to a year, which was pretty typical for our case. Again, I’m just going to throw a reminder that if you do have some questions, type away in the chat box or the Q&A, and I will get to those at the end of the presentation. Uh probate uh pros and cons. Uh time and cost could uh typically modest. Uh depends on uh what your attorney fees and things like that are um for uh for probate. Court supervision protects against creditors. If there are, you know, if there was credit card debt or anything or mortgage, thankfully my, you know, the condo was paid off. My mother did not have credit card debt. In fact, I think she bought something for about $200 around before she passed away that we had to pay $200 to the credit card. Uh, but if there are is debt, it is protected until probate ends. uh can be timeconuming for complex estates uh title transfer delays. There’s could be a lot of fees which we had paid and ancillary probate which means if there is let’s say properties in another state you’re not just dealing with probate in the state that you’re in like we were in the state of Florida that’s where my mother lived but let’s say she still owned a property here in Illinois she didn’t but just in case she did there could be ancillary probate in Illinois then so it’s where things could be especially if they’re not in a trust or something like that. Uh it is public record like I said. So um you’re you know it’s so that privacy if it is important get your estate plan wills and probate avoiding probate. Can it be avoided? Absolutely. Yes. Uh this is where we’re going to you know having beneficiaries named is there a trust needed? Uh all those different things. So, joint ownership, uh, complete beneficiary designations on IRA, 401ks, any other retirement plans, life insurance. Make sure you have your beneficiaries up to date on that. Uh, use a trust if you think you might need a trust, and we’re going to talk about that toward the end of the presentation. We’re going to dig a little bit more on that. But, uh, uh, creating a trust is certainly something to consider. uh could be it’s a little more cost than wills uh and wills and power of attorney documents. But there is also and I’m going to share a screen toward the end of this some online do-it-yourself sources for some of these. If you think you’re savvy that you can do this on your own, there are some outlets for that. Uh making lifetime gifts, you can start to give away money uh throughout uh your living years so you don’t have to wait until you pass away to give it. Uh, some people want to see their family enjoy it while they’re still here. Transfer taxes include federal gift tax. So, if you start to give money away, it could be taxed. There’s an exclusion for how much you can give without it being taxed. Estate tax is basically imposed on transfers made upon your death. So, gift tax is while you’re still alive. Giving money away, if you give too much away, it could be taxed. The estate tax is when you pass away is there could be an additional estate tax. Then there’s also an additional if you are separate uh for if you skip generations giving uh you know when you pass away [sighs] uh which is grandchildren, great grandchildren.

So the federal gift tax, lifetime transfer. So gift tax applies to transfers made during your life. You can give up to $19,000 a year uh individually to anyone or as many people as you would like. If you have five children and you want to gift each of them 19,000, you certainly can. If your five children are all married and have spouses, you can gift your son or daughter-in-law 19,000. So, you can give each family 38,000. And you could do that to every you can give to your grandchildren. You can give to anyone $19,000 a year without it being taxed. All of this totals up that you can give away up to $15 million whether still alive in combination of living and at death without it being taxed. Uh the 15 million exclusion is the largest. So it’s been it crept up over the years. There’s been years, many years where it was lower. Uh and uh of course uh now at 15 million, this is the highest it’s ever been. So the federal estate tax uh applies on transfers made at death. Generally does not apply to transfers made to spouse or a charity. So you can give to your spouse even if you have a healthy estate like this without it being taxed. 15 million uh excluded from all transfers, gifts and estates combined in 2026. All any portion or excuse me any portion of exclusion from uh used for gifts will be unavailable to the estate.

New feature important for married couples. It is portable. So if your estate it could be let’s say 15 million without go being uh through the estate tax but if your spouse has let’s say $15 million you can pass away you can gift $15 million to your spouse and then your spouse can gift 30 million. So your 15 million can kind of move forward to the spouse and when the spouse passes away up to 30 million can go um without being uh taxed on the estate tax. So this is the generation skipping tax where there’s an additional 15 million for this that if you gift directly to uh grandchildren or greatg grandandchildren skipping a generation. So here’s where the taxes are for the estate tax and it’s a flat 40%. Uh so it was 2024 13.6 13.9 now it’s at 15 million. Uh and it is so again if it is a $20 million estate and someone passes away the first 15 million is not taxed but the 5 million after that could be taxed at [clears throat] five uh at 40%. So this is how do we avoid things like that? You start to give away early if you can. Lifetime gifting allows you can do 19,000 uh to as many or as people as you would like. Uh it removes future appreciation of property from your taxable estate and no step up in basis. Here’s what that means. No step up in basis. So I’m going to use a step up example first. though, if someone owns a stock, let’s say they have a brokerage account and they have a stock and I’ve seen something like this. So, I’ll use like an old oil stock as an example. Someone bought an oil stock, you know, 50 years ago and they still have this stock. They bought it for, let’s say, $30,000 and it’s worth $200,000 now. And it’s just grown over the years. Now, there has been no tax on that gain until it’s actually sold. If that living person sold the stock, they would pay capital gains from the 30 up to the 200,000. So there would be hefty capital gains paid on that. Now, if that person passes away and someone inherits that stock, it steps up to the 200,000. Let’s say on day of death, that value was 200,000. If the beneficiary of that sold it immediately for 200,000, there’s no taxes paid, no uh capital gains because there is a step up on that. If you start to gift while you’re still alive, if you have to liquidate any assets, stocks or anything like that to gift, it could be a taxable event to you. Just so you know, there’s no step up on that. Uh step uh that’s only upon death. Lifetime gifting transfer uh transfers excluded from the gift tax. Uh so 19,000 if you are married, you and a spouse can each give 19,000. So a couple could gift each person 38,000. If you are contributing to a 529 college savings plan uh for someone, you can give 95,000 or 190,000 if you are married filing joint uh tax-free. So, you can gift directly to a college savings plan. There’s no gift tax if you pay someone’s tuition, but you have to pay the education uh the college or whatever it is. You have to pay it directly. You can’t gift it to someone to pay tuition. You have to directly pay the uh tuition. And there’s uh so you can do that without it being taxed. And same thing for medical care. If you are paying someone’s medical bills, if you are able to, as long as it is not taxed, if you pay the medical provider directly, again, you cannot gift it to someone to pay the bills. You have to pay the bills directly for them. Trusts. So, let’s dig into trusts a little bit. So versatile estate planning tool can protect against incapacity, avoid probate, minimizes taxes, professional management of assets, provide safeguards for minor children, elderly parents, can protect assets from future creditors, and control over property. Here’s what a trust is. A trust is basically it’s a separate entity. Uh it’s almost like if you had a business and you had a business, you know, uh savings or checking account for the business. Those are away from personally if you had a corporation. Uh if I was Joe and I had Joe’s garage because I’m a mechanic. Um and I have Joe’s personal accounts and I have Joe’s garage uh you know uh accounts separate from myself. I don’t own that. The business owns it, but I control the business. Same thing with a trust. You’re creating a separate entity to own assets. you’re creating this trust and the biggest thing is let’s say for example you create a trust you put the home in the trust and if you pass away you’re going to name what’s called a successor trustee to take over that’s sometimes why they call it a living trust if people die the trust can keep on going someone else just controls it does not go through probate uh this is a a big way how do we things that don’t have a beneficiary maybe when you bought your home there probably was not a beneficiary form. Some states, there’s I think about 11 or 12 states that you can do beneficiary forms. Go to your county, check with your state or county to see if you can do a beneficiary form for your house um to avoid maybe creating a trust or something like that, but that is certainly a possibility. So creating a trust basically takes the assets out of your personal estate and you’re creating this separate entity to own the assets. Uh so parties to a trust there’s a grtor. A grtor is the per is the person who creates this entity creates the trust. Um and you’re going to have a trustee that’s the person who controls it. Now many times the same person is the grtor and the trustee or grtors and co-rustees. So if a husband and wife create a family trust uh and they have assets in there, they put the house in there, they were probably the grtors that created it and they are probably the co-rustees controlling it. So they can be the same person. And then you would name beneficiaries in the trust. So, if you have all of these and if you have some complicated things, some examples of some of those are if you have a special needs person that is in your care. Uh here’s an example of someone that I’ve uh spoken to in the past. I was working with them and they said, “Yeah, we have this trust. We have a special needs person. It’s not our child, but it’s a relative and lives in our home and we actually have it in the trust.” the home was in the trust and it said if we passed away and the special needs person is still alive, the trustee cannot sell this home. This special needs person will always have a home. So those are some of those things that you can put in a trust that are not normally in a will or in your wishes. Another example is uh I’ve had someone said I have three three children. Two of them are very responsible and one is not responsible at all. And if this not responsible child inherits what we have, a third of what we have, it’s going to be gone in, you know, very quickly. So we have it in the trust that the trustee will distribute this p this child assets at a certain age and then when they get to a certain other age, they get more and then another age they get more and it’s spread out. The good is that you can control that from the grave. The bad is this trust has to keep on going and someone has to manage that and there could be fees, cost, expenses and things like that. But some of these things are you are certainly able to do. Uh trusts that are revokable or irrevocable uh comes into play. A revocable is your typical trust like I was just saying is you can change the beneficiaries. You can do whatever you need to do. When you have a an irrevocable trust, you do not control. This is what someone might do if they have extreme wealth and they need to distance themsel from these assets that would be subject to the 40% estate tax. That’s why someone might have an irrevocable trust. it takes it completely out of their estate and it would not be subject to the 40%. So there’s certainly ways talk to your attorney if you are in that uh uh situation you would definitely want to create that type of an estate plan. Life insurance can provide an instant estate. What that means is that even if you have no assets, if you don’t own a home, you don’t have assets, but you have a life insurance policy that you want to leave to someone that is create that’s part of your estate even though you have no other assets. So, a life insurance col uh policy can [clears throat] it can provide an instant estate uh can provide uh needed estate liquidity. Sometimes some people will say, you know, we can pay for the funeral based on life insurance proceeds to come very soon. Uh life insurance proceeds are included in the estate tax. So if you have a million dollar life insurance policy and you have 15 million other dollars that would have not been taxed because that’s at that cap, that million could be taxed at 40%. even life insurance is part of that 15 million estate. Key issue is ownership of the policy. Here’s where we’ll talk a little bit about irrevocable trusts. And this is going to be wrapping up fairly soon here. So again, I’ll just remind if you do have some questions, I will take these at the end. And we’re we’re getting there here soon. Uh life insurance and an irrevocable life insurance trust. Uh basically if you are in the situation where you have extreme wealth and you need to get fund money out of your estate or even have life insurance outside of your estate, you would have an irrevocable uh trust. In this case, a life insurance trust. So you are the insured. You have this irrevocable trust that’s going to hold this insurance policy and your family is your beneficiary. So you create the irrevocable trust and you name someone else as a trustee. You cannot be your own trustee on an irrevocable trust. Someone else has to manage that. Uh and you’re naming the beneficiaries as well. So trustee purchases uh the life insurance policy and it which is owned by the trust. So the trustee that you named uh purchases this policy, you can make cash gifts to the trustee to the trust to pay the premiums for that and beneficiaries technically can withdraw cash gifts. Uh so some of that cash value in that type of a policy might be available. Um but uh the whole purpose is uh trustee uses the cash to pay the premiums for the life insurance. And this again, this irrevocable life insurance trust is outside of your $15 million estate. So this is how some people can avoid paying the 40% is creating entities or trusts outside of your estate. So at death, the insurance company um pays the irrevocable trust which pays the beneficiaries uh and are not subject to the estate tax because again it’s outside of your estate. Proceeds distributed according to the terms of the trust and the beneficiaries receive the full proceeds fee free uh from estate tax and even income tax. So in conclusion, have you implemented a plan for incapacity uh health and property? Do you have a valid will? Are transfer taxes a planning concern for you? Does your overall estate plan reflect your current wishes and circumstances? So here is a there here’s an outside source. Um, now this is not something that we, you know, we’re not I’m not referring, but this is just an example of it’s a website you can go Trust and Will. You can even type in trust and will and you’ll find this website where it’s kind of a do-it-yourself. If you are savvy and you want to at least check this out to see, can I create my own, there’s templates and things and there’s some online sources. It’s not free. you will pay in the I’ll call it the hundreds of dollars instead of the potential thousands of dollars where if you create a will, trust, powers of attorney. Um so it’s a much less cost but there are there are certainly some online sources. Um I had a spec uh an attorney that I used when I lived in Roselle, Illinois. I’m in a suburb of Illinois and at our previous house, we had an attorney who has since retired, but I do have some other attorneys local in this area that I can certainly refer if you would like to speak to an attorney about some of these things about opening up a will, trust, powers of attorney, all of these important documents. But again, this is just a source where you can look and see if this is something that you want to do on your own or you could certainly uh you know, you and I could speak and as I go through the questions here in just a moment, you have a you see a QR code on the screen there if you would like to set up a one-on-one conversation with me just to say, “All right, I just want to see what I should be doing. Can we just look at my stuff and see if do I need a will? Do I need a trust? Do I need the powers of attorney?” and you know those types of things. You and I can have this one-on-one conversation. Uh you can put your camera up to the QR code. You click on the yellow thing that comes up there and you’ll have access to my calendar. You can schedule a time right now if you wanted to or I’m going to put up the survey here in just a moment. It says set an appointment with Joe if you want to say yes. we can you and I will set up a time to speak and whether that’s a phone call or Zoom or if you’re local here uh where I my office is over by O’Hare airport we could even meet face to face. So I’m going to put up the survey here right now. So the survey is there hopefully you see that on your screen and you can just click on that to hopefully respond to that and then I will go through the questions here. So, uh, the first one is, can you recommend an attorney, uh, that can help with the trust and wills? Yes, I certainly can. I have your information here. Uh, I hope you’re one of the yeses on there that we can certainly talk about it and see if, uh, um, you know, what attorney I could certainly recommend for you. Uh, can you have two executives in a will or a trust? You can. Uh, so let’s say a trust. Um, you are what is called the trustee. If you are married, you could be co-rustees. Let’s say you have two children and you want to have one of them control the estate. You can have a successor trustee, one child. Or you could have successor trustees 50/50. They both have to control it. Co-rustees. So co-successor trustees. Same thing with executives. Yes, you can certainly do that. uh for our family when we had five kids when my mom passed away uh one executive sometimes uh I’ll be see especially if you have multiple people and you have two let’s say two of if you have three children and you name two of them as an executive uh that could uh cause a couple of uh issues there but you certainly can uh so if a single person has property how do I ensure that my property gets passed to my heirs will and trust is certainly at least beneficiaries. That’s where I always start is name beneficiaries on your accounts and that’s your savings checking, life insurance, uh IRA, 401k, anything that you can has an account number, you can add beneficiaries. Do that first. Then it’s the other things. What if the car uh you might have a car that could be an estate issue if if it’s just in your name and uh who’s going to get the car you know someone might there might be people fighting over that will maybe you can even put the car in the trust you could put your home in the trust and your wishes are carried out by the successor trustee. So, if you are a single person and you have some property, number one, name beneficiaries on the accounts, things with account numbers. If you’re uh if you know, if I could see what state you’re in, if we do have a conversation, we could see if there’s that beneficiary form for your home. Um, and then anything else would be wills and trusts, especially if you have jewelry, artwork, anything that’s hanging on the wall or wherever it might be, your wishes need to be documented. That would be in the will. Uh, can you recommend an entire already did that one? Is there a way to avoid the 40% tax on money from the sale of the deceased person’s property that goes into the trust at the time of sale. So, if we’re talking of of an estate, the 40% is only above 15 million. Um, if things are not in place, uh, there’s I I used to do a presentation and it talked about James Gandalfini, if you remember James Gandalfini from The Sopranos and other things. He had a sudden heart attack and passed away in his 50s and he had I think they estimated it was about a $70 million estate that he had no estate plan. Uh, so you got to do it while so after someone passes away, if it’s an estate over 15 million, it’s going to be subject to the estate tax. You need to take care of it before someone passes away to the irrevocable life insurance trust or speak to an attorney on getting assets outside of your estate to get under that 15 million to not be subject to the estate tax. So, if if someone has over 15 million and they’ve already passed away, it’s kind of too late. Uh could we see the replay possibly? Unfortunately, I did say at the beginning uh I am not able to uh get the uh recording of this or I’m not able to give the deck out or the slides out um you know for compliance purposes. Uh let’s see, there’s some more here. Uh, will you be able to get the copy of the slides? Unfortunately, no. Are you able to recommend an attorney or lawyer in Texas? I do not have one, but I can certainly help maybe help you find something of a trusted. Maybe I can even check with clients. I have some clients in Texas um in the Dallas um to see if they maybe have an attorney or something. So I always have some sources to go through but I don’t have I just in the Chicago area here where I can certainly recommend someone uh if I have my home uh as an asset of my revocable trust does the value of the capital gains uh purposes reset the day? Yes. Even if it’s in a trust there is a stepped up cost basis on your home even if it’s in a trust. Uh so yes you are protected on that. Yes. Uh even uh hello. Even if the life insurance policy has a beneficiary, it has to be included in the trust. Not necessarily. As if it’s owned by you personally and you have beneficiaries named, it does not need to be in the trust. You can have the trust own it, but you don’t have to do that. You can just have it owned by you. And as long as you name beneficiary, now it’s outside of the trust. If you have different beneficiaries in the trust, I’ve seen this too, that someone might have their children as beneficiaries in their trust, but they have another nephew or niece that’s near and dear to them, and they have this separate account that they have that nephew or niece as the separate beneficiary. It’s outside of the trust. The trust has nothing to do with that account. And so, that account would definitely just go to that individual person. So that’s one of those things. Maybe this life insurance you don’t want in the trust because you want a separate beneficiary. So your life insurance does not need to be in the trust. Uh can a person be a trustee and also be listed as a beneficiary? Yes. Uh I’ll say a successor trustee maybe not necessarily the trustee because if I have my own assets and I’m the trustee of my own trust, I’m not going to be my own beneficiary. But if I name one of my kids as the successor bene uh trustee. So my one of my kids is the successor trustee. I pass away the successor trustee. My daughter let’s say controls the trust but she can also be a beneficiary. She uses the trusted person that I put in there to control to do that. So, um I would say successor trustee can also be the beneficiary, but most likely the trustee is whose assets they are. However, there’s maybe someone else created a trust on my behalf. Um and maybe they’re a beneficiary. So, it’s possible, but there could be a conflict of interest on there. I would say if you have a complicated issue like that, speak to an attorney about that if there’s some certain examples of that. Let’s see if anything else came through. We are I think that is all of the questions that I have. I’ll just wait a minute and see if anything else came through. I think that is it. Thank you all so much for your time and attention tonight. I hope uh you and I are going to have a one-on-one conversation here soon. Thank you. Have a great rest of the evening.

Okay, good afternoon everybody.

We got a couple minutes to before we start, but I just wanted to check on a couple of things. Uh, welcome Andrew and Ida and James and Sarah and Sheila. Susie, welcome. Hey, can you guys do me a favor because I I didn’t have my um normally I set this up where I can see it on my phone to make sure everybody if you guys can just somebody raise their hand if uh if you can hear me. Okay. And you can see the uh long-term care. Perfect. Thank you, Andrew. Thank you, Ida. We’re good. Um, that being said, if uh we got a we got a few minutes if people uh if you want to if you want to say hello. I’m going to take everybody off of uh allow everybody to talk. If you want to say hello or ask a quick question in advance. Hello Sarah. Hello Kelly and Amy and Julie. We got a good crowd today. Hello an

good to see you. Yeah, good to be here.

All right,

I’m free of porn. And I apologize if I uh if I completely butchered your name.

Welcome Steve. Welcome MK Mary.

Welcome Malcolm.

Welcome Braden. Welcome Nick.

All right.

Welcome, David.

I see you scheduled something, David, for Friday. Look forward to speaking to you then. Oh, hi, Bill. Good to see you. Yeah, I look forward to meeting with you.

All right, welcome Conrad. Welcome Mary. Welcome Pam. Welcome Pam.

Hello. Hello. All right, we’re going to get started in just another minute or so. Looks like we got a pretty big crowd. So, I’m going to

I’m going to take everybody when we get started. I’ll

I’ll take everybody off uh so that uh I’ll allow everybody to talk at the end as well, but All right.

Welcome, Colleen. Welcome, Conrad.

All right, looks like we got a pretty good crowd. I see a bunch more coming on still. Uh, but it is now 2 o’clock and I’m going to honor everybody who’s here on time. So, I want to honor your time. So, with that, uh, my name is Bill Rito. Welcome to today’s webinar. All the things you needed to know or didn’t know you needed to know about long-term care protection strategies.

Hold on. It looks like somebody Hold on. Okay. All right. I think uh All right. I think I got rid of the echo. Okay. Um so, as I said, my name is Bill Russo. I am the financial advisor for Northern California in uh for Alliant Retirement Investment Services. Um we have advisors all over the nation. Uh, I kind of want I’m I’m out of San Francisco uh just north of SFO, but um I cover well I have clients all over the nation as well. But for the most part, most of my clients are in the Bay Area, Nevada, Oregon, up through uh up through Washington, but I have I have clients everywhere as well. uh a lot in Arizona and Florida, which seems to be uh where everybody moves to in retirement. So anyway, all right. So, um for anyone, I see a lot of old faces here. I also see a few new faces here as well. So, with that, I’m going to give you a little uh insight in how I run our webinars here. Um I’m just going to go through before I get started. I’m going to go through just a few logistics. I apologize in advance if I sniffle and sneeze a little bit. I got a little bit of a cold that I’m not not killing me, but I’m I’m a little uh a little slower than I normally am. So, if I’m not as witty and quick as I normally am, well, that’s that’s probably why. So, um we appreciate I I appreciate any and all questions here. Uh when you have a question, though, there’s a there’s a way to do it. Um, you’re going to notice at the bottom of your screen is a um is a menu of a little control panel. You’re going to notice a Q&A and you’re going to c uh you’re going to notice a chat button. Either one of them, I have them up on my screen. So, when you get a question, as soon as it pops into your mind, type it in there. But be patient because what I’m going to do is I’m going to go through the whole presentation first. I promise you at the end I will answer any and all questions. So, as soon as a question pops into your head, ask put it down. The only question that’s a stupid question is a question that you didn’t ask because you thought it was stupid. And I guarantee that if you have a question, there’s two other people on the same webinar that have the same question that didn’t ask it because they thought it was a stupid question. So, ask away. So that’s kind of how this runs as far as um my disclosures go. Um I just have a today’s session is for educational purposes only and includes proprietary material. So protect both the content and everybody’s privacy. We ask that everybody here does not um pre-record capture the presentation whether by video, audio or screen sharing or AI tools without prior consent. Um I appreciate your understanding and uh I’m glad you’re here. So now that I got that uh disclaimer out of the way, I can take off my disclaimer hat. Okay. And the coming attractions are I do this every other week typically. So, every other Wednesday, um, and I’ll switch off between 2:00, which is now, and 6:00. So, the next one I have, I’ll be talking about estate matters, uh, principles of pres preserving your wealth. Um, that will be on Wednesday, July 29th at 6 PM where I’m going to talk about, yes, trust, but everything everything you need to know about protecting your assets at the end of life and uh whether it be IAS, um, you know, different uh different strategies on maximizing what goes to your heirs and not go to your uncle Sam. So, that comes up on Wednesday at 6:00 p.m. Stay tuned for that. And then, um, two weeks from then, at this same time, August 12th, I’m going to be talking about retirement, the fragile decade, which is essentially the the five years prior and 5 years after your retirement date. A lot can happen during that time and I’m gonna tell you specific actionable items that you need to be aware of before and after that time during that you know pretty pretty momentous decade of your life. So, that’s going to be happening on Wednesday, August 12th at 2:00 p.m. And if Wednesdays don’t work for you or they don’t always work for you or you don’t like the sound of my voice or the the my jokes or whatever, the good news is is that we have plenty of other advisors at plenty of other times that can help you with that. So, if you want a list of all of our webinars for the next two weeks, go to uh our website at aris.aliancreditun.com/events.

That’ll give you all the all the upcoming webinars for the next two weeks. If none of those times work for you or you happen to be up at 3:00 in the morning with insomnia, well, why not check out one of our podcasts that at least if it won’t put you to sleep, at least it’ll get you to learn something. So, that’s also on our website. Uh, it’s just the same website/mpodcast. And if you go to alliancreditun.com/ um slash our blog, there’s a link to our website at ARIS. ARIS is Alliant Retirement Investment Services. Um, we handle everything long-term. So, what’s long-term? Anything beyond 18 months. Uh, the reason why that is is because if you need the money earlier than 18 months, Alliance’s got some great resources with very competitive CDs and savings accounts and all that good stuff. But once you go beyond 18 months, you’re starting to compete with the long-term effects of money. Inflation. Inflation is the rate at which prices go up. Gas, food, housing, all that stuff. We’ve gotten a crash course on what inflation can do to the earning power of your money uh quite a bit over the last few years. So, what we do here is we help you plan and manage risk or plan for the major, you know, the major events in your life like retirement or college savings or whatever. Um, and we help you also manage risk. And we do that by planning. We do everything through planning. So with that, when we do a plan for you, we first take all of your goals, we prioritize them, we quantify them, and then prioritize them. And then we’ll take a look at everything you have to fund those goals. Whether it be uh your 401k, your pensions, social security, and we’ll take a look at everything, whether it be how often do you buy a car, do you like to go on vacation, we take a look at everything and just make sure that you’re on track to doing everything you want, and we’ll come up with strategies on when’s the best time to take your social security. Does it make sense for you to um you know convert your 401k to a Roth or and create a plan to do so? If it does, there’s a myriad of things. So, we do not charge for our services. The only thing it’s going to cost you is a couple hours of your time to do a plan. Um the reason why that is is because we are a nonprofit. Now, Alliant Retirement Investment Services is a nonprofit. It does not mean we’re a charity. What a nonprofit means is that any profits we do make, instead of paying off shareholders or lining the golden parachutes of our corporate executives, it goes back into our serving our members. So, with that, I’ve gotten all my pitches out of the uh out of the way now. So, let’s get on to today’s subject matter is long-term care. I know it’s everybody’s favorite subject matter. Um, but it’s really important. Now, one thing I telling you right up front, my job here is not to sell you long-term care insurance. You’re never going to hear a pitch from me to sell longterm care insurance on this webinar. Um, now that being said, um, long-term care is, even though, you know, yes, long-term care insurance, I can sell long-term care insurance, but that’s not the purpose of that’s not the purpose of today’s webinar. Today’s webinar is to get you to plan for it. And why is it so important to plan for it? Well, because you know many members of the baby boomer generation are now reaching retirement age. In fact, approximately 10,000 baby boomers turn 65 every day. A trend that is expected to continue through the rest of the decade. That works out to be one person every about 11 seconds. How fast is that? Well, in 2020, there was about three and a half working age Americans for every individual in retirement age. By fast forward 40 years, by 2060, there will only be two and a half working age Americans for every individual in retirement age. The median age of the US population is expected to grow from 38, which is what it is today, to 43 by60. So again, we’re all we’re an aging population is that’s a that’s a really, you know, long- winded way of saying we’re aging. So with that aging, it means that over 70% or about 70% are expected to need long-term care services at some point in your life. And now it’s difficult to predict, you know, the type of care one person might need or how long he or she will need it. Um, but statistics reveal that the average person needing long-term care will need it for about 3 years. Women are averaging a little longer at about 3.7 years to men’s 2.2 years. Probably because women live longer than men. So, stands to reason that that’s why women are in, you know, needing long-term care longer than men. uh and 20% of us will need care for more than 5 years. So, just a couple of I don’t say this to scare you. I say it to prepare you. So, here are the things we’re going to talk about today. Understanding long-term care. I’m going to talk about what it is exactly, how much does it cost, and what are your options. So, you know, since so many people are over the age of 65 and are expected to eventually need some level of long-term care, you know, let’s go into understanding about long-term care, how it works, and consider, you know, what you need to do to prepare for it financially. Okay, first question is, what is long-term care? Long-term care is a bunch of different things. Long-term care includes skilled nursing care such as rehabilitative care needed as after a long, you know, extended hospital stay, but it’s just one of the many types of care available. Long-term care also includes assisted living facilities, which is what most people think of long-term care. These are environments for individuals who can no longer function independently but don’t need daily care. These facilities offer occasional help um is what referred to as the activities of daily living. These include bathing, dressing, eating, transferring, getting in and out of bed or a wheelchair, and walking. So, typically, just to let you know how most long-term care providers work is if you need long-term care, you need to qualify for two of those six. So, if you need to, you know, if you need one of those, you know, hurricanes, you know, to help walk, you know, that uh if you need one of those or you you see those bedroom, those bathrooms with the bathtubs with the door on it, because any of those are typically covered, you need two of those six to be covered for the long-term care, the long-term care insuranceances that are out there. Um now in addition long-term care also includes home health care that is associated with occasional help that you know activities you know the activities of daily living that I just mentioned um as well as help with meals, budgeting, house cleaning, uh medication management, even transportation. Um, in this case, however, the help is offered by hired assistants who come to your home uh on a regular basis. So, give you give you a heads up that like uh just an example, my mom is 89 years old now. Um, so it’s kind of taken care of by, you know, her care. She’s she lives on her own, but she’s on um she’s she’s a couple blocks away from my my sister who kind of is on the front lines of making sure my mom’s okay because she’s at 89. She doesn’t really she’s forgetting some things here and there. She’s fallen a couple times and she forgets to eat sometimes. So, my my sister’s kind of on the um on the front lines of making sure that, you know, she takes care of the house, has someone come in uh well, we pay for someone to come in and clean and and do all that. My my sister kind of takes care of mostly everything, but we have someone come in and take So, that is all considered part of long-term care. And speaking of my sister, it also includes respit care, which respit care is the occasional break for family members who provide long-term care services. So, in my case, my sister’s case, you know, there is my my mom has a long-term care policy that provides respit for my sister periodically so that she can kind of take a break and we can hire someone to kind of help mom so that, you know, my sister can, you know, my sister recently just took a vacation out to see one of my I got five sisters. I got a lot of sisters. So, she went out to go see visit one of my other sisters. Well, we provided some this the care policy provided some help with my, you know, with my mom while my sister was away. So, there’s all sorts of things that are included in long-term care. It’s not just nursing home.

Okay. So, how much does long-term care cost? Well, that $64,000 question is a lot of times more than $64,000 and it really depends on where you live. So, the national average for assisted living centers uh single occupancy is around $50,000 a year. Um the average cost of skilled nursing facilities is much higher though at about at about $100,000 a year. Uh now obviously if you want to go, you know, if you want to go on the cheaper side of that, move to Utah or Missouri. Um where, you know, the costs are somewhat less than the sub than the national average. Unfortunately, New York and California are quite a quite a bit higher. Um, as you can see on here, I mean, New York is almost $150,000 a year for a long for a skilled nursing facility. So, whereas here in California, it’s going to it’s going to typically cost you around $10,000 a month on average.

So, and again, I don’t say this to scare you. I say this to help prepare you that this is an expense that most of us are going to need at some point. So, I’m not saying you need to buy long-term care insurance. I’m saying what you need to do is prepare for it and and allocate for it.

So, okay, what are your options for long-term care? Uh there are many. However,

your primary choice is typically between two options. Self insurance or purchasing a long-term care insurance policy. Now, I’m going to go through each.

Now, self insurance involves depending on your personal savings and investments to fund any long-term care needs. This would give you complete flexibility, but it requires that you are prepared to handle that potential expense. Now, remember that the national average for assisted living centers is about $50,000 a year. The average cost of skilled nursing is about $100,000 a year. Um, however, in California, which most people on this webinar are, it, you know, again, it’s higher than that. Now, excuse me. Um, self- insurance is a choice that many people make usually by default simply because they haven’t planned for long-term care expenses at all. So, if you if you don’t plan, well, you are planning this is your plan. You’re taking care of this for yourself. And as you see, self- insurance, self-insuring, you know, well, especially if you don’t plan for it, can have consequences.

Now, I’ll give an example of self-insuring for someone who did not really plan effectively. This chart shows a million-doll retirement for portfolio generating hypothetically about a 5% rate of return, which is usually what f you know us financial planners kind of divvy out as you know that’s how much you can that’s how much you can withdraw from your retirement without without affecting the principal for the most part. So with that, okay, if this is generating five 5% rate of return, it assumes that the six a 65year-old couple will be withdrawing $50,000 a year adjusted upward of 3% per year to account for inflation. Okay. If all goes well as planned, the retirement portfolio has a potential to provide income until the couple reaches 92 years old. Okay, great. However, if one of those spouses spends five years of his or her retirement in a nursing home, well, now the portfolio’s income potential changes dramatically. The hypothetical example assumes that the couple will spend $117,000 a year adjusted upward of 3% for inflation during the 5 years cuz you know we’re in California or I’m in California. So as you can see if they don’t make any changes their funds are going to be exhausted by the time they reach 83 years old. Now again I’m not saying this to scare you. I’m saying this to prepare you that you just need to there are ways to prepare for this. Um, stay tuned. I’ll get to that before we end. Okay. Now, the first question I usually get is, well, wait a second. What about Medicare? Medicare does cover some some long-term care, but it’s only a partial solution to the longterm care problem. Medicare actually does cover some skilled nursing home care under very tight restrictions. You have to have stayed in the hospital for 3 days first and then be discharged directly to the skilled nursing facility. However, Medicare doesn’t pay for custodial care. And under these conditions, Medicare will cover the first 20 days completely. So for the first 20 days, okay, you’re good. The next 80 days, it will cover all but a deductible. And after 100 days, it doesn’t cover anything. So you’re covered for a little over 3 months somewhat. This assumes, of course, that you find a skilled nursing facility that accepts Medicare and you meet the other conditions that Medicare imposes as well. So, it’s a little bit of a limited choice as well.

Okay. Now, long-term care insurance. Now, there’s a bunch of different ways to get to have long-term care insurance. Um, what long-term care insurance is is it’s it’s a way to transfer the financial risk of long-term care to an insurance company through either long-term care insurance. There are also some annuities now that offer long-term care benefits as well. So, if you don’t qualify for um traditional long-term care insurance, um you know, there are other options for you. Uh a long-term care care policy can cover all levels of care from from skilled care to custodial care to inhome assistance. Uh many find it to be an appropriate way to protect themselves and your loved ones from, you know, obviously the potentially devastating costs of of long-term care.

Why is it going to the next page? Okay. So, now there are a number of pros and cons to long-term care policies. On the pro side of ledger, um, long-term care insurance policy can obviously protect your assets. You won’t need to dip into your retirement funds to cover the cost of care. Great. Um, and under certain circumstances, your premium may be partially or completely deductible. Um, that being said, there are different types of policies out there. Some of them you can pay up some of them because that’s that’s a problem with a lot of long-term care. Um well, hold on. I’ll stay tuned. I I’ll get to that at the end of this. Let me get through this first. Um long-term care insurance also offers other advantages as well in in the event of long-term care illness. Um you know, it’ll enable you to obviously preserve your dignity. you can maintain your standard of living as for as long as possible and primarily your independence. Um, you can also preserve your choice. You can keep from, you know, becoming the burden on your family if if that’s important to you. Um, some people figure, hey, you know what? You were burden on me for how long. Now it’s your turn for me to be a burden on you. U, my sister would say, my mom’s not being a burden at all. We don’t think that. But um it is certainly it is certainly something that all of us as a family, as I said, I got five sisters. We’re all helping out, not just, you know, not just with um you know, my sister’s kind of on the front lines, but we have people coming in and helping her out as well. Um, that being said, on the cons side of the ledger, um, you need to be comfortable with the cost of premiums or at least have a set amount set aside to take care of the cost of doing so. Um, now there are some sorts of policies because here’s the problem. Here’s what I was going to get to earlier. Um, there are the big problem with a lot of long-term care policies out there is it’s not it’s not exactly a sexy investment. It’s something that you really hope you never have to use um you’re paying for it. if you know and if you pay for it um and never use it a lot of times at least the traditional long-term care insurance you’re paying for it can be fairly expensive and you know if you never use it it’s just an expense that’s gone you now there are other types of policies out there that there are a number of different things you can do there are annuity policies that you have the instead of having an income writer, you can have a long-term care rider. So that what’ll happen is the long-term care needs come out and it’s tax it is, you know, it’s tax-free um to take care of those. There are other um that come in a life insurance policy that basically will you pay it up in advance. So, let’s say you have $200,000 sitting in checking in savings or CDs that are, you know, I’m probably not going to need this. It’ll probably go to the kids, the grandkids, but I got it there just in case. And if that just in case is I need it for a long-term care event, which is usually the just in case that most people come up with, well, that two or that 200,000 that you have in that account for that just in case, well, you can put it into an account which will give you leverage on that. So if you need it, you can pull it out usually after four or 5 years or so. Um you know, you can pull it out. However, um if you need the money, take it out. It’s available to you. However, it’s the last money you want to touch. Why? Because if you leave it in there, that 200,000 can become 3400,000 of tax-free uh tax-free uh long-term care coverage. So, and if you don’t ever use it, well, then what happens is is that it will um the 200 will typically go tax-free to your heirs. Now, you’re not making a ton of interest on it because essentially the interest is essentially paying the long the cost of long-term care, but you’ll get like it depends on your age and and whatnot, but you’ll typically get the 200 will provide like between 230 and 250 that will go to your heirs if you never need it. So, that being said, this and and again, I’m not trying to sell you a long-term care policy. I’m just trying to show you that there are many solutions out there to help you get to get to your end goal, which is covering your long-term care needs. Um, so that’s the one cost. Uh, the cost of premiums is obviously a con. The other thing is is that there’s a wide range of benefits and premiums available on a lot of these policies and you got to be an informed consumer because you don’t want to be paying for something that you’re very unlikely to use. Um, and there are you want to you want to have someone who’s going to shop for you because different insurance co companies judge different ailments differently. So there you go. So, with that, that kind of covers the pros and cons of long-term care policies. Um, now, when you’re choosing a long-term care policy, you need to bear in mind a few things. Number one, you need to make sure you understand the limitations and the features of the policy that you’re considering. Uh, in most cases, policy holders cannot collect their benefits until their disability reaches certain levels. Remember I talked about two out of the six uh functions of life. Usually that’s the certain level that that qualifies. You got to you got to qualify for two of the six daily functions of life. Um and most most policies will specify how much they will pay for either each day of care and for how long. So, you want to make sure that you know how long you’re covered for and your total amount. Um, second, take a close look at the type of care covered. Long-term care policies can cover everything from skilled nursing care in a nursing home to periodic uh custodial care in your own home. You need to understand exactly what’s covered and what is not covered. Third, you want to look at the total benefit. uh you don’t want a policy that’s going to run out of benefit just when you need it most. Um you also don’t want to pay for coverage that you’re unlikely to need as well. So, you know, again, it’s it’s really all about planning. Um you definitely uh oh, look at the waiting period for benefits and uh when they’re scheduled. They’re usually going to have a a a period of usually it’s 90 days where you got to wait 90 days to get in. Typically because especially in California, it’s because that’s when Medicare kind of covers that first 90 days. So the first 90 days is a waiting period for them. You’re not going to be able to collect until Medicare kind of takes care of their portion. Um, you also may want to consider um inflation protection because the cost of health care has been rising a lot more, especially in recent years than the rate of inflation. Um, and you also want to consider a um a policy that has a waiver of premium. This means that your premiums are discontinued once you start drawing benefits. You don’t have to pay into the policy anymore. now you’re collecting it. So, all things to consider. Um, an important thing, one more other thing about long-term care policies is that, um, uh, is that, sorry, I just got a question that I kind of threw me off track here for a second. Um, the other thing about long-term care policies is, you know, ultimately, here’s who it’s not for. Long-term care policies are for people who have a lot of money or no money. Why? Because if you have no money, well, then, well, the government will take care of you. Now, you may not like the way the government takes care of you, but they will take care of you. um you know, they will they have facilities that are set aside for but the problem is is that you can’t have any assets to get in them. You got you can’t have more than $2,000 a a month income to get into those facilities. Now, on the other end, if you have a ton of money, you do not need long-term care insurance because hopefully you’ll have like in in the case, you know, in in a case of my mom specifically, she’s got some coverage, but she doesn’t have a ton of coverage because and it’s really to cover a few of the she’s got a small policy that covers the cost of inhome care and things like that. The reason why that is is because for the most part, she’s got enough assets where they’re generating if she really needs to go into a long-term care facility. Well, at that point, her assets are going to cover that portion of it. She’s got enough assets to generate enough income to pay for that. Um, so if you have a lot of money, you don’t need long-term care insurance. You still need to plan for it, but you don’t necessarily need long-term care insurance. It’s for the people in the middle that really long-term care insurance is for. If you know, if if a long-term if you’re all set and everything’s good to go and you know what, we’re we’re pretty good with retirement. But if one, especially if you’re part of a couple and one of you gets sick and it’s going to really dwindle the retirement savings for the other one, that’s when you need to plan. You really need to plan for how you’re going to take care of long-term care insurance. So, like anything, it’s not really um you know, planning is you can do anything as long as you plan for it. So, with that, um, you know, there are a number of long-term care planning strategies. Um, I can go through them with you. Um, but it’s really to cover everyone from couples to, you know, families to your your loved, you know, the the your younger loved one or we live in a sandwich generation where, you know, we’re taking care of elderly parents and raising kids at the same time. So, um, all of these I can help you with all of these different strategies. Um, now that being said, if you do want to do a plan with me, um, not necessarily a will and trust plan, but, um, if you want to do a plan, um, feel free. We’re here to help. Whether it be, you know, take a look at, um, you know, with with this, this is, um, Will and Trust is is a provider that we work with, um, that can kind of help you kind of get your estate and things like that in order. This is really a plan for excuse me. Um, you know, it’s someone we work with. We’re not I’m not promoting it. I’m just saying that we can help kind of walk you through if you want to do estate planning or anything like that as well along with if you want to set up a financial plan or do some long-term care strategies. you know, it doesn’t cost anything to sit down and talk with us um or to talk with me. So, with that, if you would like to talk, uh hold on a second. Um I’m here. Uh you can there’s a couple ways to do it. You can either and I promise you I will answer all questions. Um I see we do have a quite a few questions up here. Um, but if you want to sit down with me before I answer the questions, um, there’s a couple ways to do it. You can either scan this QR code that’ll take you directly to my calendar where pick a pick pick a time that works for you either via Zoom or phone um, and you’ll reserve that right on my calendar. Or what you could do is you could um uh just click on whether or not you would like an appointment with me and I’ll contact you. If you do that, do me a favor. Put in the uh chat or Q&A. Just put down either email or phone. It lets me know how you best want to be contacted. So with that, okay, um let’s get to the questions. Uh Julie, you are very welcome. She says, “I just want to say thank you and tell you how much I appreciate Alliance webinars.” Well, we’re here to help. Okay. Um she also mentioned, “Yes, San Francisco is averaging $14,000 a month for skilled nursing facilities.” Um, it can be especially if you’re in a um especially if you’re in a uh Oh jeez, I was going to mention it, but I forgot it. An Alzheimer’s um uh an Alzheimer’s facility, they can really be really expensive. Um that being said, okay, so next question. Um

Ann asks, “What do you consider a lot of money?” Well, that depends on you. Um you know, it depends on everybody. A lot of money is, you know, so when I say a lot of money, it really depends on what your needs are. If what I do is I cover when I do a plan, I’ll cover what your normal living expenses are. And then what I’ll do is I’ll do the whatifs. What if we have another 2008? What if you have a long-term care event? What if we have um you know what whatever it may be, right? So what I’ll do is I’ll first run the scenario with with just if everything goes right do your does your income meet your expense needs. Okay, once we get that and say, “Okay, hey, you have a 85% success rate of living the rest of your life and never needing any money any great. You’re right in the bullseye. Fantastic.” All now 85% cuz a lot of people ask me, “Well, wouldn’t I rather be at 100%.” No, 85% is the number you want to be at. The reason is it doesn’t mean that you’re going to get 85% of the way to your goals and then run out of money. It means that there’s an 85% chance you’re going to live well into your 90s, do all the things you want to do in life, and still have money left over. So, if you’re at 90 or above, what it’s telling us is one of two things. Either one guys, you can relax a little bit, fly first class, you know, buy that buy that luxury car if you want, or if you come back and say, you know what, Bill, I’m living my best life. I don’t need anymore. Great. then we can get to the same place with less risk. Okay. Um but then what I’ll do is once I make sure that you’re okay to live for the rest of your life without worrying about, you know, running out of money, well then we take a look at the whatifs. Well, what if we have another 2008 in this case? What if you have a long-term care event? Okay, what is that going to do? Remember the couple that we had where they were all set? They were going to live until 92 years old without running out of money. And then one of them got sick for five years. And now all of a sudden they’re eating ramen for the last 10 years of their life or one of their lives cuz the other ones, you know, no longer eating anything. But you see my point. So that’s one of the things I do with how much. It depends. It depends on what your needs are and where you live and how much you’re going to need for long-term care. It’s just scenario planning. So that’s one of the things. So when I say a lot of money, it that’s what I mean by a lot of it just depends. Okay. So hopefully I answered your question and all right. David asks, um, okay, he said, I went to an alliant workshop. I went to an Alliant workshop a couple years ago and they mentioned an annuity or something where you could put in $100,000 and have $300,000 for long-term care if you need it. Can you tell us more about that? Yeah, it’s um it’s essentially an Well, there are a couple of ways to do it. You can do it in a life insurance chassis, which is what I mentioned earlier. Um, you can also do it. There are certain types of annuities that do that as well, which will give you a certain amount of essentially what you’re doing is you’re getting a you’re getting an additional rider on it. So, it’s typically like an income writer or something like that. In this case, it will it will grow tax deferred like an annuity, but if you need it for long-term care pol long-term care purposes, Yeah. then you get leverage on that. Now, you’re essentially buying that leverage, but there are ways to do it. So, yeah, I mean, it depends. There are many different things out there. Um, when we talk on uh I’ll tell you a little bit more about it on Friday when we talk, David, cuz I know you have an appointment scheduled for me. But hopefully I I gave you enough information for everyone else that, you know, at least you can know what to look into. Um, all right. Next question is from Wayne. Uh, and and if I didn’t answer your question, feel free to follow up in the in the chat. Um, all right. Next question is from Wayne. Is a joint policy preferred to an individual policy? Should I pay with cash or qualified money? And finally, should I pay with cash or Oh, hold on. Uh, okay. I think he repeated the should I pay with cash or qualified money? Um, I appreciate your comments. Okay. Um, it depends. The joint policy is a joint policy preferred to an individual policy. It really depends on the differences and ages of the two people on the joint policy. So, what I would do is I’d run scenarios on both to see what’s best for because if one of you’s, you know, if you’re a couple, one of you is 20 years older than the other one, well then, yeah, you shouldn’t do a joint policy on both of you because, you know, well, well, it depends. You’re going to be paying for the older person’s you’re going to be paying for the older person’s uh premiums. So it again it would depend on your scenario. So make an appointment with me. I’m happy to I’m happy to sit down with you individually and see uh Wayne, you know what’s right for you. Uh that being said, would you should you pay for it with cash or qualified money? And again, it depends on your it depends on your tax situation. Uh most of the time I would say you don’t want to pay with qualified money. Uh you don’t want to pay premiums with qualified money unless you’re doing it through an RMD or something like that. Um but then again, I’m putting on my disclaimer hat again. I’m not qualified to give tax or legal advice. For tax or legal advice, please talk to your qualified tax or legal professional. Um, but I’m happy to go through that with you individually, Wayne, and uh kind of look at your plan and see what works best for you. So, with that, um, I I don’t see any more questions, but I’m going to stick it on for a few more minutes if any new questions come aboard. Um, with that, I usually try and keep these down to an hour, so um, I’m going to be on for another 13 minutes or so at least. Uh, I’ll open it up if people have, you know, if people just want to say hello or have other questions in there. Um, but with that, um, I thank you all for your time. I hope that you got some information that you can take some, uh, you know, you can take action on. So, with that, feel free to give me a call if you want to do a if you want to do a plan or just have a question in general. Doesn’t doesn’t cost anything to set an appointment and ask me with that. Take care everybody. Have a good afternoon. Oh, okay. A couple more questions just came in. Um, okay. Isn’t it super expensive? Deb asks, uh, “Isn’t it super expensive to buy long-term care insurance if I’m 64?” It depends. It depends how much coverage you need. It depend It depends on your health. don’t take my, you know, I just have a cold. It’s nothing contagious, but um usually most people, most long-term care policies are issued be between the ages of 60 and 75. So, you’re actually right in the wheelhouse of when most are, you know, when most uh at 64, you’re in the wheelhouse of when most policies are issued. That being said, it depends. Um, what I would say is, Deb, you know, sit down, we’ll make a plan to one, see if you even need it because you may not need a long-term care policy. Um, and there are ways to do it where it won’t necessarily cost you anything except possibly the interest that you’re earning on that checking or savings account. And it gives you leverage because let’s say that you have $200,000 or $100,000, you know, for what if money, right? And it’s sitting in a checking account or a savings account earning 2 or 3%. Okay. Well, you take that and you get, you know, that you turn that 100 100,000 into, I don’t know, 1752 250 somewhere around there of tax-free money. How long would it take your $100,000 to double and turn it into $200,000 tax after taxes? So, there are a number of ways to do it. Um, again, I’m not saying that long-term care insurance is the way to go. I’m just saying you want to plan for it. And that’s that’s what I’m here for, to help you create a plan. And whether or not long-term care insurance is the right way to go or not, there are many things you can do to fund it. But, um, it’s important to create a plan. So, there you go. So, with that, uh, okay, you’re welcome, Ann. You’re welcome, Chris Charles. You’re welcome, Chris. And I look forward to seeing you on Friday, David. All right. So, with that, um, again, I’ll be sticking around for a little bit longer. Um, if there are any as as just came in, if there are any straggler questions coming in, I’m here to here to help.

and I’ll open up uh I’ll open up the lines in case people have other questions. If you want to talk to me, just hit your mute uh the microphone and talk away.

Deb asks, do I do any face-toface inpersons meeting? I love to face toface in-person meetings, Deb. Unfortunately, nobody ever wants to anymore. But yes, you can come see me. My office is in uh my office is um in Oyster Point in South San Francisco, just north of uh the airport. Um I I do have clients that I do make house calls for. Um, so you know, make an appointment with me and we’ll uh, you know, give me a call and we’ll Yeah, I’d love to see you in person as well. I do I do see certain clients in person, but uh, about 90 90 95% of them want to do it on Zoom nowadays. But, uh, yes, I’m here and I’m happy to do it in person. Uh, probably not this week because I don’t want to give you I don’t want to get you sick, but anytime next week going forward. Absolutely. Love to meet you in person. De

Oh, thank you, Deb.

We’re we’re lucky to have my mom. So, thank thanks for the uh she’s she’s definitely she’s definitely put up with us for long enough, so it’s the least we can do.

And there’s thankfully there’s only one, you know, we we have five, you know, we’re not in it. My sister isn’t in it all by herself. So we have there’s six of us all together. So,

but I look forward to talking to you soon, Deb.

Hello and good afternoon. I’m going to get started in just another minute or so. I just want to make sure people have a chance to get logged in. I will be right back with you. Thank you. Well, hello and good afternoon everybody. Thank you so much for joining me for planning for long-term care. Uh one of the many webinars that I do. I do these presentations every two weeks or so. uh unless there’s a vacation or a holiday. But uh so yeah, about every two weeks I do these on many different topics. Uh today we’re going to be touching on long-term care planning. My name is Joe Gaspari. I am one of the financial consultants here at Alliant uh with the Alliant Retirement and Investment Services team. I do offer uh full financial services from stocks, bonds, mutual funds, ETFs to whether it’s income planning, full retirement planning. That’s one of the biggest things that I do when someone says, “Here’s what I have. Here’s what I want. Am I on the right path? Am I doing the right things? Should I be saving more? Uh spending less, working longer, working shorter, all these different uh factors that might affect your retirement or whatever uh financial goal you’re you’re saving for. But uh again, one of the biggest things that I do is that retirement or financial plan. At the end of this presentation, I will be putting up a survey. I hope you will select yes on there. Uh especially if I haven’t met you already, that we could have a one-on-one conversation. Maybe it’s going to be specifically about long-term care. Maybe it’s about just future planning in general. Uh and we can work up a very comprehensive plan specifically for you. Uh but uh but today let’s just talk about some long-term care planning and learn a little bit about the strategies on what can this cost overtime and who needs long-term care, how many, you know, what percentage of people. So, we’re going to touch on a lot of things. If you do have any questions throughout the presentation, type in the Q&A box or the chat box, either one, and they will hold till the end of the presentation. That’s when I’ll be taking those questions. So if you think of a question, type away at any time. Those will save until the end. So I do want to let everyone know that we are not able to that’s one of the most common questions that we get every presentation is will there be a uh a video or anything like that available after. We are not able to record these for compliance uh purposes and we are not able to have these recorded by any listeners of these presentations. So they cannot be recorded or distributed. So uh thank you for in uh for your uh participation in that. But we cannot record these. Excuse me.

Sometimes you just got to sneeze in an unopportune time. So but again thank you for uh not recording these pres and distributing these presentations. I do have some upcoming presentations um is uh at uh for estate planning the important documents like powers of attorney uh for healthcare power of attorney for financial wills trust the difference between these what’s important for you to have many times just at least naming beneficiaries on your accounts um is certainly sufficient but uh but we can certainly uh you know learn a little bit about what does this all mean for estate planning as you’re looking to spend money in your retirement years. But what if stuff is left over? Hopefully, there’s stuff left over. Uh where does it go? How does it pass? What are the best strategies to get this to whoever your beneficiaries are, whether it’s spouse, whether it’s children, friends, relatives, anyone, charitable organizations, whoever that may be to make sure these pass seamlessly. After that, I do have on Wednesday the 29th, I have IRA planning, uh different types of IAS, whether things are pre-tax like traditional IAS or 401ks, things that are post tax like Roth IAS that grow tax-free uh for retirement. Uh taxable accounts each year like a brokerage or a savings, those things that you get 1099s on every year that you have to claim on your taxes. and what are the best ways to uh strategize on where money should be in the future to hopefully as you go through the different stages of taxes when you’re maybe working making more income than if you were not working whether that’s higher income or modest income what how do we manage your tax brackets going forward you do have access to to see what other webinars are coming up whether it’s from myself or one of my other 10 or 11 team members that do these presentations. We have people in LA, Denver, San Francisco, Houston, Utah, and here in Chicago. We are scattered around the country doing these presentations at different times, different days. We probably have anywhere from three to five presentations a week going on with at least one of us. myself. Again, I do these every two weeks, whether it’s a Tuesday or a Wednesday, maybe it’s a daytime, maybe it’s an evening. You also have access to the podcast. You can listen to our Aerys Alliant Retirement and Investment Services. That’s what Aerys stands for. We have our website and blog. You can check us out to see what who we are, what products and services we offer. I’ll be putting that up at the end of this presentation as well. So, our commitment is provide sound financial information, help you identify what’s important to you. Uh whether it’s uh you know, things like long-term care like this or just saving in general, investing, where what about the volatility in the markets at periods of time, where should you be putting things? This is all these are all the things that we would love to help you with. Uh we do offer which I will be saying again at the end of the presentation our complimentary no obligation consultation and in this consultation we can work up again here’s what you have here’s what you want are you on the right path and again that full financial plan that we do not charge for assessing the risk into getting into long-term care. uh people are turning 65 today have a nearly 70% chance of needing some type of care long-term care. Now this is very as we go through this this is very different. We are not talking about your uhiitei, you know, United Healthcare or Blue Cross Blue Shield or those types of things just for your normal health care uh whether it’s you’re on Medicare or whether you are working and have you know u some type of uh plan through work. This is very different. We are not talking about just going to the doctor periodically or maybe even a hospital visit for whatever reason. These are things of long-term that you need someone assisting in many of these different uh things that we’re going to talk about today. 20% of 65 year olds will need support uh for more than 5 years. Again, that’s one out of five, but that’s still a significant number. 8% of people ages 40 to 50 might have some type of disability or requirement for long-term care as well. What is long-term care? again, ongoing services and support needed because of a chronic health condition, disability, prolonged injury, illness, or cognitive impairment, uh, such as Alzheimer’s.

Levels of care. So, we’re going to discuss three levels. Skilled care is that round the clock you might be bedridden for whatever reason and you need health care, you need uh skilled uh skilled nursing or even potential doctors. Uh but again that you need long-term care with skilled labor. Uh intermediate care uh nursing or supportive care by professionals and or or uh custodial care which is basically maybe you need someone to help cook, clean, uh help transfer you from a bed to a chair, chair to a bed, uh bathroom, things like that. If you need any of the things listed here, that would be listed as custodial care or personal care. Where can you receive care? This comes up a lot with long-term care, uh even long-term care insurance situations of where can I get care? Uh do I have to be in a nursing home? Do I have to be in some type of assisted living? Can I get this care in my home? And many times the answer is yes. that you will still be able to have some type of an insurance and get someone maybe someone coming to you that you can be in the comfort of your own home and still get care. Uh adult daycare is certainly one of those other options where maybe you’re dropped off if you have family members that are working still and maybe that you’re dropped off during the day, picked up in the early evening uh just for an adult daycare. Common misconceptions. I’ll never need long-term care. It won’t be that expensive, which it is. Uh Medicare and Medicaid will cover the costs. Uh Medicare will cover for a very short period of time. Uh statistically, and Medicaid will, but we’ll talk about what the restrictions for Medicaid. Uh my family will take care of me. Some many times people will say, “Oh, I got adult children. They will they will take care of me.” Uh many times easier said than done. Maybe that is the case for some families, but I just can’t count on that for every family that someone can stop working to care for someone needing long-term care. Caregiving challenges. 41 million people provide unpaid care for a family member. 61% of caregivers are women and one-third 34% are a are in either in retirement or of retirement age 65 or over. Unpaid care uh caregivers spend an average almost a full-time job well close to 35 hours a week caring for someone in addition to their own jobs. Uh four in 10 caregivers consider their caregiving situation to be highly stressful. I am working with several people right now that could be maybe in uh with, you know, obtaining some type of long-term care insurance or that are caring for family members right now. And this is kind of hot and heavy. Uh very hard, you know, on on on their hearts right now of I should start be thinking for my own future as well. Um that being a caregiver for someone else and now I’m thinking is there someone going to be there for me? If not, how do we pay for this? Why is it important to have long-term care strategy? So, protecting your assets, uh it could be an asset depletter that if you let’s say you did need skilled nursing care uh for a period of time for a year or two or three or even up to 5 years, are there enough assets? Because that type of care can be very expensive. And how much assets are you willing to earmark for that? Or do you have enough assets to uh you know to even be paying other bills in addition to your own personal care? Uh maintain independence. uh preserve freedom to choose where your care is provided when you have that uh some type of coverage or that uh that peace of mind knowing that whatever it this is going to throw at you. Uh could you be in the comfort of your own home uh or wherever you uh would prefer to be not where you have to be? Avoid becoming a burden on someone else. Today’s focus we’re going to touch on these three things. The first one, potential costs of care in different settings. So, here’s one we’re going to look at. National median costs. These last numbers were updated in 2021, uh, updated every few years. So, hopefully we’ll get some updated numbers here soon, but still in 2021, just homemaker services. This might be, you could see at the very bottom, uh, it’s got the star there based on 44 hours per week. homemaker services. You need someone to help cook and clean and do things around the house for you. Again, maybe getting you out of a chair into a bed, a bed into a chair, something like that. Uh, but that is close to 5,000 a month or close to 60,000 a year just for that. Um, and that could be someone that is I’ll use the term unskilled labor for this and which could just be a family, a friend, a family member or a friend or someone that’s just assisting around the house. Home health aid, a little over 5,000 a month. Adult daycare, about this is the least expensive of these because it’s the least amount of time. And again, you’re dropping someone off at a a adult daycare and picking up typically in the evening. Uh private room and in assisted living, 4,500 per month. Now, we’re talking a little bit more expensive with the semi-private. in a nursing home almost 8,000 a month and over 9,000 a month if you need a private room in a nursing home. A little over 800,000 a year for something like that. So, someone says, “Hey, I have a $500,000 that I can earmark and I’ll just selffund my uh long-term care.” That is $500,000 that could go out if that was in a f for a five-year term of someone in some type of facility that either do you have enough assets to pay for that or that is 500,000 less that is going to your heirs uh because all the assets are being used up. annual cost of a nursing home care. Uh the national medium cost for a private room in a nursing home, 94,900 again in 2021. If we’re going to do this at a 4% annual increases uh over 20-year period of time, that’s over double 211,000 uh a year uh for uh for this type of care and a private room in a nursing home. So, we can just see escalating over time. Uh, typically health care costs and even long-term care costs are exceed inflation. Even if inflation were, let’s say, at a 3% average uh rate, we’re looking at much higher for health care. I’m going to just again throw a reminder. If you do have any questions, uh, go ahead. I know there’s some already, but type away in the Q&A box or the chat box and we’ll get to those questions at the end of the presentation. Uh costs vary depending where you live. This is pretty astounding when I look at Texas versus uh it’s the highest California on just the different costs just depending what state you live in. Uh so we’re seeing Texas is the lowest and again this is a private room in an assisted living. uh you know we’re so average cost uh for that 48,000 almost up to 63,000 when we look at for a semi-private room in a nursing home now now we’re talking New York 153,000 versus uh Texas at about 61,000 so will someone need to move to a different state to get the care that they need because it’s just not affordable in some other states

look to what uh for for um at a nursing home or other senior living facility. People ask uh ask people you trust and do you know anyone in this type of situation where where are they staying? Are they getting home care? Are they in a good facility? There are some sources medicare.gov gov through there where you can get some uh some resources on what trustworthy places that you can look at uh comparing different facilities and talk to the residents, talk to people that are going there if you’re allowed to. I know there’s privacy things that uh they don’t want people just walking into a facility and just start asking uh people questions, but uh um but again, you know, questions asked, you only get the answers if you ask the questions. So uh certainly you know reach out to some people to see where you know where what are the best places in certain areas. Uh focus number two is meth methods to pay for long-term care. Uh so lack of confidence and ability. So when we look at people working on the left side of this page versus retirees on the right side. Uh when we look at very confident to somewhat confident, if we add those up, we’re looking at about uh let’s say about 54% are somewhat confident plus uh that they’re going to have enough assets to fund their own long-term care. Uh but again, that’s a little under 50%, little under half are not feeling very confident on that. Uh same thing with retirees. The numbers are very similar. So people working and then retired. Uh, how many people are are are you comfortable with what assets you have? Can you be self-funded? And are you willing to use your own assets for this type of thing? Then looking at how expensive this potentially could be. How will you pay for the potential cost? Pay out of pocket. That’s number one. So, someone again might be self-funding their long-term care just from savings, investment accounts, retirement accounts, wherever those funds come from, but things that you’ve saved over time. You can rely on government programs such as Medicare or Medicaid. Um, again, Medicare is very short-term. We’re going to talk on about that in a couple of slides here on what does Medicare cover. Medicare is not long-term care. Medicare is a there’s a very short-term care, but it is not long-term care. Medicaid, we’ll talk about the restrictions of Medicaid because you cannot have assets if you go onto Medicaid. Uh purchasing long-term care insurance, we’re going to touch on as well. Add a long-term care rider to a life insurance or annuity. Uh that’s one of the most popular things that we do right now is more of a hybrid uh you know policy which is an annuity with long-term care rider or life insurance/l long-term care where whether you’re in a care situation and you can use some of that policy to pay for your care or if you what if you never even needed that care it’ll pay an enhanced death benefit. So someone is getting something out of those. uh this presentation doesn’t get too much into the individual policies. That’s what our conversation will be about. But I can tell you the the old school tw over 20 years ago when I when I would talk to long-term care, I was with a different firm back in the early 2000s and talking about long-term care. um long-term care policies at the time like GE or Genworth at the time was a very big player uh doing long-term care policies. John Hancock was the other really big one. And those were are the ones that you make a monthly premium or annual premium. And you’re paying, you’re paying, you’re paying. And I can tell you many times because the world has changed since the early 2000s. We’ve gone through many crisis times. We’ve gone through higher interest rates. We’ve gone through very low interest rates. And we’ve seen those types of policies where the premium goes up and the benefits go down or the benefits go down or a combination of both of those where I’m paying more for less benefits over to then what you signed up for 20 plus years ago. Uh those policies are still there, but they’re not very popular because they are still very expensive uh when you just pay that monthly premium. The hybrid policies are much more common now. uh and much more reasonable for because if you never go if you never go into a long-term care situation that these policies that you’ve been paying for 20 plus years, many of them many of them do not have a death benefit. Uh which means that if you never went into a long-term care situation of a policy that you’ve been paying 20 25 year years in and you passed away, it’s gone. It’s done. It’s over. No, nothing goes to anybody. So all the premiums you paid are just gone. So now as people want to make sure that if I’m paying for something, I need this to go to someone, whether it’s me for the long-term care purpose or if I pass away, maybe using none or some of the uh the long-term care uh claim, if not any of it, death benefit will go to someone taxfree. And by the way, it uh also with your if you are if you have a long-term care policy and you put money into this, whether it’s a lump sum or making premium payments and you go into a claim, which means you can’t do two of the six daily living activities, feed yourself, dress yourself, bathe yourself, and you’re getting payments now from this long-term care policy. Those are tax-free as well. Those are tax-free withdrawals. As long as it’s used for long-term care, you do not have to pay tax. So, if you’re putting a chunk in and you’re getting a big much bigger benefit now coming out, it’s taxfree. Same thing with the death benefit. Paying out of pocket or self-funding, you do have freedom. Uh you can choose your who where you are. If you’re paying for it, you can have someone come to you if you need to go to a facility. may be ideal if you can afford to pay for it, but you must be willing to liquidate your assets, may impact the ability to pass um assets to family or beneficiaries. If you run out of money, relying on family members or the government may be your only options using a reverse mortgage. This is kind of a controversial thing that you know it’s when people say, “Oh, it’s well worth it to do a reverse mortgage or never do a reverse mortgage.” some people might say, but basically it’s if you have a lot of equity in your home or maybe even no mortgage, you can do a reverse mortgage where instead of you making payments to pay back a loan, you get payments from that. So, you’re not you’re not paying anything upfront. Uh you’re well, besides fees and costs, but you’re getting money from this company who’s doing a lean on your home. This does need to be paid back, but it’s basically how do you get income from an asset like your home, and you’re able to do that through a reverse mortgage. You can borrow against your equity. You can uh use the proceeds to hire caregivers. There’s no mortgage payments. Again, loan must be repaid when you vacate your home. Whether you move, sell, if you pass away, the loan has to be paid back. Your beneficiaries or your heirs will need to pay this back. A reverse mortgage takes part of the equity in your home and converts it into payments made to you. You can use the payments you receive to pay for long-term care services you need so you can continue living in your home. Drawbacks uh may not be suitable if you remain in the home just for a short period of time. You’re not getting enough benefit out of it. Uh then uh loan must be repaid when you move out, sell or die. amount can be borrowed. It’s typically much less than than the actual value. If you have a $300,000 home, let’s say it’s even paid off, you will not get 300,000 worth of, you know, payments out of here. They will might do two or two maybe up to 250. They will do a percentage of that. They you cannot get the full value. Uh amount can be borrowed as uh involves substantial fees. there are a lot of fees and costs associated with doing a uh a reverse mortgage. Uh the the company doing this reverse mortgage uh they are looking they’re trying to make a profit and they’re not just you know being nice. Uh they’re absolutely a business making a profit. Uh interest is added to your balance and adds up over time. So, it’s kind of a big question mark and it might be a last resort for some people relying on government programs. Uh Medicare will cover your health care expenses in retirement. Uh again, Medicare for uh for your traditional doctor visits or maybe hospital visits. Medicare will, but Medicare will not cover your long-term care. And Medicare Medicaid will cover care in a nursing home potentially. We’ll talk about some amounts and what the availability is on for Medicaid. Uh Medicare is your your health insurance for 65 and over. Uh different parts you have Medicare part A which is your hospital coverage. So your hospital visits are through Medicare A. You do not have to pay for Medicare A if you are not on uh Medicare yet. Uh part B is your doctor visits, your doctor insurance, medical insurance, and that’s what you have to pay for. It’s 22 uh.90. $22.90 uh a month is what you are paying for Medicare Part B. If you opt for the Advantage plan, Medicare Part C, that’s uh you have to go through private insurance. you have to go through either Blue Cross, Blue Shield, United Healthcare, Etna, those types of comp uh companies to get a uh Medicare Part C. I would kind of say it’s similar to more of like an HMO plan uh where it could be a little bit less cost than A and B and but uh um it’s less there’s more restrictions on doctors and they have to be within the network and things like that. Medicare Part D is your prescription drug coverage. Medicare does not pay for personal care or custodial care. Home health uh benefits are limited. Uh Medicare for skilled nursing facility, we can see your first 20 days. This is the short-term care. Um and this is for skilled nursing. Uh this is not just for uh someone to come help cook and clean. This is for skilled nursing that Medicare will pay 100% for the first 20 days. They will pay partial for days 21 through 100. So those remaining 80 days. Um and you are on the hook for $200 a day. $200 a day times 80 days is $16,000 out of pocket. Um, and because and now if your care is much more than that, but they will pay partial partial and you are on the hook for $200 a day. Over a 100 days, Medicare does not pay anything. It’s all on you. That’s where whether it’s out of your assets or some type of insurance that you might have. Medicaid. Um, so this is a federal/state program. It could vary in every state on how much uh um you know benefits that you have through Medicaid. Um it’s meansbased uh which means if you have no assets, there is a restriction on how much assets you could have. I believe it’s on the next page here. uh but uh Medicaid is the biggest payer right now of uh long-term care, but you cannot have you can have very limited assets if you have a spousal situation. We’ll talk about that a little bit on the next slide. Uh each state establishes establishes its own eligibility rules. A few state Medicaid programs may uh programs may allow applicants to self-direct their own care. uh there’s some website sources uh for something like that. But again, Medicaid is if you don’t have assets, if you cannot afford to pay, that’s what Medicaid is all about. You will still get some type of care, but where, when, how, that’s up to uh facilities on what spaces they have available for Medicaid uh recipients. eligibility. In most states, an individual’s income must be less than the cost of care. Uh like social security typically or maybe there’s a pension. Uh the income gap uh applies in some states. Assets 2,000. You can have $2,000 in uh assets basically excluding some of these things on the bottom. Um but if you are married your healthy spouse can have assets but in your own name uh you cannot have assets. Um as you know when people ask questions about Medicaid many times this is uh you need to have a conversation with an elder attorney or some type of estate planning attorney on how to get qualified for uh Medicaid uh and legally start to give away assets or spend down your assets. But uh things that are not counted in that your home if your spouse is still living. If you are a single person, you cannot own the home. Only if your spouse is still living. You can have one car. Uh household and personal belongings. Term life insurance is acceptable to own. Medicaid compliant annuity if it’s something that you you’re getting guaranteed lifetime income from. Uh burial plots and funeral expenses. Uh strategies may include using assets that count, savings to purchase assets that don’t count, maybe using some uh savings to buy an insurance policy, a term insurance policy, transferring assets in an irrevocable trust. There is a big difference between a revocable trust, which is the standard trust that most people might have. Uh if it’s a family trust or a living trust, those are termed as a revocable trust. An irrevocable trust, you do not control your own assets. Someone else has to be the trustee of those assets. So, they are technically outside of your estate. Uh, and start to give away assets, start to gift to, um, family, friends, or whoever start to give, you know, uh, give money away. Distributing or protecting your assets in advance may help you qualify for Medicaid. So benefits are qualify for Medicaid as soon as possible, protect a healthy spouse, preserve assets for loved ones. The drawbacks ethically problematic for some. Some some people are saying that they don’t feel like they should uh need to somehow like hide their assets in some ways. For some people uh may require to give up the rights of your assets and Medicaid laws are pretty complex and again they vary per state. Another reminder that if you do have some questions, please type away in the chat box or the Q&A uh box and I will get to those at the end of the presentation.

Medicaid planning example. So, here’s an example of giving away assets. So, you transfer ownership of your house to your son. Uh the value of this home is 400,000. The average cost of a nursing home in in your area is 8,000 a month. So 400,000 value of the asset divided by 8,000 a month for this care. Uh Medicaid is saying you are not eligible for Medicaid for 50 months. 50 that maybe you should have sold the house and use those assets for care. Uh this so there are different ways or something like that. if you spoke to an attorney, how do I start to give away assets and qualify for Medicaid as soon as possible? I am uh working with a um very good client of mine actually uh out in New York and her sh her her husband is on Medicaid and now she has restructuring some of her assets working with an attorney so she can herself go on Medicaid and we’re going through some steps on all this and it’s been probably a little over a year that she’s been planning this for herself now. Um so in this case the ineligible uh ineligibility for Medicaid is a little over 4 years. So benefits of long-term care insurance. So different types of policies for long-term care. What are most people doing these days? So in exchange for a premium or a lumpsum that you might deposit into some policy. Uh there’s a contractual daily or monthly benefit that you will receive if you are in a claim for a long-term care. Especially valuable uh for middle inome Americans who want to preserve their financial independence and quality of life. Preserves freedom to choose where and when you receive this care. Uh helps protect accumulated assets. avoids the need to spend down your assets, especially if you already have um different types of policies. One of the things when I talk to people about planning, do you have other insurance policies, whether it’s life insurance or do you already have a long-term care policy? Is this still the best policy? Insurance reviews are a big part of this process as well. And are you in the right type of policy for whatever you’re trying to protect? Maybe you have family members, maybe a higher death benefit is most important to you. Maybe you don’t have uh maybe you’re unmarried or don’t have children and maybe the death benefit is not the mo most important thing. Can things be reallocated to put you in an appropriate policy? Uh so preserves the freedom to choose where you receive the care, helps protect the accumulated assets, and avoids the need to spend down your assets by having some type of insurance policy. How does long-term care insurance work? You must be in reasonably good health to get it. So when people say, “When do I get long-term care?” Basically, when you don’t need it. Um so if you are in a health situation right now whether it’s heart or lung or cognitive uh uh disabilities or something like that or some cancers or things that uh make make you not qualify, you need to get this insurance while you qualify. Uh so sooner than later to at least start investigating this. Maybe it’s something that you can afford to do. Maybe you feel you can’t afford to get some type of policy, but let’s certainly have the conversation to see if this is something that you should be planning for. Premium is based on again these are if you’re making monthly or annual premiums are based on your age and the features and benefits you choose. The younger you are, the more benefits you will get in this type of a policy. benefit is typically triggered when you become chronically ill or cognitively impaired or can’t do two of the six daily living. Feed yourself, dress yourself, bathe yourself, those types of things that if you are not able to do those, then you could be in a claim for your long-term sharing care insurance and get payments from that policy. Once the elimination period or the waiting period, typically it could be a 30-day, a 60-day, or even a 90day elimination period, which means if you are in a claim, doctor says you can’t do two or more of the six daily living things. If you are in a claim, the insurance company says, “All right, you were approved that you can start to get payments, but you have to wait this 30 days or 60 or 90 days.” So, you’ll always want to know, is there an elimination period for this? Five key features in long-term care insurance. The benefit, so the benefit is the amount that you will receive every month uh or annually to help pay for care if you are in claim. The benefit period is how long is that going to last? Is it 1 year? Is it 2 years, 3 years, 5 years? or even typically a lot of times it’s 6 years that you get this coverage for the elimination period is the waiting period to start getting the benefit 30 60 or 90 days. Uh location of care. Does this policy that you have allow you to get home care? Can you be in the comfort of your own home and have someone come to you? Maybe it’s family or friends that you’re able to pay. And maybe it’s uh someone like a company like Visiting Angels or something that will send someone to you. Uh professional um companies like that that will also uh do home care or do you need to be in a nursing home? Inflation protected? Is there increases? So, for example, if you’re buying a policy today and you’re young enough and healthy enough and you get this and let’s say your benefit is 4,000 a month, uh if you’re young enough, let’s say in 20 years, is 4,000 a month going to make a dent into that, how much is uh is care going to be in 20 years from now? So, are there some type of cost of living increases on this benefit? managing the cost of long-term care insurance. Uh the younger you are when you buy long-term care policy, the less expensive the premium. Make sure you can afford this uh premium now and in the future. Buy from a reputable company. There are many companies that we are able to use for this type of insurance. And of course, every company that we are able to even talk about are highly rated uh insurance companies. Make sure you can afford the premium now and in the future. Buy from a reputable company. Choose features and benefits wisely. Take advantage of tax incentives. So, typically if you’re making monthly premiums or annual premiums into these, many times it’s there’s some type of tax deduction. I do not have details of what is the specific situation. How much can I deduct? Talk to your qualified tax advisor if it comes to something like that. But there is a chart here based on your age on uh they it is age-based that uh on how much you can uh deduct and there are potentially some state deductions as well. Again, talk to your qualified tax advisor about how this can affect your taxes. Partnership policies that help you qualify for Medicaid. Uh key features to consider. What’s the benefit amount? The benefit period. Uh again, the amount, how much do you get every month? Uh as a benefit, how long do you have to uh how long does that last? 1 year, 2 years, up to 6 years. Benefit triggers, the two of the six daily. Many times that is the factor. If you can’t do two of those six daily living things, many times you’re in claim, and many times that’s a doctor note or something from your medical uh provider. Uh elimination period, how long do you have to wait to start getting the benefits? uh types of facilities included. Could it be home care? Could it be an assisted living? Does it need to be a nursing home? What type of uh location is this? Inflation protected. Will these premium uh the benefits increase over time? And the waiver premium. If you are making monthly premium payments into this policy and you’re in claim, many times that you don’t have to make those premium payments anymore. As long as you are in claim, you do not have to make payments. Sometimes that’s not the case. Sometimes there are you do have to continue making your payments but many times it is a waiver of premium and guaranteed renewable. Other insurance options there’s hybrid life insurance. So a combination that I said earlier a combination of life insurance and long-term care or a deferred annuity with a long-term care rider. And we’ll touch on both of these. So, a hybrid life insurance uh linked benefit long-term care rider uh chronic illness or critical illness acceleration rider. Here’s what all this uh means. There’s positives and negatives uh of of course, but uh if you are looking to get an insurance to cover two different events, a death benefit and a long-term care benefit, if you had one policy for a death benefit alone, and you had one policy for a long-term care benefit, that death benefit would be higher on that single policy and the long-term care benefit would be higher on that single policy. But if you have a hybrid, you’ll be covered on both, but it could be a little bit lower for uh for the benefits of both of those. But you are getting two uh cover coverages in there. And that something is going to someone. If you need it for long-term care, it’s available to you. If you never needed it for long-term care and you passed away, that benefit is going to someone for a tax-free lump sum death benefit. So the positives, the premium is guaranteed and won’t increase over time. Flexible premium uh payment options. Many times we do a lot of lumpsum things. Uh that they’re very common these days, especially if someone can afford if someone cannot afford that. Uh there are some monthly options, but again, typically I’m going to be looking at more hybrid options uh than your standard long-term care uh because they’re just more affordable and it make have a lot more benefits attached to those. Um maybe easier to qualify um for coverage than a traditional long-term care policy. Might allow for you uh for you to pay family members who cares for you. There’s a big difference on many different policies where it might be indemnity payments or reimbursement payments. Here’s the difference on that. Uh some policies offer indemnity payments. So let’s say hypothetically you’re getting 5,000 a month benefit that’s coming to you if you’re in claim. An indemnity payment means that you get 5,000 a month direct deposit tax-free if it’s for long-term care and you use it as you choose. If you want to have a family, friend, or someone, whoever, just to come to the home and help care for you, you can pay for them out of this 5,000 uh or if you for whatever purpose, maybe you need to get a wheelchair accessible vehicle and you’re going to make a monthly payment. Yeah, you can use this uh premium for something like that as well. You can use it for whatever you need. If it is a reimbursement payment, that means you pay let’s say the 5,000 a month that you’re that you need to pay for some care and you get reimbursed. You have to submit receipts and that means it cannot be family or friends. It has to be a reputable company uh that uh that does this and like you’re visiting angels or something like that or whether you’re in a nursing home but you are getting build you’re paying it you submit that receipt and you get reimbursed. So there’s a big difference whether it’s indemnity payments or reimbursement payments deferred long-term care annuity. So, there are uh you can kind of look down this list here, but basically what a long-term care annuity is. It’s a fixed annuity which earns a gu uh an interest rate uh for a period of time for as long as you own it. It’s just earning interest uh tax deferred interest and it’s growing growing growing over time and you have a long-term care writer. An example of one of the policies that I’m able to offer in this type of an annuity is it’s a lump sum deposit. In this specific case, let’s say a h 100,000 goes into this policy. It is immediately available if you qualify for 300,000 of long-term care coverage. So day one, you put a 100 in and it’s worth 300,000 of long-term care insurance. And year two, year three, let’s say it’s just growing over time. Let’s say some years down the road, let’s say your 100,000 has earned interest. Let’s say it’s worth 125,000 um in value. So, it’s because it’s been earning interest. Now, your long-term care benefit is still three times that, which would be 375,000 of long-term care coverage. And then that payment back to you is divided by 72 months, which is 6 years of coverage. And that would be how much you could receive in a monthly benefit from this policy. So you put money in, it earns an interest rate. Now, how how does this pay out? What if you don’t need it? So it pays out this uh I’ll even do a very quick calculation. Just if I said 375,000 divided by 72 payments is $5,28 a month. That’s what you would get from the insurance company. If you use that for six years, that’s what the coverage is for in this specific example. Um, you would have gotten 375,000 for long-term care coverage out of that for 6 years. What if you never needed that policy and you passed away? Uh, that let’s say that example of the balance was 125,000. If you passed away, someone’s getting the 125,000, whoever you name as the beneficiaries. So, um, but there is certainly money going to someone. Uh, but that’s basically what a, um, an annuity with a long-term care rider. I do those as well. Um, and I do the hybrid life insurance/long-TM care, many of those as well. Uh, tax-free HSA distributions. You’re able to use um, HSA health savings accounts for potential long-term care needs. uh withdrawals for long-term care. So, if you are if you have this money, if you have an HSA account available, maybe you have a high deductible health care plan, typically that’s why you would have an an health savings account is with a high deductible savings or a high deductible uh uh health care plan like we do here at Alliant. That’s what our company offers. It’s a high deductible, so I’m able to contribute to an HSA account. And if there are funds in my retirement down the road and I want to use those uh for some long-term care, uh I can certainly do that. And those are tax-free withdrawals. Begin planning today, whether you’re healthy uh while you’re healthy enough to take advantage of all the options. And again, if you and I do get together and have a discussion, we could certainly talk about your future plan. Maybe it’s for retirement, but what if uh what if you passed away? What’s the death benefit of all of your assets? And who are those going to? Is it going to be a spouse? Is it other children, family, friends, whoever those are? I want to make sure that whether you are here, you have enough assets to live on in retirement. If you’re not here, where does all that go? And how does it go? What are the best tax advantages for all of these things for beneficiaries? and what if you have health care needs like long-term care or not. And we’ll look at all of these different scenarios for this comp complimentary plan that I will offer you uh while you have enough time to plan for Medicaid and accumulate funds in your health savings account and to relieve your family of the burden of making these decisions. So, long-term care planning checklist, you can see here uh just again everything that we talked about here. I would love to have this one-on-one conversation. uh work with us, use us, we are a free source to you on doing financial planning. uh it is not an obligation uh as we get t you know if we do talk about what do we do that’s what this page has on here I am a full financial services uh advisor here with the credit union whether it’s looking at how do I invest where should I be should I be more aggressive should I be more conservative um and there’s many different types of uh investment options that we can select from uh every anything that is available I can offer full financial services, including all of this planning for whatever your life may uh throw at you. Uh I do life insurance, I do long-term care insurance, I do all of the protection things like that. Um and it’s all available to you. So hopefully you will say yes at the end of this presentation and have a one-on-one conversation. With that, I’m going to take some questions. I know I have a um a good number of them here right now. I’ll try to get hopefully to all of these uh before our time is up. But uh as I’m going through the questions, you have you can see on the screen there the QR code. If you have your phone handy and you want to hold that up to your camera up to that, just tap on the little yellow tab that comes up there and you will have access to my calendar and you can schedule a time and you can even do that right now if you so choose. I will be putting up the survey otherwise and just basically saying would you like to set up an appointment and with that uh um you know so if you say yes on there well of course I’ll reach out to you and we’ll get something on the calendar. Uh so I’m going to launch the poll here.

So hopefully you see that up on your screen right now. So select yes if you would like to have that conversation. Um and then uh while you’re doing that I will go through the questions that I have. Do the costs you are um presenting include meals? So, uh, possibly some, uh, have like it’s all-incclusive, which means your room and all the meals are, um, I can’t say that every service will include meals, but many of them, especially if you are in like a nursing home and you’re paying an 8 or 9,000 a month for some of these, yes, that would include the meals. I can’t say that for every facility, but many times, yes. Uh, who had the information to review insurance options? Um, not sure. I have your name on here. What what you’re asking here. Who had the information to review insurance options? I’m not sure what what that means. So, I have your information. I would I can certainly get some more clarification on that from you. Uh, please repeat the link for nursing home comparison. Uh if you don’t mind any everybody, I’m going to might make you a little dizzy here, but I’m going to go back to the screen uh with the the link. Let’s see if I can get to it. Sorry for the busy screen here.

soon as I get back to the Medicaid.

If you have your camera ready while I’m about to bring this up, you can take a screen a picture of the screen as soon as I get to it. And hopefully it’ll be here within the next page or two here. If it doesn’t pop up here, this might this is might be the one that you’re looking for. Uh so if you have your camera ready or I’ll just leave this up while I’m going through some questions here. So that is for the uh for comparisons.

Uh let’s see. At what age should one obtain long-term care insurance? Uh some will argue that if you’re in your you know even early 50s because it’s very inexpensive. It’s much less expensive the earlier you do it. Someone might say, “Well, I haven’t accumulated enough assets yet to do something like this.” And maybe, you know, the average is probably in the early 60s, sometimes a little higher. I could say that if you are 70 or older, you can still get this many times up to age 75, but insurance companies will start to dig a little deeper. uh if you are 70 or over they will do a cognitive call many times where someone will call you and do and check you out a little bit. They’ll ask you a bunch of questions like for example they will say um they will give you a list of 10 items and can you repeat the 10 items? Not necessarily that you have to remember all 10 of them. It’s did they even did you understand the questions that they were asking? So some they will do a cognitive call. So it is a little harder to get approved on some of these especially um if there’s a beginning of any any cognitive uh um areas there. But uh uh but you know as far as what ages typically in the early 60s might be the most common. Uh I’ve done many in the 50s as well and especially with people with assets. Um, the most common type of long-term care policies that we do, even though we do some with some type of monthly or annual payments, uh, we do a lot of lumpsum options, which means people might have enough assets to say, “All right, I have enough assets. I think I might be able to self-fund, but what if I earmarked a h 100,000 toward this long-term care policy? Still doing something, still working for you. Uh, but it might be earmarked for an enhanced benefit for long-term care or a life insurance. Uh, so we do a lot of those types of policies. Uh, what are the reasonings for having an elimination period? It could be because maybe you just had a short-term uh, issue. Maybe it was uh for example, sometimes people will go into a claim on a let’s say a hip replacement where they need some care. So let’s say that let you know if you did a hip replacement but it was let’s say magically better within a 60-day elimination period. 2 months later you’re okay. It will not pay out. Um, but if you had an issue where maybe it’s 6 months to a year or longer that you’re you need care, you can go on claim. You have to wait that 30 or 60 days, that elimination period, and then you get payments and if you suddenly are better, maybe that HIP is now improved or you’re able to do things on your own, you go off of claim and then funds are available to potentially go back on claim. So, you can go on claim getting money from the policy, go off claim because you’re better, and then potentially go back on claim if that happens. But the elimination period is to avoid any shortterm things that might have happened uh that the insurance company will have that period of time where okay, we know you’re in claim, but just in case you’re better in the next month or two. Typically, if it’s a long-term care situation, you’re probably not going to get better, but that’s the purpose of the elimination period. Uh, can I buy while living in one state? But what happens if I move? Yes, you can. Uh same thing with you know life insurance things are state um you know uh you know stateaterun especially when um uh you know if so someone buys life insurance I’m in Illinois if I’m doing a policy for someone that lives in Illinois I go by Illinois rules of buying a life insurance policy for someone um but if you move to another state absolutely it would still pay out a death benefit would still pay out for long-term care. Yes, you can move.

Oh, sorry that uh changed the screen there. Uh can I buy uh what happens if you move? Uh can you update uh the stats uh in your desk? For example, the 2026 uh HSA contributions have. Okay. All right. So, uh, yeah, I’ll have to look at the HSA contributions on there and see if we could have our our admin person change, uh, some of those numbers. So, I apologize on that. Uh, what’s on the screen is Medicaid, not the nursing home evaluation link. Uh, we’ll see if I could find that. I think I just have I’ll still try to do that. Let me see. I had a long question here. Uh when you say qualify for Medicaid as soon as possible, what do you mean by that? My grandfather is 80 years old and he wants to pass uh in his home pass in his home with care uh to in his home does uh he does does own his own home and from what you described he will have to give away the assets in order to qualify for Medicaid. uh since the spouse is disease his main asset is the home fully paid. I am his caretaker and he is still uh able to do a lot on his on this the right is this the right time to start planning for Medicaid. So there could be the reason I say as soon as possible is there could be a five-year look back for Medicaid. Uh so if you’re applying if all of a sudden uh someone applies and says I have no money, I have nothing. Um but uh you just gave everything away a month ago or 2 months ago. Um maybe that was legally maybe some people will do some things to hide assets. Uh so everything does have to be done correctly and but there could be a 5-year look back on these. as an example, if he assigned the home over to someone else. Remember when it said that 400,000 home because if care is average of 8,000 a month, that was 50 months that you would not qualify for Medicaid. So, that’s one of those you need to start planning that. And I would highly recommend an elder attorney or an estate attorney to figure out um how and when and where to uh where assets can be. Um I will have to get back to I’m going to make a lot of people dizzy as soon as I uh if I can get the nursing home evaluation link. I’m still looking for that one. Um but if not I can please reach out to me if I don’t have your information and I will get that information for you. Um other than that I think that is all. Uh can you go over the HSA process again? Uh so I cannot share the slides. Someone just asked if I can share slides. I am not able to. Um I’m looking for the nursing home comparison. I will try to find that. I have your information here. I will get back to you with the I can do a screenshot of a link and I can get that to you so you’re not waiting for me to find that page. Uh the HSA process is if you have a health savings account and you have funds in this that maybe it’s even invested or just earning an interest rate, you’re able to accumulate assets in an HSA account. And basically, for example, myself, I have an HSA account that I put this money in pre-tax. So, it comes out of my paycheck. And our company actually provides some of that, too. So, it’s all pre-tax going in as long as money is used for health care and long-term care is acceptable for this that you’re able to use assets from your HSA account and uh um and put money and use it for long-term care. Let’s see if there was anything else. Uh what’s on? It’s the Medicaid, not the nursing home. So again, I will get to you that information. Uh okay. So we’re just past 3 o’clock. I appreciate your time so much. Thank you. And I hope that we’re going to be having a one-on-one conversation soon. We’ll talk to you all soon. Have a great rest of the day.