Determining Your True Values Will Lead to a Successful Financial Strategy

Determining Your True Values Will Lead to a Successful Financial Strategy

“We want to retire by the time we reach 60!”

“It’s vitally important to send our kids to the college of their choice!”

“I want to quit my job and do something else!”

“We want to buy an apartment in the city!”

We all have dreams. We have those ideas that swim in our minds and create endorphins to rush through our bodies. The hurdle we frequently struggle to jump over is our ability to take those ideas and put them into action.

Lisa and Mark, both in their early 40’s, had been working hard to build their net worth. They lived carefully and thoughtfully, funding their retirement plans and living comfortably within their means. They knew how to save their money for a secure future. When we sat down to talk about their planning goals, the following conversation took place.

Lisa began, “You know, I like my career and the financial rewards it provides, but I’d really like to do something else or work part-time.”

Mark answered, “Yeah, but without your salary, I don’t know if we’ll be on track to pay for college and be able to stop working before our mid-60’s. And we also talked about summer camp for Hilary. It all costs money.”

Lisa looked dejected but offered, “I know. I just feel so torn…”

These conversations are normal. We all have that idea that magnetically draws us like a compass pointing north.

The question is, what is your truth? What is that one idea that, if not attained, will create disappointment or regret?

Determining our true values is a process of thoughts, discovery, conversation and finally an agreed-upon strategy. Lisa and Mark’s assignment was to go home, talk about their prior discussion, and consider what underlying values became clearer and more defined.

Several weeks later, Lisa and Mark returned to reveal the outcome of their conversation.

“Mark and I invested a lot of time talking about this, and I believe we’ve developed our most important values. We decided that while Hilary’s education is very important, we have agreed that unless she earns scholarships, her choices will be limited to state schools. We also expect her to contribute to her school’s tuition. While I would love to change my work situation, we’ve agreed that I will continue another five years and then transition to part-time so we can save more money for our future. We really want the option to make significant life changes in our early 60’s. Can you help us determine whether that’s possible? We value the idea of changing our lives as soon it is practical and rational.”

In summary, Lisa and Mark’s highest priority and greatest value is retiring in their early 60’s. This decision affects their big-picture core values as well as their everyday smaller values, such as the following:

Lisa and Mark made some budgeting choices that helped put them on the path to achieving their most important goal. These choices included decreasing childcare costs by choosing a less expensive option, shaving 25% off their annual vacation budget, cutting 15% off their other discretionary spending, keeping their cars for 8 to 10 years and increasing their deductibles and co-insurance on their insurance plans to save on premiums. They explored other cost-cutting ideas like cutting out cable TV and replacing paper goods like power towels and napkins with cloth.

Incremental shifts in spending, along with careful monitoring, supported Lisa and Mark on their mission to live their highest values. It’s the smartest place to start when planning your life, and the answer is your life’s most satisfying goals.

Michael Kay
Advisor
Twitter Email

I founded Financial Life Focus because I wanted to work with people who put your success at the forefront of everything they do; people who understand that finding balance is ... Click for full bio

Are Your Clients Failing to Plan for the Costs of Long-Term Care?

Are Your Clients Failing to Plan for the Costs of Long-Term Care?

Written by: Matthew Paine

It’s been a tough few years in my family. My mother has been battling cancer for what feels like forever, and while she’s been managing her health with diet and exercise for some time, a few months ago everything changed. Her cancer had become aggressive, and chemo, which she had dreaded, was suddenly the only real option. My mother is in her late 70s, so the already brutal side effects of chemo resulted in a prolonged hospital stay that is currently at four weeks and counting. The good news is that she’s mentally strong, and she’s battling like a lion.

My dad is another story. Suffering from early-onset dementia, his ability to understand what’s happening and why my mother isn’t at home shifts from day to day. Because he’s unable to drive or care for himself (at least predictably), my siblings and I have been juggling taking care of him ourselves. It’s not an easy task, especially with jobs, children, and lives of our own to manage as well.

Like many families, none of us—my mother, my father, my siblings or myself—saw our current dilemma coming our way. Clearly we should have. My mother hasn’t been in top health for years. My dad’s condition is sure to get worse. And even if both of them were in perfect health, their age alone should have driven us to communicate better, earlier, and smarter. Despite being in the financial services industry myself, I haven’t been involved in my parents’ finances. I know they saved well for retirement, but I don’t know where they stand financially today. I don’t know what or how much insurance coverage they have. I have no idea how they plan to pay for their long-term care—or if there even is a plan.

The situation is forcing our family to get personal—and fast. Despite being careful about nearly every other aspect of our family’s financial lives, this one slipped through the cracks. We failed to plan.

Just like cancer and dementia, this failure to plan is an epidemic. And it’s only getting worse. To help your clients battle this epidemic, it’s vital that planning for long-term care become an intrinsic part of your retirement planning process. Here’s why:

Retirement planning alone isn’t sufficient.


We’ve all seen it. A client has a great retirement plan in place, and suddenly life throws an unexpected curveball. The later in life your clients get, the more likely that curveball will be the need for long-term care. According to the National Center on Caregiving, the number of people needing long-term care will hit a shocking 27 million by 2050. And according to the AARP, one in four people age 45 and over are not prepared financially if they suddenly required long-term care for an indefinite period of time. That statistic alone tells us that our efforts at planning are failing.

Long-term care costs are escalating rapidly.


According to a 2016 survey from Genworth Financial, a private nursing home room costs just over $92,000—about $7,698 a month—which is 19% more than it cost for the same care in 2011. According to the AARP Public Policy Institute, lost income and benefits over a caregiver's lifetime is estimated to range from a total of $283,716 for men to $324,044 for women, or an average of $303,880—and less than 10% of that care is expected to be covered by private insurance.

Medicaid isn’t the answer.


Many people assume that public programs are the answer to long-term care, but in the case of Medicaid, a program designed to assist the poor, it is a last resort. First, while nearly everyone over age 65 has Medicare coverage, that program doesn’t cover long-term stays. That means that many people who need that coverage are forced to spend down their assets until they qualify for Medicaid. How poor must a patient be to receive benefits? In order to be eligible for Medicaid benefits, a nursing home resident may have no more than $2,000 in "countable" assets, and the patient’s spouse—called the "community spouse"—is limited to one half of the couple's joint assets up to $119,220 (in 2016) in "countable" assets. The result: even a couple who has spent a lifetime saving for a comfortable retirement can be forced to draw down nearly all of their assets before qualifying for Medicaid.

Once on Medicaid, long-term care patients lose the one thing many seniors care about most: choice. As a recipient of public assistance, patients rarely have a say in where they receive care. Whether that means being placed far from family, in a less-than-desirable facility, or even in a facility that lacks certain types of care (such as a dementia unit or other specialized care), the patient is at the whim of the state.

The good news is that even for those who feel there’s no light at the end of the tunnel, there are options that can help seniors who are struggling to pay for their post-retirement care to not only cover those rising expenses, but to do so in a way that gives them the freedom of choice. A Veteran myself, I know that VA Benefits are highly underutilized—including long-term care benefits. You can learn more about these benefits here. As well, the National Association of Insurance Commissioners (NAIC)’s July report Private Market Options for Financing Long-Term Care Services offers a variety of options for helping finance long-term care needs. Included in that list is the use of life insurance policies to help to fund long-term care expenses—an approach that is supported by GWG Life’s LifeCare Xchange Program.

Related: NAIC Sees Life Insurance as a Viable Solution to Long-Term Care Costs

In my own situation, I know there’s a high likelihood that my dad will eventually require skilled nursing care. I hope that as my siblings and I begin to dig into the details of my parents’ estate, we’ll find that they have indeed planned for long-term care. If that’s not the case, I’m comforted to know there are options available to help ensure Dad is not only in a facility that can meet his specialized needs, but that his new home is where our family chooses for him to be. Life may throw its curveballs, but at least Dad’s care will count as a home run.

Matthew Paine is Senior Vice President at GWG Holdings.  Mr. Paine started his financial services career with AXA Advisors, developing marketing strategies for the North Central Region and building his personal practice. Since 2008, he has lead sales teams in raising capital in various assets classes ranging from the Life Insurance Secondary Market, Multi-Family Real Estate, Conservation Easements, and MBS Hedge Funds/Fund of Funds. Mr. Paine has a BA in Marketing/Management from the University of St. Thomas in St. Paul, MN and holds FINRA Series 7, 24 and Series 63 licenses through Emerson Equity, LLC. Member FINRA/SIPC.
GWG Holdings, Inc.
Investing in Life
Twitter Email

GWG Holdings, Inc. (Nasdaq:GWGH) the parent company of GWG Life, is a financial services company committed to transforming the life insurance industry through disruptive and i ... Click for full bio