This is Long Term Care Planning (Ep. 8)

Welcome to Ideas by Mike, the podcast with Mike Milligan, where you will find one-of-a-kind financial planning advice for your one-of-a-kind life. With over 22 years of experience as a certified financial planner, Mike shares experiences and advice on crafting simple, easy-to-understand financial plans based on your values and priorities. He believes that taking a personalized approach is the best way to prepare for the future and give meaning to your finances. So follow along as Mike, and from time to time his guests, explore different strategies and tools that could help you secure your financial future in retirement. Now on to the show.

Hello and welcome to the Ideas by Mike podcast with your host, Mike Milligan. I'm Wendy McConnell. Hi, Mike. How are you?

Great, Wendy. How are you today?

I'm good. I'm good. Now, I heard there's some, some very exciting news at the Milligan household over the weekend.

Yeah, we, we actually got a 3rd dog in our house. We have, we have 2 dachshunds, Goobs and Luna. But we decided after much thought that we could handle a 3rd dog. What our oldest dog is only like 2 and a half. She's not very high energy. Our youngest dog is high energy. So we got a third dog to balance them out. And so far so good.

Okay. So it's the third one's gonna slow one down and speed one up.

Correct. That's exactly right.

Okay.

And that's a one of a kind plan right there. See, we even take our one of a kind planning into how we manage our dogs.

Speaking of which, we will be diving into the 4th segment, uh, 4th segment that is of the 5-step one-of-a-kind financial plan. And today we're going to be talking about long-term planning and the innovative tool HALO. So, uh, can you briefly explain how the one-of-a-kind financial plan works, Mike?

Yeah, Wendy, uh, like we've been doing over the last 3 podcasts, we've been diving deeper into each component of what encompasses A one-of-a-kind financial plan. Those 5 components, again, are tax planning, which we do because taxes are the largest expense you'll ever have in your life. The second component is retirement income planning, because retirees fear, or their biggest fear is that they're going to run out of money. And what they realize is if I have guaranteed lifetime income, Then my fear of running out of money goes away. The 3rd component, which one we covered in our last episode, was on investment planning. You know, we talked a lot about what risk is. We talked about time horizons. We talked about how you— what real risk is. And it was a great, great conversation. Today, we're going to talk about long-term care planning. I didn't say insurance, by the way. I said planning. We're going to talk about what long-term care planning is. And then the 5th element of a one-of-a-kind financial plan is legacy planning. You know, how do you privately and discreetly and without taxes pass money beyond onto the next generation when you pass away?

Okay. So, like you mentioned, the last episode was on investment management, and that's really just about risk tolerance. Go give that a listen if you haven't already, and then come back to this one, right?

Yeah, exactly. Risk tolerance is misunderstood so much, right? Nobody really wants to tolerate risk. It's that whole conversation we had is, if you got on an airplane and the pilot came on and said, today we have a 90% chance of getting to our destination, I think a lot of people would get off that plane. And we talked about that one. So, you know, we focus on alleviating risk to ensure just a smoother financial journey.

Yeah.

So, let's talk about, you know, let's talk about today what can really disrupt that financial plan the most, and that is long-term care planning.

So, that's something that we, you know, really need to think of, think about, but don't often. So, this is a big issue, right?

It's incredibly significant, Wendy. A long-term care event can ruin the wealth of a family and set them back forever. It's the ultimate destructor of wealth. It causes stress. It can cause turmoil within the family. Personally, this is one thing about my story that is so important and why This is part of the one-of-a-kind financial plan, is if you remember back to our first episode, when I talked about my family, why I became a financial planner, is it was my grandmother. She's the one who just, if you haven't listened to the episode, she had a college sandwich business, became an entrepreneur out of necessity. But what most people miss in that story and why this is so important to me is she spent her last 23 years In a nursing home facility, right? 23 years. So, like, one stat though, this is personal, but there's also a stat that goes along with this. According to the U.S. Department of Health and Human Services, about 70% of people age 65 and older will need some form of long-term care services in their lifetime. We have a dilemma, right? People want to live longer, but they're not living as healthy longer. So, just because you have a great life expectancy doesn't mean you have a health expectancy. The average cost of a semi-private room in a nursing home is over $90,000 per year today, and a private room costs over $120,000 annually. Wendy, this is a problem.

That is a whole bunch of money, Mike.

It is. So, we, you know, we often think of like average age or average life expectancy being 82. But lifestyle, and really your background, how you've lived, your ancestors, right? What your lineage is, those play huge factors in determining life expectancy. That's where Halo comes in. Halo is an innovative tool that combines the research of a company called 23andMe. I'm sure you've heard of 23andMe.

Yep.

And some really smart academic PhDs from the University of Chicago, and puts their research together to create a personalized life and health expectancy from a comprehensive standpoint, using a comprehensive analysis.

So, we're going to know our life expectancy?

Yeah, right? And so, that's the thing, right? That question. That lifelong question of, I can make a great plan if you can tell me when you're going to die.

Right.

That would be an easy thing, right? To create a perfect plan. But based on— research has evolved so much, right? 23andMe has got it based off of your heritage or if you're Irish or if you were born in one of the Far East countries or They've got that component. Then the medical research that comes in and says, do you eat a lot of vegetables? How active are you? What is your stress level? Do you smoke? And when you combine all of these data points together, you can come up to a life and a health expectancy. But that is not something to be scared of.

Right.

Do you remember, like, as a kid, you know, kids would stay up at night because they would think there's a boogeyman in the closet and they would tell their parents like, hey, I can't, I can't stay up. There's a boogeyman. Parents would like open the door and show the kid that there's no, there's no boogeyman. And so when you like, so when you shed the light on, you know, even the most basic fears of like a kid, right, the boogeyman, you know, The, the, you know, one of our biggest fears or the things that we're scared about the most is dying, right? When you shed some light on it, it's actually an enlightening experience. And that's what, that's what Halo does for us.

So what I wonder is, when you were talking about like some of the questions, you know, are, are people honest when they answer these questions? You know, are you active? Do you eat a lot of vegetables? I, I see a lot of people that eat a lot of burgers saying, oh yeah, I eat a lot of vegetables.

I will. I mean, not, not to call anybody out on this, right? But like, my mother is this way, right? So, Mom, when you're listening to this, you're gonna know exactly what I'm talking about, right? Mom, my mom will say to me, you know, like my doctor has told me, my mom is a, is a, is a 2-time cancer survivor, right?

Right.

We just, you know, and that's another, another part of my story of why this is so personal. She's a 2-time cancer survivor. She'll have gone to the doctor, the doctor will say, you know, Lay off fried foods, don't eat so much red meat. My mom on her plate will have fried okra, which is a vegetable, theoretically, but it's fried. But, you're right. I mean, there's a point of self-realization that a tool like this has, right? In that, if you don't actually put the data in there, that's why there's a 3% margin of error in there, right? Because people sometimes see themselves— doing actually better than they are, and they don't want to see the reality. But if you're honest, if you don't work out, just say you don't work out. I mean, it's just an assessment tool. And the great part about Halo is the assessment tool will actually help you, because at the end of the day, it'll show you how you can actually live a healthier life longer and how you can increase your life expectancy. And so, sometimes when you put the truth on paper, when you put the truth on paper, And you see the results of that truth come back at you, it encourages people to take action that they can actually follow through on, just not like live in a fairy tale, right? So, that's the real power of Halo. We've seen this work though, too. Like, I saw a client who, you know, we have clients who are brutally honest with this tool, right? And I saw one client who was shocked to learn that her life expectancy could be much shorter than she actually thought. She had a lot of future plans to travel. And after this assessment, she realized she could potentially only have 6 healthy years left. So, she prioritized those trips, right? She had a goal of getting to 6 of the 7 continents, right? And she thought she had 15 years to do it, where the reality, it was only 6. So, you know what she did, Wendy? She went and lived.

Right.

Because life is for the living. Now, that halo assessment that she took is not common, right? It's not one that— it doesn't often get too far away from where life expectancy or where you think your life expectancy is. But that scenario stood out to me and reminded me exactly how important it is to have a tool like this when we do financial planning, because everybody's life expectancy is not the same. We have a one-of-a-kind life. And therefore, we need that kind of one-of-a-kind plan.

So, you know, it just kind of makes a point there on you really need to think about planning for long-term care.

Yeah, I mean, there's, there's, there's 2 things that are inevitable in life, right? We are going to pay taxes. And we are going to die. There's nobody that listens to this. That is going to get out of this life any other way other than death. Right? The longer we wait to plan, the harder it is to get things in check. Right? Another way of saying, the only person who can take care of your older self is your younger self. That's why people need to take action now. So, selling long-term care insurance isn't the goal. That's when most people talk about long-term care planning. They talk about long-term care insurance. That is not my goal. It's never been my goal in the financial planning process. In fact, I'd rather not sell people long-term care insurance. I'd rather not an insurance company profit off of your decisions or your heritage. I would rather plan it correctly. So, because if we can plan it, you can make a couple, you know, some simple changes. Not only to your lifestyle, but also your investment plan. We can plan away the cost of that insurance. We all live this one-of-a-kind life. Yet, we're all susceptible to saying we are average. It's saying that we'll live to 82 because that's what we hear from a life expectancy. But we know lifestyle and your background plays a big role in that. So, we don't focus on the average data that comes out. We want to use a tool that's going to put your life and your data in place so that we can make a plan for you. Because we deal with people every day that are living in their 80s, in their 90s, right? And we also see people who pass away in their 40s and in their 50s. So, if we can use a tool that helps us plan appropriately for your long-term care health needs, then it's putting really that one-of-a-kind financial plan into play for your one-of-a-kind life.

Okay. So yeah, I plan on being like 95 at least. So, but HALO is going to actually help us figure that out, correct?

It is. And so it is, it's a link that we give out to our prospects and our clients. And on that link, you go through really a guided self-exam. So the exam's really going to ask you questions that are going to say, tell me about your lifestyle. Tell me about your parents. Tell me about your grandparents. And it's really about just how long did they live? If they have passed away, what did they pass away from? Where do you think you originated from? Did you originate from Europe? Did you originate from Asia? What is your origin or what is your family's origin? Then, it's going to ask you about your lifestyle. And listen, there are no right or wrong answers as long as you're truthful and honest, because if you're truthful and honest, it's going to spit out to you the most incredible multi-page personalized report you will ever see. And that personalized report is going to give you steps to be able to— if you implemented a few things, you're going to see the impact it has on the quality of life you have left and the amount of life you have left.

And this is because, you know, as you mentioned, people are living longer, but not necessarily healthy.

That's exactly right. You know, for some reason, we in America have, you know, set this goal on the longevity of our life. Right? Like, we live, you know, really the people who live, if you study longevity, you know, people who live the longest are not based in the United States. They're based in the Far East and then in that kind of Greek isle mindset, right? And if we look at those 2 things, it's about diet and activity, right? But for some reason, we as Americans want to be the best at everything we do. We live in the Greatest country in the world, we're the most innovative country in the world, so we obviously want to live as long as anybody else. So then, we got this whole idea of modern medicine, the pharmaceutical companies, who want to help medicate people so that they can live longer. But man, we miss the point. The point of living is to live, not to be in a nursing home facility. Or not to be a burden on your family, where you're actually, your family has to take time away from their life to come and deal with you. And so, the point of this report, and really the one-of-a-kind financial plan, is to do the assessment that is needed so that you know what the rest of your one-of-a-kind life is going to be like from a financial standpoint.

So, you know, whether we're afraid of it or not, you know, we, we really need to be informed as well as possible.

Right. Especially if you've, uh, but often, you know, it, it, this is especially true if you have any, uh, any indication that, you know, you could potentially have some end-of-the-life slippage, right? Whether it be mentally or physically. Because if you're going to be in poor health, you're going to spend a lot of your wealth at the end of your life. And that wealth may be conflicting with what you want to have happen. Like, you may want to leave a lasting legacy to your kids and grandkids, and a monetary legacy, right? You may end up— you may want to give something that's going to help, like for instance, cancer research. your alma mater where you went to college. And if that money is spent instead on keeping you comfortable at the end of your life because you're not mentally or physically able to do it yourself, well, it's ultimately eroding the wealth that you could pass on. And so, one of the things, and this is just a tough topic, Wendy, of the 5 stages of this financial plan, this one-of-a-kind plan, This is the toughest one to endure, but it's the one that most financial advisors just neglect. Because it's so easy to talk about how the stock market's doing, or the trips you're going to take in retirement, or your grandkids. Those are all great topics. This is the one though, long-term care planning. And again, it's not long-term care insurance. long-term care planning is the one that can have the greatest impact on your legacy and the wealth that you leave behind for those you care about the most.

So, Mike, we know that you're a certified financial planner and you are also a professor. So, how does your perspective change in these roles when it comes to long-term care planning?

Well, that's a great question, right? Because when we're talking about taxes, or retirement income, or investment, this, Todd, this is such an easy question to answer, Wendy, because there's the academic side of those, and then there's the planning side of those. And when it comes to long-term care planning, there's an element to this that is not involved On the academic side, and we don't talk about it, but when I talk to my students, I do. It's the emotional side of long-term care planning. From an academic— from a— from as a professor, you know, you approach it from an educational perspective, emphasizing the importance of understanding the whole financial picture. So you teach that long-term care planning is not just an add-on, but a fundamental component of financial health. In the academic world, we discuss theoretical aspects, such as risk mitigation, and that ultimately leads to insurance. Right? It leads to, like, if somebody comes in, you tell them that long-term care insurance is going to save them generationally at the end. From a financial planner standpoint, We have to look at the human element or what people think about their money. And so, we can actually not just say, hey, listen, insurance is the way to get rid of this. We can look at somebody square in the eye, telling them the truth, saying, your 24 hours that you live in retirement, you need to devote 20 to 30 minutes of that just to go walk your dog or to get out and go to the YMCA for socialization and get on the treadmill or the bicycle. Because those being active, being physically active, a financial planner can say, go be physically active. A lot of financial planners think that's out of their scope of responsibility to be able to do that. But listen, if you're in a relationship with somebody and you're helping them with their money, one of the things you can help the most with is check in on how they're doing physically. We're not a doctor, we're not therapists, we're not exercise coaches, we're none of that. But if we're really doing our whole job, right, as a financial planner side, take the theoretical, analytical, academic side out of it, right? And put the human element into it as a planner. And we can actually say to somebody, let's get rid of insurance that is not needed. You can do that, right, by walking 20 to 30 minutes, eating more fruit and vegetables, right? And it's not Mike Milligan saying that for us. On the planning side, it's 23andMe and the University of Chicago folks that have come together to put Halo together that tells you to do that, right? And it's just a tool that's part of the long-term care planning we do as part of the one-of-a-kind financial planning.

So, um, I'm a little confused about that. Are you saying then that we won't need long-term care until later and that we don't need to plan for it until later? Or are you saying that we can make a plan that we will be able to afford our own long-term care?

So, you can self-fund, right? That's a great question, Wendy. So, like, for instance, the whole point of insurance, and it doesn't matter if it's long-term care insurance or car insurance, right? Or auto insurance. The whole point of insurance is to insure the unknown, right? So, like, you know, if you have a homeowner's policy, it's there because you don't know in the future If there's going to be a hurricane hit your house, or if there's going to be a fire. And because that asset is so big, most people don't have enough money set aside to rebuild in the event that happens. Car insurance. You have car insurance because if somebody pulls out in front of you today, Wendy, and it's their fault, right? But they don't have insurance. You have insurance to get your car back, right? The whole point of like long-term care insurance Is to pass that end-of-life expense that's more than your typical daily expenses, right? So, it's not what you typically would have in a day. It's much more because you're in a nursing home. You have paid medical staff there. They're providing 3 meals a day. They're providing custodial and security. It's where you live now. That cost is significantly more than what your average expense is. So, you buy the insurance to safeguard against your budget not being able to cover that expense? Well, the thing is, is if you do 2 things, if you are more active with a healthier diet, right? And you can control those things. Well, you're going to be healthier longer, closer to your death. And number 2, if we know what the expense is and we put money aside for it, That grows over time. Well, any of that expense can be covered by what you've saved versus passing the risk on to the insurance company.

I like that. I like that. Because like you said, and there's like all of those stipulations with the insurance companies too. Like you just never know.

There is. And like, you know, my, my, my job as a, as a certified financial planner is to make sure your money lasts as long as possible. This means that just making small changes over time can make an impact. If we, from an investment standpoint, we talked about starting to save earlier in life, a smaller amount saved earlier is a bigger amount in the future because of compound interest and time. The same thing can be true about long-term care planning. The sooner you plan for it by making small changes to how you live your life, Drinking less alcohol, right? That's a hard one. Drinking less alcohol, adding more steps in your day, trying to practice mindful breathing to reduce stress. If you just put those things in and think about every time you make a small little step along the way, you're helping your future self be healthier. And that's the point of the— like, as a planner, We could bring those to bear for people by just making those small adjustments that have a better financial outcome and hopefully a longer health expectancy.

Yeah. So, as we wrap up, what final thoughts do you have for listeners today?

So, HALO is just a tool, right? And just like we talked about, like, in retirement income and investment planning, like, Home Depot sells a lot of tools, right? And you could build a house by going to Home Depot, but nobody normally builds a house by going directly to Home Depot. They go to an architect and a builder that will help design the perfect plan or the perfect dream home for you. And then the builder, you hire a builder that's going to construct it with great craftsmanship and with great detail. But at the end of the day, the builder still goes to Home Depot to buy all of the tools.

Right. Right?

You can go directly to long-term, to like a Home Depot or an insurance company to insure your long-term care, or take that expense off of your budget and work with a planner that has an all-encompassing approach. Or what we call it is a one-of-a-kind financial plan that can bring a tool to you. That can show you how you can not spend unnecessarily on something you may not need. And so, like today, just like we have tools that we use for tax planning, retirement income planning, investment planning, our tool HALO is free. Matter of fact, you can get access to this HALO tool just by going to our website. And if you go to our website, the HALO tool is located In our— directly on our website for somebody to click on, and you can start the assessment on your own. And when you're done, you'll get your amazing complimentary report on what your health and life expectancy is and how you can change it to live a healthier life longer.

And what is the website?

ideasbymike.com. So, www.ideasbymike.com.

And they can find out all the information that they need to know to get in touch with you if they have some more questions.

That's exactly right. There's a contact button right on our website. You click on that, it'll give you access to immediately book a time to our calendar with either me or somebody on the team to find out what really is concerning you and what you're missing as part of your financial planning process. Because, Wendy, we see often people have, you know, like one of these 5 elements that they feel really strong about, you know, that they feel they've gotten taken care of. And what they may be lacking is like a partner who could do the tax planning, or somebody who could show them how to do the retirement income side, or even the legacy piece. And a lot of times, to have a one-of-a-kind financial plan, it just takes a little tune-up of what they already have. And that's what we can That's what we can help people do.

And next time we're going to be talking about the final facet of the One of a Kind Financial Plan, which is?

Legacy planning, which is, it's just, we have an amazing, and this is the tool that people, that everyone says they need. There's not one person we talk to that doesn't say, I need this. And when you say, do you have it? They're like, no. And like, we just, we simply just walk people directly on, you know, hand, handhold with them. We walk down that little sidewalk to get it done. And then it's over. And then, and then we just revisit that place about once every 5 years. Because again, death, we're all going to die. It's not something we want to talk about every day, but it's something we need to plan and prepare for.

All right. Sounds good. Well, thank you very much, Mike, and thank you for listening today. Please like, follow, and share this podcast with your friends. Until next time, I'm Wendy McConnell.

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