Here’s just one example of how a couple could use funds in their IRA to fund unlimited years of LTC coverage from my book, “Long-Term Care: The Elephant Lurking in Your Retirement.”
For their circumstances, ages, and health, this product made the most sense for their goals out of the two dozen asset-based LTC products we offer.
Charles and Patty are aged 62 and 61 and in very good health. They took $200,000 out of one of their IRAs and transferred that amount into a special IRA annuity via a direct transfer (non-taxable). This new annuity had a 25% cash bonus. Now their account is worth $250,000. Click the image for a clearer look.
From this new IRA/annuity, $25,000 a year would be withdrawn to pay a $25,000 annual premium of a special life/LTC combo policy for just ten years. Tim and Patty would pay the taxes on those IRA withdrawals from their checking account each year so that the maximum amount would fund their LTC plan.
The death benefit of this life/LTC combo policy would never be less than about $247,700. If they passed away, never needing care, their kids would get at least the $247,700 tax-free death benefit (instead of a taxable $200,000 IRA).
But here’s the reason they decided to do this.
EACH of them has an unlimited number of years of $7,439 a month LTC protection. If just one of them needed elder care for four years, the tax-free LTC benefits would equal over $357,000 (using the death benefit money first).
If, between the two of them, they ended up being on a claim for seven years, the total tax-free LTC benefits paid would be over $624,000.
Ten years of an Alzheimer’s claim, the LTC benefits would equal more than $892,000. There is no limit to the number of months that they can get their tax-free LTC benefits.
To be sure, that benefit won’t pay 100% of their monthly LTC expenses, but it will go a long way when you total up all of the potential months the policy could pay out… and yet still have a tax-free death benefit for the kids if neither of them ever needs care.
Again, although all products are not available in all states, many other asset-based options exist to prepare for extended elder care – in your home, an assisted living facility, or elsewhere. Some folks use IRA money; others use unneeded annuities or life policies and, of course, CDs and savings.
You can get an LTC quote request form emailed to you by clicking the LTC button on the bottom right of this page. Let’s see if any of our products would help you plan ahead to protect your spouse or family from the burden of caring for you.
LTC planning is about more than just dollars. It is all about saving your family from the chore of being your hands-on caregiver and changing that role to being your care supervisor!
all the best… Mark
PS – you can get your own copy of my book (which explains ways to plan ahead for extended elder care — with or without insurance by CLICKING HERE!