Have you thought about how you are going to pay for long-term care? According to Jim McKennon, “Another way to put this is don’t go broke in your final years of life. I had an aunt who is the most frugal person in the world. She wouldn’t buy herself a new dress. She keeps on saving money. She was born during the Depression, so she saved money. She did a great job and she cashed in all of her CDs which is the only thing she would invest in. She was on the last one when she finally passed away.”
McKennon believes that “It would have killed her to know that all those savings from all those years, all those living so frugally, are just gone, absolutely gone! And it happens time and time and time again and you can avoid it. You say that “I can’t afford long-term care insurance”, I agree with you. Heck, nobody can afford it. If you buy it today the price goes up and keeps on going up and up. I saw it and I can say I don’t it is not the right thing,”
What is an Asset Based Long Term Care?
He explains, “I want to show you something better, this is called asset-based long-term care. I took the oldest person I can find and did apply this to him. Although it works better the younger you are but if it works well for this person, thank God it’s going to work for you. Now let me give you a little background without giving you a name or anything.”
He said that “This individual is a client of mine for a long time. I knew he had several annuities with me, has tax-deferred annuities and had some tax-free life insurance, almost all index products. We’ve done a great job of putting together a phenomenal portfolio for it and he had this one annuity that he was not going to use, and I know he doesn’t need it.
He said that he does not need it, there was absolutely no chance that he will need that money unless he happens to go into a nursing home facility. His mother had spent some time in a nursing home facility, his dad had spent some time too and he knew the cost involved in a nursing home facility. I think today, it’s close to ten thousand bucks a year. It’s very, very expensive and if you don’t have to go a nursing home facility, you just need home care. It also gets very expensive you’ve got to hire people to come and sit with you 24 hours a day and it’s very, very expensive.
What is an Annuity?
McKennon suggests that “A simple way to take care of this is we will look at this annuity. The amount is $330,000, now he had an annuity and had been enforced but I think not in ten years. So, he had some surrender penalties and we had to take that out there. So even with his surrendered penalty, he ended up getting about $330,000, this was an older type of index annuity that doesn’t pay the interest rates that are new ones.
We’ve got some new ones; we’ve got one with an average of 15.5% for the last 10 years. But this one is averaging about 3%. So, what did he actually give up? Now, assuming he was spending the interest, all that money which he was not. But if he was a 3% of $330,000, he was making $9900 a year. Assuming a 25% tax bracket he got to keep 75% of it. So, what he gave up was maybe $7425 a year in spendable income.
“But again, as I said he wasn’t taking any interest, he was going to use that money to pay for long-term care. Now the way the annuity works is, if you take money out it’s considered taxable. You take out interest first this all comes out income tax free. So, let’s just look at the numbers really quick. He gave me $330,000; he was 77 years old and his wife was 77 years old as well. He had prostate cancer and skin cancer. But I don’t think his wife had any medical problem. He picked up right off the bat on day one, $730,174 of long-term care benefit the day he gave me the money. He was approved and I got him approved. Remember I told you about the cancer, so even if you got some medical problems, we can still probably give you 3%. We got him approved and he got $730,174. Just imagine, he turned $330,000 into $730,174 on day one.”
“Now let’s just assume that he left that money in the annuity and he never need it. Under the rule of a 72, if you divide your assumed interest rate which was 3% into 72, it tells you how long it would take that money to double. So, it would take 24 years. This means 24 years before he would have double the $330,000 which is still less than he got here from day one. He is 77 years old. Is he going to live 24 years more? I don’t think so. This is a phenomenal deal if you are sitting there with an annuity that you don’t need. Are you sitting there with money you don’t need? You’ve got a CD but very, very little. You are not even spending the interest. You are going to use it to pay for long-term care. But why not put it into something like this.”
The Younger You Are, The Better
“By the way, if he wants to get his money back, he can get it back anytime. This is a no-brainer. Now look at this husband and wife, they picked up a benefit of $11,063 a month that’s $22,126 on both of them in a nursing home and again it pays for home care as well. This is a phenomenal product. We’ve got a ton of them. We are still doing a ton of them. This just happens to be the oldest one I’ve got.
I’ve done a bunch of people in their 70s, not 77. I’ve done 75 or 74. Remember, the younger you are, the better it works. How much better? Just think about how much better it may be for somebody who is in their 60s. When this person is trading $330,000 for $730,174 on day one and that’s tax-free money. So, it comes out to pay for nursing home expenses tax-free. Plus, you can get your money back any time you want. I think that’s an absolute solution to your problem. “
McKennon concludes, “Maybe you are sitting there with a problem, probably saying I’m not going to worry about it. Medicare will take care of it. The government is going to take care of me. Well, maybe we’re running out of money very, very quickly. If you’ve got a situation, you’ve got money sitting in a low-interest paying account, or you don’t need the money to pay for long-term care in the future, then why not put it into something like this. You can double your money if you are younger.
You have done better than that, you are at least going to double your money on day one. You can get in touch with us by calling 601-990-2102. You can also text us at 601-757-6488 or email us at jim.mckennon@gmail.com or go to our website and check us out at www.moneymgtinc.com.
Recent Comments