Connecting the Dots to Protect Retirement

  • Originally published October 31, 2017 , last updated July 6, 2018
  • LTC, Long-Term Care
Connecting the Dots to Protect Retirement

Retirement planning can be considered in phases — accumulation, income planning and protection. They’re like dots to be connected for clients.

In the first phase of retirement planning emphasis has been on savings, investment and accumulation. It’s the foundation of building a retirement portfolio.  Many investment and financial vehicles are used to accomplish this objective. Some are tax qualified and others non-qualified.

So when an individual reaches the next phase — planning for retirement income —many choices emerge for providing a stream of income, while maintaining a growth strategy for those income-producing assets.  But what are the tax consequences of IRAs, 401(k)s, 403(b)s and even deferred annuities that have substantial gain over basis?  For many, these funds are the last to be utilized for retirement income because of the potential tax consequences. 

There is another dot that needs to be connected for clients: protection. The need for extended care is too often an overlooked concern.

For many, long-term care (LTC) is a consequence of longevity. It can bring a high price on not just the individual and retirement plan, but on a family’s overall health and finances.  For many advisors, a recommendation of “self-insuring” has been a commonly accepted protocol.

Is this really the best advice? What about your responsibility to your clients? Consider these questions:

  • Have you conducted a discussion to uncover how each client feels about the issues of needing care for an extended period of time?
  • What if there was a way to mitigate the risks of an extended care event with leveraging of non- income producing assets? 
  • What if the funds earmarked for LTC are never exhausted but are passed on to the family at death?

This is exactly how LTC insurance can be designed.  Asset-based LTCi, or Hybrid LTCi also has some advantages including:

  • Leverages a single premium or annual premium into a multiple LTC benefit or death benefit to the family
  • Joint Life-2nd to die:  provides more LTC benefits to both individuals
  • Rates are guaranteed to never go up
  • 4% Guaranteed Cash Value growth
  • Lifetime LTC rider
  • Less restrictive underwriting than traditional LTC
  • 100% Return of Premium available on many of the product offerings

Deciding what resource will fund the plan often determines the best solution. The portfolios of various hybrid and traditional LTC carriers have been developed to leverage the benefits while minimizing taxes. 

How To Get Started

Download our LTC Case Development Worksheet  and determine what is important to each client.  With help from the SMS LTC team, you don’t need to be an LTC expert to be professional. We can help you research the best solutions and train you on how to present this to clients in a professional manner.

Want to learn more? Visit the SMS LTC video library to discover solutions and learn how to position LTC with your clients.