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#34 - The Good, the Bad, and the Truth About Paying for Long-Term Care: Part 1

Eric Blake: Welcome to another episode of the Simply Retirement Podcast. I'm your host, Eric Blake, practicing retirement planner with over 25 years of experience and the founder of Blake Wealth Management. On this show, our goal is to provide education, resources, and support to empower women to live the retirement you deserve, whether you're single by choice, divorced, widowed, or if you're just simply ready to take control of your financial future. This show is for you to listen to past episodes, ask a question, even suggest a topic for the show. You can go to www.thesimplyretirementpodcast.com. We're also available on YouTube at the Simply Retirement Podcast. Now back on episode 11, we were joined by Dina Mabry to talk about navigating long-term care. We've also had several different shows about different episodes about long-term care, whether it be home care, hospice versus palliative care, finding the right senior living options, and we're going to share those episode resources in the summary of this episode.

But today I want to focus specifically on long-term care insurance, traditional long-term care insurance, the good, the bad, and the truth about long-term care. Our guest today has almost 45 years of experience as a professional serving seniors. Nancy Ditman has done everything from funeral services to running nursing homes and retirement communities, everything in between. But over the last 20 plus years, she has turned her attention to helping individuals and families plan for and fund long-term care. Nancy not only has directly advised clients on long-term care solutions, she is also a core instructor of these certified long-term care designation, and this is a designation that specifically for financial professionals to help them grow their businesses through long-term care planning, not just selling products. She is known as a national specialist and educator in the long-term care industry. She's also a former instructor for the CSA, which is the certified Senior Advisor designation. So with the bar set, very high with that introduction. Nancy Dykeman, welcome to the Simply Retirement Podcast.

Nancy Dykeman: Thank you, Eric. Gosh, it's good to see you and good to be with you. This is really the topic for me. I believe so much in planning ahead and we plan ahead for every big event. We plan ahead for college, we plan ahead for marriage, we plan ahead for kids, for families. We plan ahead for the future, but we don't think something's going to happen to us that might be bad enough that we need to have some money to pay for care, but it's happening. I remember 20 years ago saying, when is this boomer thing going to hit with insurance and with funding? Because people aren't getting ready and they still aren't. Women aren't, men aren't. We avoid this topic sometimes, and now I realize when I go to a cocktail party and people say, how are your kids? The next thing they say is, well, my kids are great. They're in college. They're at, oh, but I'm taking care of mom.

Nancy Dykeman: It changes. If you start listening, you'll see that people are talking about it in a social setting saying, I don't know what to do. So to me, planning ahead is a gift to your family.

Eric Blake: Well, I think that's one of the things as a practice, we focus on retirement planning for women over 55 and there's always the conversations about, well, what do I do about social security and taxes and investing and all these things? And all those things are important, but there's that variable that so many women face when they're planning for their own retirement of, Hey, I've got to also make sure that I am there for my parents, or they still may be children in the house. Who knows? But that's a situation that can really derail your retirement when you've got to turn your focus on your family, your parents who are trying to deal with care, and what do you do about that? Sometimes obviously women have to leave the workforce altogether earlier than what they planned. So I think it is definitely a challenge that has to be, it has to be planned for.

You've got to make sure we're headed in the right direction, and I know you're a great resource to help us with that. So that's why I wanted to have you on, and you and I have gone back and forth for the last probably what, three months or so getting ready for this. But I would like to you if you could, I know part of your personal story is part of your why and why you like doing this and why you got into this. So if you wouldn't mind just sharing more about your background, your family story, and what drives you.

Nancy Dykeman: Well, when I went to college to teach lower elementary education and then switched to business, I thought, what am I going to do here? And I married into a funeral service company. My husband and his father owned a large company in northeast Iowa, and we ended up with seven locations and we were expanding the company and I thought, I'm doing pre-need planning. A lot of people have prepaid their funerals to help protect their family from having to do that. Well, I was doing that and doing new future development of the company, and we sold the company to our staff, and then I became a nursing home administrator and all of a sudden with people walking in the luxury retirement communities going, well, what if I need care? Can I stay in my apartment? Can I stay in my little cottage? So we were planning again and I thought, I need to fund this.

After 15 years of taking care of people and then taking care of my parents and my family, I thought I have to help people stay out of the nursing home. Most of us will never go there. It's just not unless we're spending out our money to go on to the state funded Medicaid program, which is the last resort. So if I can keep people out of the nursing home and give them money of their own to plan with or through insurance or an annuity, whatever it is, let them make the choices. And that's been a very big part of what I do. So I switched from administrating and providing care, and I learned a lot about what people really need. And it isn't medical care. It's day-to-day care from a spouse or family. So most people stay at home. So how do you pay for five to $10,000 a month for a few hours a day of a home care worker if you don't have a plan in mind?

So going from funeral service to long-term care administration and then into the funding side of it, and I help consumers as well as financial advisors figure this out and talk about it. It's really about a conversation, Eric, a conversation with your children, a conversation with your spouse. It may not be comfortable, but it helps you to say where I want to be and who I want with me and what the heck is going to pay for it. If you don't talk about it, all of a sudden you have a chaotic event of a bad health diagnosis or you've had a bad fall or an accident and you have no plan, nobody knows what you want, so talk about it. I always say Thanksgiving is a good time around the table, and yet I'll have people say, well, I don't want to talk about this at Thanksgiving. If you don't talk about it, then it is just, Hey guys, let me give you an example. My neighbor fell down, he's had six surgeries, his wife's taking care of him, she's failing. What if that happened to me? Who's going to step up? And nobody will raise their hand. They just sit there at the table and eat their cake or their pie. But it is hard on families and it's hard on the caregiver. So we need help and we need money to pay for that help.

Eric Blake: Well, that's what they say I think. I guess it's hard to really define. We know that over the next 20 years we've got more baby boomers turning retirement age and retiring than ever. It's kind of the old cliche of the good news is people are living longer. The bad news is people are living longer. So is there a way, can you kind of define what that problem is? And it may be hard to really put a true definition on it, but as we look over the next 20 years, what do you feel like is the problem or the definition of the problem we're going to see as people are getting older and needing more type of care?

Nancy Dykeman: Giving care at home is almost harder than having someone go to a facility, but placing somebody in a facility is difficult to do enough. To me, having been in funeral service, I think ongoing care for three, four years of a spouse or a child or an adult is harder than a death because just doesn't end and there's no resolve. And so what we try to do with funding options is keep the chaos down and turn it into calmness for the kids because it's going to be the alpha daughter is going to step up and say, even though I don't want to take of you, mom, I will take care of you. But mom's already has a plan and it's a roadmap, and that's important to me. So protecting families from caregiving full-time is my goal. I've been there. I'm here now. My husband needs care right now, and he has since his covid booster caused him to have two heart cardiac arrests, so his heart stopped.

So he's weak. He's home, home all the time, and I can't work. I can't have a life. My grandchildren are next door. I can't hardly see them because he needs so much care and I have his policy, his long-term care insurance policy we bought 25 years ago is paying every expense. I don't know where I'd find that money, Eric. I don't know where it would come from. Where could it come from, from your own income for five to 10,000 a month just to stay at home? And it's taking a toll on my health. It's taking a toll on my daughter next door. I don't ask her to provide help for her dad, but she's always on duty for an emergency. So it isn't just an elderly issue. It can happen to anybody at any age. And I think that's the reality is that as these boomers are getting older, and I'm a boomer is realizing that in our sixties we had a lot of energy in our seventies, we don't have as much energy in our eighties. We don't have our nanny energy. But I talked to a woman yesterday and her dad is 103 in her mother's 90, who knew we were going to live this long and the longer we live and frankly the better shape we're in, so we're going to live longer and probably need care from somebody. So my goal is to protect families from having to go through what I've gone through with caregiving.

Eric Blake: Well, can you talk about that a little bit? Thinking about actually when we thinking about care, the first thing we always think about is it's an injury, it's a sickness, something along those lines. But again, as we're living longer, it potentially becomes the cognitive issue that becomes more of a, or has the chance of becoming more of a challenge as we live older.

Nancy Dykeman: Being a senior doesn't mean you will get Alzheimer's, but being a senior does mean that you will have some memory challenges. That is not necessarily going to happen to everyone, but people over 85 have some deficiency in memory and maybe it's choice, maybe they just don't want to remember some things, but if it isn't choice, it's probably going to be just a change in your system, in your mind. But taking care of someone who might wander, who might fall, who can't make good choices, good ideas to share with you, it's exhausting. And so you have to have some help. And especially at home, we're finding that people who have memory loss had it probably 10 years ago and the family just didn't. They just said, oh, dad just can't quite remember. But now he's to the point where he can't remember them. Well, it starts a long time ago. Regular long-term care or extended care as we call it, because it's extended healthcare beyond your medical care and Medicare, they don't pay for this. So when you talk about long-term care for memory loss, it could be a long time that somebody had gotten care from family and nobody reimbursed them, and it takes a toll on that family member who's the primary caregiver.

Eric Blake: Well, let's talk about that. That was actually a great point as we were preparing for the episode is you actually, and honestly, I don't think about it in these terms a lot myself, but I think it is a great point of helping people understand there is a difference between long-term care and extended care. Can you just give a breakdown of what those two different issues are?

Nancy Dykeman: It's perception, long-term care. When we talk about long-term care, all we had until the early nineties was nursing homes. Then we added a wing and I was an administrator. Then we added a wing and called it assisted living, and then we started to recognize home care in the mid nineties. So it was the only thing, and so when I talk and I speak about long-term care, people instantly think of an old guy in a wheelchair or a woman in a wheelchair by the front desk. That's not what we're talking about because most people don't go to that level. We're talking about an accident, an onset of an illness, several surgeries in a row, and you need help, substantial assistance for more than 90 days for a physical reason because you can't take care of yourself and do your daily skills or a mental reason. You're just not safe to be alone anymore.

That's a simple definition, but the more we say long-term care, people think it's not going to happen to me that won't let it happen to me, especially men because they're the hunters, gatherers and providers. They have a hard time with thinking, I can't picture myself out of the picture. Women, we get it. We've been caregiving for 40, 50, 60 years, depends on how old we are. We've been caring for something, even if it's a dog or cat, but that's different between men and women. And so why is this a woman's issue? It's a women's issue because we live longer and we need care longer, and we are caregivers from the heart. So how do we protect ourselves and our kids, our families, from having to be the kind of caregiver that we would do for our parents? I did it for my mom for 20 years, but it blew my sister and I apart.

We have not spoken, and it's so sad. I'm not proud of that. But she had issues. She's a healthcare provider. I was a healthcare provider, and it's hard to agree on not only the care that my parents received, but the money to pay for it, and it blows families up. You don't want your children to be blown up over the money when you could have done a plan that would be the roadmap for them to follow. So I think there is a difference between extended care and long-term care. However, it's the same thing. It's how we talk about it.

Eric Blake: Well, that's one of the things I feel like personally, if I'm going to tell women that we focus on retirement planning for women, I think the way we phrase things as the advisor as we talk about things is critical. So if just taking your guidance that we really should be talking and focusing more on that extended care term, not just long-term care because of the perception if nothing else.

Nancy Dykeman: Well, and you don't want to be talking about people being sick because as you get older, it's more frailty than anything. It's terms that we used to use when we only had one place to go, which was a nursing home. Now you have somebody who has a major car accident, several surgeries, rehab, all paid for by their health insurance or Medicare as they get older, but they don't have any money to pay for what's going on beyond that. That's why we call it extended care is really one of my instructors at CLTC. He calls it retirement disability income.

Eric Blake: Nice. I like that

Nancy Dykeman: Because when you're working, you have income. If you can't work, well, this is, you can't take care of yourself. And mostly it happens in retirement, but it could happen earlier. But if it happens in retirement, it's a boost in your income. Like disability, income insurance, it's tax free and the benefits are tax free, but where else would you get that five to 10,000 a month and it's going to double 10 to 20,000 a month in the next 20 years is the cost of care, Eric, if the cost of care was not rising three to 4% a year, would we need insurance? We wouldn't.

Eric Blake: You wouldn't think so because ideally, if you got investments, you got social security, you got all these other things, more than likely it would help you keep up with that. But

Nancy Dykeman: That's

Eric Blake: Not the change.

Nancy Dykeman: I was a nursing home administrator in the mid nineties. My most expensive bed private room was 1900 a month. It's 9,000 a month, that same bed. So we can't stop that train going down the track. What we need to do is hedge against that and not blow up our retirement and blowing up our retirement blows up our legacy to our children. That's where they get into fights about, well, wait a minute. How much of mom's money is going into her care when she could have had insurance? I'm going to get insurance because I don't want my kids to have to do that. So now the boomers are finally, it's finally rolling over into their children saying, I'm not doing that. I don't want my kids to do what I just did for mom.

Eric Blake: Well, I mean, as you know, the best stories come from personal stories and just thinking about exactly what you just said, my family is going through something very similar to that. My grandmother, she's still at her home, but she has 24 7 care, and these conversations come up. Obviously it's not inexpensive, and you start thinking about how you got to think long ahead at this point because she doesn't have insurance.

Nancy Dykeman: It's 35, $40 an hour,

Eric Blake: 24 hours. Now you got to start thinking, you got to be creative. It becomes more, less than a science and more of an art of, Hey, how are we going to do this? Where's the money going to come from? She's 89, and we are so fortunate. We actually just took a family picture with my granddaughter, our first granddaughter who's now seven months old, a five generation picture. We had five generations in that picture where she's 89 at the time. My granddaughter was six months and we want her to live. It would be great if she lives until my granddaughter can sit in her lap and those types of things, but you just don't know. But as long as she's with us and as long as we want her to be there, that also means we've got to come up with funding strategies and figure out what do we sell? What do we do here?

Nancy Dykeman: That's a great story too, Eric, because I met a sixth generation woman who had just had her baby. So that was a seven generation grandma is 104, her son is 85, his daughter is 65. They're all on Medicare, some are on Medicaid. The federal program state programs can't support all the people that have lived beyond 65. We weren't supposed to live past 65. So then her son is 45, he's on Medicaid, his daughter's 25 and just had a baby. I mean, that's unbelievable. Who thought that would ever happen? That has a lot to do with why we have to have a plan in mind because the people who don't plan are going to go on to those federal and state programs, and there's not any money there. There's just no additional money to go there.

Eric Blake: I say the only way it happens is you got to start early and you got to live long. That's the way you have those that many generations in one family.

Nancy Dykeman: Well, and I always say when I'm out at a hotel teaching at a conference or teaching consumers, how many of you went to the gym this morning? Four or five people. Oh, good for you. All right. Now you might want to think about that because the more you work out and the longer you are living, go have a cookie. You go have a donut because do you want to live to be 104? My number is 103. And after I talked to that woman yesterday, I thought it's possible. It's possible, but I don't know if I'll feel like I do today.

Eric Blake: Well, my grandmother's, her thing is jalapeno cheddar biscuits from Whataburger. So when we go to see her, she gets one every day. That's what we get for breakfast. I'm like, what's the worst going to happen?

Nancy Dykeman: Exactly. Right, right. Well, these are good questions because I get 'em every day is why do I need this kind of planning? It isn't all about the money, Eric. It's about the family. What is taking care of somebody you love full-time going to do to you? And if your health fails, who's going to step up?

Eric Blake: Well, let's talk about one other thing, because the financial services industry, there's a lot of weaknesses we'll call it. But you brought up one of those in the questionnaire that you helped me just in preparing for this is why do financial advisors not talk about long-term care? Now, these are not the people you work with, I am sure.

Nancy Dykeman: Oh, they are.

Eric Blake: So what do you feel like is the issue there? Why do financial advisors not talk about this with their clients?

Nancy Dykeman: If they would simply talk about, let's set aside 200 to 300,000 for you, Fred and you, Marge, and out of your portfolio, and they're going, what's that for? Well, that's in case you need care. Oh, we need that kind of care. Oh, they don't want to spend their own money to do it. And yet a lot of financial advisors I work with aren't insurance licensed, so they come to us at LTCI partners to do the long-term care planning with their clients. But my goal is for financial advisors to bring it up because us as clients, we don't ask our financial advisors about, is there one more thing that we haven't done? Is there anything else we haven't done? And I always ask the financial advisor, what have you set aside in their portfolio to pay for extended care? And they'll always say, nothing. We haven't done that.

We haven't had that conversation. Why didn't you bring it up? Well, I'm not comfortable with it and I don't sell insurance. Okay, well, refer to us. We're brokers. We're the largest long-term care brokers in the country, so come to us and we'll help you design a plan for your client. Well, then he goes, well, they could self-pay, invest that money and let them self-pay because they don't think this is going to happen. Chances are out of a couple, one of 'em is going to need care. And then the other one is exhausted and probably a woman need care in the end of her life. She took care of him first. But I want 'em to just bring it up on their reviews. I think a lot of your listeners have a quarterly or semi-annual or annual review with their financial advisor ask, what have we set aside for any extended care?

And you know what he's going to say, well, not really anything. You know what, Eric? It's all of it. They've set aside. They've exposed their entire retirement, their income and assets and their legacy to their children, to the needing maybe a million dollars for the cost of care 20 years from now. Why wouldn't a financial advisor think it was their responsibility to bring it up? And I'll have 'em in my class say, what do I say? What's your plan for extended care? That's all you need to do is ask your clients, every one of them, go back to 'em and ask every one of 'em, what's your plan? Because we haven't planned for that yet. And we need to because the longer you live, the more chance you have, you're going to need care from each other.

Eric Blake: Well, and that's the question I asked, so I phrased it just a little bit differently, but it is something that we have the conversation about, and I just say, what is your strategy? Do you have a strategy? If you don't, there's one there for you. It's kind of like estate plan. If you don't do a will, the state has a will for you with long-term care. There's a plan there. It may not, it's probably not the plan you want, but there's one there for you. There's a strategy, and it may require you spending every single dollar. That's what people's biggest fear, that people fear that than running out of money more than almost anything, public speaking, any of those fear based, running out of money is one of those fears, the top five. But if you don't have a plan, you don't have a strategy, that's what very good chance, that's what's going to happen.

Nancy Dykeman: Well, and how do your kids feel about you? Are they planning on any inheritance from you, any kind of legacy planning? Where are they all and how are they going to get together and how are they going to do this together? And I just think it is a responsibility of financial advisors to ask those questions because you're leaving yourself wide open for a son or a daughter to say, where's my dad's plan? He's spending a hundred, $200,000 a year on his care that we never planned on.

Eric Blake: Well, and it's this big thing in our side of things. I dunno how many financial advisor conversations you see, but whether it's a conference or it's networking events or whatever it is, this whole thing about fiduciary, are you a fiduciary? And using that as a selling point of, yes, I'm a fiduciary advisor, but how can you call yourself a fiduciary if you're not having those conversations? How can you really make the argument you're doing what's in the best interest of your client if you're not having the tough conversations in the first place?

Nancy Dykeman: Well, they seem to plan for everything else. And I mean, I have friends that are financial advisors. I'm not dissing them in any way. I'm just saying, you plan for everything else and you leave this out. It could be the biggest rock to hit that retirement that you could ever see. And I watched it with my parents. My dad died when he had 5,000 left. He sold life insurance with a huge company for 32 years as a second career. And he came down after taking care of mom for 20 years and all of her expenses, and she died. He lived five more years, and he came down to his last month. He had $5,000 left to pay the assisted living, and he died.

Eric Blake: Oh, wow.

Nancy Dykeman: We would've been looking at Medicaid for him, and who would've guessed that he was a life insurance salesman that put four kids through college? What happened to their money? We spent it all on mom. We didn't ever intend to do that. And that's where my sister and I, my sister goes, but I want some of that money. Let's not spend it on that. Let's put dad on Medicaid. Now, that didn't go with me. I said, we want to pay for him as long as we can. It's hard. There's a lot of hard decisions to make for someone you love.

Eric Blake: Well, Nancy, this has been a great conversation so far. I'd say that's a really good place to put a stop on things, and let's continue in the next episode with second in our series of talking about long-term care.

Nancy Dykeman: Okay, that sounds good then. Thank you so much.

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