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Welcome to How to Retire on Time, a show that answers your questions about all things retirement, including income, taxes, Social Security, healthcare, and more. This show is an extension of the book How to Retire on Time, which you can grab today on Amazon or by going to www.howtoretireontime.com.
This show is intended for those within 10 years of their target retirement date or for those are are currently retired and are concerned about their ability to stay retired.
Welcome to How to Retire On Time, the show that answers your questions about all things retirement, including income, taxes, Social Security, health care, and more. This show is an extension of the book, How to Retire On Time, which you can grab today digitally for free on retireontime.com, or you can go to Amazon and buy a paper copy. My name is Mike Decker. I'm the author of the book, How to Retire On Time, but I'm also a licensed financial adviser, insurance agent, and tax preparer, which means when it comes to financial topics, we can talk about it all. Now that said, please remember this is just a show.
Mike:Everything you hear should be considered informational, educational, as in not financial advice. If you want financial advice, you can request your wealth analysis from me and my team today by going to www.yourwealthanalysis.com. With me in the studio today is mister David Franson. David, thanks for being here.
David:Yep. Glad to be here.
Mike:David's gonna
Mike:read your questions, and I will do my best to answer them. You can text your questions in at any time during the week by texting (913) 363-1234. Again, that's (913) 363-1234, or you can email us at hey,Mike@howtoretireontime.com. Let's begin. Hey,
David:Mike. How do you plan for taking care of your parents during your own retirement?
Mike:This is a tough one. Yeah. This is a tough one because most people, I think, love their parents. Most parents did their best. I mean, I think most people try to do their best, whether they did a good job of it or not, it's another story, but all humans are inherently trying to do their best.
Mike:Mhmm. Some of them may have run out of money because they didn't plan appropriately, or they just got hit with health hardships. Some of them have sufficient assets, but they're just not able to take care of themselves and to save money. Maybe they're moving in with you. Maybe you're consolidating houses.
Mike:There there's a lot of things that could happen in these situations. So first and foremost, if you have siblings, make sure that you're having a transparent conversation with everyone. The last thing you wanna do is say, well, I was taking care of mom or I was taking care of dad, and you were taking money out of their estate to pay for things, and it wasn't properly accounted for or disclosed. K? Because the last thing you want is upon the estate.
Mike:Someone says, hey, you were stealing from from mom, and then relationship sour. Happens all the time. Full transparency disclosures are great. And if they don't like your proposed strategy, your proposed bet, you say, no problem. How do you think we should solve this?
David:Yeah. That opens up a
Mike:A conversation.
David:Yeah. Right.
Mike:You're trying to do what is right for the family. What is right for the family is an open discussion. It's collaboration. Contention is when you say, I think this is right. I don't care what anyone else thinks.
Mike:We're gonna do this, and then let the chips fall as they will. That's not what you wanna do. If there are major purchases, if you're using family assets or things like that, you wanna have that kind of transparency and that open conversation. What's expected? The other part too is if you're spending your time on your parents, how are you being compensated?
Mike:I think it's appropriate to be compensated for your time. Now there are some regulations around that, so be very, very careful. Explore this, and you're probably not a nurse. Most people are not nurses. So to qualify your time as a health care expense might not work.
Mike:Probably doesn't qualify. So could you get a certification and qualify for in home care? Could you be compensated as just an assistant? Is the family okay with this? Again, these are the conversations you need to have.
Mike:What you don't want to experience, if you can help it, is that your parents' estate stays intact and is never touched, and you're draining your estate to take care of your parents. Have you seen that happen before? Yep. The expression nice guys finish last because they have no boundaries. That doesn't mean jerks finish first.
Mike:It means kindness is defined, at least how I define it, as unconditionally seeing the good in someone else, but having enough self respect that you know where the line is to be drawn, that you invite them in to participate based on what is right, but you're not getting pushed around. So in these conversations, it's very important to just define things, have that transparency, but just like on the airplanes, which apparently is becoming increasingly more common, if the mask comes down, you put the mask on yourself Yeah. And then you help out those around you. And this isn't just about parents, by the way. I'm gonna kind of peter off into another rabbit hole.
David:Okay.
Mike:You don't pay for your kid's college if it sacrifices your retirement. If you have your affairs in order, and your retirement's taken care of, and you can afford to pay for your kid's college, or you can help grandkids get into school, great. But you take care of yourself first, then you take care of kids or mom or other people second. That is not selfish. That is self preservation.
David:So a difference there, self preservation and selfishness. It's having self respect.
Mike:Oh, yeah. Because when people spend their life constantly saving other people, they never take care of themselves, and they're the ones that have to deal with it. This is a tricky one. Operate with transparency, have open conversations. You don't need to say, hey, mom's got $5,000,000, and that creates, you know, oh, let's not work or save anymore because we're gonna get all this money.
Mike:Mom or dad might spend a lot of it because of, let's say, they've got Alzheimer's, and they need to be admitted to some sort of care that's very expensive, and they're still younger and healthier, and they live a long time. $5,000,000 is probably enough of a cushion, but 500,000 might not be a for long term Alzheimer's with a healthy body.
David:Right. And so do we think since people are living longer, do we think this is gonna be more of a problem in the future? Is it even more of a problem now that kids are having to help take care of their parents in retirement?
Mike:Yes. I am gravely concerned about the impact on the family with our nation's health. Let me explain why. Dementia is on the rise. Alzheimer's is a problem.
Mike:Physical health for a lot of people isn't their priority. Working out, eating well is not a priority. I don't know many people that are looking at the ingredients and understanding what they're actually eating. So when you don't eat well, when you don't understand the nutritional aspect of your retirement, your health care costs can increase and bankrupt you. Your mental abilities can decline at a faster rate.
Mike:So for example, do you know what fat's good for? Your brain. Do you know what fat's not really doing for you? It's not really hurting your gut. Fat is for your brain.
Mike:Fat is for parts of your neurological makeup of your body. Sugar is what makes you fat. But the sugar industry allegedly, as the conspiracy theory says, conspired against us or the world or whatever to preserve itself and its industry and convinced us all that low fat diets were better for us. Well, it's interesting to see that the cognitive decline started around that time frame. Roughly speaking, I'm not a medical professional.
Mike:I'm just pointing out some interesting dots that I've noticed. I tell every one of my clients, look, if you have proper diet and exercise, then there's a good chance that your health care costs will be lower. That's less financial stress on your life. I tell them all to go to functionhealth.com, which by the way, this is not a paid advertisement. I don't know Doctor.
Mike:Mark Heitman. I'd love to meet him one day. Yeah. I don't know him. I don't have any ties to this company.
Mike:I want this to be an honest endorsement, so to speak. I don't know if I can endorse other companies, but I really like them. But I I tell my clients, go to functionhealth.com, pay the $500, whatever it is, and start looking at your your health, get their write up, and start understanding, okay, how do I stay healthy for a long term period of time? Stop eating sugar. Just stop it.
Mike:Sugar leads to dementia. Yeah. That's it.
David:But it tastes so good, Mike. Yeah. I just want it.
Mike:It does. But we can't control the consequences. We can only control our actions. Are there other ways that you can fancy your sweet tooth and still enjoy yourself? Yeah.
Mike:There is. Moderation to all things, but the amount of sugar we eat today and the consequences we're gonna pay is astronomical. And then understanding how to heal the body. Are important things that we are not talked about enough. Yeah.
Mike:This is a financial show. Yeah. We're supposed to talk about taxes and Social Security and all that, but you know what's a problem? Health care. You know what's also a problem?
Mike:Long term care insurance because if you need it, you can't afford it. And if you can't afford it, you don't need it, in my opinion. And it's not investment. It's transferring risk to an insurance company that if you got sick early on in retirement, then it's financially beneficial. But if you play the odds as normally would be there, it might have been better if you just put it in the market or something.
Mike:Now we don't know what the future of the market will be. There's some risk there in the comparative analysis, But all things being equal, insurance is not an investment. You don't get this right to do whatever you want, buy insurance, and think the insurance companies are just gonna pay for everything that you need. Insurance only works when the odds are against you and that you're likely to not get a good return on your investment. They don't function if they're paying out more than they're taking in.
Mike:I think we miss that. Oh, I'll buy long term care insurance, and it's fine. Oh, Medicare is gonna take care of everything, and it's I've got a life insurance policy. I've got this chronic illness rider. Those don't cover everything.
Mike:So you don't get this get out of jail free card with your help. And if you don't take care of it, it can become a significant burden on your family. So your parents made their decisions, help them as best you can, set boundaries, hold civility, be kind to them. They made you. Right?
Mike:They gave you life. Yes. So love them. Right? But love doesn't mean leaving yourself open to abuse.
Mike:Right. Love is understanding that, hey, you might need to end up on Medicaid. Sorry. We'll help you as best we can. Right.
Mike:Love might mean we'll do what we can, but we can't overextend ourselves. We can't go over our skis. And then you start your own path today on living a better diet. Love the book, Good Energy, by doctor Casey Means. Love the book, How Not to Diet, by doctor Gregor.
Mike:Love the book. What is I've got the book right here. Food, What the Heck Should I Cook by doctor Mark Hyman. Love the book, The Vegetable Butcher. My son loves to eat vegetables more than any other food.
Mike:That's sweet. We learn how to cook veggies. Yeah. And they are gourmet. Are easy to cook, and they're tasty.
Mike:What was the question?
David:Yeah. The question is,
Mike:you know
David:Taking care
Mike:of parents.
David:How do you plan for taking care of your parents during your own retirement? And so to wrap this up, could you talk about sort of being proactive in this context versus being reactive?
Mike:Yeah. Proactive is having active conversations with all the siblings, making sure the estate plan is up to date, and that the transfer of money and how it's being spent is appropriately documented. So if you're receiving money for payment, that's one thing. If you're receiving money that they're spending for something else, that's another thing. If you're receiving some of your inheritance early, you need to make sure that documented correctly.
Mike:And that's form seven zero nine of the IRS code because you've got, what, a $12,000,000 exemption. So you can receive part of your inheritance early for some sort of compensation. But if it's compensation, I guess that wouldn't be work with a tax professional on this. Yeah. You can receive inheritance early as well through form seven zero nine.
Mike:So you're gifting the the parent is gifting more of the estate tax under the federal exemption, but this is a very nuanced conversation, and you need to document it correctly. You need to have proper accounting of it all, and you need to make sure that all the siblings are on board of what's happening so that when the parent dies and everything comes out, that you don't ruin relationships. I mean, family is is the most important unit of all. I think the family unit is more important than local charities or schools or any other group, even even your local church. Your family is more important.
Mike:Your family is more important than your extended family. Right? So it's you and your kids and your spouse. And then you've got your family unit with your parents and the cousins and all that. That is the foundation of our society.
Mike:And so if you make a misstep and someone gets greedy and you ruin those relationships, you're paying for that for the rest of your life. It is hard to recover from that. Get these things in order, take care of your health, and have open conversations. Don't shy away from it, because when you shy away from it, that reactive position often ends up poor. That's all the time we've got for the show today.
Mike:If you enjoyed the show, consider subscribing to it wherever you get your podcast. Just search for how to retire on time. Discover if your portfolio is built to weather flat market cycles or if you're missing tax minimization opportunities that you may not even know exist. Explore strategies that may be able to help you lower your overall risk while potentially increasing your overall growth and lifestyle flexibility. This is not your ordinary financial analysis.
Mike:Learn more about Your Wealth Analysis and what it could do for you regardless of your age, asset, or target retirement date, go to www.yourwealthanalysis.com today to learn more and get started.