Quote:
Originally Posted by rickroll
parents want to put a chunk of their retirement fund into annuities because they don't want to have to worry about their finances
they have regular retirement account, max social security (both waited as long as possible to let it kick in for higher monthly payments), they own multiple properties which they could rent or sell if they needed money, they also have full health insurance that covers everything with no caps and is for the rest of their lives (job benefits are +ev yo) so they aren't going to face medical debt and this is more of a hedge of markets and real estate both crashing in their lifetimes - which i think is kinda silly
main issue is they are looking at it in terms of "at least one of us needs to live x years in order to recoup the principal and then it's like free money"
I explain that if they invested the principal and then after x years it was the same amount and didn't go up that'd be a terrible investment
so i'm trying to show them what they would have by not annuitizing, created several spreadsheets showing the difference, that they'd need to live x amount of years in order to break even and y in order for the annuity to be better than not doing it
but they keep on going back to the "guaranteed income" aspect, which is puzzling because frankly if we took the amount they wanted to annuitize and flushed it down the toilet they'd still be just fine
thinking of giving up this quixotic fight against losing ev but wondering if anyone else itt had to deal with similar issues with their olds and how they went about it
they are in their early 70s, both think they'll live into their 90s obv
Since America doesn't have a good system for long-term care please do yourself a favor and research asset protection and how to protect their home value from Medicaid recouping nursing home costs, and take them to an estate planning and asset protection attorney if they don't believe you. You could lose your entire inheritance to the cost of assisted living and nursing homes. Even if an elderly person is healthy now, all is takes is one fall to break a hip and then need a nursing home.
Medicaid does not pay for assisted living at all, and it only pays for a nursing home if the person has less than $2k in the bank. Whatever income your parent has goes to the nursing home except for about $20 per month and then Medicaid pays the rest of the nursing home bill each month. Then Medicaid recoups the nursing home costs from the sale of the home either before or after death.
Medicaid has a five-year look-back period so if your parents give everything to you now and then need a nursing home within five years, Medicaid treats it as if it was never gifted to you. I think some people use irrevocable trusts too.
Sometimes people hold back some money so they can begin to pay the nursing home as a private pay patient. Some places let patients stay as Medicaid patients when their private pay money runs out and other places kick them out. Some nursing homes do not accept Medicaid. Other nursing homes have some beds reserved for Medicaid patients (that they get paid around $8k-$10k per month for) and other beds for private pay patients (that they charge around $10k-$12k + per month). So if the nursing home you want doesn't have an open Medicaid bed then you can't get in unless you're private pay.
Long term care insurance is expensive and doesn't pay out very much so that's not a great option either.
This is also something you might consider in your search for a wife. If she can help you take care of your parents later that can save you hundreds of thousands of dollars in assisted living costs.
Also please research how to avoid probate and why everything should be in a living trust (and not a will, even though lawyers will tell you a will because they make more money from probate) so you don't lose a year and have to pay high probate costs. You can write your own trust using software or books if you don't want to pay a lawyer.