Veterans Group Life Insurance (VGLI) – What You Need To Know (2018)

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Veterans Group Life Insurance is very important to understand. When you are in the service you have SGLI. SGLI is nice. It’s subsidized so it’s not very expensive.

But when you separate from service you have 240 days from your last day to get VGLI without having to go through underwriting.

Make sure you take advantage of that 240 day window. If you don’t, and you try to get underwritten later, you may not be approved.

Without question, get VGLI when you separate. However, after you’ve secured coverage try to get a private insurance policy. Private policies may be a lot more affordable.

But do NOT drop your VGLI until you have secured a replacement!!!

Universal Life Insurance – What You Need To Know

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Universal Life Insurance is NOT the same as Whole Life Insurance, please be advised.

Two completely different things. In my experience, very few Universal Life (UL) policies work as sold. I’ve seen many about to lapse to unsuspecting owners, always at the most inopportune time.

This doesn’t happen with Whole Life.

If you have a Universal Lfe policy, PLEASE, get an INFORCE ILLUSTRATION. This is how you analyze the strength of the policy going forward.

The annual statement you receive does NOT do this. It only gives you a brief review of what happened in the previous 12 months. We need to see what the projections are going forward.

Get the InForce Illustration every few years. Please. I’m begging you.

Continuing Care Retirement Community – Magnolia Trace, Alabama

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Continuing Care Retirement Communities can be found in every area of the United States.

In this video we analyze the Magnolia Trace CCRC in Huntsville, Alabama.

There are five different options plus a one year “look in” of sorts where you can try the community out without putting down an entrance fee.

Magnolia Trace Pricing

I’ll share with you the current pricing for their Royale I and II. THis is a 1572 sq. foot 2 bedroom unit with a den. We’re also assuming a couple is moving in. The monthly fee is includes a lot of utilities with one chef prepared meal a day. (You need to see what else comes with the fee or is missing).

Life Care Premium: Entrance fee $315,000 – $340,000 monthly fee $4670

Asset Preservation: $250,000 – $275,000 / $5250

Income Preservation $ 365,000 – $400,000 / $4360

Life Care 50 (you get a 50% refund to your estate)
$440,000 – $475,000 / $5100

Now the one I like best is the Modified Life Care where if you have.

 

Social Security For Divorcees – Part 2

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If there is any one thing you can take away from my Youtube channel is that if you’re a divorcee, when you receive SPOUSAL benefits that has NO affect, none whatsoever, on your ex’s benefit.

Please do not forget this. Your benefits are not tied to your ex’s. Which mean that any divorce decree you signed is completely irrelevant. That letter you signed carries NO weight. Nothing.

No judge is going to say “Oh, sorry Ms. smith, you signed this letter that says you won’t get your benefits.” Nope, not going to happen.

If anything, you may be able to hold out for MORE of the total assets in the division because YOU are going to receive less benefits.

Think about it like this. Your hub has $500,000 in his 401k. You have 0. You have no Social Security benefits on your own record because you didn’t work. So, your benefit will be solely the spousal benefit, which is half of his.

The judge is going to split the 401k in half, 50/50 under the QDRO rule.

So maybe you should throw it out to the judge that because you did the work at home and made no income you essentially sacrificed your own Social Security benefits and thus should be given more of the 401k than a 50/50 split because you’re only getting $1400 when he is getting $2800.

I have NO CLUE if that would hold any water. But certainly something to think about.

Either way, just remember, your benefit will not affect your ex’s. Do not fall for the idea that a divorce decree will be held against you. It won’t.

Continuing Care Retirement Community – CCRC Guide Review

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Continuing Care Retirement Communities are gaining market share as more baby boomers age.

In this episode I go over a guide from the CA Advocates For Nursing Home Reform. While the guide is nearly 10 years old and I’m not familiar with this specific organization, it is definitely worth your time to read, especially if you are looking at a CCRC.

CCRCs Similar to Long Term Care Insurance

CCRC’s act like a long term care insurance policy. They take away your concern of wondering how you’ll get care if something happens to you or your spouse.

Entrance Fee

The entrance fee is generally based on the local community average housing costs. So, keep that in mind. If you are in Alabama and looking to sell your house to go to a CCRC in Los Angeles, you’re probably going to need to come up with cash even after selling your home.

Monthly Fee

The monthly fees can increase, and most likely will, each year. You’ve got to make sure you have the ability to pay for the increases. Your Cost of Living Adjustments from Social Security won’t cover those increases in the least.

Lifestyle Adjustment

One thing I thought was interesting in this article was it focused on the lifestyle adjustments one needs to make. Think about it, your whole life you lived in a neighborhood of varying people; Retirees, young families, single couples etc.

Now you go into a CCRC and you’re going to be with people your age exclusively. That may be quite an adjustment especially if you’re in an apartment. Just something to think about.

CCRCs mainly are non-profits

Most CCRC’s are non-profit. Don’t think that means they’re any more “righteous” than for-profit organizations. You just have to look deeper. Some sponsoring organizations offer their name only, but don’t do anything on the day to day management.

Lots of interesting information in this guide for sure. Link is below.

http://www.canhr.org/publications/PDF…

Continuing Care Retirement Community – Deep Dive Into Financial Statement of VMRC

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Continuing Care Retirement Communities (CCRC) are non-profit. Many of them are affiliated with a church denomination of some sort.

In this episode we look at the Virginia Mennonite Retirement Community (VMRC) in Harrisonburg, VA.

Virginia Mennonite Retirement Community

Why VMRC? Because when I lived in the Shenandoah Valley, I had clients here. And would find myself at VMRC a few times a month, doing seminars, meeting clients, attending various events. It’s a good place run by good people.

However, it takes more than just “good people” for me to feel comfortable dropping hundreds of thousands of dollars, essentially all my life savings, at some place. So, I wanted to analyze the books they provide for the public to see.

A couple things jumped out at me that you should be aware of if you are considering your own CCRC for you or your folks.

Pay Your Own Utilities At The Independent Living Cottages

1. at VMRC at least, the independent living cottages do NOT have utilities provided for in their monthly fee. The apartments do. But not the homes. I do not know if that is typical. But it is important to understand because the monthly fees will be much lower for the cottages most likely simply because you’re paying those expenses on your own. If you’re going to have a hard time meeting the expense of the cottage it’s only going to get that much worse when you go to the apartments.

Monthly Fees Go Up Each Year – Depends on Amenities

2. The monthly fees go up each year and the amount is not insignificant.

For the cottage living space the monthly fees increase on average $25 a month each year.

For 1 apartment that has a lower monthly meal plan cost, the monthly fees go up on average $45 a month each year.

For the other apartment, with a higher meal plan allowance, the monthly fees go up $65 a month each year.

So, you’ve got to weigh those increases with your own budgeting.

Refunds on Entrance Fees

3. Be wary of the “refunds”.

Now, in no way am I saying the refunds these folks offer are unscrupulous or anything. What I am saying is that interest is NOT earned on your refunded amount.

So, a refund of $250,000 or so today won’t be nearly the same value in 15 years. Just remember that.

What VMRC does, as do most CCRC’s I imagine, is offer a normal fee based on the fair market value of the unit today. Say that unit is assessed at $300k. That’s your entrance fee.

With this you will get a refund of 60% after you’ve been there for 5 years. (I do not know if this goes to your heirs and/or estate. So, you’d need to check that).

Discount On Entrance Fee, Pay Premium For Higher Refund or Pay Fair Market For 60% Refund?

However, you could “buy” a higher refund option where you pay 150% of the FMV of the unit, or in this case, $450,000. Then you would get a refund of 90% after 5 years.

Lastly, you can pay only 75% of the FMV and get NO REFUND after 5 years. So it would cost you $225,000 today for an entrance fee but when 60 months is up, they owe you nothing.

I’ll do another video on whether or not it makes financial sense to take the refund option.

No Escrow Account For Refund Obligations

Now, VMRC states, very explicitly, that there is no escrow account for your refundable assets. If you get a refund it comes out of operating expenses or from selling a unit to a new entrant.

That concerns me to some degree. But looking at their books they have MORE than enough in marketable securities to cover ALL the refundable liabilities they have.

Thus, I am not concerned much at all.

Marketable Securities Much Larger Than Refund Obligations

However, I would check their Statement of Additional Information EACH YEAR to ensure that their marketable security balances are keeping up with the refund obligations.

If not, and you need a refund, from where does it come???

Anyway, all in all, this was a very informative exercise for me. I hope you find it helpful.

https://www.scc.virginia.gov/boi/cons/sr/ccrc/c0075.pdf

 

 

Term Life Insurance – Why EVERYONE Under 50 Needs It

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Term life insurance OUTSIDE OF YOUR EMPLOYER is so important. I’m going to share with you why you need some.

I’ll also share with you my near disaster when I left my job with no life insurance.

Thankfully, it worked out, but man, it made me nervous. Don’t let that happen to you!

 

$500k 30 Year Term Life Insurance

Here’s a strategy for those in their 20s, even if you’re not married. Go get a $500k 30 year term policy. That sucker won’t cost you much at all, especially if you’re in good health. Then you don’t EVER let it expire. That’s what I foolishly did. And it nearly cost m family dearly.

Once you have that policy locked in, you don’t have to worry about life insurance ever again. Well, unless you have more than $500k of debt.

If you are in your 30s and just starting out. You may think you don’t need much life insurance either. After all, you’re young right??? WRONG!

 

Get a Private Term Life Insurance Policy

Get a 20 or 30 year term life policy, again for $500k to have that locked in too. DO NOT rely on your employer.

Do you know how employer life insurance works? First AD&D is not true life insurance. Whatever AD&D you have, simply disregard.

You are underwritten through your employer as standard rate, which is similar to if you smoke. Thus if you are in good health you are paying much more than you would for a policy you get on your own.

Secondly, if your employer drops your salary for whatever reason and your insurance is say 5 times salary, guess what happened to your insurance? It drops too!

 

Employer Life Insurance May Be Portable But It Isn’t Cheap

Lastly, if you get laid off, you can take your insurance with you but it’s crazy expensive. Too expensive for most people who just got laid off to afford.

Avoid all this by simply going and getting your own policy when you’re young and in good health. And get MORE than you think you need. It’s too cheap not too. Just do it!

Continuing Care Retirement Community (CCRC) – What You Need To Know

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Continuing Care Retirement Communities number almost 2000 now. Hard to believe because this is an industry that is relatively new in the world of humanity.

But I’m a big fan of them. They offer lots of amenities, lots of services, and the comfort that once you’re in, you can’t be put out…at least most of them do.

However, there are some things you need to know and we go over those in this episode.

Questions To Ask

 

How much does it cost to get in?

And how much can you get back if you decide to leave? Or if you die, is there any refund for your heirs?

 What’s the monthly fee and what does that cover?

Food? Lawn care?etc.

How often has the monthly fee increased over the past 10 years?

What are projections for increases? What if increases are more than you can afford to pay?

What are the finances of the facility?

Do they have their books audited? What do the auditors say? (remember folks, their refund guarantees are only as good as their financial situation).

What Is The Occupancy Rate?

High occupancy is not a good thing unless there is an explicit reason for that.

How Long Is The Wait List

A high wait list is a good sign. The more people want to get in than they can accommodate

Can you tour the facilities?

To include the varying degrees of care being provided?

 

Okay, there are a million things to ask. This is just for starters. I’d absolutely ask around to current residents as well as the children of residents too, if at all possible.

See some younger guy sitting around in the waiting lobby, maybe strike up a conversation with him as he’s probably waiting for his mom. See how he feels about the place. He’l provide an honest answer. Are they taking good care of mom?

A couple links below for you to do more research. I’m trying to interview a couple folks for my podcast too. I’ll let you know when i get that going.

Lanier Estates Continuing Care Retirement Community

https://www.cnbc.com/2018/07/05/do-yo…

https://www.mylifesite.net/wp-content…

TSP Loan? Yes! And Here Is Why…

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Should you borrow from your TSP? Yes! If you’re going to pay off other debt.

In this episode I walk you through how you calculate a TSP loan and when and why you should do it.

I’m working with a woman now, we’ll call her Sara, who has $30k outstanding on a Home Equity Loan and $20k outstanding on a car loan.

The monthly payments total around $850 or so.

Borrowing $50k from her TSP will pay both loans off AND the interest she was before paying to the bank will go to her. Her interest is based on the yield of the G Fund at the time she took the loan. Currently, that yield was 2.857% (7/20/2018). Weird because when I look at the yield of the 10 year Treasury Bond it’s almost identical! Crazy that. (No really, just go back to my G Fund video where I discuss the correlation between the G Fund and the 10 Year Treasury).

Even better for Sara though is that in 5 years her TSP loan will be completely paid off, yet she would still have had her Home Equity Loan balance.

In this case, she’ll free up nearly $900 a month. And have no debt. And that couple thousand of interest will have gone to her account, not the banks.

“But Josh, she can deduct the interest on her home equity loan!”
“Really…what if she doesn’t itemize. Oh by the way, even if she were deducting it that interest is costing her real money. Interest on her TSP loan is going to her.”

“But Josh, the markets do better than the loan she is paying herself. So, to take the money out of her TSP will hurt her return!”

“With that logic, you should have never have any equity in your home. You should be fully leveraged at all times.”

Arguments in FAVOR of Retirement Plan Loans

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In this video I go over some of the objections about retirement plan loans.

These are the big ones:

* Money you borrow will be out of the market and thus not growing
* Why pay off a mortgage or equity line debt when that interest is tax deductible?
* What if I leave my employer before the loan is paid off?
* I’m paying the loan back with after tax money, only to have it taxed later when I take it out.

Retirement Plan Loans

Love to hear your comments as these are 4 main reasons I hear NOT to borrow against your 401k.

But while they all have SOME validiity, not to the extend that it seems EVERYONE is always saying “DON”T EVER BORROW AGAINST YOUR 401K,! ONLY FOOLS DO THAT!”

I disagree.

Here’s another post on this topic.