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Agency ONE

on 8 December 2015

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Transcript of LaRochelle_GRIP

70% of the population over the age of 65 will need Long Term Care (LTC).

Of Those Needing Long Term Care
17% -- Less than 1 year
12 % -- 1-2 years
20% --2-5 years
20% -- over 5 years

Average cost of LTC is $85,000 per year, but there are huge regional differences.
Case Study: John and Jane
Generational Retirement
Income Protection Plan


John and Jane Smith, ages 53 and 48 live in the DC metro area.
let's look at the impact on a very real couple
Annual after-tax earnings = $175,000.
Annual after-tax earnings = $75,000.
Their goal is to retire at age 67 and 62 respectively (in 14 years), sell their home and buy a smaller townhome.
They plan on selling the investment property and invest the proceeds for retirement income.

They plan to travel extensively and enjoy time with friends and family during retirement.
Their main concern is making sure that they have enough assets to continue to live in the lifestyle they currently enjoy.

Any residual assets will be passed on to their children, future grandchildren and will be used to make charitable bequests.
Case Study: John and Jane

They have two adult children who are both out of college, one of which remains financially dependent.

They have a rental income property which generates approximately $12,000 per year after taxes.

They have cash flow requirements of approximately $200,000 after tax per year and contribute to their 401K/403B plans, respectively, in the amount of $15,000 per year and $6,000 annually.
Case Study: John and Jane
Case Study: John and Jane
Case Study: John and Jane
Case Study: John and Jane
Implementing the Generational Retirement Income Protection Plan provides the protection against Jane's mother needing assistance from her children due to a long term care event, helping John and Jane
get a GRIP on their retirement planning.
John and Jane's net worth is $3,425,000.
More Statistics
Currently there are approximately 45 million Americans over 65 years of age.

By 2030 --71 million will be over 65.

By 2050 -- 90 million will be over 65.
-- 21 million will be over 85.

Life expectancy for men currently 65 years of age is 87.

Life expectancy for women who are at present 65 years old is 89.
Case Study: John and Jane's Balance Sheet
Case Study: John and Jane
After meeting with their Financial Planner they realize that they are on track for their "Golden Years."

All income requirements are met, considering a 2.5% inflation factor.

The value of wealth transfer assets is predicted to be approximately $7.5 million when Jane reaches the age of 87.
Case Study: John and Jane
But then something happens...
Case Study: John and Jane
While the expense of Jane's mother's long term care is absorbed without a lifestyle impact

Their wealth transfer is then reduced to $1.17 million when Jane reaches age 87 and

The risk of running out of money is meaningful if Jane lives past 87 without a lifestyle change.
Case Study: John and Jane
During their financial planning review:

John and Jane purchase a $1,000,000 life insurance policy with a 2% Long Term Care Rider on Jane's mother.

The $40,000 a year premium comes out of the couple's free cash flow rather than going into their investments.
As a result:

Jane stops working which leads to lost wages and lost contributions to Jane's retirement plan.

Jane's mother's assets are depleted.

John and Jane step in to care for Jane's mother for the remaining 6 years of her life, costing them $10,000 per month.
As such, this scenario impacts the couple's retirement and wealth transfer plans following Jane's mother's unexpected illness to the point where:
Enter the Generational Retirement Income Protection Plan (GRIP)

$10,000 per month is used to pay for the LTC needs of Jane's mother.

$280,000 residual death benefit is payable to John and Jane at the time of her death.

Jane's mother, five years into their plan, develops Alzheimers at age 76 and requires Jane's attention and care before she passes away at age 82.

Many Boomers and Generation X-ers are taking on the care of their parents.
In fact:

29% of the adult population in the U.S. are unpaid caregivers for family members or friends.

70% of elderly people are being solely cared for by family or friends.

The majority of caregivers are women.
Women caregivers are more likely to also suffer from:
Emotional stress, anger, anxiety and depression.

Heart disease.

Exhaustion and reduced immunities.

Increased substance abuse.

Poor physical health in general.

Higher mortality rates.
Resulting in:

Lost savings.

Lost time and wages.

Lost retirement contributions.

Care giving has a direct impact on health.
3 in 4 adults age 65 and older who need chronic illness care are at home.
With Jane's projected death at the age of 87.

Consider the Following:
Consider the Following:

Founding Partner
Laker-Beacon Group, LLC
919 East Main Street
Richmond, VA 23219

Scott L. LaRochelle
Full transcript