Influential Entrepreneurs with Mike Saunders, MBA - Rick Miller, Founder of Miller Wealth Planning Discussing Hedging the Long Term Care Risk

Episode Date: March 31, 2026

At Miller Wealth Planning, we provide Doctors, business owners and other high net worth individuals a comprehensive, bullet-proof financial plan. Rick has put together an exceptionally talented and experienced team to show you how to manage the numerous risks high-net-worth professionals face.These risks include: tax risk; market risk; longevity risk (running out of money); inflation risk; long-term care risk; lawsuit risk; and loss of income risk, among others. Your freedom from worry is our objective.Rick’s credentials include: Certificate in Financial Planning; IRMAA Certified Planner; Certified Dementia Practitioner, and Investment Advisor Representative.Rick has Master’s degrees in English and Counseling along with broad experience in business creation, real estate investing and more.Learn more: http://millerwealthplanning.comThe opinions expressed on this show by the host and Fredric W. (Rick) Miller are their own and do not reflect the opinions of this radio or television station. All statements and opinions expressed are based upon information believed to be reliable. Although it should not be relied upon as such. Any statements or opinions are subject to change without notice.Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/rick-miller-founder-of-miller-wealth-planning-discussing-hedging-the-long-term-care-risk

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of Influential Entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have with us Rick Miller, who's the founder of Miller Wealth Planning, and we'll be talking about hedging the long-term care risk. Rick, welcome to the program. Thank you, Mike. It's a pleasure to be here.

You know, I think a lot of times people hear certain topics like, oh, yeah, yeah, yeah, yeah. That'll never happen to me until it does. And I have a feeling that long-term care is one of those topics that people just think, yeah, it's a risk out there. But let's talk about how viable of a risk it really is. What's the state of long-term care preparation today in America? because I have a feeling that people know about it, but they don't prepare for it. Well, you've actually just asked me three or four great questions. Let me start off with long-term care in my 27 years of being an independent financial advisor

is without question the most difficult issue that people have to deal with. Why is that? Well, we'll talk about some of the, you know, some of the numbers, but really what it boils down to is that it is a question that has multiple unknowns. For example, do you know if you're going to need long-term care? No. Nope. If you do need it, do you know how long you're going to need it? No.

Probably not. Do you have any idea how much it's going to cost? No. Yeah, unknown. And if you're part of a happily married couple, those questions have just been doubled. So that reality, plus the fact that for most human beings, there are certain topics and certain issues that are that are fraught psychologically and emotionally. One of them, of course, is mortality. the other big one is frailty and losing your independence.

So when you have human beings that are confronted with essentially a problem that's got so many multiple unknowns, they shut down. They just, I won't think about it. I'll just, I'll think about it another day. And what that inevitably translates to, Mike, is that nothing gets done. And if we look at the reality of the long-term care insurance industry, well, let's see, probably 40 years ago, there were, I don't know, 50 companies offering traditional long-term care insurance policies. Now there are nine, and it's very likely that's going to be down to eight by the end of this year. And why is that?

Well, part of that is the insurance company's inability to quantify from an underwriting standpoint the reality of this risk. When people buy long-term care insurance policies, they keep them. The traditional insurance kind of life insurance policy, they have high lapse ratios. And what that means, Mike, is that for every thousand policies, the insurance companies have a history of seeing that probably 30% of those are not paid through to death or being used by the owners. That is absolutely not the case with long-term care policies. When people put money into those, they did not lapse. So as a result, for the insurance industry, long-term care became just a huge loser. From the customer or the client's point of view, the traditional long-term care policies also have some flaws that from my position as a fiduciary advisor kind of suggest, well, this might be a red light.

And the biggest of those flaws is that when you initially get approved for a long-term care policy, and of course it's your good health that gets you entry into that plan, and you are told, all right, the premium is going to be, let's just say, 3,000 a year. And everything can go long, hunky-dory for, you know, 10, 20 years. And I can use my wife and I as an example, as you might expect, a financial professional. My wife, Allison and I have had long-term care policies on each of us, you know, for 35 plus years. And everything was fine for the first 25. And then we got a letter in the mail saying, dear Rick and Allison, of course, we've got individual letters because the policies

were individual. You have been great clients. And we appreciate your trust and your paying on time. but oh, by the way, your premium for next year will increase 77%. Oh, absolutely. Have a nice day. Yeah, that's not an exaggeration. And so what that means for most people, now as you know, Mike, I've been doing this for 27 years and I intend to can, this is my retirement. You know, I like to say I will stop when, A, I'm either drooling on the paperwork or I go out feet first. But for typical people that don't necessarily have additional cash flow in retirement, they're now faced with some tough choices.

They have tens of thousands of dollars invested in this policy, and they're going to be hit by that significant increase to keep those, that level of benefit. So they're going to have two other choices. They either have to pay the freight, which is the first choice. They either have to say, all right, that's too expensive, and the insurer will offer them reduced benefits for a smaller annual premium, or they just throw their hands up and say, I'm out, you know, and cancel the policy. the difficulty is that all right for alison and i that has happened once and just last year it happened again wow an additional 25% increase in premium so all of this long story i just want to point out that in my view as a fiduciary advisor the traditional long-term care policies have a significant flaw that, you know, I mean, my responsibility is I have to look out for people. I have to protect

their financial lives. And it's difficult for me to say, okay, here is a vehicle to address this very critical issue, but, you know, it might end up increasing two or three or four times over, you know, the next 20 or 30 years. That's very, very difficult for. for me to make a recommendation on that basis. So with that said, where do people go? Well, this is a particular topic that I've been involved in and very committed to for many, many years. And as a matter of fact, a few years ago, I was addressing about 400 financial advisors, and I gave

them a copy of a white paper that I wrote called hedging the long-term care risk. And I chose that title very deliberately because even for people of wealth, doctors, dentists, entrepreneurs, business owners, you know, people who've had long federal careers who have assets, the difficulty can be how do they what assets do they use to cover this sort of amorphous very difficult concept that I

mentioned at the beginning of our talk about you don't know if you've got three or four or five, six and don't knows well in my view the best that you can do is hedge the risk and the term hedge means that

since you don't know what the ultimate cost or obligation might be, you set up a plan that has as many ways as possible to provide leverage or provide additional dollars through insurance or annuity or a variety of other ways to cover those costs. Since you don't know ultimately what it's going to be, And quite frankly, you know, the bug might not bite either you or your wife. You might, you know, pass comfortably in bed at home without ever having needed long-term care. But that's statistics suggest that that's not likely to be the case. So what this leads to then is what are the other ways to address or hedge the long-term care risk?

and in my work as an independent advisor, I've identified there are eight or nine other strategies or vehicles that people can use, and you don't necessarily have to have millions of dollars. Obviously, the more, the stronger your financial picture is the better. But there are tools out there that can provide cash flow for you, or you, or you. your spouse in the event that at some point they need long-term care in the future. You know, Rick, you brought up a whole lot of things there that brings up a question in my mind, and you're the expert. So this seems to be kind of like an analogy, how guys like to make analogies. But if you have the old traditional long-term care policy of X number of dollars and premiums and you have it for a year, two, three, four, and never use it, those premiums are

gone. You can't get a refund like your car insurance like, hey, I didn't wreck this year. giving my premiums. Nope. It was there if you needed it. So the newer kind of approach that you're describing, isn't there a feature where if you need it, it's there? But if you don't, the money's doing what it needs to do for long benefit of, you know, retirement, cash growth and things like that. But yet it's not like a use it or lose it. Am I thinking correctly there? No, you absolutely are on the right. track. There are various kinds of annuity vehicles, and an annuity is, many people don't realize this. It was the original financial instrument. The Romans and Greeks argue about who created it first, but you find

the word anua in Latin and in Greek way, way back. So that's an instrument that is designed to create lifetime income that you can't outlive. And some of the more sophisticated options you have with that particular tool give you a provision that in the event that either one of you, let's say it's a married couple, needed long-term care, the income stream that the annuity can provide can be increased, doubled, in many cases, to provide a pot of money to help offset those costs. Now, that's a perfect, I'm really glad you asked the question and phrased it that way because that's a perfect example of a hedge.

You know, you have a tool here that A, can grow your money, B, it can give you an income stream, and C, it can provide some long-term care assistance. It can do all three or only one or none, as your particular circumstance dictates, but it can easily provide, you know, a couple hundred thousand dollars towards long-term care from that one vehicle. Let's talk a little bit about, I know we can't ever predict and say 100% of the time or 72%, but from a broad stroke, what's the industry average of people that need some type of long-term care?

Well, this is one of those uncomfortable facts, Mike. If you take women, the likelihood of them needing some assistance in their elder years, and this could be, you know, just assistance at home, it wouldn't necessarily have to be nursing home, but women tend to live longer than men. and what that ends up is that they've got in excess of a 70% chance of being likely to need some type of care at some point later in life. That's a big number. Yes, it is a big number. And it's an unfortunate situation in that for many wives, in that the husbands typically, don't live as long. And the husbands usually, and again, usually put up parentheses around that, quotation marks, very often see their cognitive or ability to live independently diminish

before their wives, their wives. And what that necessitates is then, in almost every instance, the wife becomes the caregiver. And caregiving is very, very strenuous, very emotionally, psychologically difficult, particularly for your loved one. You know, your life partner, I mean, my goodness. But the result of that very often is that the wife loses her health in the process of devoting all of her time and energy caring for her husband. So one of the things about my financial practice that I've stressed for years is that as a part of the overall plan, you must have a specific framework or direction for protecting the surviving spouse. Most of the time, that's going to be the woman. most of the time she is going to need in terms of the number of years that the women need care,

it ranges from two to five on average. For men, it's one to about two and a half years needed care. So you've got to have a plan in place to not only deal with her potential long-term care need, but when the spouse dies, when the first spouse dies, if it's the husband, if you're going to kill him off, we're going to knock me off. As an example, okay, what's the effect? Well, number one, now the family only has one social security payment.

Secondly, if there was any pension involved on the part of the husband, that's usually going to be cut in half or, or 25% or something like that. Plus, now the wife is a single filer. In other words, she loses income and her tax burden, her income tax burden goes up. So for financial plans to be proper and appropriate, there must be specific emphasis on protecting

the surviving spouse with long-term care as a big piece of that regiment. You know, and I know that 70% number is, you know, not the gospel truth, but it's a big number. And if it's not right, it's pretty darn close. And I'll bet you that there's another large percent of people that don't make these plans. So if someone is listening to this going, man, maybe I ought to look a little closer into this, how does long-term care event, like if you need some type of long-term care, care, how does that impact the retirement plan if they've not put plans into place? Simply, Mike, it can result in bankruptcy, financial devastation.

I mean, across the United States, the monthly cost for a nursing home is over $7,000 a month. It's like $73 or $7,400 a month. Home health care is about $3,300 a month. And again, you know, if we're thinking about a happy couple, if both a husband and a wife need care, just take those numbers, you know, add them together, multiply it by a few years. And you've got just a huge financial impact that can white people out. And, you know, I would even think from a, you know, layperson's perspective like myself, yeah, that's the worst that could happen, bankruptcy, white people out. but what if someone didn't put one of these plans and into place and a long-term care event happens and they just say, hey, Rick, I need $100,000 this year for long-term care, pull it out of one

of my retirement accounts because it's there. Well, that might be a possibility if you are that fortunate, but that could derail what that money is supposed to be doing. So even though you have it and can self-fund, maybe that's not the best approach, right? Well, that's absolutely correct. I mean, self-funding, even for people with substantial assets, seems like a nice idea. But I would say number one, if you can, why not leverage an instrument or a strategy that will have somebody else, you know, contribute for that care? You know, if your dollar can provide a couple extra dollars in terms of, you know, dealing with, the long-term care expenses, why not explore something like that? But you also ask me, in that last question, let me just bring up one thing that is pretty much universally ignored.

It's not a financial, it's not a product or a financial tool that advisors or stockbrokers deal with, but it is a reverse mortgage. And this can be for probably a significant percentage of Americans, their fallback way to address the long-term care risk in a way that, again, does not, it's a hedge. It's there if you need it. If you don't need it, that's fine. Reverse mortgages, unfortunately, like so many things, have,

a very negative opinion in the press, and I can give you a short history about that. The reverse mortgage, basic idea is to provide tax-free access to the equity in your home. And for the vast majority of Americans who are homeowners, the home equity that they've developed over decades of paying the mortgage is. one of their biggest financial assets. And years and years ago, probably again, you know, 30, 40 years ago, somebody came up with the idea of a reverse mortgage, which gives you a way to tap that equity. And then, of course, 2008, the mortgage crash. At that point in time, there were literally hundreds of individual reverse mortgage

tools around the country. Every little podunk bank, including your big money center banks, offered reverse mortgages. Well, that all got wiped out. However, in one of the things that I have to give Congress credit for, is they brought back the reverse mortgage available. It's an FHA product now. And the government brought it back precisely because there is a recognition in Congress

that this long-term care situation for many people can mean financial devastation. So that's why it still exists. You can go to any bank. It's all the same loan. But what I want you to understand is why the bad, the negative reputation occurred. And two, why simple planning can eliminate it. There are, like all financial instruments, reverse mortgages have certain rules. And one of the rules, the most problematic of these rules, and it's still there,

is that you cannot put a reverse mortgage in place until you're 62, which is fine. Okay. So here's our example. I'm 62. my wife is six years younger than me, so she's 58 or 56, whatever my math is. So she's younger. So, and we like the idea of having access to all the, or not all, but a significant portion of the equity in our property. So we put a reverse mortgage in place. We signed the papers. Next week, the garbage truck takes me out. Okay. So I'm a goner. I'm, I'm.

Rick Miller's no more. Well, that just created a major problem for Allison because she's not 62. She cannot legally own or have a reverse mortgage. So, and that rule is still in the existing reverse mortgage requirements. So what that just means is you have to be aware. of that and, you know, not potentially cross that red line. So what had happened in the past is that many people were not informed or didn't read or, you know, just didn't understand the implications of that age difference rule.

And so, you know, life happens, you know, people pass, accidents happen. and reverse mortgages got a kind of a bad reputation because the wife only has two choices in that event. She either has to refinance the house and maybe she was not the primary wage or maybe now that the husband is past, the pension is gone. Or, you know, she may not qualify for the loan is the big issue. There's so many variables there, Rick, and that's probably just a pebble in the ocean of all the things that you should consider. And it kind of makes me think of this. If someone listens to this conversation and goes, wow, I had to check this out. Let me just go fix it all with one fell swoop on Google or AI.

Nope. Because you need to have someone that knows the process can guide you through, ask the right questions, know exactly what you need. And that would be sitting down with someone like yourself. So if someone is interested in reaching out and connecting with you, what's the best way that they can do that, Rick? Well, there's a couple ways. They could go to millerwealthplanning.com. Check out my website. You can also reach me at Rick Miller Advisor at gmail.com.

I could give you my cell phone as well. I don't mind people simply calling me out of the blue. 703 is my cell 401, 3672. And, you know, in my 27 years, I didn't mention at the beginning, but my very first career, Mike, was as a college English and communications teacher. And I've got master's degrees in counseling and English, and I'm a pretty darn good communicator, but I'm an even better listener. So my obligation and my pledge is to listen to what you need and guide you to the best possible solutions.

Perfect. Well, Rick, thank you so much for coming on. It's been a real pleasure chatting with you today. Oh, same here, Mike. Thank you. You've been listening to Influential Entrepreneurs with Mike Saunders to learn more about the resource is mentioned on today's show or listen to past episodes. Visit www. www. influential entrepreneursradio.com.