We all know the saying, “Only two things are certain, death and taxes.”  These may be true, but there is also a very high likelihood that individuals may need long-term care in their golden years. The aging population is living longer, but not necessarily healthier, and this is causing a significant rise in long-term health care and support.  Many people are surprised at how costly long-term care actually is and their equally as surprised to find out that it’s not covered under Medicare. So, what are your options when planning for future health care needs?

Financial Advisor, Darcy Bergen says, “Long-term care comes with a hefty price tag.  Private duty nursing assisted living facilities, and skilled nursing homes can cost upwards of $50,000 to $150,000 per year. If you’re a wealthy person, you may take your risks and pay cash if necessary, but what about those that don’t want to risk it or succumb to future price increases? Two of the most popular options are a traditional long-term care policy or a hybrid policy.”

With a traditional long-term care policy, if the person does not use long-term care, the money is lost.  This is why even for those individuals that are well-off financially, hybrid plans are becoming the better alternative.  With a hybrid long-term policy, there are many benefits, and the biggest one for most is that if it’s not used, the beneficiaries receive the invested funds. Also, with a hybrid plan, many times, the amount initially invested will significantly increase if long-term care is needed.  For example, if it costs $100,000 for the hybrid policy and the person needs long-term care, the amount set aside can in many cases be $200,000 to $500,000 allotted for the actual care depending on the policy specifics.

Darcy Bergen explains, “In order to afford the expense of long-term health care, many retirees are looking into hybrid whole life, hybrid indexed universal life (IUL), and hybrid annuities as alternatives to stand-alone long-term care policies. Hybrid policies are less restrictive and don’t usually have a “use it or lose it” approach to benefits. In fact, some hybrid policies offer a death benefit if the policyholder does not use long-term care benefits.”

Darcy Bergen is a financial advisor and owner of Bergen Financial Group headquartered in Peoria, Arizona.  He takes particular interest in helping individuals learn the best tactics to retire with optimal reward. His passion for assisting people in building sustainable wealth and in living their best life in their golden years is based on market analysis and finances, and also their highest quality of life.

Managing Partner and Financial Advisor, Darcy Bergen started Bergen Financial Group in 2003 and has been recognized as one of the top 20 advisors in sales with Midland National life annuity division year after year. In 2015, after many years of successful investment and financial development for his clients, Darcy Bergen became a fiduciary (Series 65 license), offering even further reliance between trustees and beneficiaries.

Bergen Financial Group offers conservative retirement planning strategies and products designed to provide guaranteed income for life while protecting their client’s principal from the fluctuations of the stock market with fixed index annuity options.

When high earning individuals retire, they can use their life insurance as a means of income. For business owners, it’s a way to make sure the company can move forward successfully. Concerning financial planning into retirement, purchasing a policy that will build cash value over the years with the principal protection while having stock market linked returns is a valid retirement plan, as the client can withdraw cash loans tax-free.

Darcy Bergen focuses on key retirement planning areas, including social security and risk management. Darcy Bergen teaches several retirement planning classes at local colleges designed for those who are retiring soon. Topics included are who to use Life Insurance as a retirement tool.

Universal life insurance premiums are used to cover the costs associated with the death benefit, and any excess goes toward the cash value. If a policy is purchased early enough in life, the cash may grow large enough to cover the costs, making the policy self-sustaining. The cash portion can be used for large purchases or to supplement retirement income.

Darcy Bergen explains, “The best kind of cash value life insurance plans are “index universal life because there is no stock market risk and the returns can be linked to earning interest based on an index like the S&P 500. Indexed plans can earn double-digit returns with no risk to the principal in good stock market years.

Financial advisor Darcy Bergen holds more than two decades of experience in financial planning. He sheds light on the rules of IRA contributions and withdrawals.

“The rate of return on investments will vary over time, particularly for longer-term investments. Investments that offer the potential for high returns also carry a high degree of risk, and actual returns will fluctuate.”

Darcy Bergen further explains, “The types of securities and strategies illustrated may not be suitable for everyone. Contributions to a Traditional IRA may be fully or partially deductible, depending on your individual circumstance. Distributions from traditional IRA and most other employer-sponsored retirement plans are taxed as ordinary income Roth IRA contributions cannot be made by taxpayers with high incomes. To qualify for the tax-free and penalty-free withdrawal of earnings, Roth IRA distributions must meet a five-year holding requirement and distribution must take place after age 59½.”

Single Filing

If your modified adjusted gross income is less than $122,000, you can make a full contribution. If your modified adjusted gross income is more than 122,000, but less than 137,000, a partial contribution can be made.

Married/Joint Filing

If your joint modified adjusted gross income is less than $193,000, you can make a full contribution. If your joint modified adjusted gross income is more than $193,000, but less than $203,000, you can make a partial contribution.

A full contribution is $6,000 for anyone under the age of 50. For those 50 and over, an increase of 1,000 is allowed for a contribution in order to enable those individuals to put away more for retirement at an accelerated rate.

Roth vs. Traditional

Roth Ira contributions have no tax deductions or breaks; however, the earnings and withdraw are typically tax-free. With Traditional IRAs, federal and state tax deductions can be made. When an individual is retired, withdrawals are taxed at ordinary rates.

Withdraw Rules

Darcy Bergen understands that many individuals are confused by the tax exemptions and tax penalties regarding withdrawing contributions. Traditional IRA withdrawals before the age of 59½ may incur a 10% penalty on top of federal and state taxes. At age 59½, you can withdraw funds from an IRA without penalty.

Generally, once you reach age 70½, you must begin taking required minimum distributions. A tax professional can help assess your specific situation. Tax-free and penalty-free withdrawal also can be taken under certain other circumstances, such as a result of the owner’s death. The original Roth IRA owner is not required to take minimum annual withdrawals.

Stretch IRA

An inherited or Stretch IRA is allocated to a beneficiary by a parent, grandparent, spouse or others to hand down their IRA to a benefactor. The benefits of a stretch IRA are numerous. Some advantages include avoiding sizable tax brackets, paying taxes on a deferred basis, and that the preliminary decisions can be altered if needed.