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Carroll S Golden
a book bubble about
How Not To Tear Your Family Apart
Parenting & Relationships
Author Insight
Cash Flow Concerns
The smallest deed is better than the grandest intention. When we are thrown into a situation, without some preparation, we may overreact and overreach. Is there anything in life that doesn’t work better with a little preparation? When it comes to financial matters, that is certainly true. An extended care event will impact your cash flow unless you are otherwise prepared. You need cash flow for daily living expenses, you need cash flow for family/friend events and vacations, and you need cash flow for saving, investing, and financing activities. In our story, members of the Jones family are quickly seeing the value of financial preparation for extended or long-term care needs. Fortunately, members of the Jones family are in their working years. Some of them take advantage of a saving plan, called a Health Saving Account (HSA). HSAs are a type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses. It’s part of the Jones family preparation since they can use money from their HSA tax-free to pay long-term-care insurance premiums, with the maximum annual tax-free amount based on their age. Like most financial instruments, they need to understand all the requirements so their Care Planning Team will look into the pros and cons.
Book Excerpt
How Not To Tear Your Family Apart
“Even with a good financial plan in place, I guess someone who doesn’t plan for possible extended or long-term care costs may be obligated to withdraw savings, cash in stocks, or liquidate assets regardless of good or bad market timing. I wonder what our tax advisor would say.”
Jackson, who uses the same CPA as Doug, remarks, “Nothing that I would want to hear!”
Having your savings and accumulated assets blow up probably wouldn’t make for a pretty tax picture. It leaves you vulnerable and dependent on family and friends, or government, state, and/or community services. Expecting help from outside resources comes with emotional complications for both the giver and the receiver. It can mean that someone else or an entity may control your care. That’s an unsettling prospect.
Looking into funding vehicles early in your career while there is ample time to accumulate funds is smart. One way to contribute funds to retirement income is with a Health Savings Account (HSA). An HSA is specifically designed to help pay for medical care costs and, under certain circumstances, long-term care insurance premiums. According to their personal summary, Jodi and Jackson both have HSA accounts.
Takeaway:
Paying for extended or long-term care expenses is an income problem that can have serious asset, investment, and personal preference consequences.
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