What does it actually cost to pay for long-term care out of your pocket? Many retirees plan to "self-fund" their future medical or assisted living costs using their savings. However, most people don’t consider the severe tax consequences of withdrawing large sums from a traditional IRA or 401(k) all at once.
In this video, we break down the reality of self-funding long-term care. If your care costs $10,000 a month, you can’t just take out $10,000. Because of income taxes, you may actually need to withdraw $16,000 to $18,000 a month from your IRA to cover that single bill. This accelerated spending can quickly drain the assets you intended to pass down to your children or cause massive disruptions to your charitable giving. Learn how to leverage tax-free long-term care benefits to protect your hard-earned Retirement assets from unnecessary taxation.
🔍 Frequently Asked Questions (FAQ)
– Are long-term care insurance benefits taxable? No, qualified long-term care insurance benefits are generally received tax-free, unlike withdrawals from traditional IRAs which are taxed as ordinary income.
– Why is self-funding healthcare risky in retirement? Self-funding forces you to liquidate assets under pressure. If those assets are in tax-deferred accounts, the massive tax hit can double your actual care expenses and deplete your Estate much faster than anticipated.
Questions? Email us at [email protected], call us at (919) 535-8261, or visit our website at https://cardinalguide.com/
