Philip Snyder, Senior Vice President at The Warner Companies, breaks down one of retirement’s most overlooked needs: long-term care. With roughly 70% of retirees expected to need care, Philip explains why a pension or Thrift Savings Plan alone won’t cover it, why nursing home costs rising above inflation make early planning essential, and how today’s hybrid life insurance policies build cash value and pass unused benefits to beneficiaries. Practical guidance for federal employees and everyday Americans on how—and when—to fund the care they may one day need.
Jeffrey Snyder, Broadcast Retirement Network
Joining me now is Philip Snyder. He’s Senior Vice President at the Warner Companies and for full disclosure, he’s also my dad.
Dad, always great to see you. Thanks for joining us this morning.
Phillip Snyder, CLU, The Warner Companies
Always a pleasure, Jeff. Nice to see you.
Jeffrey Snyder, Broadcast Retirement Network
So I wanna pick up the conversation. I think last time we had you on, we talked about life insurance and some of the nuances there. I wanna talk, I brought you back.
I mean, I’m always happy to talk to you, as you know. But I brought you back to talk about long-term care and in particular, long-term care for America’s federal employees that work for the U.S. government. Are there certain considerations that may be a little bit different than the private sector, the typical private sector workforce?
Phillip Snyder, CLU, The Warner Companies
I’m not sure that there are. I mean, generally the considerations of how you fund, first of all, you have to recognize the need for long-term care, not necessarily insurance, but long-term care. And that’s a consideration when you’re doing your own financial planning because statistically about 70% of retirees, we’ll say, are going to need long-term care in some form for some duration in their retirement years.
How you pay for it is the question.
Jeffrey Snyder, Broadcast Retirement Network
So when you look at the numbers, and before we started the show, I did a quick AI search on the number of U.S. government federal employees. It’s about a little over 2 million. That’s including the Postal Service.
It doesn’t include the U.S. military. So we’re talking about a swath of about 2 million people. Now, Dad, when you look at their benefits, just broadly speaking, because there are nuances, obviously, there are some workers that have the legacy Defined Benefit Pension Plan, and all the new workers and U.S. military go into a hybrid, which includes portion that’s in the Defined Benefit Plan, but a lot of it goes into the Federal Thrift Savings Plan. Does having a DB plan, a pension plan, change any of the calculus for that long-term care figure?
Phillip Snyder, CLU, The Warner Companies
It’s a source of income, primarily, in retirement. The question is, is that income gonna be used in whole or in part to pay for potential long-term care expenses? And if not, it seems to me that that would be post-retirement income for fundamental needs that we all go through in our retirement years.
Basic expenses, travel, whatever the case may be, what you’re accustomed to doing. I’m not sure that those funds could be used, in all cases, certainly, for long-term care expenses. I think the broader question is, and I’m not necessarily distinguishing long-term government employees from non-government employees.
I think we all have to come to the realization that there’s potential for a significant cost for long-term care in retirement years. That’s really the fundamental issue.
Jeffrey Snyder, Broadcast Retirement Network
So let me ask another question. So the richness, so as a follow to that thesis, the richness of the benefit, the retirement benefit, is not necessarily related to the outcome that how you’re gonna pay for long-term care. The reality is, as you said, more than 60 to 65% of us, myself included, you and others, will need some type of help during their lifetimes, especially maybe when we get to like age 75 or 80 going forward.
Phillip Snyder, CLU, The Warner Companies
Well, that’s true. And people, first of all, there’s a lot of education needs to be done, broadly speaking, to recognize this potential need. There is no, with the exception of some minor benefits under Medicare and benefits available to those who don’t have significant assets through Medicaid, everything else is gonna be funded either through your own sources, personal assets, or in whole or in part, or through insurance.
Or through other family members taking care of an individual who needs long-term care. So it’s a combination of all those things. So the point is money is needed for the most part.
What’s the source of the money?
Jeffrey Snyder, Broadcast Retirement Network
So when I think of benefits, when I think of my wage, so when I was an employee of a corporation, I’ve always worked for the for-profit, but I think the same applies whether you work for a not-for-profit or government, you get compensation. And that compensation includes your W-2 earnings, your wages. It includes all the benefits that are paid to you.
That’s all pooled together. So when you’re, so if I’m a federal employee or any employee, I’ve gotta look cumulatively at all these benefits and then figure out, okay, over here at some point in time, I’m gonna need long-term care. Do I buy that through my employer or do I go through a third party, typically a private sector entity to buy my long-term care insurance?
Phillip Snyder, CLU, The Warner Companies
Well, it seems to me, and I can’t say that I’m intimately familiar with the long-term care benefit program through the federal government. My suspicion is it’s a typical rich long-term care benefit. But the question becomes, A, do we even need insurance?
Number one, do we have other money that we’ve saved and will inherit that we can allocate and set aside to fund potential long-term care expenses? How are we gonna pay for it? If that fund is not large enough, or if there is no fund, then you need to seek other alternatives, part of which could be insurance.
It could be care given at the recipients’ residence by family members. That creates other issues to be considered. Who are the family members?
What’s their proximity? What’s their availability? What impact will it have on those caregivers themselves?
All those factors have to be weighed and determined. And the time to do it is, I would say, certainly beginning at age 50, 55, no later than that. It’d be ideal that you’d be accumulating money prior to that over your lifetime.
And you just need to recognize the potential for those expenses and how they’re gonna be paid for.
Jeffrey Snyder, Broadcast Retirement Network
So I like what you just said there, but I also like the fact that I think this is more of an educational opportunity. I think the way typically employee benefits, and again, I’m gonna lump in private sector, not-for-profit and for-profit, or excuse me, governmental into the same bucket, regardless. I mean, there are nuanced differences, but the way it’s always been sold is, here’s your retirement benefit.
Here’s your healthcare benefit. Here’s your disability benefit. Here’s some of the other benefits that we offer you.
It seems to me the better approach, and having been in my industry for 30 plus years, you’ve been doing this for decades more. I’m not gonna out you in terms of how old you are, but you’ve been doing it a lot longer than me. It seems to me that if you just come to people very holistically, I hate that word, by the way, together and just tell them that you’re going to need to pay all your home bills.
And in the future, you’re gonna need to pay for care, healthcare, home care, et cetera. The best thing to do, that actually will trigger to people. They know they have to pay these expenses.
Phillip Snyder, CLU, The Warner Companies
Right, well, people need help planning. I think that’s the point. And I don’t think the planning community is large enough to handle all the people in the country who might be impacted by this.
It’s just not. But people need to seek out help. That’s the important thing, and plan.
You plan for retirement. You plan for paying for your children’s education. You plan for your weddings, whatever the case may be.
Funerals, even. You plan for those things by creating money. What’s the source of the money to pay for all that?
Long-term care is probably, in many cases, not even in the calculus. Nobody gives thought to it. But nursing home costs, as an example, and nursing homes are generally at the back end of the need.
As these needs regress or get worse over time, and you need help in a nursing home, that can be six figures every year and going up. And these costs are escalating way above inflation. So, you know, the rate of inflation.
So these can be potentially big numbers. And so you may not necessarily need to buy insurance to fund it all. Maybe you’ll have, let’s say you can build a couple of hundred thousand dollars that could be allocated towards that without necessarily disturbing your normal retirement needs and so forth.
Maybe then you want to consider buying insurance to fund piece of it. It’s just an individual planning.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, well, my plan is I’m gonna be moving in with my brother. Jody and I are gonna be moving in with my brother and sister-in-law. So you made a comment that there aren’t enough people in our industry to support these decision-making.
I’m assuming you’re referring to financial advisors, estate planners, people like yourself, insurance that work for an insurance brokerage. Are you saying they’re just not enough to keep up with the volume? And where does, if that’s true, where does technology play a role?
Like, you know, I’m thinking about AI. Where does that play a role in this equation?
Phillip Snyder, CLU, The Warner Companies
Well, people need to be exposed to the potential risk. They can gain a wealth of information online. Yeah.
Flooded with information online. Now, a lot of it is salesy and sales-oriented. Probably most of it is salesy.
Jeffrey Snyder, Broadcast Retirement Network
I would say 98% of it’s sales. I mean, if you look, if you’re gonna be true.
Phillip Snyder, CLU, The Warner Companies
But there are, there’s so much information, just educational information that can make people aware. And the light bulb can go off and say, you know, I didn’t even know about this or didn’t give thought to it, but it is a major consideration potentially. Not everybody needs long-term care, right?
So, but it is something that needs to be included in your thought process and your planning process. Whether you’re a highly affluent individual or you’re, you know, a salaried employee of, you know, with modest income, let’s say, you still have to take this into consideration. How am I gonna pay for it?
And who’s gonna help me?
Jeffrey Snyder, Broadcast Retirement Network
Would, for those long-term care manufacturers, there’s quite a few. I mean, they’re, you know, I’m not gonna go name them because they’re not sponsors and I don’t feel like I should name, I’ll probably forget one of them. But is, typically that benefit is use it or lose it.
So would it make sense to create a long-term care benefit or maybe it exists today that is more analogous to permanent life insurance where it gets a cash value and if you don’t use it, it can be bequeathed to a beneficiary? Or does that exist today in the form of permanent life?
Phillip Snyder, CLU, The Warner Companies
Yeah, I mean, we tend to think of long-term care as the insurance, as a free-standing product that’s a use it or lose it. And there are, that product still exists. In other words, it only pays for long-term care.
A reimbursement, for example, or an indemnity benefit, either one for long-term care. But there are other products in the marketplace. You may own a permanent life insurance policy and that product could have, and still could in the future, include a benefit to provide for long-term care by just advancing a portion of the death benefit monthly to offset incurred expenses.
There are other products that are, so that’s a life insurance solution with a rider, we call it, to access the death benefit, pull forward the death benefit to pay for expenses. There are products out there that are more, that do combine permanent insurance, life insurance with cash value, with a long-term care benefit. And those are hybrid type policies and those are very popular today because they’re not use it or lose it.
If you don’t use the benefit, there’s a death benefit paid out that typically pays the beneficiary the sum of the premiums that were paid to buy the product as a whole. So those are very popular today, that type of product.
Jeffrey Snyder, Broadcast Retirement Network
And I mean, I would assume that would be, I mean, you don’t have to be a wealthy person. We’re not talking about the Uber high net worth person here, Dad, right? We’re talking about anybody can own that type of policy.
Like the way I think about, and maybe I’m not thinking about this right, maybe other people don’t think about it this way. But every time I make a contribution into my 401k or when I had a 401k or make a contribution into a life insurance policy, I look at like investing in myself and investing in an asset. So if you follow that through, you should be able to bequeath that asset either to your, take cash out of it or provide, give it to a beneficiary like your spouse or other loved ones.
Phillip Snyder, CLU, The Warner Companies
Well, that’s true. I mean, so that’s all part of the planet. Even highly affluent people sometimes will buy some form of long-term care insurance.
They won’t fund their whole benefit, a potential benefit with it, just because some of their asset mix may not be as liquid as they’d like it to be. And you don’t wanna liquidate assets at the wrong time from a tax perspective or a sales perspective just because you needed the money to pay for care. I have other clients and friends who don’t have long-term care insurance, but they have money set aside, lots of money.
They’re lucky. Most people don’t have that. So they almost don’t have to deal with the issue because there’s plenty of money there.
On the other hand, average people don’t have that. They don’t have that as a resource. So you gotta think about, it’s a matter to be talked over within your own household and a broader conversation, if you can, with your siblings and relatives.
And so there are a lot of considerations and it’s just needs planning, I guess is my summation. You need to plan for these things. You need to realize what the potential expenses could be and the services that may be required and how are you gonna receive those services?
Who’s gonna provide them? Where are they gonna provide them? Or another thought, if I’m an older person and I need care, maybe I relocate to Charlotte and have you take care of me.
I’m not saying you should. No, I mean, you’re welcome. You just have to deal with the cats.
That’s a conversation, part of a conversation. It is. So all those factors have to be taken into consideration.
The time to do it is earlier than later. You don’t wanna terminally fund these things at the back end because then you’re just paying out of pocket. So it’s hard to get into every alternative in a brief period of time, but by and large, it’s a conversation that needs to be had.
Jeffrey Snyder, Broadcast Retirement Network
Yeah. Well, those average Americans, we call them real Americans on this network. And candidly, dad, they’re more of us than there are of any other group of Americans.
Dad, we’re gonna have to leave it there. Thanks so much for making a few minutes. And by the way, you and Evelyn are certainly welcome to come to Charlotte anytime.
Your granddaughter, Cat, is sitting right next to me. But we look forward to having you back on the program again very soon.
Phillip Snyder, CLU, The Warner Companies
I hope this was helpful. Thanks, have a nice day. Bye-bye.