Retiree Healthcare for Parents: A Lot Isn’t Covered | Series 3.7 - Enjoy More 30s: Family Finance

Episode 7

Retiree Healthcare for Parents: A Lot Isn’t Covered | Series 3.7

Published on: 28th June, 2021

What Medicare and Medicaid cover, and more importantly, what they don't when it comes to Long Term Care.

Securities offered through TFS Securities, Inc., Advisory Services through TFS Advisory Services, a SEC Registered Investment Advisor Member FINRA / SIPC. TFS Securities, Inc. located at 437 Newman Springs Road, Lincroft, NJ 07738 (732) 758-9300.

Transcript
Voiceover Audio:

Welcome to the EnjoyMore30s Family Finance

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podcast. The only podcast dedicated to making life more

Voiceover Audio:

enjoyable for young families. By hitting on the financial topics

Voiceover Audio:

that tend to weigh on us, stress us out, and distract our focus

Voiceover Audio:

from simply enjoying life.

Joseph Okaly:

Hello, and welcome to the seventh and final episode

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of the Your Parent's Money Mindset series. Last episode, we

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covered the new restrictions inherited IRAs face when it

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comes to the distribution timeline, the potentially huge

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negative tax impact, and what you can possibly do to minimize

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it.

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Today's episode is titled Retiree Healthcare for Parents,

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A Lot Isn't Covered, where we're going to review some of the main

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items you really should be aware of when it comes to your parents

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and the possible medical expenses they are exposed to.

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You will learn today what you need to know about these main

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retiree medical items and what you can do and help your parents

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to be aware of to try and best account for them. If there is a

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primary episode to listen to in this series, this is the one.

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Now as you probably know, having a baby is expensive. The

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expenses start right away way before you even welcome them

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into the world. When I had my first child Avery, I was like,

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you know, I have health insurance so I'm probably

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covered, right? Well, as you may have found out like I did, that

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is not always the case. Some recommended tests now mind you,

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these were doctor recommended tests to make sure our unborn

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child was healthy, for us weren't covered. So we had to

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pay out of pocket for those. Others we had to submit back to

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insurance for consideration. The hospital charges 10s of 1000s,

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of which a few 1000 winds up coming back to you. Who would

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have thought that there were so many tolls on the road along the

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way to having a child? So what you need to know is your parents

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and their medical expenses can be much like this as they age.

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I'm guessing you have heard of the terms Medicare and Medicaid

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before. So that's kind of where I want to start.

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Now Medicare is the federally run universal retiree healthcare

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available at age 65. So it becomes your primary insurance.

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Medicaid, on the other hand is a program run at the state level

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and provide certain medical coverages for those that meet

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extremely stringent lower income levels. So unless you really

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make almost nothing, this tends not to be applicable for bass

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medical coverage and speaking about Medicaid. Instead, let's

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transition back to the more widely applicable Medicare. Now,

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Now some of the main items not covered at all though through

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we could spend easily an hour covering everything here. So I'm

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going to really just focus on the parts that are likely most

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pertinent for you to know about, the parts where the holes

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generally occur. These two areas can be broken down into what

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Medicare doesn't cover all of and what it doesn't cover any

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of. Medicare has different parts, the main two parts being

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Part A for hospital insurance, and Part B for medical

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insurance. This base coverage, though, doesn't cover all of the

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costs. Roughly 80% is covered after the initial deductible,

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leaving around 20% left which can certainly add up very

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quickly for larger medical items. The two ways to fill this

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hole are Medigap often referred to as a Medicare supplement plan

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Medicare are long term care and most dental and vision care. The

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or a Medicare Advantage plan. Again, I could spend easily

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hours diving into this, but the main takeaway is that they

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should really make sure they have something. In very general

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terms Medigap plans are a standardized add-on to your

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original Medicare to help cover that remainder or gap, hence,

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Medigap. The biggest benefit here is you generally have more

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flexibility in what doctors you use and where you receive care

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and even though the plans are provided through insurance

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carriers, what they must include is standardized. So every Plan G

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first one though Long Term Care is the biggie. For those that

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is the same as every other Plan G. Most of our clients tend to

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have these Medigap plans because of these reasons. So that's them

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filling in that last 20% that Medicare is not covering.

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Medicare Advantage actually replaces your original Medicare,

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and it can sometimes be more cost effective, but it does

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generally come with more restrictions on where you can

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receive care and the plans are not standardized. So you really

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need to make sure you carefully review what you're actually

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signing up for. It does generally include prescription

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coverage, though, which is a benefit, whereas in a Medigap

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Plan, you would need to also purchase Part D for

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prescriptions, although that Part D tends not to be overly

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expensive.

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are not familiar, long term care can be amazingly expensive and

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amazing in a bad way. In New Jersey, you can easily hit six

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figures a year for the highest levels of care. I've seen places

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in Arizona be less than $40,000 for similar care so it really is

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dependent on where you live, but as you can see, none of it is

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cheap. Most people kind of just assume that Medicare is, you

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know, going to cover it. "I've heard of Medicare, I know that

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everybody has it, it kind of covers my health related stuff.

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So long term care is probably lumped in there, right?" But it

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does not cover you in the way that you think Medicare is going

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to cover them as they get sick. But let me say, again, long term

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care services are not covered. So what can you do? The first

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thing is to make sure that your pre retiring parents know what

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they're going to use to bridge the gap. If your parents happen

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to have medical retirement benefits through their work,

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which is something you really don't see too much going forward

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anymore, this will act as their supplemental. So they're

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generally already covered. Getting help from a qualified

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individual for those that do not have the retirement medical

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benefits through work, can be very important in helping to

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make sure the right decision is made. If you do get help from a

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qualified individual, just make sure to ask them, do they only

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do Medicare? Do they do a lot of other things as well, just as so

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you're aware kind of where they are coming from. Is Medicare

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really the only thing that they do or is it just one of many

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things that they may want to now discuss with you. The biggest

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part of all of this though, may be what they do right after

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retirement. They have 63 days, once they lose their existing

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health coverage through work to obtain a supplement policy and

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receive guaranteed issue or acceptance. So 63 days, no

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matter what the pre existing conditions, they have to be

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accepted. That's why this initial window after they retire

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is so important. It's huge, do not miss it. If you miss it,

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then you will have to qualify for the coverage. So this is a

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huge point for those parents that may not be in the best of

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health.

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Lastly, what you can do when it comes to long term care is have

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a plan. At least then you'll know where you stand. Medicaid

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in relation to long term care only kicks in when you have

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spent down virtually all of your assets. So that is not something

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to really rely on, especially if you're in a marriage situation

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where the healthy spouse still needs resources of their own to

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survive. Home equity can be in an emergency kind of a backup

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plan you know, otherwise, there are certain products available

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through life insurance, annuities, and standalone

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insurance products that can help bear at least some of that

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expense. Here though, is really where you're going to probably

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need an advisor or at least some financial planning, as it

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usually needs to be involving excess resources, not those

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resources that they're really depending on to provide

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retirement income already. If they have certain annuities or

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IRAs that are providing them with the income that they need

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in retirement, you can't use those as a long term care plan

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necessarily, because they're kind of already spoken for,

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especially again in that married situation. The key though, is to

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have some kind of a plan, God forbid Long Term Care does

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arise, what will you do?

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So the recap for today is to realize your parents may not be

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fully aware of what coverage they have medically in

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retirement, and could possibly be assuming, you know, they're

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more fully covered than they actually are. So it's really

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important to talk to them about what they may have, citing that

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there are certain things that are only, you know, partially

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covered by Medicare, and others just flat out not covered at

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all. Remember that guaranteed issue or acceptance period right

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after losing their existing medical coverage for obtaining

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that supplemental is really, really important. And even if a

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rough plan of what would happen our long term care situation is

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really highly recommended whether it's we're going to go

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to our home equity, we have this account over here that we're not

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touching intentionally or you know, maybe you're lucky enough

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to have actually had the insurance or gotten the

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insurance you know back in the day so see what kind of

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situation that they're in.

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As always, thanks for tuning in today. If you are able to

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implement what we cover then that is always just fantastic.

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You have less to worry about then before you can focus more

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on enjoying life. If you are wanting help with these things

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though or have any questions that you need help in

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clarifying, as always check out the Ask Joe section on the

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show's website www.enjoymore30s.com. That's

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enjoy more three zero s.com. If you enjoyed this episode, please

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make sure to subscribe, review us on Apple podcasts or wherever

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you listen. There are literally millions of young families out

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there I'm trying to reach and help just like you.

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Overall in the series, I really, really hope that you were able

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to pull some great pieces of information out of it and help

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bridge that financial mindset gap that almost certainly exists

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between you and your parents to some degree. I can't recommend

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enough to not just take the easy route and avoid all these

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financial conversations. Because really, the truth is, every one

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of us will pass away at some point so it's either having some

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of these conversations now, when there is still time for

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adjustment improvement understanding, or you know, you

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could do the alternative and just wait until the end and hope

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it all just works out. We've seen just too many households

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where these easily avoidable problems are run into and

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experienced just completely unnecessarily.

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The next episode will be the recap of the Your Parent's Money

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Mindset series, helping you to take that breather, mentally

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organized some of these main concepts that most speak to you

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or you think are the most relevant for your parents, and

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take even one step forward. These things are not only going

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to make your life more enjoyable by avoiding the complications

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potentially as they age, but really also make their lives

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easier by avoiding the stresses that result from these same

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complications. So until next week, thanks for joining me

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today, and I very much look forward to connecting with you

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again soon.

Voiceover Audio:

The conversations on this show are

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Joe's opinions and provided for eneral information purposes

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nly. They do not constitute ccounting, legal tax or other

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rofessional advice for your pecific situation. You should

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lways seek appropriate advice rom a financial advisor,

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ccountant, lawyer or other rofessional before acting upon

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ny content or information found ere first. Joe is affiliated

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ith New Horizons Wealth anagement LLC, a branch office

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f TFS Securities, Inc., and TF Advisory Services an SE

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registered investment adviso member FINRA/SIPC

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About the Podcast

Enjoy More 30s: Family Finance
Family Finance for Young Professionals.
Young families receive little to no personal finance help. We all grow up to have jobs and money, yet our education system focuses on Shakespeare and Algebra. Even professional advice can be hard to come by, with the majority of the industry chasing retirees and existing wealth.

Joe Okaly's podcast is aiming to change this, providing personal financial advice geared specifically to professionals with young families. This podcast is dedicated to making life more enjoyable for young families, by hitting on the financial topics that tend to weigh on us, stress us out, and distract our focus from simply enjoying life.

Joseph P Okaly is a CFP Certified Financial Advisor who fits directly in with who this podcast is focused on - a young professional with a family. With over a decade of experience as an advisor, there is passion and knowledge to make a difference.

Securities offered through TFS Securities, Inc., Advisory Services through TFS Advisory Services, a SEC Registered Investment Advisor Member FINRA / SIPC. TFS Securities, Inc. located at 437 Newman Springs Road, Lincroft, NJ 07738 (732) 758-9300.