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Jewish World Review June 1, 2000 /27 Iyar, 5760

Bruce Williams

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The truth about nursing home insurance


http://www.jewishworldreview.com -- DEAR BRUCE: Is nursing-home insurance considered a smart buy for the future? I am hearing a lot of conflicting information. Should I consider purchasing it at 38 years old, or should my dad purchase it at 60? My dad and I discussed this, and he is afraid that he or my mom will have to go to a nursing home, and that all of their hard-earned savings will be forfeited to pay for it. It would be great to give him some piece of mind. -- L.P., via e-mail

DEAR L.P.: While you are far too young to think about nursing-home insurance, your dad is another story. Assuming that he is trying to preserve his assets, without regard to their aggregate value, a nursing-home policy may very well give him the piece of mind that he requires. In today's world, you can consider the cost of a nursing home to be somewhere in the neighborhood of $40,000 a year per person, and I would want a minimum of five years protection.

DEAR BRUCE: We have four children and live in a small house that is completely paid for, since it was a gift. We can sell it for $215,000 here in Napa Valley, where prices are skyrocketing. Our income is $55,000 a year, and we have about $55,000 invested. Since we have outgrown our home, we would like to buy a slightly larger one, which would cost us at least $260,000. Or we could buy a much bigger home for about the same money if we move further out.

We are planning on putting 20 percent down and dollar-cost averaging the rest of the proceeds from the sale of the mutual funds, which can help us make our house payment. Is this wise? We have pre-qualified for a loan of up to $300,000. -- L.C., Napa Valley, Calif.

DEAR L.C.: I can't imagine what lender would think of pre-approving you for $300,000 -- that's approximately six times your annual income. Nor can I imagine how you would be able to handle that kind of a mortgage, even if you invested the proceeds of the sale.

While I realize that the land values where you are living are astronomical, it seems to me that you would want to keep your mortgage at less than $125,000. If you were to receive $200,000 net on the sale of your present home, you could handle $325,000 in home costs. I am completely baffled by what type of plan, even with no interest, one could offer a $55,000 buyer with a $300,000 debt. It just doesn't work.

DEAR BRUCE: My mom is 79 years old and has very little money. However, she does have $10,000 to invest, which she keeps in CDs that are only earning about 3 percent. She likes the idea of having CDs because she has quick access to her money in case she needs it. Is there a better short-term option for her $10,000? I know this isn't high finance, but it is a big deal to her. -- K.B., Houston

DEAR K.B.: Three percent is not a bargain. If she is bound and determined to have this immediate access to her money, you should consult a major broker in your area. They will have money market accounts, which are currently paying between 5 percent and 6 percent, and you would have even more immediate access to them than a CD offers.



Send your questions to JWR contributor Bruce Williams by clicking here. (Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.) Interested in buying or selling a house? Let Bruce Williams' "House Smart" be your guide. (Sales of the book help fund JWR).

Up

05/30/00: Keep mother-daughter loan simple
05/25/00: CDs for security, not investment
05/24/00: Battling with collection agency
05/22/00: Are callable CDs a waste of time?
05/18/00: Building a college fund
05/16/00: Even death brings no relief
05/15/00: House is 'worth' what's offered
05/12/00: Borrow from Mom and Dad?
05/11/00: Your heirs, your choice
05/09/00: Mutual-fund investigations
05/05/00: Credit cards vs. debit cards
05/04/00: Lawyer are good for something
05/03/00: The binding nature of contracts
05/02/00: You know you are in trouble when ...
05/01/00: Can primary residence be rented out?
04/28/00: A full refund after five years?
04/25/00: Get a homeowner's title policy!
04/24/00: Beware of errors in your favor
04/18/00: $10,000 limit on gifts
04/17/00: Invest or repay student loans?
04/13/00: Beware of Internet auctions
04/11/00: Six percent is a pittance
04/10/00: Married couples should share windfall
04/07/00: How not to blow an inheritance
04/06/00: Get genetic screening for Tay-Sachs
04/05/00: Beating the look-back period
04/04/00: Providing for retirement
04/03/00: Readers disagree on time shares
03/30/00: The road back to good credit
03/29/00: Pre-tax dollars in IRA taxed later
03/27/00: Gambling on business ventures
03/22/00: Old cars as hobby, not investment
03/20/00: Tax on foreign gifts?
03/16/00: How to buy government bonds
03/13/00: Buying treasury instruments
03/09/00: Subcontractors must pay S.S.
03/08/00: Real-estate lawyers are essential
03/07/00: Don't expect compensation for ideas
03/06/00: Too rich for a Roth IRA?
03/01/00: Is time-sharing a scam?
02/29/00: Paying for nursing-home care
02/28/00: Rely on a real-estate lawyer
02/23/00: Keeping child's money safe from divorce
02/16/00: Just how important is a 401(k)?
02/14/00: Shaky partnership buying house
02/11/00: Protection by residential zoning
02/09/00: Benefiting from a reverse mortgage
02/07/00: Ensure your insurability
02/04/00: Absurd community zoning laws
02/02/00: Money or securities?
02/01/00: Can we KO a custodian?
01/31/00: Why sell a home you love?
01/26/00: Everyone needs a will
01/25/00: Will splitting stocks affect rollover?
01/24/00: Should early retirees contribute to SEP?
01/21/00: Strategies for paying off debt
01/20/00: Is 15-percent growth achievable?
01/19/00: Selling a second home
01/18/00: Running from a time-share
01/14/00: Don't be a spendthrift!
01/13/00: Who gets the house?
01/11/00: It all depends on size of estate
01/06/00: Check references before hiring an advisor
01/04/00: Savings bonds a bad investment
12/31/99: Out of state ain't that great
12/29/99: Warranty rip-offs
12/27/99: Checking up on investment handlers
12/23/99: Options good only when company's strong
12/20/99: Capital gains tax sometimes best
12/17/99: Don't give up your nest egg
12/15/99: Small-claims court no panacea
12/13/99: Termite company not liable for termites?
12/10/99: Services provided must be paid for
12/06/99: How do we minimize house-sale gain?
12/06/99: Maximize your tax shelter!
12/02/99: My neighbor won't maintain even a modicum of civility
12/01/99: Long-distance rentals a bad idea
11/29/99: Mortgage strategy A-OK
11/18/99: Students can work and learn
11/16/99: Value is what will sell
11/11/99: Y2K: No big deal for real estate
11/08/99: Real life is tough luck
11/03/99: The right time to cash a savings bond
11/01/99: Slow road for savings accounts
10/29/99: What do you want from insurance?
10/27/99: You have a right to see your tax forms!
10/25/99: Why own a house at 65?
10/22/99: Online fine, but CDs?
10/20/99: Love, honor -- and separate credit
10/18/99: Find the value of your stocks
10/15/99: Property lien prevents trade
10/13/99: Clear up debt, only then tie the knot
10/11/99: If it ain't broke...
10/04/99: Should I stick with the company IRA?
10/04/99: Get a financial education!
10/01/99: Insurance: Not much one person can do
09/30/99: Lost tickets are lost cash
09/29/99: Trusting only one financial planner
09/27/99: Adult children should help out
09/24/99: Tips for first-time home buyers
09/21/99: Use the rule of 72s!
09/17/99: Legal strategy can be a pain
09/15/99: Teen drivers drive up insurance
09/13/99: Always use an attorney!
09/10/99: Whose taxes are they, anyway?
09/08/99: How do I roll over my 401(k)?
09/03/99: How can I work out my IRS payments?
09/01/99: When your company can't pay you
08/30/99: Beware of shady viatical investments
08/26/99: Landlords vary on security deposits
08/25/99: Educational IRAs must be spent on education
08/23/99: Finding out the value of old stocks
08/20/99: How to get an FHA refund
08/19/99: 100 percent financing is a scam
08/16/99: Will I have to pay a capital gains tax?
08/16/99: Thinking about PMI
08/13/99: Short-term mutual funds a-OK
08/11/99: It's your job to shop around
08/10/99: Sometimes, roots need to be uprooted
08/09/99: 'Pre-approved' doesn't mean a thing
08/06/99: Only you can determine your investments
08/04/99: Bank IRA the lowest-risk option
08/03/99: Reverse mortgages good for the elderly
08/02/99: Get the survey BEFORE you buy the house!
07/28/99: Get a lawyer -- it's worth it!
07/27/99: If it ain't broke...

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