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Carpe Diem and Other Relevant Clichés

Have you thought about when you will retire, or what you will do with all that spare time? If you’re a baby boomer, that may still be a foreign idea. Like many, you may be well entrenched in your career, in your highest earning years, with the kids out of the house and perhaps still paying for college.

Do you even want to stop working? Well, maybe the job you’re at right now. Perhaps it’s time to start thinking about where ideally you’d like to be in 5 to 10 years. That sounds like a question you’d ask a twenty-something fresh out of college. However, that question may be far more relevant for today’s pre-retirees.

[CLICK HERE to read the report, “When Baby Boomers Delay Retirement, Do Younger Workers Suffer?” by The Pew Charitable Trusts, October 8, 2012.]

[CLICK HERE to read the article, “Successful baby-boomer entrepreneurs,” at CNNMoney.com, May 22, 2012.]

[CLICK HERE to read the article, “Older entrepreneurs find new niche in startups,” at USA Today, March 11, 2012.]

After all, young adults don’t have a lot of options. They have to get a job–and for many these days that means any job they can find. For the majority of young people, their careers meander for awhile until they begin to focus on what they really want to do, and what they’re good at (not necessarily the same thing). So asking a 25-year old where he wants to be in five years may be asking him about his wildest dreams.

Asking someone in their 30s or 40s may not be much better. Those are the years when you finally get a foothold in your career aspirations and are less inclined to make a change to pursue new interests or opportunities. Not to mention that reliable income the key to raising a family and paying the mortgage.

However, for someone mid-career and middle age, not so much. You have options. You have resources–albeit perhaps not as robust as you may have hoped for by this age. But still, owning a home, making a good salary and having the knowledge and experience to know that you could find another position if you needed to–that’s no small matter. That’s called success.

The fact is, you may well be in the prime of your life. Now is when you can set yourself up for a truly positive and empowering future. You may be on the “treadmill” now, as referenced by a recent New York Times article, but high-earning years combined with reasonably good health, equal strength and empowerment.

[CLICK HERE to read the article, “Will I Ever Get Off This Treadmill?” at the New York Times, October 10, 2012.]

You don’t have to be 27 to seize the day–and many 27-year olds don’t have the confidence, experience, and resources to do so. “Carpe diem” should be the anthem of today’s pre-retirees. You’ve weathered difficult times and learned first-hand that economics are cyclical–much like life experiences.

If you’re ready to “take the bull by the horns,” “grab that brass ring,” and every other cliché previously attributed to energetic youth: Now is the time. Consider converting and/or repositioning the wealth you’ve accumulated to set your course for a brighter, more fulfilling path to the future.

Every industry out there is working hard to cater to your generation, your needs and your retirement, so we’ve lots of tools designed for just that purpose. Let’s get started taking advantage of them.

[CLICK HERE to read “Boomers Are ‘The Most Valuable Generation’ For Marketers, Nielsen Report Finds,” at Huffington Post, August 17, 2012.]

[CLICK HERE to read the article, “Baby boomer band reunites after years, revives memories of an era,” at the Boomer Cafe, October 1, 2012.]

The information and opinions contained herein are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by our firm. Content is provided for informational purposes only and is not a solicitation to buy or sell the products mentioned. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation.

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Have We Reached “The Tipping Point”?

In New York City between 1990 and 1999, the homicide rate dropped 73 percent, burglary 66 percent, assault 40 percent, robbery 67 percent and vehicle hoists 73 percent.1 Fascinated by the question of why change so often happens as quickly and as unexpectedly as it does, author Malcolm Gladwell wrote of this and many other instances in his 2002 book titled, The Tipping Point: How Little Things Can Make a Big Difference.

 

Wouldn’t it be great if a bunch of small improvements in our economy added up to a tipping point whereas growth and jobs and real estate values rose exponentially over the next year? Perhaps that’s a bit overly optimistic, but let me share some recent news that may just have the power to create a tipping point for our economy.

 

[CLICK HERE to read interview, “What is the Tipping Point?” at Gladwell.com.] 

1[CLICK HERE to read the report, “What Reduced Crime in New York City,” at the National Bureau of Economic Research, retrieved October 5, 2012.]

 

Jobs

The U.S. unemployment rate fell to 7.8 percent last month, boosted by 873,000 previously out-of-work Americans who found jobs. That’s the lowest rate in nearly four years. New revisions to previous jobs reports show that employers added 146,000 jobs per month from July through September, up from 67,000 previously reported in those months–indicating that better progress was happening all along. We just didn’t know about it.

 

[CLICK HERE to read the “Employment Situation Summary” at the U.S. Bureau of Labor Statistics, October 5, 2012.]

 

Manufacturing

Much has been discussed in the news particularly about manufacturing jobs, of which many were outsourced overseas over the last decade, much to the nation’s detriment. The September jobs report revealed 16,000 jobs were lost during that month. However, the Manufacturing Report on Business from the Institute for Supply Management (ISM) revealed that economic activity in this sector expanded in September after contraction throughout the summer months.

 

You can learn more about the role of manufacturing in this country from the Chief of the U.S. Census Bureau’s Manufacturers’ Shipments, Inventories and Orders Branch (commonly known as the M3 Survey) at the link below.

 

[CLICK HERE to view the presentation, “Manufacturing in the U.S.,” at Census.gov, October 2012.]

 

[CLICK HERE to read the “September 2012 Manufacturing ISM Report On Business,” at ISM.ws, October 3, 2012.]

 

Home-Based Work

On October 4, the Census Bureau also released a report on the increase of people working from home. Over the last 10 years, this demographic has increased by 4.2 million in the U.S. In some cases, the Great Recession has given rise to a nation of entrepreneurs, albeit by virtue of necessity.

 

But in many cases, companies are taking advantage of technology to decrease expenses and allow more employees to work from home. Nearly 10 percent of all workers work from home at least one day a week, according to the report. Interestingly, the survey also revealed that median household income was significantly higher for people who worked at home ($74,000) compared to people who worked onsite for their company ($65,600).

 

[CLICK HERE to read “Census Bureau Report Shows Steady Increase in Home-Based Workers Since 1999,” at the Census Bureau, October 4, 2012.]

When you consider steady income the one key factor that can boost home buying, consumer spending and investing, it does seem possible that a cluster of short-term but positive jobs reports could indeed be our tipping point.

 

If you’re feeling positive about your future income prospects, please contact us to help you get your money working harder for you.

 

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Tax Plans: Obama vs. Romney

Oh, there’s nothing like a good brouhaha to stir up a presidential election. If you’re a fan of political mudslinging, grandstanding rhetoric and muckraking media, you must be thoroughly enjoying this pre-election season.

A big part of the presidential campaign platforms is tax reform at both the personal and business level. Tax changes present an opportunity to stimulate the economy, lower–or raise–the nation’s deficit, and promote job growth.

There’s tons of analysis of the Democratic and GOP plans on both sides. However, ambiguity over exactly what deductions and credits would be changed or eliminated creates a wide net of speculation about which plan would benefit whom–and which would be best overall for the country. To summarize:

President Obama’s tax plan:

  • Extend the Bush tax cuts only for taxpayers earning less than $250,000 each year
  • Increase the number of tax brackets from five to seven tiers
  • Extend the reduced payroll tax scheduled to expire this year.
  • Raise the tax on long-term capital gains and qualified dividends to 20 percent
  • Retain the additional 3.8 percent Medicare cap gains tax for taxpayers earning more than $250,000
  • Impose a 28 percent cap on the total amount of itemized deductions across all tax brackets

Mitt Romney’s tax plan:

  • Reduce individual income tax rates by 20 percent for all tax brackets
  • Increase the number of tax brackets from five to six
  • Eliminate tax breaks, incentives and “special interest” loopholes
  • Repeal the alternative minimum income tax
  • Eliminate capital gains, dividend, and interest taxes on investments owned by taxpayers who earn less than $200,000
  • Impose a long-term tax rate of 15 percent on investments for higher-income investors
  • Repeal the additional 3.8 percent Medicare tax on capital gains

For more detailed analysis of the two candidate’s tax reform plans, check out the links below.

[CLICK HERE to read the article, “Obama vs. Romney: Key Differences in Taxes, Regulation,” at AdvisorOne.com, September 12, 2012.]

[CLICK HERE to read Mitt Romney’s plan for jobs and economic growth, “Believe in America,” at MittRomney.com, 2011.]

[CLICK HERE to read the President’s Budget for Fiscal Year 2013 at WhiteHouse.gov, February 13, 2012.]

[CLICK HERE to read the white paper, “On Distributional Effects of Base-Broadening Income Tax Reform,” at the Tax Policy Center, August 1, 2012.]

Corporate Taxes

As for corporate taxes, both candidates favor reducing the tax rate to help America become more globally competitive. Romney would like to reduce the current 35 percent rate to 25 percent and change to a “territorial” payment system, extend the write-off of capital expenditures for an additional year, lower the payroll tax, and create a robust investment tax credit.

Obama supports our current “worldwide” tax system (we’re the only developed country to still use this system, wherein multi-national companies pay taxes in their host countries and the balance of the U.S. tax they would owe had those revenues originated here). However, he proposes reducing the corporate tax rate from 35 percent to 28 percent for all industries except manufacturing (25 percent).

[CLICK HERE to view the Fox news video report, “Scott Hodge on America’s High Corporate Taxes,” at YouTube.com, September 10, 2012.]

[CLICK HERE to read the White House report, “The President’s Framework for Business Tax Reform,” at Treasury.gov, February 2012.]

Regardless of who wins the presidential election, any real attempt at tax reform in the next year or two would be a tremendous undertaking given our current slow moving economy, stalled employment, and budget deficits–not to mention the likelihood that Congress will remain divided. As always, we recommend you regularly revisit your portfolio and insurance products to see if there are ways to be more tax efficient.

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The information and opinions contained herein are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by our firm. Content is provided for informational purposes only and is not a solicitation to buy or sell the products mentioned. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation.

If you are unable to access any of the news articles and sources through the links provided in this text please contact us to request a copy of the desired reference.

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Oops, I Did It Again

September was a tough month for the GOP presidential campaign, marked by a series of unfortunate utterances by Republican candidate Mitt Romney. The most damaging of all was an hour-long video of him speaking at a private fundraiser, which came on the heels of misspoken comments about recent foreign policy. 

 

You’ve probably heard the highlights in the news already, but if you’re interested in seeing the video in its entirety, you can view it (and a full transcription) at the links below.

 

[CLICK HERE to view “Full Secret Video of Private Romney Fundraiser” at MotherJones.com, September 18, 2012.]

 

[CLICK HERE to read “Full Transcript of the Mitt Romney Secret Video,” at MotherJones.com, September 19, 2012.]

 

Is It True About the 47 Percent?

Yes, apparently the statistic Romney quoted in the video is true: 46.4 percent of American households did not pay federal income taxes for the 2011 tax year. But as we’ve heard from various analysts since the release of the video, that number appears a lot less dramatic in context.

 

According to the Tax Policy Center of the Urban Institute and Brookings Institution (comprised of nationally recognized experts in tax, budget, and social policy who have served at the highest levels of government), nearly two-thirds of those households did have payroll taxes taken out of their paychecks, which is the tax used to fund entitlement programs such as Social Security and Medicare. Among the remaining 18.1 percent that did not pay any taxes–payroll or otherwise–just over 10 percent were elderly. 

 

[CLICK HERE to read “Mitt Romney’s 47 Percent: Doing the Math,” at the Harvard Business Review Blog Network, September 18, 2012.]

 

[CLICK HERE to view analysis of “Who Doesn’t Pay Federal Taxes?” at the Tax Policy Center, 2012.]

 

[CLICK HERE to read, “Half avoid taxes, get U.S. help, but many not poor,” at Associated Press, September 18, 2012.]

 

In a recent report from National Public Radio (NPR), congressional correspondent David Welna pointed out that in 2009, half a dozen of the nation’s 400 wealthiest households also paid no federal income taxes thanks to tax breaks for investment losses. Furthermore, he points out that the biggest reason why so many households pay no federal income tax is due to the earned-income tax credit (EIC)–a subsidy for low-wage workers–which was enacted by Congress in 1975 (during President Ford’s term). 

 

President Reagan further expanded the EIC as part of the 1986 Tax Reform Act, stating that “Millions of working poor will be dropped from the tax rolls altogether.” President Clinton also expanded the EIC during his administration, and then President George W. Bush initiated the child tax credit–which raised the percentage of Americans who paid no federal income tax to 36 percent by the end of his presidency.

 

[CLICK HERE to read/listen to the NPR report, “Why Some Are Exempt From Federal Income Taxes,” at National Public Radio, September 19, 2012.]

 

Perhaps less focus should be on Romney’s comments about the 47 percent of Americans not paying taxes and more on his point that people “should take personal responsibility and care for their lives.” While taxes are designed to help pay for programs like Social Security and Medicare, they were never designed to provide for 100 percent of a retiree’s income or health care expenses. That’s where the importance of independence–versus being “dependent on government”–comes into play.

 

And that’s where we can help. We can offer you strategies that may help cover a greater portion of your income and medical expenses in retirement, based on your specific needs and financial situation. Contact us to find out more.

 

 

The information and opinions contained herein are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by our firm. Content is provided for informational purposes only and is not a solicitation to buy or sell the products mentioned. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation.

 

If you are unable to access any of the news articles and sources through the links provided in this text please contact us to request a copy of the desired reference. 

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The Fed Steps Up

Five million Americans have been out of work for more than six months. Less than half of the eight million jobs lost during the recession have been restored. In his press conference announcing the latest plan by the Federal Reserve to help improve the U.S. economy, Fed Chairman Ben Bernanke made it clear that the committee’s focus is to generate jobs in this country.

This latest effort by the Fed will buy $40 billion in mortgage-backed securities every month until it sees substantial improvement in the unemployment rate. 

 

[CLICK HERE to view the video, “Press Conference with Chairman of the FOMC, Ben S. Bernanke” at YouTube.com, September 13, 2012.]

 

[CLICK HERE to view an infographic on “How Quantitative Easing Works,” at The Wall Street Journal, September 14, 2012.]

 

A key point in the Fed’s statement was the open-ended nature of the bond purchases – for as long as necessary until there is evidence of “ongoing sustained improvement in the labor market.”  This a significant departure from earlier policies that specified the amount of bonds that would be purchased, and reinforces the committee’s pledge to do whatever it takes for as long as it takes to spur sustained growth in employment.

 

Note, however, that the Federal Reserve has limited tools in its tool chest to impact change in job numbers. In his own words Bernanke admitted, “I want to be clear; while I think we can make a meaningful and significant contribution to reducing this problem, we can’t solve it. We don’t have tools that are strong enough to solve the unemployment problem.”

 

Reactions

Much as Mario Draghi, President of the European Central Bank, announcement last July he would do “whatever it takes” to save the Euro, Bernanke’s words gave an initial positive boost to the market and surprised economists with the boldness of the Fed’s intended moves.

 

Michael Gapen of Barclays observed that, “These moves indicate the accommodation switch has been ‘turned on’ and the data have to tell the committee when to stop.” Joel Naroff of Naroff Economics commented that, “the Fed is admitting that its best bet to improve growth is by continuing to help this [housing] sector. By keeping mortgage rates down, the members are betting that housing starts will accelerate, creating more jobs and income.”

 

[CLICK HERE to read the article “Debt crisis: Mario Draghi pledges to do ‘whatever it takes’ to save euro,” at The Telegraph, July 26, 2012.]

[CLICK HERE to read “Economists React: “Bold Shift in Fed Policy,” at The Wall Street Journal, September 13, 2012.]

 

[CLICK HERE to read the article, “Stocks extend Fed rally,” September 14, 2012.]

 

Please feel free to reach out to us if you have questions about what the Fed’s latest round of QE means for you. We’re happy to look at your portfolio within the context of these moves and consider the best way to position your assets for the foreseeable future.

 

The information and opinions contained herein are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by our firm. Content is provided for informational purposes only and is not a solicitation to buy or sell the products mentioned. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation.

If you are unable to access any of the news articles and sources through the links provided in this text please contact us to request a copy of the desired reference.

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Scraping Together Retirement Income

 

According to the Federal Reserve’s 2010 Survey of Consumer Finances released in June, the typical U.S. household between ages 55 and 64 held just over $42,000 in their tax-exempt (IRA, 401(k), etc.) retirement plans, and the average value of bank savings accounts dropped in half, to $18,000. That’s about $60,000 available for retirement which, when coupled with the maximum Social Security benefit, would last retirees with a current household income of $100,000 about one year and one month (based on an 80 percent replacement rate).

[CLICK HERE to read the bulletin, “Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances,” at the Federal Reserve, June 2012.]

[CLICK HERE to read the report, “401(k) Plans in 2010: An Update from the SCF,” at the Center for Retirement Research at Boston College, June 2012.]

The Boston College’s Center for Retirement Research recently published a report revealing that a mere 42 percent of private sector workers in the U.S. had defined-benefit and/or defined-contribution plans at work in 2010. While more women now participate in employer plans than 30 years ago, recent analysis shows that participation is closely correlated to earnings. Among the top quintile of high earners, two-thirds of workers–both male and female–participate in plans, whereas only 11 percent of workers in the bottom quintile participate. Given the continued lag in earnings of women compared to men (in 2010, the median earnings of women working full-time were about $36,900, compared to $47,700 for men[1]); participation numbers among women also lag compared to men.

From 1998 to 2009, working women surpassed men in their likelihood of having an employer that offered a pension plan, but were less likely to be eligible for and participate in those plans. When you consider that women are more likely to become single (widowed or divorced) in old age, possess a higher life expectancy and on average earn less lifetime income than men, the risk of retirement poverty is significantly higher for women.

The United States Government Accountability Office recently published a report concerning the plight of women facing retirement, stating that although recent economic events have affected both men and women, the outcome has the potential to exacerbate older women’s financial insecurity.

[CLICK HERE to read the report, “The Pension Coverage Problem in the Private Sector,” at the Center for Retirement Research at Boston College, September 2012.]

[CLICK HERE to read the paper, “Retirement Security: Women Still Face Challenges,” at the United States Government Accountability Office, July 2012.]

Is it any wonder then that in a recent AP-GfK poll, the majority of respondents said they supported raising taxes and the retirement age in order to save Social Security benefits for future generations? Participants indicated they would rather pay more taxes than reduce the level of monthly benefits, which currently represents about 40 percent of retirees’ income, on average.

[CLICK HERE to read the article, “Narrow majority supports raising taxes, retirement age to save Social Security,” at AP-GfK, August 26, 2012.]

One of the biggest financial challenges in your life may be funding your own retirement–independent of the government or your employer. We can take a look at all of your assets, even sources you may not perceive as assets, and help you position them to provide retirement income. In the future, many Americans may be scraping together retirement income, but we’d like to help you secure it.

 

 

 

 

 

 

The information and opinions contained herein are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by our firm. Content is provided for informational purposes only and is not a solicitation to buy or sell the products mentioned. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation.

 

 

 

 

 

If you are unable to access any of the news articles and sources through the links provided in this text please contact us to request a copy of the desired reference.

 

 

 [1] Carmen DeNavas-Walt, Bernadette D. Proctor, and Jessica C. Smith, “Income, Poverty, and Health Insurance Coverage in the United States: 2010″ Current Population Reports, Consumer Income, United States Census Bureau, P60-239 (September 2011).

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Great Recession Strikes Home

According to a new study by Prudential Financial, the majority of women today are financially responsible for providing their own and their families’ income. Among the 1,400 women surveyed, 53 percent are primary breadwinners, and 22 percent of women who are married or living with a partner report being the one who makes the most money. The research concludes that these recent findings are largely due to the impact of the Great Recession.

[CLICK HERE to read the  news release, “Women are primary breadwinners, whether they like it or not,” July 11, 2012.]

[CLICK HERE to read the report, “Financial Experience & Behaviors Among Women,” from Prudential Financial, July, 2012.]

Economic Partnership
The 2009 National Marriage Project report, “The State of Our Unions, found that women offer more risk-management capabilities when it comes to managing the household investment portfolio. The study revealed that while husbands are more focused on performance, women view investments as a way to help secure their family’s financial future.

The study also concluded that since the beginning of the nation’s economic downturn, millions of Americans have relied on their own marriages and families to weather this economic storm. “The recession reminds us that marriage is more than an emotional relationship; marriage is also an economic partnership and social safety net. There is nothing like the loss of a job, an imminent foreclosure, or a shrinking 401(k) to gain new appreciation for a wife’s job, a husband’s commitment to pay down debt, or the in-laws’ willingness to help out with childcare or a rent-free place to live,” according to one of the report’s authors.

[CLICK HERE to read the “The State of Our Unions: Marriage in America 2009,” at The National Marriage Project, December 2009.]

[CLICK HERE to read the article, “The Great Recession’s Silver Lining?” at thestateofourunions.org, December 2009.]

[CLICK HERE to read the article, “The Smart Money: She Saves, He Spends,” at thestateofourunions.org,  December 2009.]

Job Front
According to the Institute for Women’s Policy Research, in the last three years of the recovery, men have recaptured 46.2 percent of all the jobs they lost since the beginning of the recession. Women are about 10 percent behind, having gained back 38.7 percent of jobs lost. Many of the job losses for women came from the public sector, as they are more concentrated in Government than men. However, growth in non-government jobs in the health and education sectors–the largest industries for women’s employment–have helped their recovery numbers.

[CLICK HERE to read the article, “Women Pick Up The Pace On Jobs Gains,” at The Wall Street Journal, August 13, 2012.]

One of the key lessons we’ve learned throughout these recessionary times is how to buckle the belt when there is no other option. If your household has acquired a new income source in light of economic growth and recovery, consider maintaining those spending controls and assigning the new income stream to a disciplined investment or savings strategy. After all, the lessons we learn today can go a long way to securing our future tomorrow. Please contact us to discuss this learning opportunity further.

The information and opinions contained herein are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by our firm. Content is provided for informational purposes only and is not a solicitation to buy or sell the products mentioned. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation.

If you are unable to access any of the news articles and sources through the links provided in this text please contact us to request a copy of the desired reference.

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A Health Care Plan – For You

A survey released in late July found that one in three doctors say they will quit practicing medicine in the next decade. But not because they’ll retire. Reasons given included declining reimbursement, unprofitable practices, and the high cost of doing business.

According to the report, “this confluence of economic and regulatory pressures is driving some physicians to early retirement and others out of the medical profession altogether. Plus, it’s influencing the emerging generation of talent to avoid the debt and risks inherent in becoming doctors.”

[CLICK HERE to read the article, “A Tough Time for Physicians: 2012 Medical Practice & Attitude Report,” at Jackson Healthcare, July 25, 2012.]

Well, that’s going to make things really difficult. The number of adults age 65 and older is projected to soar by more than 75 percent by 2030 – to nearly one in five U.S. residents.[1] We all know that the good health we tend to enjoy in younger years will likely deteriorate as we get older, so it’s easy to imagine demand for health care providers will increase exponentially during this timeframe. And in an era when demand will ramp up more than any other time in history, supply will be leaving the profession in droves – with reduced potential for replacement players.

Furthermore, when demand is high and supply is low, prices generally increase. Just to give you an idea of where they stand right now, the Society of Actuaries estimates a couple, both age 65, will need $230,000 to cover the cost of acute medical care and Medicare in their lifetimes, which doesn’t include the cost of long-term care insurance (that could cover some of these projected costs).[2]

[CLICK HERE to read the article, “Boomers Need Health-Care Costs Reality Check,” at FoxBusiness.com, August 16, 2012.]

[CLICK HERE to read the article, “Stern Advice – Managing medical costs in retirement,” at Reuters, August 8, 2011.]

[CLICK HERE to read the new release, “Federal report details health, economic status of older Americans,” at National Institutes of Health, August 16, 2012.]

We might be living long but, unfortunately, living longer doesn’t necessarily mean living healthier. In fact, the more active you’ve been in your younger years, the more likely you’ll need a joint replacement in old age. The less active you’ve been in your younger years, however, you may have more health issues overall.

Currently only about 25% of American employees have considered a plan for health care expenses in retirement.[3] Because medical expenses tend to increase the older you get, developing a separate plan to cover them is an important consideration. This requires estimating your health care needs and costs in retirement and determining if you should purchase additional health care coverage (Medigap insurance) to help preserve your personal assets and retirement income.

Feel free to contact us to talk about your personal health care plan in retirement. We’d like to help ensure it doesn’t conflict with your retirement income plan.

If you are unable to access any of the news articles and sources through the links provided in this text please contact us to request a copy of the desired reference.


[1] Institute of Medicine, “The Mental Health and Substance Use Workforce for Older Adults,” July 2012.

[2] Society of Actuaries, “Securing Health Insurance for the Retirement Journey,” 2012.

[3] Sun Life Financial Unretirement Survey; “Flying Blind: How Working Americans View Healthcare Costs in Retirement,” May 24, 2011.

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What “Recovery” Feels Like

What “Recovery” Feels Like

Today’s headlines are dominated by the claims, promises, accusations and trash talk of our noble presidential candidates. Each says they’re fighting for the future of middle-class Americans, a category of citizens for whom neither can admit to being a card-carrying member.

But who is the middle class, anyway? Recent research and survey trends have unleashed some interesting findings. For example, since 2000 the middle class has shrunk in size, from 61% of the adult population in 1971 to 51% in 2011. Not surprisingly, there were increases in the upper economic tier (from 14% to 20%) and lower tier (from 25% to 29%) during the same time frame.1

1[CLICK HERE to read the news release, “The Lost Decade of the Middle Class,” at Pew Research Center, August 22, 2012.]

[CLICK HERE to read the article, “Middle Class Exit ‘Lost Decade’ With Little Hope: Pew Report,” at The Huffington Post, August 22, 2012.]

Even though the Great Recession officially ended three years ago, the middle class isn’t really feeling much recovery in terms of its income – or home equity for that matter. Sixty-two percent say they had to reduce household spending in the past year due to money issues, whereas at the height of the recession in 2008, only 53% reported cutting back.1

According to data from the Federal Reserve’s Survey of Consumer Finances, American’s median net worth fell 28% from 2001 to 2010, erasing two decades of gains. From 2007 to 2010 alone, the value of middle income family assets fell by 19%.1

 

Mature Middle Class

From 2001 to 2011, adults ages 65 and older fared best, or so it would seem. Their incomes are higher now than in 2001, but you could also attribute this to the fact that many 65+ folks are continuing to work, whereas before they could retire. 

And speaking of earning income, mature workers do not appear to be enjoying the increases their younger peers are getting. According to a new report from Sentier Research, the typical household income for people age 55 to 64 years old is almost 10% less in today’s dollars than it was three years ago – when the recovery officially began. Actually, in almost every demographic group nationwide, Americans are earning less today on average than they did in June 2009, despite our third year in recovery.

Perhaps we should reconsider what “recovery” really means.

[CLICK HERE to read the article, “Big Income Losses for Those Near Retirement,” at The New York Times, August 23, 2012.]
 

Who’s Getting Paid More?

A recent AOH Hewitt survey found that companies are spending less on base pay increases for all workers, opting instead to reward high-performing workers with larger bonuses. According to an AON Hewitt spokesperson, “It is unlikely that salary increases will reach pre-recession levels of 4% or higher any time soon.” Aon Hewitt projects base pay increases of 3% in 2013 for executives, salaried exempt and nonexempt workers.

However, some areas of the country are more likely to pay higher increases than the national average, including Denver, Austin, Dallas/Fort Worth, Detroit, San Diego, Houston and Kansas City. Cities expected to pay lower-than-average increases in 2013 include San Francisco, Chicago and Minneapolis/St. Paul.

[CLICK HERE to read the news release, “Aon Hewitt Survey Shows Marginal Rise in Salary Increases in 2012; Spending on Performance-Based Awards Remains Strong,” at Aon Hewitt, August 13, 2012.]

[CLICK HERE to read the Employment Cost Index news release for June; U.S. Bureau of Labor Statistics, July 31, 2012.]

As our “recovery” continues to amble along, you may feel more confident about the future by putting your savings on track for risk-managed growth opportunity – coupled with retirement income security – for the future. We’ve got strategies that can help you do that. Please give us a call.

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Making Homeownership Viable Again

There’s been discussion in recent years about renting being a better investment than buying a home. Analysts have emphasized that homeowners need to take the perspective that owning a home is more about quality of life than the road to riches. But that’s like saying don’t invest in stocks when prices are low, which is a very short-term view. We’ve been taught to buy low and sell high, and that means even when the real estate market takes a turn for the worse, we need to steel ourselves, hang in there and trust in the long-term return.

 

It appears the residential market is poised to reward us for that long-term view. Maybe it didn’t make sense to sell your house when prices were dropping, but buying was and continues to be a very good way to build equity for the future. And with mortgage rates still at record lows, homebuyers today can position themselves for some very high returns on their investment in the future.

 

[CLICK HERE to read the article, “Rent vs. Buy: What the Standard Indices Aren’t Telling You,” at Zillow Real Estate Research, August 1, 2012.]

 

Jobs to Increase Prices

While improvement on the unemployment front is slow and generally disappointing, there is some comfort in knowing that lower home prices are more influenced by this economic factor rather than pure demographics. With a massive population of baby boomers in or on the cusp of retirement, there’s been concern that overbuilding over the last 30 years to accommodate this population increase would result in mass vacancies as the generation diminishes. However, the recession has helped curbed housing starts and the formation of new households – creating pent-up demand that may well explode when jobs return.

 

Young college graduates have been forced to move back in with mom and dad, mid-career layoffs have turned elderly parents into landlords, and a proliferation of fixed-income seniors have moved in with their adult children. This constriction of new and previous household formations has lowered demand for housing, thus reducing prices further. Traditionally, the average number of households fluctuated based on demographics, but now we can take heart in knowing that the current excess supply of vacant homes is at least partially due to pent-up demand, and we won’t have to wait for demographics to catch up with supply.

 

[CLICK HERE to read the commentary, “Pent-up Housing Demand: The Household Formations That Didn’t Happen – Yet,” at HousingEconomics.com, February 2, 2011.]

 

New Rules Proposed for “Investment Statements”

You might call it your mortgage bill, but the Consumer Financial Protection Bureau (CFPB) wants your monthly mortgage statement to look and act more like an investment statement – so you can monitor and manage this asset more closely. A few rules recently proposed by the CFPB include:

 

·     Servicers would have to send regular bills to homeowners each billing cycle that spell out payments by principal, interest, fees and escrow; the amount of and due date of the next payment; and warnings about fees.

·     Servicers would have to alert homeowners with adjustable rate mortgages that their interest rates are about to change as early as 7 months before the changes kick in.

·     Servicers would have to credit homeowners’ mortgage accounts the day payment is received.

 

[CLICK HERE to read the article, “New rules aimed at helping homeowners,” at CNNMoney, August 10, 2012.]

 

Home ownership has long been considered not only a good investment, but also the key to building significant wealth over a lifetime. As you approach retirement, there are many ways you can position this investment asset to help secure your lifestyle. Please give us a call if you’d like to discuss these options.

 

 

 

If you are unable to access any of the news articles and sources through the links provided in this text please contact us to request a copy of the desired reference.

 

The information and opinions contained herein are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by our firm. Content is provided for informational purposes only and is not a solicitation to buy or sell the products mentioned. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation.