The market may not be the greatest risk to your retirement portfolio

Most investors think the greatest risk to their retirement portfolio is the stock market. As such, many of us have a myopic focus on returns, performance and investment risk. But are we ignoring a far greater risk—our health care burden? Let’s say you have amassed $1 million in savings toward your retirement. If faced with another stock market decline similar to 2008-2009 (year-over-year decline of 38% on the S&P 500 Index) or the cost of meeting your lifetime Medicare premiums, which has more risk? The 2017 Retirement Health Care Costs Data Report, put together by Health View Services, a data resource for financial advisors, reveals that the total retirement health care costs for a 65-year-old-couple retiring this year is $404,253. And that is in today’s dollars, which does not account for the medical inflation rate of 6%. These lifetime premiums include Medicare Parts B, D, supplanted insurance, dental, vision, hearing, plus deductibles, copays and any other out-of-pocket costs. It is a conservative number because the 6% medical inflation rate does not include a variety of additional medical costs that the typical person would pay. Just to be sure, I asked my partner Zack Marcotte, who just loves to crunch numbers, to figure out my health costs. My lifetime bill tallies up to be $420, 696.   Now, let’s look at market risk. You would have incurred a $380,000 stock market loss in the financial crisis, if you were fully invested in equities and took no action. Remember, too, that the 2008-2009 periods was the worst stock market loss since the 1929 crash. Many believe that the risk of another financial...

Volatility returns to the markets

It has been a “sell on the news” earnings season so far. Corporate results continue to beat earnings forecast, but most stocks have been either sold after the announcements or, at most, mark time. What does that say about the direction of the markets? Granted, you can’t read a whole lot into this week’s actions. We have had plenty of one-day pullbacks in the averages. Thursday’s dip (met by buying) could have only been one more. Once again, technology took it on the chin, but that is to be expected since tech has been leading the market, hitting new all-time highs on almost a daily basis. As I said last week, “expect a pullback sometime soon.” Right now, I am looking at 2,455 as a support level for the S&P 500 Index. If we remain above that level, then it is business as usual in this bull market; below that, and the story changes. Aside from earnings, which are still coming in at the predicted 75% “beat” rate (such a scam), the shenanigans in Washington have reached a level that the noise is beginning to spill over into the market. The Senate healthcare votes are a case in point. After a seven-year tirade over the failings of Obamacare, Republicans could hardly muster the votes to even discuss its repeal.  Despite a President who has been throwing a tweet tantrum over killing the Affordable Care Act on a daily basis, the Republican majority in the Senate could not even muster the votes to repeal even parts of the ACA. I, for one, say “hurrah,” since I have long been a...

The death of the gas guzzler may take longer than you think

There is a gathering consensus among certain countries and companies that gas and diesel engine cars could be relegated to the dustbin by 2040. How much of that is hype largely depends on who you talk to. This week the U.K. joined France in banning the sale of internal-combustion engines by 2040. Their ban follows on the heels of similar initiatives in several cities throughout Europe.  The main impetus for these moves has been Europe’s efforts to curb auto pollution dating back to the mid-Nineties’ emission controls. Although the UK and France represent only about one-third of autos sold in the EU, most European countries are sympathetic to regulations and deadlines that will reduce pollution, especially in an era where electric and fuel-cell vehicles are becoming a feasible alternative. However, U.K. and French auto production is a drop in the bucket compared to both U.S. and Chinese production. The two account for nearly half of all light vehicles sold in the world. The fact that in China, the central government has been working to discourage consumers to purchase gas guzzlers, while promoting the manufacture and purchase of electric vehicles, lends increasing pressure to end fossil fuel vehicle production sooner than later. Actually, it is only here in the U.S. where the government (thanks to the Trump Administration) is rolling back emission standards. Part of the reason governments are now feeling confident that they can dictate an end to fossil fuel vehicles is the increasing number of studies that forecast electric vehicles (EV) will be both affordable and readily available no later than 2020. Some analysts on Wall Street expect...

Earnings keep stocks afloat

One week into second quarter earnings, the S&P 500 Index of companies are growing at 8.6%. Earnings “beats” are in line with past quarters with almost 75% of companies beating both earnings and sales estimates. Stocks haven’t really gained as a result, but; they haven’t gone down either. Recall that money-center banks reported great earnings last week, but it was a classic “sell-on-the-news” moment. Financials fell as traders took profits in the group.   Individual stocks in most sectors have responded in the same way this week.  Of course, there are always exceptions to the rule (Netflix for one, up 14% in one day), but the profit-taking has not been enough to send the averages appreciably lower. As I wrote last week, we are officially in no-man’s land where, in order for markets to gain any traction, we need a spate of new unexpected news. That’s a tall order as we enter August-September; traditionally slow months worldwide for financial markets. The most important story this week has been the continued decline in the U.S. dollar. It has reached a two-year low against the Euro, which is now trading at 116 Euros to the dollar. Part of the reason for the fall is the expectation that the European Community’s economic prospects are getting stronger. Yet, inflation, like elsewhere in the world, is still below the European Central Bank’s (ECB) targeted rate. As a result, the ECB has delayed the decision to wind down their bond buying program, which has been in place for the last few years. This follows a similar decision by the Bank of Japan earlier in the week....

How overworked nurses hurt you and your hospital

  Nurse throughout the country are complaining about their hours. Some critics say that they should be happy to have so much work and overtime. After all, plenty of people are working for minimum wage–if they can find a job at all. The problem is that nursing requires a heck of a lot more than your usual service job. Given that almost 90% of the care you receive in a hospital comes solely from nurses, the ratio of nurses-to-patients is a critical factor for you, the patient, and the hospital you enter. The higher the ratio of nurse to patients, the higher the risk that something unpleasant may happen to you during your hospital stay. Here are some of the risks. The more overtime a nurse works, the higher the chance of infection you have. The CDC says over two million hospital infections occur annually. On average, ICU nurses work overtime 5.6 % of the time in most major hospitals. So you do the math. When overworked nurses are stressed beyond their ability to cope, the chances of errors in medications increase and with it the mortality rate of patients. Then there is “The failure to rescue” syndrome. That’s when the patient goes into critical mode. On TV, the heart rate monitor beeps out a warning, the intercom screams out that the patient is coding, a dozen nurses rush in, armed with every conceivable medical device and bring you back from the dead. But in real life there may not be anyone available to rescue us. It happens more times than you know. Hospital accidents do happen and errors...