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...

A tale of two charities

As Senate Republicans unveil their version of a new health care law replacing the Affordable Care Act today, Democrats are already crying foul. But while politicians are busy back-stabbing each other, there are real people out there who are sick and getting sicker. These are Americans who can’t afford, or can no longer find, insurance. Their stories are evidently not “newsworthy”. Instead, the media prefers to accentuate the divisions among our lawmakers, while President Trump describes the House “Choice Act” as “mean”. In the meantime, who is taking care of all those sick and elderly victims in this supposedly divisive America? Well, the national, 90-clinic strong, Volunteers in Medicine (VIM) are doing their damdest to help. “A national solution to America’s uninsured”, is the slogan of this the non-profit organization founded in 1994 by a physician, Dr. Jack McConnell, in Hilton Head, SC. They provide free medical, dental and other health-related services to all those who have no insurance and can’t afford it. Sound familiar? It should. In my last column, I wrote about the heroic volunteers of the Mercy Mission, a wholly-volunteer, charitable organization deep in Trump country that is doing a yeoman’s job of providing the same–free dental and medical services to the poor and undocumented in Fort Worth, TX. This week, I visited a VIM clinic in Great Barrington in Berkshire County, MA. http://www.vimberkshires.org Hillary Clinton once called Massachusetts “the Red Army of the Democratic Party”. You can’t get more liberal than Great Barrington. It is where Arthur Peisner, the local VIM Chairman, oversees 150 volunteers that have provided 4500 hours of clinical services this year...

Healthcare costs are strangling us

Recently, none other than the Sage of Omaha, Warren Buffet, has sounded the alarm on what he sees as the number one threat to American businesses—rising health care costs. His advice is that we better do something and do it quickly. While Congress bickers over how to repeal and replace Obamacare, there is still a large body of American politicians who believe we should simply return to the good old days. While they fiddle with adjusting insurer’s premiums, or gutting Medicaid, the entire healthcare system surrounding them continues to burn. While they debate whether you should be responsible for your own medical insurance and how much Medicare should cover, health care costs rise at the rate of hyperinflation. Our legislators and president are strangely silent on what happens to those whose employer does not provide health insurance because they can’t afford it; (which is the case for many in small businesses). And by the way, small businesses happen to be the main employer of American labor. They are also silent on what happens to those of us whose Medicare insurance premiums, plus uncovered medical expenses, become higher than their retirement income. Recent estimates put uncovered medical costs at $260,000 for these same retirees. Of course, there is always Medicaid for the impoverished among us. But even that program, if the House has its way, will be reduced by $1 trillion this year. The politicians are focusing on the symptoms and not the cause of our healthcare problems. Mr. Buffet, a Democrat, in his recent shareholder meeting, took time to address what he called the real problem for American business,...

Should college be free?

Recently, New York became the first state to offer a tuition-free college education to middle-class students at two and four year public colleges. Tennessee, Oregon and the city of San Francisco have also given similar benefits to students attending community colleges in their states. It’s about time. The headline of this column was taken from a series of articles I first published six years ago. At the time, I argued that the benefits of a college education today were about equivalent to the worth of a high school degree back in the 1940s and 1950s. Back then, graduating from high school opened the door to a good job, while creating a population of largely, law-abiding citizens (and guaranteed educated cannon fodder for the country’s military in time of war). Back in the day, when Thomas Jefferson first suggested creating a public school system, he and others like him argued that a free and common education would create good citizens, unite society and prevent crime and poverty.   It took decades before that concept became law but, once implemented, it worked as the founders expected. However, as society changed, a high school education was no longer sufficient. The computer age ushered in different educational demands and skill sets that students could only acquire in a higher-education environment.  For all intents and purposes, college (and vocational schools) has replaced high school as the entrance ticket to the “American Dream.” As such, I reasoned that since public high school education is free in the United States, why then should Americans pay for college? Under the New York legislation, tuition will be free for...

Markets wobble as geopolitical concerns escalate

This holiday weekend will be a worrisome one for global investors. Concerns that North Korea may decide to exhibit another show of force in the face of American warships off its coast has markets cautious and with good reason. The sad truth is that Kim Jong-un, the North Korean dictator, is unpredictable. It is one reason why the United States has steered clear of military confrontation with this country—up until now. If he does try something, like a nuclear missile test for example, our new president’s response may also be unpredictable. In fact, my hope is that China can exert pressure on its North Korean neighbor to stand down. In a remarkable shift in Chinese policy, a PRC-controlled media outlet warned North Korea this week that China would respond to any nuclear test severely. It could, for example, stop the flow of oil into North Korea. That would cripple North Korea’s already troublesome economy. It has also staged troops on its border with North Korea. I doubt they would use them but… Behind the scenes, President Trump and his Chinese counterpart, Xi Jinping, have been talking by telephone this week to diffuse the situation. Was there a little deal-making going on as well? It was probably not a coincidence that China voiced public displeasure with its long-term client state in the same week that Trump declined to name China as a currency manipulator ( something he had promised to do while campaigning). Adding to investor’s worries is the continued back-and-forth between the Russians and the Trump Administration over Syria. Evidently U.S. spyware had recorded Syrian officials discussing the planned...

Don’t let romance blind you to the financial downside of living together

Unmarried couples need as much, if not more, financial and estate planning than those who are married. Without it, one or both partners may lose everything they have committed to the relationship. Here is a primer on what steps you should take. Over 6.7 million unmarried couples are cohabitating in America at last count. Over 90% of them are heterosexual, in case you’re wondering. As such, these couples, regardless of sexual orientation or length of the relationship, are considered and classified as unrelated individuals in the eyes of the law. And the rights of unmarried couples are different depending on your state. Not all states, for example, recognize common-law marriages. As a result, without legal safeguards, the children you are raising, the assets you have mutually accumulated, and the house that you share can easily be taken from the surviving partner. The law will assume that any property and the care of surviving children should pass to your next of kin. Even your stated wishes of what you would want to happen in the event of your death or disability may not be followed. Okay, now that I have your attention, the first rule is to protect your estate. Your estate is everything and anything you own, or have contributed to before your death. Next, there needs to be documents established for situations that may be short of death but that still safeguard your rights. This would include what happens to you and/or your partner in the event of disability or illness, which might require someone else to make medical and financial decisions for you. Such an agreement is...