NY Times article: Plan on Growing Old? Then the Medicaid Debate Affects You

growingoldBy Ron Lieber, New York Times
June 30, 2017

These are the stories we tell ourselves: I will never be poor. I will never be disabled. My child will develop normally. They stand a decent chance of being true, even.

There is one tall tale, however, that ought to inspire a great deal of skepticism: I will be able to pay for myself in my old age.

In fact, a majority of people cannot and do not. One in three people who turn 65 end up in a nursing home at some point. Among the people living in one today, according to the Kaiser Family Foundation, 62 percent cannot pay the bill on their own.

And when that happens, Medicaid pays. The very Medicaid program that stands to have hundreds of billions of dollars less to spend if anything like the health care bills on the table in Washington come to pass.

Click here to read the full article: https://www.nytimes.com/2017/06/30/your-money/plan-on-growing-old-then-the-medicaid-debate-affects-you.html?action=click&contentCollection=your-money&region=rank&module=package&version=highlights&contentPlacement=2&pgtype=sectionfront

Estate Planning Workshops this week at DePaul University!

elderly-woman-doing-paperwork-1024x682EVENT LOCATION


TUESDAY, JULY 11 from 6:00 TO 7:00 PM    OR
THURSDAY, JULY 13 from 6:00 TO 7:00 PM

You are invited to our complimentary workshop on Estate Planning Essentials: Get Expert Answers to the Most Common Questions About Estate Planning. Estate Planning is not just for the wealthy. Estate Planning is for everyone. Give your heirs peace of mind and prevent potential conflicts. Take the guess work out of some of the most important decisions affecting your Estate.


  • How to Avoid Unnecessary Legal Costs and Avoid Tax Losses
  • Understanding Wills and The Do’s and Dont’s to Protect Your Estate and Heirs
  • How You Can Relieve Loved Ones from Making Tough Emotional Decisions
  • Probate Court: Learn the Purpose, Process and REASONS TO AVOID IT!
  • The Trust Puzzle: Revocable? Irrevocable? What Does This Mean to You?

  • Understanding New Estate Tax Rules and How They Can Help (or Hurt) You

  • Learn Why a Durable Power of Attorney Can Significantly Impact Your Estate

Learn more and register here:  www.atfinancial-edu.com/estateplanning

Market Commentary: Meeting Your Income Needs Begins with Identifying Them

MarketCommentary2016-croppedWhether it’s pulling out of the Paris Agreement on climate change, a testimony given by the former FBI Director, or the ongoing investigation into Russia’s interference in the 2016 election, Donald Trump’s presidency has been a tumultuous one so far. Yet, for whatever reason, the stock market has remained largely oblivious to all the turmoil. Although upward momentum from the November election ended in late March when Trump’s health care bill stalled, the markets have mostly continued to hover around their peak highs—despite one controversy after another coming out of the White House. Instead, it seems that big investors have focused on things like an encouraging jobs report, a slight first-quarter GDP increase over the fourth quarter of 2016, and their continued hope for the success of Trump’s economic agenda.

As we noted last month, no matter what you think of the Russia investigation or any of the other controversies swirling around Trump and his administration, the chances that these investigations could ultimately delay or even derail Trump’s ambitious economic plan seem very real. “(It) slows everything down,” said policy analyst Isaac Boltansky about the Russia issue specifically. “From a market’s perspective, my concern remains that this issue is beginning to dominate the congressional bandwidth, which is a headwind for advancing the GOP’s pro-growth agenda.”

As for how long Wall Street will remain patient and hopeful—that’s anyone’s guess. But, as we also noted in another recent newsletter, an increasing number of analysts are now forecasting that a major directional change in the markets is likely no matter what happens with Trump. Legendary investor Jim Rogers told Business Insider recently that he believes a market crash is coming in the near future that will “rival anything he has seen in his lifetime.”

Another telling and potentially ominous detail we’ve discussed before has also remained consistent: big investors haven’t been fleeing the bond market in favor of stocks. They have remained committed to both, which is a possible indication that their optimism isn’t as great as it might seem. In fact, the 10-Year Treasury rate actually dropped from 2.29 at the beginning of May to 2.19 as of early June. To us, this suggests that big investors are still “hedging their bets” just in case.

Income Starts with Defense

Of course, you already know we believe that if you’re retired or near retirement, you shouldn’t really be making bets with your portfolio at all, never mind hedging them. You should, instead, be focusing on over-protection and strategies designed to generate the income you need to achieve your retirement goals regardless of market conditions.

But, how exactly do you know how much income that is? Well, you probably don’t until you sit down and figure it out—ideally with the help of a qualified financial advisor who specializes in income-based strategies. Not making this effort is a common and sometimes very costly mistake among retirees and near-retirees because it causes them to stick with risky growth strategies with a mindset of: “I better get all I can just in case.” To use a sports analogy, these people are focusing on offense even after they have more than enough points to win the game, and well after they should have shifted their focus to defense. They continue to unnecessarily invest for growth, forgetting—until it’s too late—that growth can quickly turn to loss.

As you may already know, once you do shift your focus to income instead of growth, you quickly realize that financial defense is a natural byproduct of investing for income. That’s important because your principal needs to be secure to reliably generate the interest and dividends you need to achieve your goals. In our experience, an ideal asset allocation for most people heading into retirement is one in which no more than 30 to 40 percent of your portfolio is in riskier options like stocks or stock mutual funds (even those, we believe, should be dividend-paying stocks), and the rest is in alternative strategies specifically designed for protection and income.

That kind of allocation allows you to utilize the four percent cash flow rule, meaning your investments are reliably generating at least four percent annual income through interest and dividends. For example, ideally, if you have one million dollars in invested assets, you should be able to generate approximately $40,000 a year in income because of the way your assets are allocated. Whatever the amount, the trick is to then add it to your Social Security benefits and any other sources of retirement income (such as a pension). Then, you should measure the total against your specific retirement goals, living expenses, and expected length of retirement.

Top-Down Analysis

Often, people find that their income needs are less than they would have guessed after they’ve done a “top-down” budget analysis. In other words, instead of adding up their expected retirement expenses, they start by identifying the expenses they expect to go away and subtract those. For example, if you’re making $100,000 a year while working, you can figure out how much of that is going into your 401(k) and subtract it. You can also subtract the 7.65 percent FICA tax that comes out of your check. And, if you expect to have your mortgage paid off by the time you retire, you can subtract that monthly expense as well. By the time you’ve subtracted all the expenses you will no longer have after retirement, you may find that the $100,000 you’re making now can be reduced to $70,000 of income with no negative impact. And, if you’re already retired, you should have a good handle on the anticipated expenses you’ll need to add (such as nursing home care, for example). This way, you’ll have a better idea of the amount of income you will need to address those expenses.

Of course, these are all just examples based on rules of thumb. The point is that whether you’re already retired or just in the planning process, knowing your specific goals and determining your income needs are good steps toward helping you recognize the strategic value of over-protection and the importance of satisfying your retirement needs and goals from income instead of principal.

NY Times article: Now, Your Financial Advisers Will Have to Put You First (Sometimes)

USdepartmentoflaborBy Tara Siegel Bernard
June 8, 2017

When a doctor prescribes a drug, most people trust that it is the best course of treatment. The next time you seek financial advice, those professionals will be required to act in a way that approximates the patient-doctor relationship. But many investors will still remain vulnerable.

The fiduciary rule — which was created under the Obama administration and has, for now, survived efforts to quash it — takes partial effect on Friday. That means all types of financial advisors, including brokers and insurance agents, must put their customers’ interests ahead of their own financial motives, at least when handling customers’ retirement accounts.

While the new rule strengthens consumer protections, there are large gaps in what it actually covers. And nothing in the rule requires professionals who call themselves wealth managers or financial advisers to advertise the fact that they may only be licensed to sell a product — and have little training or education in genuine financial planning.

Click here to read the full article: https://www.nytimes.com/2017/06/08/your-money/now-your-financial-advisers-will-have-to-put-you-first-sometimes.html?ref=your-money&_r=0

As inflation eludes, U.S. rate-hike bets lose shine (Reuters)

Clouds over the Federal Reserve in WashingtonBy Richard Leong
Reuters, New York
June 12, 2017

A surprisingly weak run of U.S. inflation data has investors backing off bets the Federal Reserve will meet its three targeted interest rate hikes this year, and has breathed fresh life into the bond market after a rough start to the year.

The Fed’s preferred measure of price pressures earlier this year had shown signs of breaking out of five years of stagnation to reach the Fed’s 2 percent inflation goal, partly on hopes of the Trump administration’s fiscal stimulus. But lack of progress on the Trump agenda, only a wisp of wage growth, and three straight months of falling oil prices have sapped that momentum.

Click here to read the full article: http://www.reuters.com/article/us-usa-bonds-inflation-analysis-idUSKBN1930H0

Strategies to Cope With Permanent Debt (Reuters article)

FILE PHOTO: A credit counsellor goes through a checklist with a client in need of help with debt in OrlandoBy Chris Taylor
June 2017

Most people think of debt as a temporary condition: Something you accumulate early in life, chip away at during prime earnings years, and say good riddance to well before retirement.

But what if your debt is permanent?

Then you might feel like Annette Loos, a 57-year-old mom from Kansas City, Missouri who has around $20,000 in student debt that she pays a bit of every month. Even though she has a good job as a project manager in the banking industry, her debt from her college days just sticks around.

“I joke that it will be written on my gravestone, ‘She is still paying her student loans,’ ” says Loos, who earned her degree in 1984. “It’s depressing because it never seems to go away.”

Loos is not alone. A new study from Northwestern Mutual shows that 14 percent of people surveyed expect that their debts will last for the duration of their lives.

Seen in that sense, debt takes on a darker hue. It is no longer a useful tool that can help secure a college degree, or buy a first home. Instead, life can start to feel like a Dickensian “debtor’s prison,” waking and working just in order to pay more interest.

It is common knowledge that Americans are struggling under the pressure of debt. In fact, in the first quarter of 2017, total U.S. consumer debt reached $12.7 trillion, according to the Federal Reserve Bank of New York. This new peak surpassed the previous record reached back in 2008. Student loan debt alone has now hit an astonishing $1.3 trillion.

Click here to read the full article: