From 1985 to 2014, the Consumer Price Index ran 5.1 percent behind the CPI-E, an experimental measure created by the U.S. Bureau of Labor Statistics to measure the inflation affecting elderly Americans, according to research by J.P. Morgan Asset Management.
The culprit is health care, which accounts for 13 percent of expenditures by Americans over age 65, compared with 5 percent for all other age groups, according to the Center for Retirement Research at Boston College.
With healthcare costs rising faster than inflation, it is becoming increasingly important for advisors to factor this into planning for clients, particularly elderly clients without the assets to absorb these costs.
Long-term care costs are rising steadily nationwide, but the costs vary significantly across the country, within each state and by the type of care needed.
Although the reasons for the variability in cost among the states are many, the point is that it is important that to know the cost of care in the states you have clients residing and to help them prepare for the possibility of the cost if/when needing this type of care.
While the launch of direct-to-consumer “robo-advisors” hasn’t exactly disrupted the existing AUM of (human) financial advisors, the technology tools of robo-advisors have done much to highlight the inferiority of many of the technology solutions...
Michael ends the article by asking some great questions to help you decide if a robo-advisor option would or should work for you...."So what do you think? Do you have interest in implementing a “robo-advisor” solution in your practice? What problem would it solve or role would it fulfill? Are some platforms more or less appealing to you than others? Would a robo-advisor offering change how you charge your clients or offer services to them?"
"A comprehensive new report on retirement health care warns that the expected increase in health care expenses for seniors will nearly swallow the average Social Security benefits Americans often depend on for retirement."
The report cited that a a couple aged 66 today can expect health care costs to eat up 67% of their lifetime Social Security benefits. The problem becomes more challenging for younger people since the projected health care inflation rate is about 6.5%.
HNW families don't always manage the physical risks to their increasingly valuable art collections with the same rigor they employ when managing financial investment risk.
The three main risks accounted for 75% of all fine art property claims for the past two years- Breakage, Water Damage, and Transit. Advisors can help clients understand and manage these risks by understanding what they are and how to reduce the risks.
A couple retiring in 10 years at age 65 will spend about 90% of their lifetime Social Security benefits on health care, HealthView Services warns.
The five charts and article looks at the various costs of health care found in the study and notes that healthcare cost inflation is 6%, up from 3.6% in 2014. The study forecasts healthcare inflation will continue at "a multiple of CPI and significantly outstrip Social Security cost of living adjustments."
The “kiddie tax” rules were created to limit the ability of families to save on taxes by simply shifting income – especially investment income – from higher-income family members (like parents) to lower income family members (such as children) to take advantage of their lower tax brackets.
Yet while the kiddie tax rules are unavoidable for young children, it is often possible to avoid their reach for college students, who are not subject to the kiddie tax if they also generate enough earned inco
As a guaranteed income stream that cannot otherwise be liquidated or reinvested, most retirees don’t think of their Social Security benefits as an asset. Nonetheless, its value actually can be calculated, given known payments and reasonable assumptions regarding interest/growth rates and life expectancy. And in fact, the payments are significant enough that it would take several hundred thousand dollars just to replicate the average Social Security retirement benefit for an average life expectan
For retirees who don’t wish to take any market risk, one of the most straightforward retirement income strategies is to simply purchase a bond ladder that will provide the desired cash flows in each year of retirement.
There is at least one corner of the investment universe where active management may be worth the expense—fixed income. If your clients have passively managed fixed income funds, it may be time to get out.
Although the majority of actively managed bond funds fail to beat their index, there are a few areas of the bond market where the passive approach doesn't win.
The article points out that "this passive advantage melts away when you look at the performance of investment-grade short- and intermediate-bond funds and global income funds. Only half of intermediate funds were outperformed by benchmarks, for example, compared to 95 percent of long-maturity government funds, S&P reported."
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