Healthcare: what you do need to do now

Donald Trump promised today that there will be “healthcare for everyone” after repeal of the ACA. He can actually do that very easily and cheaply, by cutting back the healthcare provided to “catastrophic” coverage. This category of plan exists today, but almost no one actively sells it because if provides very little value to the […]

via Healthcare: what you do need to do — CRAIN’S COMMENTS

Age and Perception

“I just can’t proof my own work.  My mind fills in what’s suppose to be there instead of seeing what is actually on the page.”

Have you ever heard anyone say that?  My guess is you probably have.  Heck, I’ve said that.

It turns out, there’s a physiological reason for this problem.  According to a new research report from the University of Arizona, the mind “inhibits” itself from auto-filling what one sees.  However, the ability to do this declines with age (1).

There are probably other factors that affect this ability to inhibit thoughts.  We just don’t know what they are.

Understanding this inhibitor and what affects its operation may explain a lot more than proofing mistakes:

  • The elderly have a very high incidence of slip and falls.  Is that because they don’t recognize obstructions when they see them?
  • The elderly are more prone to fall for scams.  Is that because they are slower to recognize signs of dishonesty?

What we have is a slowing of mental acuity independent of diseases like Alzheimer’s.  This slowing may have dramatic implications for healthcare costs for the elderly and for quality of life.  How we can slow or stop this decline requires further research because of its potential to affect so many households around the globe.

 


Sources:

(1) “Research shows how visual perception slows with age,” Science Daily, June 21, 2016.  https://www.sciencedaily.com/releases/2016/06/160621155010.htm

Sanity, Finances and Supplemental Insurance

Realistic thinking and an ounce of prevention can give you a happier life.  If it sounds simple, it actually is.  It’s harder to change one’s mindset than it is to take the actions that are needed.

Most Americans, and certainly older ones like me, grew up with several assumptions about how our lives would play out.

(1)  Income will increase over time.  Taking on debt now is OK, because you can pay it off with increased earnings in the future.

(2) Housing is an investment.  The value of housing will increase.  Buy as  much as you can afford now, and make money when you sell.  Take on an equity loan now, and the growth in value will enable you to sell, cover the loan and still make a profit.

(3) Kids will do better financially than their parents.  In  your old age, your kids will be able to help you if needed.

(4)  Social Security is there to cover basic expenses in retirement.

(5)  You will be able to retire and enjoy yourself in your later years.

Like the Easter Bunny, these are wonderful myths.  However, trying to live as if they were true is a quick path to what some analysts call, “money depression.”(1)  That in turn is linked to problems with relationships and health.(2)

That’s the deadly spiral:  money problems can trigger depression, which can trigger health problems, which can add to money problems.

The blind faith in the future is what enables people to spend everything they earn and dive into debt.  It’s why almost half of Americans admit they would have trouble handling even minor financial emergencies, like a $400 medical bill.(3)

The new era of “living within one’s means” requires three things:

(A) Realism about the lifestyle one can afford

(B) A realistic budget

(C) Resources to deal with “the inevitable unexpected”, so that these don’t siphon off money you need for other things.

Item (C) is where supplemental insurance fits.  No one expects to get sick or have an accident, but the average American spends over 9 years of his/her life dealing with illness or injury.(4)  No one expects to have an accident.  Most cancers in the US are now attributed to environmental rather than genetic factors.(5)  You simply cannot plan on staying well.  That’s not something you fully control.

Supplemental insurance works by providing cash to those who are hurt or ill.  The cash is paid to the insured rather than to healthcare providers, and can be used to meet health insurance deductibles and copays, as well as to pay living expenses while ill.

Supplemental insurance makes sense for most people because it is very low cost.  Policies start at less than $20 per month for individuals, and less than $40 per month for families.

Financial peace of mind means having a budget that works and knowing that you are protected to the extent possible against the “inevitable unexpected.”  Once you achieve financial peace of mind, you’ll find you have the time and energy to tackle other challenges in your life.

 


Sources:

(1) Williams, Goeff.  “7 Steps to Defeat Money Depression.”  US News.  6 Aug 2014.
Harding, Anne.  “When Money Ruins Your Mood.”  Health.com.  http://www.health.com/health/gallery/0,,20541338,00.html

(2) Crown, WH, et. al.  “The impact of treatment-resistant depression on healthcare utilization and costs. The Journal of Clinical Psychiatry

(3) Gabler, Neal.  “My Secret Shame.”  The Atlantic Monthly [may 22016: 52-63]

(4) The World Health Organization gives the health life expectancy for US citizens as 69 years, as compared to a current life expectancy of 78 years.

(5) http://www.cancer.gov/about-cancer/causes-prevention/risk/substances
http://www.cancer.org/cancer/cancercauses/

 

 

 

Retirement: the Fading Dream

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Most Americans today will never be able to afford to retire.  Period.  Retirement was a concept basically created in the 1950s, and a number of factors have come together to end the dream for the great majority of Americans.  The end of the dream in turn necessitates changes in how Americans live.  These changes will affect the economy and politics.  Arguably, they already are.

Here are some of the fundamentals:

  1. The average US household has $35,000 in funds at age 65.
  2. The average Social Security payment in 2016 is $1,341 per month.
    https://faq.ssa.gov/link/portal/34011/34019/Article/3736/What-is-the-average-monthly-benefit-for-a-retired-worker
  3. According to Fidelity Investments, the average couple will encounter $245,000 in out-of-pocket health care expenses after age 65.
    https://www.fidelity.com/about-fidelity/employer-services/health-care-costs-for-couples-retirement-rise
  4. The Fidelity estimate excludes long term care/nursing home costs.  According to Morningstar, we need to add 2.4 years of nursing home or long term care costs, at approximately $13,000 per month per person, to the Fidelity total.  Subtracting what Medicare covers of nursing home expenses, that’s roughly $347,000 per person.

Basically, the average person needs upwards of $800,000 in liquid assets to retire.  However, at age 65, the average American has $35,000 in savings.

It’s pretty easy to see that these numbers don’t work for most people.  And that doesn’t consider the 10% of seniors who are caring for a grandchild.

So, how can the average person cope?  

  • They can work.  However, that takes jobs away from younger workers.  Job creation in the US isn’t strong enough to support both an influx of new high school and college grads and oldsters returning to work.  However, in this competition, older workers are handicapped as large corporations don’t like to hire them.  Seniors will return to the labor market at a much lower rate of pay than they had previously.
  • They can die at an earlier age.  In the US, low income males are doing that today, having lost 4 years of life expectancy since 2000.
  • They can deplete assets and let state aid contribute to covering expenses.  However, that means living one’s last years in extreme poverty.  People with severe, terminal illnesses such as advanced cancer are often having to do this.
  • They can move in with children.  The incidence of multi-generational families is on the rise.  That will change the kind of home buyers will want.
  • They can move outside the US to where health care is much less costly.  Central America is the destination of choice for emigres.  The US government doesn’t publish statistics on citizens who live outside the country.  Current third party estimates range from 3 million to 9 million, excluding military and diplomatic personnel and their families.  All estimates agree that the number is increasing.

[NOTE TO POLITICIANS:  More Mexicans are now leaving the US than entering, counting both those with and without documentation.  Why is this a point of discussion this year?]

Several of these trends suggest that there may be another sell-off of single family homes in the future, with another round of declining home prices, underwater mortgages and foreclosures.  Boomers will need money for health expenses.

The growing volume of available senior labor may put a cap on wage increases, and increase deflationary pressure.

The fundamental problem is that today’s Americans reached adulthood with certain expectations about how their life would be.  Those expectations are being dashed, generating the anger that is playing out in the current election season.  The disappointment and anger is still in its early stages, and may get much worse.

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In this context, its rather amazing that so many people wanted to run for the Presidency this year.  The next four years are likely to be traumatic, and the next chief executive is likely to leave office after one term as a much hated individual.