The Oil Price Roller Coaster

Over the past 40 years I have seen oil prices go from $8 per barrel to $150. It has vacillated in between countless times.

For a great summary on the topic please read the article by Thomas Donlan in the January 12, 2015 edition of Barron’s.

http://online.barrons.com/articles/three-cheers-for-cheap-oil-1420870776

The stock market bubble continues

Weak oil prices and low interest rates are a double edged sword. Although the consumer may be happy short term it is a troubling signal about the long term health of the economy. The markets, in general, are saying that they do not believe we are in for expanding economic growth. If the markets thought our GDP would grow at 4-5% then the bond market would get hit hard, yields would be rising, and stocks would be pulling back.

The average stock has gotten quite expensive relative to the market. People are whistling by the graveyard. Areas of concern looking forward:

    • Abenomics could fail to lift Japan out of deflation
    • Europe’s economy could continue to deflate pulling down the global economy
    • China’s growth could continue to sputter
    • Increased Terrorist activity worldwide
    • Russia standoff with Ukraine
    • Low oil prices push countries to invade others for raw materials
    • Federal Peserve raises interest rates prematurely

Alternatives to High Health Premiums

President Obama promised a $2,500 annual premium savings for a family with his ObamaCare program. The costs, for most families have been more than $5,000 higher than they were originally paying. Wow! That amounts to $7,500 more than was promised. For 2015 it appears premiums will rise another 25%. So those big mean, terrible insurance plans of the pasts were really not so bad!

Here are some ideas to soothe the pain a little for you.

• Set up a Health Savings Account.

    (1) You can set aside $3,300/year for an individual or $6,550/year for a family. If you are 55 or older you can add $1,000 extra per year. It is deductible going in, it grows tax free and when you take it out for qualified medical expenses it is tax free.

    (2) If you put away $6,500/year starting at 45 and increase it to $7,500 at 55, by the time you are 80, with a 4% growth it will be worth $660,000. This amount can be helpful in your retirement years for health costs including Long Term Care.

    (3) The tax benefits are helpful. If you have maxed out your 401k, or, want to divert those 401k contributions to your HSA it may not be a bad idea.

    (4) An HSA would allow you to lower your health premiums by purchasing a high deductible plan.

• Concierge Plan

    (1) For $1,800/year in Florida up to $2,500/year in New York you get access to your physician 24/7/365

    (2) Each appointment is 1 hour, no rushing, and, a better physical

    (3) You can contact the doctor by email or phone when you need

    (4) You still need a basic health insurance policy to cover office visits

    (5) This concierge fee is an extra costs on top of your health insurance

• Get into a Wellness program, lose weight, cut down on fatty foods and reduce alcohol consumption. People that have done theses few things have lowered their medical visits and costs.

Want to be Rich?

Imitation is the best form of flattery. It also is a method to be successful in anything. As a child I was taught by my parents; If you want to be a great baseball player, singer, student, business man or anything then copy and mimic the actions of those that are successful in each of those areas. I did, and, well, my folks were correct!

Here is a great article from the November issue of Success Magazine. If you want to be rich, then, do what the rich do. If not, then, you do not have to read the article.

16 Rich Habits: http://www.success.com/article/16-rich-habits

Alternatives to Long Term Care

“Age Wave” has found that people underestimate how long they will live. They also underestimate their need for Long Term Care (LTC). That is, 37% think they’ll need it, but 70% actually do and only 8% have any coverage.

The issues with typical LTC policies are: They are expensive, premiums continue to rise, areas of coverage are being dropped and some companies have just cancelled policies.

The two types of coverage are:

    (1) Use it or lose it. You pay a premium for a specific amount of coverage. If you never use it the money is just gone. Premium cost for a healthy 59 year old is $6,000 per year to develop a pool of $328,000 with a maximum of $300/day.

    (2) A Hybrid policy. You pay an initial lump sum for a certain amount of care later. No further annual payments. You can get your premium money back after a time, or, your heirs can get two times your principle amount if you die before using the insurance, or, you could get up to 5 times the principle payment in LTC benefits.

Keep in mind for your planning… the median cost for a private room in New York City is $170,000 per year. In Florida, the median is $90,000 per year.

The best time to start planning and to take action is in your 40’s and 50’s.

Another family approach is, say, you are in a nursing home that costs $200,000 per year for 20 years, then, you will spend $4 million of your own money. Many parents will buy a $4 million life policy on themselves, then, upon their death the family gets the $4 million, tax free from the insurance. Since their estate has been dwindled by the $4 million of LTC costs.

Our favorite approach is a multi approach hybrid policy. The primary purpose is to be used to generate TAX FREE retirement income. It can also be used to pay for LTC, should it arise, and lastly, it can pay family members a tax free death benefit.

So, if you are in your 40’s, 50’s or 60’s contact us on the best option for yourself.