The future is always difficult to predict. Many argue that it is getting even more so because of a variety of factors:
- Great upheaval in recent years in the federal as well as state and local governments. Some are suggesting that a major shift in governance may be at hand, both in the United States and overseas. This change may result in a populist government, shifting more power and responsibility from the federal government to state and local governments.
- A challenging economy in the US and uncertainty as to when inflation will be brought under control and a strong sustained rate of growth will return.
- The inability of governments to address debt problems without greatly curtailing spending.
- The burgeoning challenges and costs of an aging population.
- Concern that technology, artificial intelligence, robotics, and disruptive innovation may cause significant job losses in certain sectors of the employment market.
The current period of high inflation and increased interest rates is affecting food prices, gas prices, and housing costs within the U.S. and abroad. For many individuals and their families, household budgets are tightening, and savings rates are abating after the cessation of pandemic benefits to wide swaths of the populace. In this challenging economic environment, areas of concern are numerous. We encourage you to initiate a conversation sooner rather than later with loved ones and your financial professionals. We find that by consistently conversing with our clients, a financial plan can be adjusted to address such potential financial impediments as those listed below:
- Managing debt
- Adjusting investment strategies
- Investing for current income
- Evaluating tax strategies; considering new tax regulations
- Concerns over potential job loss or coping with job loss
- Evaluating home ownership
- Meeting college costs
- Helping adult children in financial need
- Preparing for a delayed retirement
- Thriving financially throughout retirement
Smart Money Tips
- Reduce the number of your IRA accounts. A lot of people have too many IRA accounts which only complicate their financial lives. You’ve got better things to do, so reduce the number of accounts you have, ideally to a single traditional IRA account. If you also have a Roth IRA, you’ll need to keep that money in a separate Roth account. Having multiple IRA accounts can become particularly challenging when you begin making RMDs (required minimum distributions) after age 73 – an age that increases to age 75 in 2032. While you can make the total required withdrawal out of a single account, you’ll have to calculate the RMD for each individual account. Chances of errors aplenty with penalties abundant.
- If you are planning to purchase an LTC policy. Keep in mind that, unlike other kinds of insurance whose premiums rarely change very much, long-term care (LTC) insurance policies can increase premiums with the approval of the state insurance commission. Neither the company nor the insurance agent is likely to be very clear explaining this, but you should ask whether and by how much the company has raised premiums in the past. Also, be wary of a policy that is considerably cheaper than similar policies. It may be a prime candidate for a big increase. Most importantly, before buying a policy, you need to look well into the future to see if you can afford the possibility – indeed, the probability – that your premiums could rise substantially. It is beneficial to consider a worst-case scenario in which your premiums could rise by 50% or even double between the times you sign up for the policy and when you’re likely to receive benefits. In other words, don’t buy a policy that is so expensive in relation to your household budget that you couldn’t afford a big premium increase. It would be unfortunate to have to drop a policy or severely curtail your coverage later on, just before you need the benefits.
Food for Thought
Don’t worry about people stealing your ideas. If the ideas are any good, you’ll have to ram them down people’s throats.
–Howard Aiken
Money Can Be Funny
The statistics on sanity are that one out of every four Americans is suffering from some form of mental illness. Think of your three best friends. If they’re okay, then it’s you.
-Rita Mae Brown
Word of the Week
psychrophobia (si-kro-FO’be-a); noun – A dread of cold; extreme sensitivity to cold
Origin: From Greek psychro – “cold” + phobia – “fear”
The past few weeks have been especially tough on psychrophobics.