Philadelphia Reflections

The musings of a physician who has served the community for over six decades

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Financial Planning for a Long Retirement

How should individual investors ensure they have enough money for retirement?

Such a person is often a professional or entrepreneur who has worked to accumulate the wealth. Legions of "advisors"line up to take this money and manage it or else to sell "products" that promise to solve some problem or other. Without this background, extra savings will be needed, to buy advice. And advice is not invariably reliable.

A person who has created his/her career and its wealth from scratch, can likely manage investments themselves, or at least supervise the process from a position of strength from observation. Reliable advice is not always cheap.

This collection of articles explains to the individual investor how to take control of their wealth. They may eventually decide to look for help from an advisor but they will retain control of their assets and they will know what to do.

Financial Planning videos on YouTube

Insurance

As far as Medicare is concerned, Part A (hospital) is entirely paid for out of the general fund, derived from everybody's taxes -- to the individual, it is essentially free. Medicare Part B, paying doctors, is 75% subsidized by taxes, so it is a no-brainer to sign up. Part D is not a bargain for me, because I have one of those sweetheart deals from a University. However, for an ordinary citizen it comes close to breaking even, and should be regarded as a budgeting device for an age period in life when you probably do want to smooth out your expenses.
Posted by: G3   |   Feb 19, 2008 12:05 AM
There is an age, beyond which an insurance company will not sell term insurance. That means you have to accept the rather low returns on permanent coverage. Somehow, it seems to me you ought to be doing your own investing toward that eventuality, possibly with term insurance in the early years, to get started.
Posted by: G3   |   Feb 18, 2008 11:59 PM
Alan,

Thank you for your comment.

You are right that I have not mentioned a number of types of insurance. I feel badly about this and hope to fill in the gaps as time goes on.

In the situation you describe, might not life insurance help? If the surviving, non-participant spouse prefers an annuity to a lump sum, such an option could be arranged.

Cheers,
George 4
Posted by: GRFiv   |   Feb 16, 2008 4:48 PM
Very good article. For insurance you don't mention insurance to protect loss of income from a pension when the major pension owner dies. e.g. I expect to receive a sizable pension and when I die my wife only gets 50% of it. This would be a significant hardship if I die young
Posted by: Alan   |   Feb 16, 2008 2:30 PM
The McCarran Act was part of the long fall-out from the Roosevelt court-packing uproar. The Court had held that the Constitution limited federal involvement to interstate commerce, as "commerce between the several states". It reversed itself when FDR threatened to keep adding more Justices until he had a majority that would get rid of the interstate commerce limitation, Within six weeks of the decision, Congress responded to insurance lobbyists by saying that no federal regulatory agency was to interfere in the business of insurance. All of the states then passed laws regulating insurance, so the effect was to single out this one industry and shift its regulation to the state level. That was clearly the idea of the founding fathers -- for all commerce, except commerce between the several states. The resulting experience with insurance regulation at a state level has been very unsavory, perhaps because all of the corruption was focused on a single industry. In 1973, ERISA was passed because big corporations were driven crazy by the multitude of regulators for pension plans. As an afterthought, the health insurance benefit was tacked onto the ERISA bill, essentially saying everything we said about pensions also applies to health insurance. I don't know about life insurance as a company benefit, but I wouldn't be surprised if it got included in some way. The overall consequence of all this has been gridlock, and the wide-spread assertion that this mess is not amendable because everybody is scared they will lose some particular loophole that has been created by accident. However, if anyone wants to do something useful, the place to begin is with McCarran Fergusson.
Posted by: G3   |   Feb 16, 2008 2:12 PM
Well, I'm not one to advocate Federal regulation but the fractured state of insurance in America serves only the interests of Boss Tweed; not the consumer.

As for Princess Diana, I don't know where things stand; those sorts of people occupy a different dimension from me.
Posted by: G4   |   Feb 16, 2008 7:58 AM
I'm about half way through and have to go. My first suggestion is you allude to the McCarran Fergusson Act that reversed the Supreme Court decision that the business of insurance could have federal regulation, especially antitrust regulation. And second, I wonder how the litigation about Princess Di turned out; there was a chauffeur, but he was acting as an agent for billionaires in the back seat.
Posted by: GRF3   |   Feb 15, 2008 5:38 PM

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