Aside

Retirement or Tuition? The Savings Dilemma

Retirement or Tuition? The Savings Dilemma

No one, much less a parent, wants to see a young college graduate weighed down by the burden
of student loans. And if those student loans weren’t bad enough, some college students open
credit card accounts as a right-of-passage of sorts into adulthood. Although a credit card provides
students and young adults the opportunity to enter a new world of financial responsibilities, they
can also cause those students to end up even further in debt by the time they graduate.

One of the biggest concerns of today’s parents is how to save for both their retirement and their
children’s college education. One survey found that 75 percent of parents of teenagers say they
plan to use their retirement nest egg to help pay for their kids’ college expenses.

[CLICK HERE to read the article, “Paying for College with Retirement Funds? Don’t.” at
AARP, July 30, 2013.]

When determining whether parents should place their children’s finances above their own, the
prevailing advice to parents is usually to “put yourself first.” One advisor equates this
recommendation with that of a flight attendant’s instructions for onboard oxygen masks – secure
your own before you help your children. The idea here is that if you don’t first have your own
financial house in order, it may be difficult to take on the additional task of providing assistance
to your children.

Although a parent’s natural instincts are to put a child’s needs first, it’s important in this scenario
to consider yourself as a safety net for your child. If you have developed an appropriate
retirement strategy, you may be more capable of providing financial assistance to your children
even if they are rooted in early debt caused by student loans.

[CLICK HERE to view the video, “Money Misconceptions: Which of the two is a higher
priority,” from Charles Schwab, March 19, 2014.]

The fact remains that there are many resources your child may be able to utilize for college
funding, such as scholarships, grants, and student loans, and he or she may have a much longer
timeline to pay them off.

[CLICK HERE to read the article, “Income-Based Repayment,” at FinAid.org, accessed March
28, 2014.]

Recently, President Obama proposed incentives to help students manage loan debt, such as
increasing the maximum Pell Grant by $100 per student, making permanent the American
Opportunity Tax Credit, and providing $6 billion for job-training programs at community
colleges. The proposed incentives are expected to face opposition in Congress.

[CLICK HERE to read the article, “Obama’s Budget Proposes Incentives for Student Success,”
at The Chronicle for Higher Education, March 5, 2014.]
Meanwhile, many parents may have to decide how to divide their savings efforts between the
rising cost of college and the rising cost of living they may face in retirement – including
unknown expenses like health care, housing, and long-term care.

If we can help you establish your priorities and create a financial strategy to help you potentially
achieve both of these goals, please contact us.

Our firm assists retirees and pre-retirees in the creation of retirement strategies that include the
use of insurance products.

The information and opinions contained herein are provided by third parties and have been
obtained from sources believed to be reliable, but accuracy and completeness cannot be
guaranteed. It is given for informational purposes only and is not intended to be used as the sole
basis for financial decisions, nor should it be construed as advice designed to meet the particular
needs of an individual’s situation. All clients are encouraged to consult qualified tax, legal and
investment professionals before making any decisions about their personal situation.

If you are unable to access any of the news articles and sources through the links provided in
this text please contact us to request a copy of the desired reference.

Ups-a-Daisy

 Originally, the phrase “ups-a-daisy” was uttered by parents as an exclamation when tossing a child playfully into the air or when encouraging him to get up after a fall. Nowadays, we often hear it as “whoopsie daisy” or “oopsie daisy,” and it means, in today’s vernacular, “my bad.” Recently we heard a version from President Obama that sounded more like: 

“With respect to the pledge I made that if you like your plan, you can keep it … there is no doubt that the way I put that forward unequivocally ended up not being accurate. …That’s on me. And that’s why I’m trying to fix it.” 

[CLICK HERE to read the press release, “Statement by the President on the Affordable Care Act” on WhiteHouse.gov, Nov. 14, 2013.] 
It would certainly appear that the most recent implementation of the Patient Protection and Affordable Care Act (ACA) has resulted in some unintended consequences, such as large-scale insurance policy cancellations and website glitches. But among the swirl of debate and political litany concerning the health care law is this idea of public apologies by those in a position of authority. It does stand to reason that, with the recent focus on business and governmental transparency, an apology and/or the public acknowledgement of blame and accountability would be appropriate. 

[CLICK HERE to read the article, “Presidential Apologies: Regrets, They Have a Few” on NPR.org, Nov. 8, 2013.]  [CLICK HERE to listen to the program, “The Art of the Apology” from KQED Public Radio, Aug. 13, 2013.]  As far as health care implementation is concerned, it’s probably a better idea to claim some responsibility as the head honcho rather than make excuses and assign blame elsewhere. It can make for a political conflict but offers the opportunity to solicit ideas for a better solution. In other words, the apology in itself delivers a political jab of, could you do any better and — if so — why haven’t you done it yet? 

[CLICK HERE to read the article, “GOP sees Obama’s Apology as a Fresh Chance to Smack the President” on MSNBC.com, Nov. 14, 2013.]  When considering the future of the health care programs that have launched as part of the ACA, perhaps we should examine a bit of history. The Massachusetts Health Care Reform Law, which was passed when Governor Mitt Romney was in office, is considered the basis for ACA. 

 However, the Massachusetts version also was considered evolutionary, not revolutionary. Its facilitation actually spanned about 15 years, first prohibiting insurers from denying, limiting or rescinding individual coverage — or charging higher premiums — based on a pre-existing condition, and later moving to tenets mandating universal coverage. Part of its success has been based on the state’s willingness to try new programs and adjust them in the future. The implementation involved experimentation, monitoring progress and encouraging feedback from all stakeholders. In other words, one big ups-a-daisy after another. 
[CLICK HERE to read the article, “The Massachusetts Health Care Reform Experiment: A Success,” on JAMA.com, Oct. 31, 2012.]  Given the process of its Massachusetts predecessor, we might consider the merits of working harder to evolve the current legislation into something that will work for the majority of Americans now and into the future. After all, it’s not clear that anyone has instituted anything better — except, perhaps, the state of Massachusetts. 

When it comes to our own finances, we don’t give up. We keep plugging away, learning from our mistakes, and trying to make better choices in the future. After all, it’s not like we have the option to simply give up and start over again. 
If we can help you evolve your current financial scenario and plan for retirement, please give us a call. 
By contacting us, you may be offered information regarding the purchase of insurance products. 
These articles are being provided to for informational purposes only. While we believe this information to be correct, we do not guarantee the accuracy or completeness of the information

Aside

An MRI for $500, Please

For years we’ve been able to “shop” for health care insurance coverage — whether for individual policies or among different options offered by an employer. But if there’s one thing that the Patient Protection and Affordable Care Act (PPACA) has done, it’s put a spotlight on the cost of not just insurance premiums — but the cost of actual medical services. 
In fact, there is an increasing trend to make cost and quality data on hospitals and other healthcare providers publicly available. 
[CLICK HERE to read the article, “Healthcare Pricing Transparency Gains Momentum,” at Forbes, Jun. 9, 2013.]  [CLICK HERE to read the article, “ Price transparency gains ground as lead healthcare issue,” at Healthcare Finance News, Jul. 9, 2013.]  In recent years, the rise of consumer-directed health plans (CDHP) has helped put consumers in better touch with the actual cost of the medical services they receive. The CDHP features higher deductibles and lower premiums than most health maintenance organization (HMO) and preferred provider organization (PPO) plans. The difference between a high-deductible health plan (HDHP) and a CDHP is that the latter can be complemented with a tax-advantaged savings account, such as a health savings account (HSA). 
HSAs may be one of the reasons consumers have started to become smarter shoppers of health care services. That’s because many of the expenses incurred must be paid out of pocket — using the savings account — while with an HMO those costs are covered without the consumer ever even knowing how much was paid. Because the tax-advantaged HSA belongs to the consumer and not the employer, as is the case with a health reimbursement arrangement (HRA), people tend to be more inclined to shop for the best value.  [CLICK HERE to read the article, “Cigna: Health accounts cut first-year costs,” at LifeHealthPro, Feb. 14, 2013.]  [CLICK HERE to read the article, “7 reasons HSAs are taking off,” at LifeHealthPro, Sept. 11, 2013.]  In fact, research from Cigna Corp. has revealed that the medical cost trend was 20 percent lower for HSA customers than with traditional plans during the first year. The study also found that CDHP members are more likely to take advantage of preventive care benefits and participate in
wellness programs and health assessments, and 59 percent are more likely to use their health plans’ medical cost information tools.  [CLICK HERE to read the article, “Surgeries unnecessarily drive costs,” at Risk and Insurance, Oct. 21, 2013.]  What’s next on the horizon — medical facilities bidding for your business? An online catalog to shop for procedure prices? These things are already happening as America’s entrepreneurs seek ways to respond to the growing demand to lower the cost of medical services.   [CLICK HERE to read the article, “Medical costs too high? Some doctors will bid for your business,” at KATU.com, Sept. 30, 2013.]  [CLICK HERE to search an online medical products and services cost database at Healthcare Blue Book.]  Whether you support PPACA or not, many people agree that some form of health care reform is necessary. And regardless of legislative mandates, the health care industry is moving forward in responding to some of these issues. It’s good to see that a similar trend toward transparency to which professionals in the financial and insurance industries can be held is being extended to the health care industry. 
Let us know if we can help you plan for the future. 
By contacting us, you may be offered information regarding the purchase of insurance products. 
These articles are being provided to for informational purposes only. While we believe this information to be correct, we do not guarantee the accuracy or completeness of the information included. 
The information and opinions contained herein are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by our firm. Content is provided for informational purposes only and is not a solicitation to buy or sell the products mentioned. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation.