I just purchased a CD ladder inside my 401(k) account. I know this sounds strange but I have my reasons. I’ll explain my logic.
Archives for May 2012
When our sons were younger and struggling to study or train for an athletic competition, I frequently pulled out this mantra: The pain of discipline is far less than the pain of regret. No one who received an “A” on an exam or crossed the finish line with a personal-best time ever complained about the preparation required. According to a recent article from someone with first hand experience, discipline is something that many retirement non-savers lack.
Will baby boomers cause our own investments to decline? According to one researcher, the answer is yes. There are so many of us that our collective retirement investing and spending plans are destined to negatively impact investment returns for everyone. How can this be?
In our youth, we thought about turning 16 so we could drive, 18 to vote (and drink in many states) or 21. As baby boomers, entirely different set of age milestones is presented, most of which relate to retirement planning. Do you think about these? I do, but mostly for investigational purposes. I try not to get caught up in thoughts such as “I can’t wait until I am old enough for Medicare.” I want to be mindful and present for the enjoyment of today. (If this sounds to you a little like a Zen state of mind, you are correct. There will be more about my recent Zen explorations in a future post.)
The Wall Street Journal has engaged a number of personal finance experts to debate several topics of importance to the rest of us. One of these recent debates was over the question of whether we should purchase long term care insurance. The expert in favor of purchasing LTC insurance is a professor of health economics and policy at George Mason University. His argument is that “hoping for the best” is not a wise or effective financial strategy.
The expert that disfavors LTC insurance is a staff attorney at California Advocates for Nursing Home Reform. His argument is that instead of buying the insurance with a $3500 annual premium, invest the premium amount., giving you $70,000 plus interest in 20 years. There is a huge psychological flaw in that argument. The average consumer will not have the discipline to actually invest the premiums that are not paid. They are much more likely to spend it. Also, for older boomers, there is no reasonable assurance of 20 years without a long term care need.
Here is the link to full debate article which is definitely worth reading.
Financial and retirement writers are regularly pumping out articles about long term care insurance. A lot of what is written is negative, such as when an insurance company decides to stop selling long term care policies. For example, my wife and I bought long term care policies from Met Life in 2008. Met Life later announced that it would stop selling new policies at the end of 2010.
I have developed a pattern now. Most of my stays back in the “big house” in Brentwood now include at least one trip to the county dump and/or to Good Will. The alternative is to do it all at once, when we sell this house in a couple of years. But I have also learned that I do not want to wait until then.
Like me, the Social Security Administration is trying to reduce its paper load. It took a major paper-killing step forward yesterday when it went live with online access to your Social Security Statements. Previously, these were snail-mailed to you annually. You could generate a benefit estimate using the SSA retirement benefit estimator but other important information (such as earnings history) could not be accessed.