long term health care plans

On Sun, 23 Dec 2007 07:54:51 -0800, Will Trice wrote (in article ):

No, I only suggested that less might be put into LTC insurance and relatively more into equities. Don't cut back on savings but maybe spread it around in different ways. I would say figure out the absolute most you can save in a month, and then save 10 percent more than that.

Agreed that a responsible planner will consider all possibilities. Nobody can predict exactly what is going to happen in the future. It would be foolish to invest based on the assumption that in the future the operation of financial markets and the choices available to an investor are always going to be same as they are now or have been for the last fifty years. My objection is mainly to someone who allows personal prejudices to interfere with flexibility in decision making. If I were a young person seeking financial advice, I would not want that advice from someone who blindly assumes that "government health plans will never come," or that "folks will never allow taxes to increase," or "mutual funds are always the best long-term investment." Most especially I would not want advice from someone whose vision is limited to one company's offerings of mutual funds. It is an axiom that past performance does not guarantee future results. Similar reasoning should extend also to asset classes, political decisions, taxation matters, and so on.

Why is the belief that one should not invest/insure with the hope that government medical programs will expand significantly in the near future a personal prejudice, when the opposite is not?

Every planner brings opinions at this level to the table. Consumers are free to take advice or not, and to work with planners whose advice makes sense on the consumers' individual level. For me, a planner who plans based on hope rather than on rational thought strikes me as worse than useless.

Don't get me wrong, I'm not calling you irrational. We could very well have a health system like Canada's sometime in the future (though I personally doubt it for the near term). But to properly take into account the existence of this hypothetical health system within your financial plan, you must be able to make an educated guess as to the magnitude and timing of the benefits you will receive, or could receive. I don't think any reliable data exists with which to make this kind of extrapolation. Of course, if real government programs start to make headway, then financial course corrections may become wise. It's not like one of these plans will happen overnight. Until then, I will plan as if your hypothetical health system will not be available to me, and then I'll be pleasantly surprised if it is.

-Will

william dot trice at ngc dot com

On Sun, 23 Dec 2007 12:29:43 -0800, Will Trice wrote (in article ):

It is only an issue if either of the two beliefs prevents one from considering all the alternatives. I think it is fair to say that people in finance (and business generally), including financial planners, tend to be conservative and to look to the tried and true ways of the past for guidance. But in historical periods of rapid change this mind-set can be a disadvantage. Probably "liberals" are more attuned to the possibility that government sponsored health plans are on the way and to other major changes to come, and this flexibility may be an advantage in financial decision making. But I agree with what you say about the uncertainty of the future.

On Sun, 23 Dec 2007 09:31:15 -0800, Thumper wrote (in article ):

I would look at a lot of "What If's" in addition to that one. What if there is a major recession and recessions begin to get worse every 5 years? What if all the banks fail? What if mutual funds become a thing of the past? Some of these unlikely events actually may be more likely than having a stroke. All are relevant to planning your finances.

You've questioned the continuity of mutual funds twice in this thread. What form of investment vehicle do you anticipate will replace them?

Elizabeth Richardson

On Sun, 23 Dec 2007 15:55:32 -0800, Elizabeth Richardson wrote (in article ):

I am not predicting they will go out of business, just saying this possibility should be considered along with other unlikely events. Back in the late 1970's and early1980's nobody really believed Savings and Loan Associations would go out of business.

You might consider her getting an immediate annuity. $100,000 should buy an $1,615 / month policy.

-- Ron