As we start the year, I am reflecting a little on what is occupying my brain’s CPU. What do I spend most of my time thinking about? Naturally this is within the context of my profession, and not all the ramblings going through the mind of a middle-aged male. (Gosh, it even hurts to write those words – middle aged male. To quote the Talking Heads…….How did I get here?)
So, here it is, the things I noodle on while at work in January 2018…………….
LTC Insurance: The Long-Term Care insurance business is going through huge changes. The bottom line is that it is not as profitable as expected because people who planned and worried about their financial future also worried about taking their meds and watching their diets. The result is much longer lives and higher payouts than expected. Coupled with a tendency to stick with their policies, LTC purchasers are inflicting great pain on the insurance industry. The result is that LTC insurance is now harder to get and way more expensive than before. Unattractive to many today. What will the impact be in 20 years?
Annuities and Retirement: Normally I am not a fan of complex insurance products like annuities. However, with interest rates persistently low, the mortality credit feature of simple annuities makes them more attractive. Most complex annuities are still the devil, but you may need to dance with this guy/gal to bring some stability to your retirement plan.
Consumer Acceptance of FinTech: One of the key questions in retirement is………am I still on plan/track? Easy to ask, hard to answer in the real world. Modern Internet Apps are a solution (I call them FinTech as a group), but how many retirees are going to want to track their spending online? We now have the technology, but do we have the desire to use it?
Stock Market Blindness: As the market propels upward, and is being supported by an administration that likes to spend like the proverbial sailor on weekend leave, what are the long-term effects? I can’t help but think we are ignoring the big issues for one last hurrah. It’s like the party has been winding down – and we all know a doozy of a hang-over is coming – but we just found a new 6-pack of beer. We know it’s not going to help with the hang-over, but it’s cold and tastes good in the moment. I fear young people are going to have a bigger bill to re-pay than we imagined just a few short years ago.
That pretty much sums up my thinking for the moment. As I re-read this piece, I think it makes me appear more negative than I am. I’m actually not that negative….let me explain…..
I do think 2016/2017 was a rough stretch for the country as a whole, but I think we learned a lot and actually have a better understanding of what really matters. I do not project current trends moving forward. I think we have experienced an inflection or turning point – we’ll be more united and kinder in the future.
Our current trajectory could be fun for a while. I am an investor. I earn more return on my Capital than I do on my Labor. Go S&P500 Go!! This will eventually show the value of good financial advice. We’ll see who has their bathing suit on when the waters recede!