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

Basic Lifetime Health Care?

Lifetimes are divided into sequential episodes for various practical reasons, and in the past fifty years a brand-new episode known as retirement has even been added to the end of the sequence. We started with two thirty-year periods, childhood, and adulthood. For its own purposes, the medical payment system stretched to three segments within a 90-year lifetime, and then for practical purposes, a five-segment one: childbirth, childhood, education, employment, and retirement. The employer community pioneered this American hybrid, but almost all other national systems are government-dominated, so the American system segmented slightly to accommodate the reality that two employers (the parents and the child's) must be recognized. The new retirement era tends to unite retirement with government as becoming the organization which pays the bills tending to dominate the choice of payment. It probably does not overstate matters to say that recent immigrants favor a unified lifetime government system, while employers are reluctant to give up control for fear government control will spread out through the opening. The fact that medical revenue at any age originates in the employment interval lends plausibility to this attitude. Comparison of the quality of the two existing approaches does not seem to disqualify either employer-based or single-payer (lifetime national governmental), although the Constitution seems to favor individual 50-state hybrids.

What is gradually shifting during the past century is the inclusiveness of the sponsor groups, retirees enlarging at the expense of the employed. These groups see themselves becoming potential beneficiaries, but changing at different rates and with different costs. Shifting costs are a befuddlement, but it seems safe to predict that costs will ultimately fall to slightly more than the first year of life and the last year of life. Before that point is reached, we will probably experience a rising period of development costs in the middle. Actuaries calculate an average present lifetime cost of $300,000, net of inflation, around which actual costs will fluctuate. Taking a wild guess that first and last year will eventually settle down to $100,000 per average lifetime, or perhaps $150,000 including terminal care, the elements of first-and-last year of life insurance should be calculable, and the premium approximated and re-adjusted annually on a current-cost basis. In the meantime, healthcare costs can be monitored by big-data methods. No one would expect such data to be precise at first, but a ten-year probationary period should suffice to arrive at commercially workable net costs for all citizens for the two universal costs for everyone -- birth and death. There will be universal outcries that other costs will be neglected, underestimated or misjudged, but a workable and basic universal system can nevertheless be established, and the intervening other medical costs managed in the conventional political way.

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