|
Posted by Don on December 22, 2007, 9:33 pm
On Sat, 22 Dec 2007 13:17:41 -0800, Will Trice wrote
> I would hazard that most financial planners would not give advice based
> on "hopes" for the future. And hopes that the government will expand
> current federal medical programs in the near future may be unfounded.
> Programs such as Medicare are getting into trouble financially. Given
> the American distaste for taxation (not that anyone really likes to be
> taxed), paying for current levels of service, let alone additional
> services, will be troublesome.
Your prediction might be reasonable if only Canada and perhaps two or three
other industrialized nations had national health plans while most European
nations had US type systems. But the reality is that the USA is an oddity, a
rich nation with inadequate medical care for large numbers of its citizens.
Under these conditions, an astute financial planner could be expected to be
aware that government health insurance is very likely on the way. I would say
it is inevitable. I should thinkl this possibility would have important
financial implications and would influence decision making about investments.
It should especially concern knowledgeable planners reputed to be aware of
the long term and not just what is happening in the market today or what was
good last year.
|
|
Posted by Will Trice on December 23, 2007, 10:54 am
Don wrote:
> Under these conditions, an astute financial planner could be expected to be
> aware that government health insurance is very likely on the way. I would say
> it is inevitable. I should thinkl this possibility would have important
> financial implications and would influence decision making about investments.
> It should especially concern knowledgeable planners reputed to be aware of
> the long term and not just what is happening in the market today or what was
> good last year.
OK, under these conditions, what advice would your hypothetical planner
give?
"You can cut back on your savings because I hope that you'll have
expanded government-funded health benefits, including long term care,
when you retire."
"Now that you're retired, you can invest more aggressively because I
hope that you won't need your cash for health care expenses due to
expanded government programs."
etc.
Perhaps our resident planners can chime in, but these don't seem like
sound strategies for an uncertain future. How uncertain? Well, how
long has the U.S. been in the medical situation you perceive? So even
if you're correct and our situation will inevitably move towards
expanded government programs, how long will it take to get to, say,
Canada's level? I would think that as part of a sound financial plan,
you would plan for the contingency that these programs will not be in
place in time for your use, even if you firmly believe they will come
about eventually.
-Will
william dot trice at ngc dot com
|
|
Posted by Don on December 23, 2007, 12:39 pm
On Sun, 23 Dec 2007 07:54:51 -0800, Will Trice wrote
> OK, under these conditions, what advice would your hypothetical planner
> give?
>
> "You can cut back on your savings because I hope that you'll have
> expanded government-funded health benefits, including long term care,
> when you retire."
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.
|
|
Posted by Will Trice on December 23, 2007, 3:29 pm
Don wrote:
> My objection is mainly
> to someone who allows personal prejudices to interfere with flexibility in
> decision making.
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
|
|
Posted by Don on December 23, 2007, 4:51 pm
On Sun, 23 Dec 2007 12:29:43 -0800, Will Trice wrote
> 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?
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.
|
| Similar Threads | Posted | | FROM THE MODERATORS: Long term health care plans | December 22, 2007, 7:49 pm |
| long term care and Medicare | September 19, 2008, 4:14 pm |
| Using CPI as basis for long term care policy | January 31, 2007, 8:30 am |
| Source of info on long term care insurance | October 24, 2006, 7:20 pm |
| "Typical" long-term care cost estimates? | August 21, 2007, 5:19 am |
| Retirement Health care premiums | April 23, 2008, 11:48 am |
| PLanning for health care costs in retirement | February 28, 2008, 1:40 pm |
| Why Is The US Ranked 37th In Health Care by WHO? Would I Really Want To Retire Here? | February 29, 2008, 1:46 pm |
| Can a short term capital loss balance long term capital gains? | October 19, 2008, 8:11 am |
| Long Term Goal | October 25, 2007, 5:06 am |
|
|
Yahoo! 
Google 
Windows Live 
del.icio.us 
digg 
Netscape 
XML Sitemap