"Woah, we're half way there
Woah, livin' on a prayer
Take my hand, we'll make it I swear
Woah, livin' on a prayer."
"Livin' on a prayer", Bon Jovi
The 1986 release, "Livin' On A Prayer" by Bon Jovi pretty well sums up how I feel about the "markets" right now. We are half way there (through the year) and it seems we are livin on a prayer. As I mentioned just a few weeks ago, almost all indices are negative for the year and that has not changed with gold now turning negative as well. Couple that with unusually high inflation and even cash has a negative real return. Folks, it's just difficult right now. These are certainly conditions that we have not experienced for some time and for this long.
Here are the numbers year to date:
S&P 500 -19.7%
Dow Jones Industrial Average -14.4%
U.S. Agg Bond Index -5.86%
as of close 7/1/2022, source CNBC and Wall Street Journal
One of my personal favorite sayings is, "manage what you can control". I used to say, "worry about what you can control". But I gave up worrying a long time ago.
Managing what you can control is managing your asset allocation, your time horizon and most importantly, your expectations. Another way to control liability in particular is insurance. You can buy insurance for almost anything these days.
With the baby boomers aging and the first wave now entering their early seventies, one financial discussion that I am having with clients more and more often is "long term care". Long term care is not necessarily about you. Many my age are now caring for parents and long-term care is often a big part of that puzzle. It can be difficult from multiple angles including financial, physical, emotional and spiritual. One of the aspects that you can control (to some degree) is the financial aspect. Long term care insurance is designed to transfer the potential financial liability of long term care from the individual to an insurance company in exchange for a premium.
My first job was selling long term care insurance for John Hancock Mutual Insurance Co. I started my career in 1997. At that point, the first of the baby boomers (1946-1964) were entering their fifties. They were generally not interested in "another insurance" but their parents were. Now it is common for me to see those same "children" buying LTC insurance for themselves because they experienced first hand the planning or lack there of that their parents did and the impact that it made.
I can talk about long- term care in general forever. It is an aspect to financial planning that I am very passionate about as I have seen personally the value of adequate planning. And if you would like to have a one on one discussion about long term care and your personal situation, please call the office to set an appointment (731-285-0097). But for the purposes of this blog post, I simply want to dispel one of the biggest myths and the one that I commonly see catch a person off guard after it is too late. Long-term care is NOT covered by Medicare or Medicare Supplement Insurance. There are some small aspects to rehabilitative care, but for the vast majority of services and costs, there is no coverage through either of those programs. So who pays for long term care costs? It is pretty simple. Either you spend your savings, you meet the minimum asset requirements for state sponsored care (you are broke) or you own long term care insurance. And remember, to get long term care insurance you need two things: the ability to pay the premium and good health. You can not have it with just one.
I of course hear objections all of the time. I had a wealthy client tell me once, "why would I buy that insurance if I can just self insure?". My answer was, "why don't you self insure your house? The odds of you experiencing a house fire are less than needing long term care some day."
The other common push back is, "why do I want to pay all of that money for something that I will never use?" In the 90's that was a pretty decent argument. I typically do a bit of field underwriting to help the client discern whether or not "statistically speaking" they may need long term care. But as most everything evolves, so has long term care insurance now to the point that at death, many policies return the premium if there was no claim. See the individual insurance policy riders and disclosures for details.
Long term care insurance can be complicated with many different moving parts and decisions to make. I try hard to make it as simple to understand and purchase as possible for clients. If you would like to discuss your situation, long term care in general and/or to get a recommendation and illustration, please let me know.
Remember, manage what you can control!
Until next time... Cheers!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index.
The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries and widely held by individuals and institutional investors.
The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
The Bloomberg Barclays U.S. Aggregate Bond Index is an index of the U.S. investment-grade fixed-rate bond market, including both government and corporate bonds.