BOARD CERTIFICATION EXAM STUDY GUIDES Lower Extremity Trauma
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Financial planning, business and strategic management, FMV for practice and clinics and related “hard” topics are included.
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We also include “soft” subjects from investor psychology, ethics and lost fortunes to luxury spending, from understanding the middle-class millionaire to the political philosophies of physicians and the affluent. Our corpus of work is regularly consulted by doctors, medical, business, graduate and nursing schools, to elite advisors, private and investment bankers, wealth managers, venture capitalists, academics and the press.
While financial planning rules of thumbs are useful to people as general guidelines, they may be too oversimplified in many situations, leading to underestimating or overestimating an individual’s needs. This may be especially true for physicians and many medical professionals. Rules of thumb do not account for specific circumstances or factors occurring at a particular time, or that could change over time, which should be considered for making sound financial decisions.
For example, in a tight job market, an emergency fund amounting to six months of household expenses does not consider the possibility of extended unemployment. I’ve always suggested 2-3 years for doctors. Venture capitalist lay-offs of physicians during the pandemic confirm this often criticized benchmark opinion of mine.
As another example, buying life insurance based on a multiple of income does not account for the specific needs of the surviving family, which include a mortgage, the need for college funding and an extended survivor income for a non-working spouse. Again a huge home mortgage, or several children or dependents, may be the financial bane of physician colleaguesand life insurance.
A home purchase should cost less than an amount equal to two and a half years of your annual income. I think physicians in practice for 3-5 years might go up to 3.5X annual income; ceteras paribus.
Save at least 10-15% of your take-home income for retirement. Seek to save 20% or more.
Have at least five times your gross salary in life insurance death benefit. Consider 10X this amount in term insurance if young, and/or with several children or other special circumstances.
Pay off your highest-interest credit cards first. Agreed.
The stock market has a long-term average return of 10%. Agreed, but appreciated risk adjusted rates of return..
You should have an emergency fund equal to six months’ worth of household expenses. Doctors should seek 2-3 years.
Your age represents the percentage of bonds you should have in your portfolio. Risk tolerance and assets may be more vital.
Your age subtracted from 100 represents the percentage of stocks you should have in your portfolio. Risk tolerance and assets may still be more vital.
A balanced portfolio is 60% stocks, 40% bonds. With historic low interest rates, cash may be a more flexible alternative than bonds; also avoid most bond mutual funds as they usually never mature.
There are also rules of thumb for determining how much net worth you will need to retire comfortably at a normal retirement age. Here is the calculation that Investopedia uses to determine your net worth:
If you are employed and earning income: ((your age) x (annual household income)) / 10.
If you are not earning income or you are a student: ((your age – 27) x (annual household income)) / 10.
Posted on May 13, 2024 by Dr. David Edward Marcinko MBA
The High Deductible Insurance Competition Heats Up
By Dr. David Edward Marcinko; MBA MEd CMP
[Editor-in-Chief]
As ME-P readers are aware, I’ve had a High Deductible Healthcare Plan [HDHP] coupled with a Health Savings Account [HSA] for my family, and consulting firm, for more than a decade. We’ve been very pleased with it thus far. No significant health problems along the way; just a few scares that proved costly, but benign, because of physician over-protection, over-reaction, or liability phobia; i.e., its better to be safe, than sorry!.
Still, having some economic skin in the insurance game because of the high-deductible feature, makes one an informed consumer. It also provides a sense of empowerment which, while ultimately illusionary for mortals, does offer a bit of self-control. After all, while we can’t mitigate against drunk-drivers and catastrophic diseases, we can live a healthy lifestyle and pay out of pocket for true health “maintenance” … much as we self-pay to maintain our cars and homes, etc. We can do our best … and hope for the rest.
Of course, the savings portion [HSA] has always been a secondary after-thought relative to the actual re-insurance coverage terms, exclusions and conditions. I personally remain focused on the indemnity or PPO type with full coverage, no co-payments and few restrictions. After all, if I use up my high-deductible for an adverse health incident, I figure I have far more problems to worry about than economic. My health, well-being and probably life are significantly in peril.
Nevertheless, as a health economist, I have always appreciated the above market rates given to my cash HSA account; 5% to 4.0% historically; and now 7.0%. Compared to the paltry 0.29% in my FDIC protected bank money market deposit account, or the 0.8% in my non-FDIC protected money market mutual fund [brokerage] account; this is a great deal.
Oh the Irony!
So, it comes as some surprise that after more than a decade, and the recent health insurance reform political re-debacle, that there is a surge of interest in the HSA companion. This time however, interest comes not from the insured’s – but the insurers. And, not from the health insurance industry, but rather from the affiliated [and desperate] banking industry.
How so – and why?
Well, it now seems some insurance companies actually desire the business of folks like me who are willing to bear a higher deductible in return for lower premiums, or who are willing to research CPT® code prices and question the efficacy of the procedures they negotiate with physicians in a collaborative fashion; or who are willing to watch their weights and abstain from over-indulgences for their own good. How novel; and again, why?
It’s the HSA pot-o-gold; Duh!
The Proof
Below, is a copy of an email I personally received from eHealthInsurance soliciting my separate health savings account [HSA] business; not my health insurance coverage business:
Dear David,
Did you know that your health insurance plan can be complemented by a Health Savings Account (HSA)? If you haven’t opened an HSA yet, it’s not too late! An HSA allows you to:
Use funds to pay for copays, deductibles, prescription drugs, dental services, vision care and more
Save money by deducting 100% of your HSA contributions from your taxable income
Earn tax-free interest on the funds that accrue in your account over time
Grow your account from year to year – the money you contribute won’t expire; you can even use an HSA as a secondary retirement savings account
There are no penalties or taxes when you use your HSA funds to pay for qualified medical expenses. Take advantage of your health plan’s benefits and open an HSA today! eHealthInsurance has partnered with nationally recognized, highly-rated HSA banks to offer you industry leading choices:
The Bancorp Bank
HSA Bank
JPMorgan Chase Bank
OptumHealth Bank
Sovereign Bank
Wells Fargo Bank
We’re with you every step of the way
Our representatives are also available for online chat 24 hours day.
Gary Matalucci
Vice President of Customer Care
The Question Is?
Such the deal; NOT!
So, any thinking HDHP participant [like me] must logically ask why such “nationally recognized, highly-rated HSA banks” would offer above market rates during these times of essentially high interest rate levels. Why the interest at all? Are they trying to loose money; or are they just befriending me?
As tennis player John McEnroe might say: are you serious!
Assessment
Yes John, the high rates are a serious loss-leader for more expensive products.
These banks want to make money; not from the interest rate spread on your HSA cash, but by enticing us to place this growing cash horde into their “investment vehicles.” In the recent past, some of us mortgaged our homes chasing the stock market or were goaded into flipping houses. And now, these same bankers are encouraging us to mortgage our health insurance on whatever high-priced, low-quality, fee-ridden, load bearing, snarky “investment vehicles” they can pawn off on us.
Of course, the health insurance companies get a fat sales commission or percentage cut, as well. A win-win situation for all but us – the insured.
Think AARP.
My Personal Advice
Do not do it. Do not take the bait.
The HSA portion of your HDHP is for paying premiums and future medical care in the event of a health catastrophe. It is for savings, not for investing in a risk-bearing vehicle. Far too many of us realized too late that a home is a place to live – not an investment. Likewise, a health savings account is for your health, and health insurance – not risky investing.
Assessment
Well, that’s my opinion as a retired surgeon, former insurance agent and financial advisor. Your own thoughts are appreciated.
Conclusion
Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, urls and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.
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Modern Portfolio Theory approaches investing by examining the complete market and the full economy. MPT places a great emphasis on the correlation between investments.
DEFINITION:
Correlation is a measure of how frequently one event tends to happen when another event happens. High positive correlation means two events usually happen together – high SAT scores and getting through college for instance. High negative correlation means two events tend not to happen together – high SATs and a poor grade record.
No correlation means the two events are independent of one another. In statistical terms two events that are perfectly correlated have a “correlation coefficient” of 1; two events that are perfectly negatively correlated have a correlation coefficient of -1; and two events that have zero correlation have a coefficient of 0.
Correlation has been used over the past twenty years by institutions and financial advisors to assemble portfolios of moderate risk. In calculating correlation, a statistician would examine the possibility of two events happening together, namely:
If the probability of A happening is 1/X;
And the probability of B happening is 1/Y; then
The probability of A and B happening together is (1/X) times (1/Y), or 1/(X times Y).
There are several laws of correlation including;
Combining assets with a perfect positive correlation offers no reduction in portfolio risk. These two assets will simply move in tandem with each other.
Combining assets with zero correlation (statistically independent) reduces the risk of the portfolio. If more assets with uncorrelated returns are added to the portfolio, significant risk reduction can be achieved.
Combing assets with a perfect negative correlation could eliminate risk entirely. This is the principle with “hedging strategies”. These strategies are discussed later in the book.
In the real world, negative correlations are very rare
Most assets maintain a positive correlation with each other. The goal of a prudent investor is to assemble a portfolio that contains uncorrelated assets. When a portfolio contains assets that possess low correlations, the upward movement of one asset class will help offset the downward movement of another. This is especially important when economic and market conditions change.
As a result, including assets in your portfolio that are not highly correlated will reduce the overall volatility (as measured by standard deviation) and may also increase long-term investment returns. This is the primary argument for including dissimilar asset classes in your portfolio. Keep in mind that this type of diversification does not guarantee you will avoid a loss. It simply minimizes the chance of loss.
In the table provided by Ibbotson, the average correlation between the five major asset classes is displayed. The lowest correlation is between the U.S. Treasury Bonds and the EAFE (international stocks). The highest correlation is between the S&P 500 and the EAFE; 0.77 or 77 percent. This signifies a prominent level of correlation that has grown even larger during this decade. Low correlations within the table appear most with U.S. Treasury Bills.
Some of the pioneers of behavioral finance are Drs. Kahneman, Twersky and Thaler. This short introduction to the subject is based on John Nofsinger’s little book entitled “Psychology of Investing” an excellent quick read for all medical professionals or anyone who is interested in learning more about behavioral finance.
Rational Decisions?
Much of modern finance is built on the assumption that investors “make rational decisions” and “are unbiased in their predictions about the future”, however this is not always the case.
Cognitive errors come from (1) prospect theory (people feel good/bad about gain/loss of $500, but not twice as good/bad about a gain/loss of $1,000; they feel worse about a $500 loss than feel good about a $500 gain); (2) mental accounting (meaning that people tend to create separate buckets which they examine individually), (3) Self-deception (e.g. overconfidence), (4) heuristic simplification (shortcuts) and (4) mood can affect ability to reach a logical conclusion.
John Nofsinger’s Book
The following are some of the major chapter headings in Nofsinger’s book, and represent some of the key behavioral finance concepts.
Overconfidence leads to: (1) excessive trading (which in turn results in lower returns due to costs incurred), (2) underestimation of risk (portfolios of decreasing risk were found for single men, married men, married women, and single women), (3) illusion of knowledge (you can get a lot more data nowadays on the internet) and (4) illusion of control (on-line trading).
Pride and Regret leads to: (1) disposition effect (not only selling winners and holding on to the losers, but selling winners too soon- confirming how smart I was, and losers to late- not admitting a bad call, even though selling losers increases one’s wealth due to the tax benefits), (2) reference points (the point from where one measures gains or losses is not necessarily the purchase price, but may perhaps be the most recent 52 week high and it is most likely changing continuously- clearly such a reference point will affect investor’s judgment by perhaps holding on to “loser” too long when in fact it was a winner.)
Considering the Past in decisions about the future, when future outcomes are independent of the past lead to a whole slew of more bad decisions, such as: (1) house money effect (willing to increase the level of risk taken after recent winnings- i.e. playing with house’s money), (2) risk aversion or snake-bite effect (becoming more risk averse after losing money), (3) trying to break-even (at times people will increase their willing to take higher risk to try to recover their losses- e.g. double or nothing), (4) endowment or status quo effect (often people are only prepared to sell something they own for more than they would be willing to buy it- i.e. for investments people tend to do nothing, just hold on to investments they already have) (5) memory and decision making ( decisions are affected by how long ago did the pain/pleasure occur or what was the sequence of pain and pleasure), (6) cognitive dissonance (people avoid important decisions or ignore negative information because of pain associated with circumstances).
Mental Accounting is the act of bucketizing investments and then reviewing the performance of the individual buckets separately (e.g. investing at low savings rate while paying high credit card interest rates).
Examples of mental accounting are: (1) matching costs to benefits (wanting to pay for vacation before taking it and getting paid for work after it was done, even though from perspective of time value of money the opposite should be preferred0, (2) aversion to debt (don’t like long-term debt for short-term benefit), (3) sunk-cost effect (illogically considering non-recoverable costs when making forward-going decisions). In investing, treating buckets separately and ignoring interaction (correlations) induces people not to sell losers (even though they get tax benefits), prevent them from investing in the stock market because it is too risky in isolation (however much less so when looked at as part of the complete portfolio including other asset classes and labor income and occupied real estate), thus they “do not maximize the return for a given level of risk taken).
In building portfolios, assets included should not be chosen on basis of risk and return only, but also correlation; even otherwise well educated individuals make the mistake of assuming that adding a risky asset to a portfolio will increase the overall risk, when in fact the opposite will occur depending on the correlation of the asset to be added with the portfolio (i.e. people misjudge or disregard interactions between buckets, which are key determinants of risk).
This can lead to: (1) building behavioral portfolios (i.e. safety, income, get rich, etc type sub-portfolios, resulting in goal diversification rather than asset diversification), (2) naïve diversification (when aiming for 50:50 stock:bond allocation implementing this as 50:50 in both tax-deferred (401(k)/RRSP) accounts and taxable accounts, rather than placing the bonds in the tax-deferred and stocks in taxable accounts respectively for tax advantages), (3) naïve diversification in retirement accounts (if five investment options are offered then investing 1/5th in each, thus getting an inappropriate level of diversification or no diversification depending on the available choices; or being too heavily invested in one’s employer’s stock).
Representativenes may lead investors to confusing a good company with a good investment (good company may already be overpriced in the market; extrapolating past returns or momentum investing), and familiarity to over-investment in one’s own employer (perhaps inappropriate as when stock tanks one’s job may also be at risk) or industry or country thus not having a properly diversified portfolio.
Emotions can affect investment decisions: mood/feelings/optimism will affect decision to buy or sell risky or conservative assets, even though the mood resulted from matters unrelated to investment. Social interactions such as friends/coworkers/clubs and the media (e.g. CNBC) can lead to herding effects like over (under) valuation.
Financial Strategies
Nofsinger finishes with a final chapter which includes strategies for:
(i) beating the biases: (1) Understand the biases, (2) define your investment objectives, (3) have quantitative investment criteria, i.e. understand why you are buying a specific investor (or even better invest in a passive fashion), (4) diversify among asset classes and within asset classes (and don’t over invest in your employer’s stock), and (5) control your investment environment (check on stock monthly, trade only monthly and review progress toward goals annually).
(ii) using biases for the good: (1) set new employee defaults for retirement plans to being enrolled, (2) get employees to commit some percent of future raises to automatically go toward retirement (save-more-tomorrow).
Assessment
Buy the book (you can get used copies through Amazon). As indicated it is a quick read and occasionally you may even want to re-read it to insure you avoid the biases or use them for the good. Also, the book has long list of references for those inclined to delve into the subject more deeply.
You might even ask “How does all this Behavioral Finance coexist with Efficient Market theory?” and that’s a great question that I’ll leave for another time.
Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.
Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com
OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:
Posted on April 25, 2024 by Dr. David Edward Marcinko MBA
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
Otherwise known as “National Prescription Drug Take Back Day,” National Drug Take Back Day on April 25th is sponsored by the Drug Enforcement Agency. Its goal is to keep the public aware of the dangers of prescription drug use and misuse. Many Americans don’t know how to safely dispose of the prescription drugs that have been sitting in the medicine cabinet past their prime. Using these expired drugs, or using someone else’s, is dangerous and puts both the public and the environment at risk.
Spotify made money in Q1. According to Morning Brew, the streaming music giant grew its revenue last quarter by 20% to $3.8 billion on a record $180 million in profit, it announced yesterday. The smash report comes after Spotify cut costs last year, which included laying off more than a quarter of its workforce. The company also raised prices in 2023 for the first time in a decade as it further expanded beyond music into audio books and other categories. Spotify shares soared ~11% following the news.
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Here’s where the major benchmarks ended:
The S&P 500 index® (SPX) rose 1.08 points (0.02%) to 5,071.63; the Dow Jones Industrial Average® ($DJI) fell 42.77 points (0.1%) to 38,460.92; the NASDAQ Composite® ($COMP) added 16.11 points (0.1%) to 15,712.75.
The 10-year Treasury note yield rose more than 4 basis points to 4.644%.
The CBOE Volatility Index® (VIX) rose 0.28 to 15.97.
Transportation shares were among the market’s weakest performers Wednesday behind a drop of more than 10% in Old Dominion Freight Line (ODFL), which reported lighter-than-expected quarterly revenue. The shipper’s nosedive helped send the Dow Jones Transportation Average ($DJT) down 2.3%. Consumer staples, semiconductors, and utilities posted moderate advances. The Dow Jones Utility Index ($DJU) gained for the sixth straight day and ended at a three-and-a-half-month high.
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The National Association of Realtors’ $418 million settlement over an alleged conspiracy to inflate commissions received preliminary approval yesterday. It’s a new world order: Sellers won’t have to pay buyers’ agents anymore. There’s been talk of a metaphorical death of real estate agents, or a mass extinction; the jury is still out, but RE/MAX cofounder and chairman Dave Liniger doesn’t seem too concerned.
The Labor Department announced it has finalized its Retirement Security Rule, which aims to protect American workers who are saving for retirement and relying on advice from fiduciaries for it. The new rule will update the definition of an investment advice fiduciary under the Employee Retirement Income Security Act and the Internal Revenue Code.
Clinicians don’t always get it right, and their mistakes can be costly: Studies show misdiagnoses lead to roughly 800,000 patient deaths or permanent disabilities each year in the US and cost the healthcare system an estimated $20 billion annually. Cleveland Clinic is using telehealth to try to combat misdiagnoses via its virtual second opinions program, which has saved an average of $8,705 per patient by avoiding unnecessary treatments, according to an analysis released in March.
Posted on April 24, 2024 by Dr. David Edward Marcinko MBA
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
Stat: 740. That’s how many employees Nike will lay off at its Oregon HQ before the end of June. In February, Nike CEO John Donahoe informed employees of the company’s plan to reduce 2% of its workforce, which would mean around 1,600 employees in total. (USA Today)
Let’s say you leave your job at any time during or after the calendar year you turn 55 (or age 50 if you’re a public safety employee with a government defined-benefit plan). Under a little-known separation-of-service provision, often referred to as the “rule of 55,” you may be able take distributions (though some plans may allow only one lump-sum withdrawal) from your 401(k), 403(b), or other qualified retirement planfree of the usual 10% early-withdrawal penalties. However, be aware that you’ll still owe ordinary income taxes on the amount distributed. This exception applies only to the plan (including any consolidated accounts) that you were contributing to when you separated from service. It does not extend to IRAs.
The S&P 500 index rose 59.95 points (1.2%) to 5,070.55; the Dow Jones Industrial Average gained 263.71 points (0.7%) to 38,503.69; the NASDAQ Composite® ($COMP) surged 245.33 points (1.6%) to 15,696.64.
The 10-year Treasury note yield (TNX) decreased about 2 basis points to 4.602%.
The CBOE Volatility Index® (VIX) fell 1.25 to 15.69.
Similar to Monday, chipmakers were among the market’s strongest areas, carrying the Philadelphia Semiconductor Index (SOX) to a 2.2% advance. Retailers and communication services shares were also strong. The Dow Jones Utility Index ($DJU) gained for the fifth straight day and ended at its highest level in over three months. The Russell 2000® Index (RUT) surged nearly 2%.
With the PP-ACA, increased compliance regulations and higher tax rates impending from the Biden administration – not to mention the corona pandemic, venture capital based healthcare corporations and telehealth – physicians are more concerned about their retirement and retirement planning than ever before; and with good reason. After payroll taxes, dividend taxes, limited itemized deductions, the new 3.8% surtax on net investment income and an extra 0.9% Medicare tax, for every dollar earned by a high earning physician, almost 50 cents can go to taxes!
Introduction
Retirement planning is not about cherry picking the best stocks, ETFs or mutual funds or how to beat the short term fluctuations in the market. It’s a disciplined long term strategy based on scientific evidence and a prudent process. You increase the probability of success by following this process and monitoring on a regular basis to make sure you are on track.
General Surveys
According to a survey from the Employee Benefit Research Institute [EBRI] and Greenwald & Associates; nearly half of workers without a retirement plan were not at all confident in their financial security, compared to 11 percent for those who participated in a plan, according to the 2014 Retirement Confidence Survey (RCS).
In addition, 35 percent of workers have not saved any money for retirement, while only 57 percent are actively saving for retirement. Thirty-six percent of workers said the total value of their savings and investments—not including the value of their home and defined benefit plan—was less than $1,000, up from 29 percent in the 2013 survey. But, when adjusted for those without a formal retirement plan, 73 percent have saved less than $1,000.
Debt is also a concern, with 20 percent of workers saying they have a major problem with debt. Thirty-eight percent indicate they have a minor problem with debt. And, only 44 percent of workers said they or their spouse have tried to calculate how much money they’ll need to save for retirement. But, those who have done the calculation tend to save more.
The biggest shift in the 24 years has been the number of workers who plan to work later in life. In 1991, 84 percent of workers indicated they plan to retire by age 65, versus only 9 percent who planned to work until at least age 70. In 2014, 50 percent plan on retiring by age 65; with 22 percent planning to work until they reach 70.
Physician Statistics
Now, compare and contrast the above to these statistics according to a 2018 survey of physicians on financial preparedness by American Medical Association [AMA] Insurance. The statistics are still alarming:
The top personal financial concern for all physicians is having enough money to retire.
Only 6% of physicians consider themselves ahead of schedule in retirement preparedness.
Nearly half feel they were behind
41% of physicians average less than $500,000 in retirement savings.
Nearly 70% of physicians don’t have a long term care plan.
Only half of US physicians have a completed estate plan including an updated will and Medical directives.
Thoughts to Ponder
And so, to help make your golden years comfortable and worry free, here are ten important retirement questions for all physicians to consider:
How much money do you need to retire?
What is your retirement cash flow?
What is your retirement vision?
How to stay on retirement track?
How to maximize retirement plan contributions such as 401(k) or 403(b)?
How to maximize retirement income from retirement plans?
What are some other retirement plan savings options?
What is your retirement plan and investing style?
What is the role of social security in retirement planning?
How to integrate retirement with estate planning?
The opinion of a competent Certified Medical Planner® can assist.
ASSESSMENT: Your thoughts, comments and input are appreciated.
Posted on April 22, 2024 by Dr. David Edward Marcinko MBA
By Ann Miller RN MHACMP™
INTRODUCING OUR NEXT GENERATION e-BOOK LIBRARYFROM iMBA, Inc.
An e-book is an electronic or digital book that can be read on a computer or a handheld device.
Our new e-books consists of text, images, and are fixed to a specific spot on the page.
And, our e-books are a data files similar in content and structure to a word-processing document that comes in a PDF format. To use our e-books, you need to purchase and download it to a device that has a .pdf file reader app, such as ADOBE® or similar on a smartphone, tablet or computer. A PDF, also known as a portable document format, is the format most people are familiar with and used in our e-books. PDFs are known for their ease of use and ability to hold custom layouts. They are the most commonly used e-Book formats, especially by professionals and adult-learners.
You can then access the e-book and read it, or highlight pages and even take side notes.
e-Books Save Money
With no manufacturing, printing, binding or shipping costs, e-Books are cheaper than traditional hard or paper back books.The price of each specialized and highly niche focused e-Book [50-100 pages] is only $25, whereas similar paperback printed books of this type generally cost $145, or more!
You’ve got a sense of your ideal retirement age. And you’ve probably made certain plans based on that timeline. But what if you’re forced to retire sooner than you expect? Aging baby-boomers, corporate medicine, the medical practice great resignation and/or the pandemic, etc?
Early retirement is nothing new, but it’s clear how much the COVID-19 pandemic has affected an aging workforce. Whether due to downsizing, objections to vaccine mandates, concerns about exposure risks, other health issues, or the desire for more leisure time, the retired general population grew by 3.5 million over the past two years—compared to an annual average of 1 million between 2008 and 2019—according to the Pew Research Center.1 At the same time, a survey conducted by the National Institute on Retirement Security revealed that more than half of Americans are concerned that the COVID-19 pandemic has impacted their ability to achieve a secure retirement.2
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There’s no need to panic, but those numbers make one thing clear, says Rob Williams, managing director of financial planning, retirement income, and wealth management for the Schwab Center for Financial Research. Flexible and personalized financial planning that addresses how you’d cope if you had to retire early can help you make the best use of all your resources.
So – Here are six steps to follow. We’ll use as an example a person who’s seeing if they could retire five years early, but the steps remain the same regardless of your individual time frame.
Step 1: Think strategically about pension and Social Security benefits
For most retirees, Social Security and (to a lesser degree) pensions are the two primary sources of regular income in retirement. You usually can collect these payments early—at age 62 for Social Security and sometimes as early as age 55 with a pension. However, taking benefits early will mean that you get smaller monthly benefits for the rest of your life. That can matter to your bottom line, even if you expect Social Security to be merely the icing on your retirement cake.
On the Social Security website, you can find a projection of what your benefits would be if you were pushed to claim them several years early. But if you’re part of a two-income couple, you may want to make an appointment at a Social Security office or with a financial professional to weigh the potential options.
For example, when you die, your spouse is eligible to receive your monthly benefit if it’s higher than his or her own. But if you claim your benefits early, thus receiving a reduced amount, you’re likewise limiting your spouse’s potential survivor benefit.
If you have a pension, your employer’s pension administrator can help estimate your monthly pension payments at various ages. Once you have these estimates, you’ll have a good idea of how much monthly income you can count on at any given point in time.
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Step 2: Pressure-test your 401(k)
In addition to weighing different strategies to maximize your Social Security and/or pension, evaluate how much income you could potentially derive from your personal retirement savings—and there’s a silver lining here if you’re forced to retire early.
Rule of 55
Let’s say you leave your job at any time during or after the calendar year you turn 55 (or age 50 if you’re a public safety employee with a government defined-benefit plan). Under a little-known separation-of-service provision, often referred to as the “rule of 55,” you may be able take distributions (though some plans may allow only one lump-sum withdrawal) from your 401(k), 403(b), or other qualified retirement plan free of the usual 10% early-withdrawal penalties. However, be aware that you’ll still owe ordinary income taxes on the amount distributed.
This exception applies only to the plan (including any consolidated accounts) that you were contributing to when you separated from service. It does not extend to IRAs.
4% rule
There’s also a simple rule of thumb suggesting that if you spend 4% or less of your savings in your first year of retirement and then adjust for inflation each year following, your savings are likely to last for at least 30 years—given that you make no other changes to your withdrawals, such as a lump sum withdrawal for a one-time expense or a slight reduction in withdrawals during a down market.
To see how much monthly income you could count on if you retired as expected in five years, multiply your current savings by 4% and divide by 12. For example, $1 million x .04 = $40,000. Divide that by 12 to get $3,333 per month in year one of retirement. (Again, you could increase that amount with inflation each year thereafter.) Then do the same calculation based on your current savings to see how much you’d have to live on if you retired today. Keep in mind that your money will have to last five years longer in this instance.
Knowing the monthly amount your current savings can generate will give you a clearer sense of whether you’ll have a shortfall—and how large or small it might be. Use our retirement savings calculator to test different saving amounts and time frames.
Step 3: Don’t forget about health insurance, doctor!
Nobody wants to spend down a big chunk of their retirement savings on unanticipated healthcare costs in the years between early retirement and Medicare eligibility at age 65. If you lose your employer-sponsored health insurance, you’ll want to find some coverage until you can apply for Medicare.
Your options may include continuing employer-sponsored coverage through COBRA, insurance enrollment through the Health Insurance Marketplace at HealthCare.gov, or joining your spouse’s health insurance plan. You may also find discounted coverage through organizations you belong to—for example, the AARP.
Step 4: Create a post-retirement budget
To make sure your retirement savings will cover your expenses, add up the monthly income you could get from pensions, Social Security, and your savings. Then, compare the total to your anticipated monthly expenses (including income taxes) if you were to retire five years early and are eligible, and choose to file, for Social Security and pension benefits earlier.
Take into account various life events and expenditures you may encounter. You may not pay off your mortgage by the date you’d planned. Your spouse might still be working (which can add income but also prolong certain expenses). Or your children might not be out of college yet.
You’re probably fine if you anticipate that your monthly expenses will be lower than your income. But if you think your expenses would be higher than your early-retirement income, some suggest that you take one or more of these measures:
Retire later; practice longer.
Save more now to fill some of the potential gap.
Trim your budget so there’s less of a gap down the road.
Consider options for medical consulting or part-time work—and begin to explore some of those opportunities now.
To the last point, finding a physician job later in life can be challenging, but certain employment agencies specialize in this area. If you can find work you like that covers a portion of your expenses, you’ll have the option of delaying Social Security and your company pension to get higher payments later—and you can avoid dipping into your retirement savings prematurely.
When you retire early, you have to walk a fine line with your portfolio’s asset allocation—investing aggressively enough that your money has the potential to grow over a long retirement, but also conservatively enough to minimize the chance of big losses, particularly at the outset.
“Risk management is especially important during the first few years of retirement or if you retire early,” Rob notes, because it can be difficult to bounce back from a loss when you’re drawing down income from your portfolio and reducing the overall number of shares you own.
To strike a balance between growth and security, start by making sure you have enough money stashed in relatively liquid, relatively stable investments—such as money market accounts, CDs, or high-quality short-term bonds—to cover at least a year or two of living expenses. Divide the rest of your portfolio among stocks, bonds, and other fixed-income investments. And don’t hesitate to seek professional help to arrive at the right mix.
Many people are unaccustomed to thinking about their expenses because they simply spend what they make when working, Rob says. But one of the most valuable decisions you can make about your life in retirement is to reevaluate where your money is going now.
This serves two aims. First, it’s a reality check on the spending plan you’ve envisioned for retirement, which may be idealized (e.g., “I’ll do all the home maintenance and repairs!”). Second, it enables you to adjust your spending habits ahead of schedule—whichever schedule you end up following. This gives you more control and potentially more income.
Step 6: Reevaluate your current spending
For example, if you’re not averse to downsizing, moving to a less expensive home could reduce your monthly mortgage, property tax, and insurance payments while freeing up equity that could also be invested to provide additional monthly income.
“When you are saving for retirement, time is on your side”. You lose that advantage when you’re forced to retire early, but having a backup plan that anticipates the possibility of an early retirement can make the unknowns you face a lot less daunting.
The fact that every physician in private medical practice, without a business education, leaves approximately a million dollars on the table and is unaware of it is well known to business experts who work with medical doctors experiencing financial difficulties.
Business experts such as Dan S. Kennedy, Peter Drucker, Michael Gerber, Maxwell Maltz, Neil Baum, William Hanson,Huss and Coleman, Steven Hacker, Thomas Stanley, Chris Hurn, Napoleon Hill, and Dave Ramsey, among others, understand the financial problems faced by medical practices and how to solve them.
Posted on March 2, 2024 by Dr. David Edward Marcinko MBA
RETIREMENT PLANNING
By Staff Reporters
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A PEP is a defined contribution plan, such as a 401(k), in which multiple employers can participate. When employers join a PEP, they delegate their named fiduciary role to a third-party pooled plan provider (PPP). PEP fiduciary oversight falls on the PPP rather than the employer. And although each PPP may set its own eligibility requirements, businesses joining a PEP benefit plan needn’t operate in the same industry or geographical area.
PEP plans provide viable 401(k) alternatives for small business owners who may otherwise struggle to compete for talent against large organizations with comprehensive benefits packages.
Other advantages include: Less in-house administration: The PPP assumes responsibility for much of the plan administration, handling all plan documentation, governmental filings and ongoing compliance. Employee payroll deductions are left to the employer, but these can be efficiently managed with the help of a payroll service provider that integrates payroll and benefits.
Tax credits can help offset PEP start-up costs. For the first three years of participation, employers may be eligible for a tax credit of $5,000 annually, with an additional $500 available to those who set up automatic enrollment. Under Secure Act 2.0, an additional credit of up to $1,000 per employee for eligible employer contributions may apply to employers with up to 50 employees for the preceding taxable year. This credit phases out from 51 to 100 employees.
Businesses participating in single-employer retirement plans (SEP) must independently communicate and coordinate with their record-keeper, custodian, investment advisor, trustee and auditor. With PEP, all these tasks and services are bundled into one, saving employers time and money.
Despite its advantages, a PEP does have some drawbacks, particularly when compared to an SEP. Unlike a PEP, an SEP gives employers more of the following:
Flexibility: Employers can customize the design of their plan to meet their retirement goals and the needs of their employees.
Control: Employers are not dependent on the actions or decisions of others and can access information and resolve problems directly without the need of a third party.
Choice: Employers have the unilateral freedom to choose a different service provider, move their plan or negotiate better pricing if they are unsatisfied with the cost or quality of service.
Bank of America just acknowledged that the personal information of 57,028 of its customers has been compromised. This breach, attributed to a failure at Infosys McCamish Systems (IMS), a provider of insurance business process solutions engaged by the bank, poses a substantial risk of identity theft to the affected individuals.
The data breach notification, filed in Maine, reveals that sensitive information related to Bank of America’s deferred compensation plans was inadvertently accessed. IMS, in a notification letter to customers, disclosed that the compromised data encompasses a range of critical personal details. The accessed information includes customers’ names, addresses, business email addresses, dates of birth, Social Security numbers, and other account specifics. Such data is typically all required for an identity thief to execute fraudulent activities under another person’s name.
IMS’s admission that it might never be able to precisely identify what information was accessed underscores the severity and potential long-term consequences of the breach. This uncertainty adds an additional layer of anxiety for customers, highlighting the challenges in mitigating the aftermath of such security failures.
Finally, Walmart and Home Depot will be the star of the show this week they report their earnings for the holiday quarter. Nvidia will also try to keep its historic hot streak going when it reports on Wednesday—expectations are through the roof.
For many physicians it’s about demographics. Just like the rest of us, doctors are aging too. Already the average physician age is about 53 years old. The Association of American Medical Colleges reports that about half of doctors are over the age of 55. Over the next decade, an estimated 40% of physicians will be over 65 years old. This means more than two of every five active physicians will reach age 65 within the next 10 years.
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Moreover, compared with their boomer colleagues who were more likely to work past retirement, a robust 60% of younger Generation X doctors are reporting that they plan to retire by age 60.
Doctors cite poor quality of life and stress as reasons for their early departure. The pandemic certainly crushed many providers and has led to burnout. Generation X physicians in their 40s and early 50s were more likely than boomers to report that their current work life was not making the grade. In short, 43% of middle-aged doctors, compared with 31% of doctors over age 55, were reporting lower levels of professional fulfillment. Moreover, 47% of mostly Gen X doctors indicated dissatisfaction with their level of personal fulfillment compared with 36% of practicing boomer physicians.
That dissatisfaction is translating into action and the pandemic is not the only reason for discontent. One survey of physicians in Massachusetts indicated that one in four doctors plans to leave medicine in the next two years and that staffing shortages and related administrative demands, e.g., hospital system metrics, paperwork, eMRs and meeting insurance requirements, were the most cited source of workplace stress.
I’m a late career entry and 55 year old burned out doctor who wants out. Can I retire in 2 years with a pension of $6,100 a month (net). I have $825,000 in my 401(k) and 457 plan and a mortgage of $95,000 at 5.30%. I am not planning to move and will retire in place.
SOME THOUGHTS AND ANSWERS?
Congratulations on you solid retirement fund on top of a pending pension.
The first step you should take is to create a detailed budget for your retirement years. Consider expected living costs, healthcare expenses, travel and any other major expenses. Many folks make the mistake of setting up a monthly budget, but keep out significant milestones that are often costly, such as paying for a child’s college education or wedding.
Next, you should figure out your plan for housing. Mortgage payments, upkeep and taxes are important considerations. There was no mention of mortgage equity.
Another factor to take into account is state and Federal tax projections. If the 401(k) funds are all pre-tax dollars, any distributions will be taxable and there may be penalties if funds are withdrawn prior to 59 ½ years old. That will impact your retirement plan if you’re preparing to retire at 57-58.
It also sounds like you haven’t taken into account your Social Security allowance. It’s possible that your pension is one that comes with a government pension offset which would explain why you didn’t include it. On the other hand, maybe you’re thinking it’s far out enough that it doesn’t factor into your calculations?
Finally, you may want to look for a fee-only financial advisor that is paid directly by the client and doesn’t receive commissions for recommending financial products. So, advice is less biased. And get a fiduciary advisor which means they are required to put your best interests ahead of their own.
Also, someone with medical niche specificity. Good Luck!
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NOTE: This is not an offer to buy or sell any security or interest. All investing involves risk, including loss of principal. Working with an adviser may come with potential downsides such as payment of fees (which will reduce returns). There are no guarantees that working with an adviser will yield positive returns. The existence of a fiduciary duty does not prevent the rise of potential conflicts of interest.
A retirement nest egg of $2.5 million can likely produce an annual income of $100,000 for as long as you are likely to live. This is using the 4% withdrawal rate many financial advisors consider standard. After starting with the first withdrawal of 4% of the total, the annual withdrawal will adjust for inflation. For example, if inflation runs at the target 2% rate of federal policymakers, during retirement the retiree will withdraw:
$100,000
in the first year
$102,000
in the second year
$104,040
in the third year and so on …
According to this model and conventional wisdom, a 4% withdrawal rate will allow a portfolio to last for at least 30 years. This would permit a 65-year-old retiree to maintain consistent purchasing power until age 95 and beyond.
For most retirees, this will likely be adequate to maintain a satisfying standard of living. Only about 3% of 2,000 retirees surveyed by the Employee Benefit Research Institute in 2022 spent $7,000 or more per month, equivalent to $84,000 in annual spending.
This model does not include a number of other factors. For instance, nearly all retirees are eligible for Social Security. For 2023, the maximum monthly Social Security benefit for people who claim benefits at full retirement age is $3,627. That’s equal to more than half the spending of the top 3% of retirees surveyed by EBRI. And, like the standard withdrawal rate, Social Security benefits are indexed to inflation.
5 Variables for Retiring With $2.5 Million at Age 65
While $2.5 million could seem like enough to retire at 65, many factors could change the outlook.
1. Unexpected Healthcare Costs
The Fidelity Retiree Health Care Cost Estimate suggests an average 65-year-old couple could need (approximate, after taxes):
This assumes both spouses are enrolled in traditional Medicare, which between Medicare Part A and Part B covers expenses such as hospital stays, doctor visits and services, physical therapy, lab tests and more, and in Medicare Part D, which covers prescription drugs.
This figure does not include long-term care (“custodial care”), most dental care, eye exams and more, so your estimated healthcare costs in retirement could be considerably more.
2. Inflation
Inflation can powerfully influence retirees’ financial well-being. When inflation occurs, it reduces the purchasing power of money withdrawn from your retirement account. You can increase withdrawals to maintain purchasing power, but this risks more quickly depleting your savings.
3. Market Downturns
Inflation isn’t the only cause of market downturns. Business cycles and financial crises can exaggerate normal fluctuations in stock market valuations. If you’re selling investments to generate income for living expenses, you may want to sell more if valuations are down.
4. Longevity
While living a long life is positive, you could outlive the money you’ve saved for retirement. Many financial planners use life expectancy to age 95 or 100 when developing plans for funding retirement.
The Social Security Administration says an average 65-year-old male can live to age 83, while the average woman can live to age 86. However, people in their 80s and 90s also generally reduce their spending, with the exception of healthcare costs.
5. Estate Planning
Retiring at 65 with $2.5 million likely involved generating high income and savings, so there’s a chance you could have assets to pass on. With estate planning, adding members of your family as beneficiaries for homes you paid off with a mortgage may have long-term positives.
You may also want to think about any additional income streams. For example, if you own a medical practice or business, you may want to add your family as a beneficiary so they can decide to keep the business running or sell it.
“Bad financial advice by unscrupulous financial advisers driven by their own self-interest can cost a retiree up to 1.2% per year in lost investment,” President Biden said. “That doesn’t sound like much but if you’re living long, it’s a lot of money.
“Over a lifetime, it can add up to 20% less money when they retire. For a middle-class household, that can amount to tens of thousands of dollars over time.”
Posted on December 15, 2023 by Dr. David Edward Marcinko MBA
By Staff Reporters
HEALTH SAVINGS ACCOUNT
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DEFINITION: According to Wikipedia, a health savings account (HSA) is a tax advantaged account available to taxpayers in the USA who are enrolled in a high-deductible health plan (HDHP). The funds contributed to an account are not subject to federal income tax at the time of deposit.
Unlike a flexible spending account (FSA), HSA funds roll over and accumulate year to year if they are not spent. HSAs are owned by the individual, which differentiates them from company-owned Health Reimbursement Arrangements (HRA) that are an alternate tax-deductible source of funds paired with either high-deductible health plans or standard health plans. CITE: https://www.r2library.com/Resource
How to avoid losing out on your HSA funds
The last thing you want is to risk losing out on the money you’ve socked away in an HSA. If you make a point to keep contributing to your account, however, then that alone should be enough to keep it active.
EXAMPLE: So let’s say your goal is to reserve all of your HSA funds for retirement, and you’re only in your 40s. If you make an HSA contribution every year, that should do the trick in keeping your account active. Making investment changes in your account might do the same.
If you have an old HSA you know you haven’t put money into for quite some time and you don’t plan to make a contribution or withdrawal anytime soon, then it could pay to contact the bank holding your HSA and confirm that you wish to keep your account active. At that point, your bank should be able to tell you what steps, if any, you need to take to make sure you don’t end up forfeiting any funds.
Posted on December 13, 2023 by Dr. David Edward Marcinko MBA
By Dr. David Edward Marcinko MBA
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DEFINITION: A general review of research on frailty defined it more specifically as “a state characterized by reduced physiological reserve and loss of resistance to stressors caused by accumulated age-related deficits.”
Between 10 and 15% of older adults are considered frail. But how do doctors measure frailty? One tool is called the Frailty Index for Elders (FIFE) and consists of 10 items that are scored zero to 10, with zero indicating no frailty, one to three indicating that there is a risk of frailty, and four or above indicating that the individual is considered frail in that item.
Another frailty index, used byDalhousie University in Canada, requires 30 variables to be measured and is regarded more as a comprehensive measure of one’s overall health.
It’s important to understand that maintaining good health and fitness is not just about avoiding illness and injury, reaching overhead for that jar of peanut butter on the top shelf, and walking the dog farther than just around the block. It’s also about recovering more quickly when you get sick or injured, which everyone does eventually.
Posted on December 13, 2023 by Dr. David Edward Marcinko MBA
By Staff Reporters
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QUESTION: Why are doctors leaving their practices?
For many it’s about demographics. Just like the rest of us, doctors are aging too. Already the average physician age is about 53 years old. The Association of American Medical Colleges reports that about half of doctors are over the age of 55. Over the next decade, an estimated 40% of physicians will be over 65 years old. This means more than two of every five active physicians will reach age 65 within the next 10 years.
Moreover, compared with their boomer colleagues who were more likely to work past retirement, a robust 60% of younger Generation X doctors are reporting that they plan to retire by age 60.
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Doctors cite poor quality of life and stress as reasons for their early departure. The pandemic certainly crushed many providers and has led to burnout. Generation X physicians in their 40s and early 50s were more likely than boomers to report that their current work life was not making the grade. In short, 43% of middle-aged doctors, compared with 31% of doctors over age 55, were reporting lower levels of professional fulfillment. Moreover, 47% of mostly Gen X doctors indicated dissatisfaction with their level of personal fulfillment compared with 36% of practicing boomer physicians.
Posted on November 3, 2023 by Dr. David Edward Marcinko MBA
By Staff Reporters
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The IRS has increased the 401(k) plan contribution limits for 2024, allowing employees to defer up to $23,000 into workplace plans, up from $22,500 in 2023. The agency boosted contributions for individual retirement accounts to $7,000 for 2024, up from $6,500. The employee contribution limit for 401(k) plans is also increasing to $23,000 in 2024, up from $22,500 in 2023, and catch-up contributions for savers age 50 and older will remain unchanged at $7,500. The new amounts also apply to 403(b) plans, most 457 plans and Thrift Savings Plans.
IBM just informed its US workers that starting on January 1st, 2024, the corporation will no longer match employee contributions to their 401(k) retirement plans. Instead, it will offer a new benefit called a Retirement Benefit Account (RBA).
“Each eligible employee’s RBA will be credited monthly with an amount equal to five percent of their eligible pay – no employee contribution required,” a leaked internal memo reads, the content of which was confirmed by The Register’s sourcing. “IBMers will also receive a one-time salary increase to offset the difference between the IBM contributions they are currently eligible to receive in the 401(k) plan and the new five percent RBA pay credit. This is separate from the annual salary plan later in the year.”
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A jury on Thursday convicted FTX co-founder Sam Bankman-Fried of fraud, conspiracy and money laundering, the culmination of a month-long trial that saw the former crypto mogul take the stand in his own defense after his inner circle of friends-turned-deputies provided damning testimony against him.
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Here is where the major benchmarks ended:
The S&P 500 Index was up 79.92 points (1.9%) at 4,317.78; the Dow Jones Industrial Average (DJI) was up 564.50 points (1.7%) at 33,839.08; the NASDAQ Composite was up 232.72 points (1.8%) at 13,294.19.
The 10-year Treasury note yield was down about 13 basis points at 4.663%.
CBOE’s Volatility Index (VIX) was down 1.21 at 15.66.
Nearly every sector participated in Thursday’s rally, with banks and other financial companies leading gainers. The KBW Regional Banking Index (KRX) surged more than 5%. Energy and retail shares were also strong. Small-cap stocks outpaced their larger counterparts, with the Russell 2000 Index (RUT) jumping 2.5%.
Instead, physician assistants (PAs) and nurse practitioners (NPs) will increasingly provide primary care services, according to a report from consulting firm Mercer.
Several years ago a group of highly trusted and deeply experienced financial services professionals and estate planners noted that far too many of their mature physician clients, using traditional stock brokers, management consultants and financial advisors, seemed to be less successful than those who went it alone. These Do-it-Yourselfers [DIYs] had setbacks and made mistakes, for sure. But, the ME Inc doctors seemed to learn from their mistakes and did not incur the high management and service fees demanded from general or retail one-size-fits-all “advisors.”
In fact, an informal inverse relationship was noted, and dubbed the “Doctor Effect.” In others words, the more consultants an individual doctor retained; the less well they did in all disciplines of the financial planning and medical practice management, continuum.
Of course, the reason for this discrepancy eluded many of them as Wall Street brokerages and wire-houses flooded the media with messages, infomercials, print, radio, TV, texts, tweets, and internet ads to the contrary. Rather than self-learn the basics, the prevailing sentiment seemed to purse the holy grail of finding the “perfect financial advisor.” This realization was a confirmation of the industry culture which seemed to be: Bread for the advisor – Crumbs for the client!
And so, at D.E. Marcinko & Associates, our informed cadre’ of technology focused and highly educated doctors, nurses, financial advisors, attorneys, accountants, psychologists and educational visionaries decided there must be a better way for healthcare colleagues to receive financial planning advice, products and related management services within a culture of fiduciary responsibility.
We trust you agree with this ME Inc, and Certified Medical Planner™ consulting philosophy, as illustrated on our website.
Posted on September 3, 2023 by Dr. David Edward Marcinko MBA
More on End-of-Life Political Decisions from a Different Perspective – Since 2009
By Dr. David Edward Marcinko; MBA, CMP™
The controversial booklet Your Life, Your Choices begins by saying,
“There’s only one person who is truly qualified to tell health care providers how you feel about different kinds of health care issues—and that’s you. But, what if you get sic; or injured so severely that you can’t communicate with your doctors or family members? Have you thought about what kinds of medical care you would want? Do your loved ones and health care providers know your wishes?
Many people assume that close family members automatically know what they want. But, studies have shown that spouses guess wrong over half the time about what kinds of treatment their husbands or wives would want. You can help assure that your wishes will direct future health care.”
Contents
The booklet, initially produced by the VA Health System and now under revision, includes two areas of focus: 1] Planning for Future Medical Decisions, and 2] How to Prepare a Personalized Living Will.
Now, insofar as doctors, nurses and some other medical professionals are concerned – decisions of life, death or dismemberment are not an unusual or particularly contentious topic except for the lunatic fringes.
Yet, when taken in the context of HR-3200, they seem to be provoking wild outrage with talk of “killing grandma”, “government death squads”, etc all within the Obama Administration’s talk of healthcare reform. Still, this is not the point of my diatribe as I remain a neutral observer and pass no value judgment at this time.
What is the Point?
Just this! As a financial advisor for more than a decade, estate planning to reduce taxes, along with living wills and advanced directives are usual topics of discussion with clients. In fact, they are fairly boring and rote topics for estate planners, tax attorneys and accountants, too.
My wife and I have a living will, for example. And, although I am not sure that I could “pull her plug”; I did watch as she and her mother did so for my father-in-law [both wife and mother-in-law are Master-Degree prepared RNs]. So; why the impolite town-hall meetings and related controversy, now! Is it mere politics as usual, unusual, or is it something else?
Assessment
The onerous pages of this booklet seem to be page 21 and page 53. Take a look and decide for yourself.
Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.
Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com
OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:
Posted on August 15, 2023 by Dr. David Edward Marcinko MBA
By Staff Reporters
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Changes to a popular 401(K) tax deduction are set to hit millions of high-earning Americans from next year. Workers over the aged of 50 are entitled to make catch-up contributions to their 401(K)s worth up to $7,500 this year. The annual cap on all contributions is $30,000.
But from 2024, those earning over $145,000 will no longer be able to put these catch-up payments into a traditional 401(K). Instead, the money will be only funneled into a Roth IRA account, according to new rules passed through Congress in December.
Posted on August 4, 2023 by Dr. David Edward Marcinko MBA
By Staff Reporters
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The Internal Revenue Service is allowing people who inherited an individual retirement account after 2019 to skip a required minimum distribution [RMD] this year, but most still must empty the account within 10 years. The IRS issued the new guidance last week.
There has been confusion surrounding the rules for inherited IRAs ever since the Secure Act of 2019 eliminated the so-called “stretch IRA” for most non-spouse beneficiaries. The old rules had allowed beneficiaries of inherited IRAs to stretch their required minimum distributions over their own lifetimes, permitting decades of tax-free or tax-deferred growth in some cases.
Under the Secure Act of 2019, most non-spouse beneficiaries must now empty their inherited IRA by the end of the 10th year following the original owner’s death. When the law was first passed, experts interpreted it to mean that all the money could be withdrawn in year 10 if so desired, said Ed Slott, CPA and founder of IRAHelp.com
Yet in early 2022, the IRS proposed stricter rules that would apply to someone who inherited an IRA from a person who had already begun taking RMDs; in that case, the recipient must continue taking distributions on an annual schedule. In other words, if the RMD tap had already been turned on, Slott said, it couldn’t be turned off following the original owner’s death, and beneficiaries had to keep withdrawing every year and paying income tax on the amount withdrawn.
Posted on July 7, 2023 by Dr. David Edward Marcinko MBA
By Ann Miller RN MHACMP™
INTRODUCING OUR NEXT GENERATION e-BOOK LIBRARYFROM iMBA, Inc.
An e-book is an electronic or digital book that can be read on a computer or a handheld device.
Our new e-books consists of text, images, and are fixed to a specific spot on the page.
And, our e-books are a data files similar in content and structure to a word-processing document that comes in a PDF format. To use our e-books, you need to purchase and download it to a device that has a .pdf file reader app, such as ADOBE® or similar on a smartphone, tablet or computer. A PDF, also known as a portable document format, is the format most people are familiar with and used in our e-books. PDFs are known for their ease of use and ability to hold custom layouts. They are the most commonly used e-Book formats, especially by professionals and adult-learners.
You can then access the e-book and read it, or highlight pages and even take side notes.
e-Books Save Money
With no manufacturing, printing, binding or shipping costs, e-Books are cheaper than traditional hard or paper back books.The price of each specialized and highly niche focused e-Book [50-100 pages] is only $25, whereas similar paperback printed books of this type generally cost $145, or more!
Posted on June 29, 2023 by Dr. David Edward Marcinko MBA
By Staff Reporters
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The new magic number for retirement is up slightly from last year, when U.S. adults said they believed they needed $1.25 million to retire comfortably, according to new findings from Northwestern Mutual. High-net-worth individuals – those with more than $1 million in investible assets – believe they’ll need $3 million to retire comfortably.
There’s quite a gap, however, between what people have now and what they think they’ll need. The average amount that U.S. adults have saved for retirement is only $89,300, up 3% from $86,869 in 2022, Northwestern Mutual found.
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Interestingly, more than four in 10 Americans (42%) said they could imagine a time when Social Security no longer exists, according to the research. And yet, people are relying on Social Security to provide 28% of their overall retirement funding. That’s more than personal savings (22%) and equal to retirement savings (28%).
Gen Z and millennials have tempered expectations – they anticipate Social Security will provide 15% and 19% of their overall retirement funding, respectively. That’s a significant drop from what boomers+ say – 38%.
Posted on June 28, 2023 by Dr. David Edward Marcinko MBA
The “Too Numerous to Count” Syndrome
[By Dr. David Edward Marcinko; MBA, CMP™]
The following list of certifications enumerates only a partial exposure of the often nebulous field of “financial planning credentials” that presently exist in the market place.
Good … and Not So
Some of these professional designations are awarded to individuals in the financial planning or financial “advisory” space after [some] diligent study and [often not so] arduous testing; others not so.
Disclaimer: I am a reformed Certified Financial Planner®, Series 7 [stock-broker], 63 and 65 license holder, and RIA representative who also held all applicable insurance and security licenses.
The individuals hold not only proper education [some only reguire a HS diploma or GED] as evidenced by the credential; the holders are often people of ethics [hopefully] and competence [usually]. But, not all credentials are the same. Some credentialing bodies have higher educational requirements that also require years of experience and a thorough background search. Others are awarded after only a few hours of study and, most all, remain non-fiduciary in nature.
Too Many To Count – Syndrome
In medicine, the abbreviation TNTC is well known. Sometime, I think this term is better applicable to the plethora of “credentials” in the financial services industry.
The Designation Line-up
A brief description for some of these financial designations [not degrees] follows:
AAMS – Accredited Asset Management Specialist
AEP – Accredited Estate Planner
AFC – Accredited Financial Counselor
AIF – Accredited Investment Fiduciary
AIFA – Accredited Investment Fiduciary Auditor
APP – Asset Protection Planner
BCA – Board Certified in Annuities
BCAA – Board Certified in Asset Allocation
BCE – Board Certified in Estate Planning
BCM – Board Certified in Mutual Funds
BCS – Board Certified in Securities
C3DWP – 3 Dimensional Wealth Practitioners
CAA – Certified Annuity Advisor
CAC – Certified Annuity Consultant
CAIA – Chartered Alternative Investment Analyst
CAM – Chartered Asset Manager
CAS – Chartered Annuity Specialist
CCPS – Certified College Planning Specialist
CDFA – Certified Divorce Financial Analyst
CEA – Certified Estate Advisor
CEBS – Certified Employee Benefit Specialist
CEP – Certified Estate Planner
CEPP – Chartered Estate Planning Practitioner
CFA – Chartered Financial Analyst
CFE – Certified Financial Educator
CFG – Certified Financial Gerontologist
CFP – Certified Financial Planner
CFPN – Christian Financial Professionals Network
CFS – Certified Fund Specialist
CIC – Chartered Investment Counselor
CIMA – Certified Investment Analyst
CIMC – Certified Investment Management Consultant
CLTC – Certified in Long Term Care
CMFC – Chartered Mutual Fund Counselor
CMP – Certified Medical Planner™
CPC – Certified Pension Consultant
CPHQ – Certified Professional in Healthcare Quality
CPHQ – Certified Physician in Healthcare Quality
CPM – Chartered Portfolio Manager
CRA – Certified Retirement Administrator
CRC – Certified Retirement Counselor
CRFA – Certified Retirement Financial Advisor
CRP – Certified Risk Professional
CRPC – Chartered Retirement Planning Counselor
CRPS – Chartered Retirement Plan Specialist
CSA – Certified Senior Advisor
CSC – Certified Senior Consultant
CSFP – Certified Senior Financial Planner
CSS – Certified Senior Specialist
CTEP – Chartered Trust and Estate Planner
CTFA – Certified Trust and Financial Advisor
CWC – Certified Wealth Counselor
CWM – Chartered Wealth Manager
CWPP – Certified Wealth Preservation Planner
ECS – Elder Care Specialist
FAD – financial Analyst Designate
FIC – Fraternal Insurance Counselor
FLMI – Fellow Life Management Institute
FRM – Financial Risk Manager
FSS – Financial Services Specialist
LIFA – Licensed Insurance Financial Analyst
MFP – Master Financial Professional
MSFS – Masters of Science Financial Service Degree
PFS – Personal Financial Specialist
PPC – Professional Plan Consultant
QFP – Qualified Financial Planner
REBC – Registered Employee Benefits Consultant
RFA – Registered Financial Associate
RFC – Registered Financial Consultant
RFG – Registered Financial Gerontologist
RFP – Registered Financial Planner
RFS – Registered Financial Specialist
RHU – Registered Health Underwriter
RPA – Registered Plans Associate
WMS – Wealth Management Specialist
This list is intentionally incomplete and it is not intended to be an endorsement of any credential by the Institute of Medical Business Advisors, Inc www.MedicalBusinessAdvisors.com
Alphabet Soup
Obviously, these “professional” designations spread across multiple industries. For example there is an alphabet of designations in the brokerage and securities field, another alphabet in the insurance industry and within the insurance industry, designations exist for those who meet face to face with prospective customers, another for those who provide client service and yet another in underwriting the various insurance products. Certainly when the designations are complied in a list such as that above, they present a dizzying array of apparent qualifications.
Assessment
While in general, education for the financial service [and medical] professional is good for everybody, there are certain things that you should do as proper due diligence to protect your family and your financial assets. What are they?
Disclaimer: I am also founder of the Certified Medical Planner™ online educational program in health economics for financial advisors and medical management consultants. www.CertifiedMedicalPlanner.org
Conclusion
Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.
Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com
OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:
Posted on June 28, 2023 by Dr. David Edward Marcinko MBA
By Staff Reporters
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Financial services giant Fidelity has a rule for retirement savings you may have heard of: Have 10 times your annual salary saved for retirement by age 67. This oft-cited guideline can help you identify a retirement savings goal, but it doesn’t fully account for how much of those savings will cover in retirement.
Enter – Fidelity’s 45% guideline now dictates that a retiree’s nest egg should be large enough to replace 45% of their pre-retirement, pretax income each year.
Following this rule, the same retiree who was earning $100,000 per year would need enough saved up to spend $45,000 a year, in addition to his / her Social Security benefits, to fund his lifestyle. Assuming the person lives another 25 years after reaching retirement age, this person would need $1.125 million in savings.
Posted on June 25, 2023 by Dr. David Edward Marcinko MBA
By Staff Reporters
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According to the National Institute on Retirement Security, almost 40 million households have no retirement savings at all. The Employee Benefit Research Institute (EBRI) estimates in its 2019 Retirement Security Projection Model that America’s current retirement savings deficit is $3.8 trillion.
What does that mean? Well, the EBRI report aggregates the savings deficit of all U.S. households headed by someone between the ages of 35 and 64, inclusive. In total, those households have $3.8 trillion fewer dollars in savings than they should have for retirement.
For more recent data, Fidelity Investments reported that in the third quarter of 2022 the average account balance for an IRA was $101,900. Employees with a 401(k) averaged $97,200, while those with a 403(b) had $87,400.
Fidelity also estimated that “an average retired couple age 65 in 2022 may need approximately $315,000 saved (after tax) to cover health care expenses in retirement.” Keeping in mind that more Americans are also living longer than ever before, they will face more challenges to cover medical expenses in retirement.
Posted on June 20, 2023 by Dr. David Edward Marcinko MBA
By Staff Reporters
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The average balance in employer-sponsored savings plans last year was $112,572, well below the $141,542 recorded in 2021. That’s according to the latest annual report, “How America Saves,” from investment firm Vanguard, which serves as record keeper for defined contribution plans that, combined, have nearly 5 million participants with a median age of 43. Such plans include 401(k)s and 403(b)s, as well as a much smaller universe of plans that employers simply put money into for employees and then employees direct how that money is invested.
“Vanguard participants’ average account balances decreased by 20% since year-end 2021, driven primarily by the decrease in equity and bond markets over the year,” according to the report.
And, the numbers look worse if you consider the median balance, which was just $27,376 last year, down from $35,345 in 2021. The median in some ways is a truer read on the state of employees’ retirement savings since it is the middle point — meaning half of accounts have higher balances, and half have lower ones.
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According to the Social Security Administration, Social Security benefits make up about a third of the income of the elderly. In general, single people depend more heavily on Social Security checks than do married people. In 2023, the average monthly retirement income from Social Security is $1,827.
Keep in mind, though, that your Social Security benefits could be smaller. If you don’t have 35 years of work under your belt when you start claiming benefits, if your earnings were consistently low or if you claim benefits starting at age 62 rather than waiting until your full retirement age (or age 70, if you want maximum benefits), then you can expect a small monthly check. There’s also a gender gap in Social Security income. Women, because they tend to earn less and work for fewer years, draw smaller Social Security checks than men do.
Modern Portfolio Theory approaches investing by examining the complete market and the full economy. MPT places a great emphasis on the correlation between investments.
DEFINITION:
Correlation is a measure of how frequently one event tends to happen when another event happens. High positive correlation means two events usually happen together – high SAT scores and getting through college for instance. High negative correlation means two events tend not to happen together – high SATs and a poor grade record.
No correlation means the two events are independent of one another. In statistical terms two events that are perfectly correlated have a “correlation coefficient” of 1; two events that are perfectly negatively correlated have a correlation coefficient of -1; and two events that have zero correlation have a coefficient of 0.
Correlation has been used over the past twenty years by institutions and financial advisors to assemble portfolios of moderate risk. In calculating correlation, a statistician would examine the possibility of two events happening together, namely:
If the probability of A happening is 1/X;
And the probability of B happening is 1/Y; then
The probability of A and B happening together is (1/X) times (1/Y), or 1/(X times Y).
There are several laws of correlation including;
Combining assets with a perfect positive correlation offers no reduction in portfolio risk. These two assets will simply move in tandem with each other.
Combining assets with zero correlation (statistically independent) reduces the risk of the portfolio. If more assets with uncorrelated returns are added to the portfolio, significant risk reduction can be achieved.
Combing assets with a perfect negative correlation could eliminate risk entirely. This is the principle with “hedging strategies”. These strategies are discussed later in the book.
In the real world, negative correlations are very rare
Most assets maintain a positive correlation with each other. The goal of a prudent investor is to assemble a portfolio that contains uncorrelated assets. When a portfolio contains assets that possess low correlations, the upward movement of one asset class will help offset the downward movement of another. This is especially important when economic and market conditions change.
As a result, including assets in your portfolio that are not highly correlated will reduce the overall volatility (as measured by standard deviation) and may also increase long-term investment returns. This is the primary argument for including dissimilar asset classes in your portfolio. Keep in mind that this type of diversification does not guarantee you will avoid a loss. It simply minimizes the chance of loss.
In the table provided by Ibbotson, the average correlation between the five major asset classes is displayed. The lowest correlation is between the U.S. Treasury Bonds and the EAFE (international stocks). The highest correlation is between the S&P 500 and the EAFE; 0.77 or 77 percent. This signifies a prominent level of correlation that has grown even larger during this decade. Low correlations within the table appear most with U.S. Treasury Bills.
Posted on May 6, 2023 by Dr. David Edward Marcinko MBA
By Ann Miller RN MHACMP™
INTRODUCING OUR NEXT GENERATION e-BOOK LIBRARYFROM iMBA, Inc.
An e-book is an electronic or digital book that can be read on a computer or a handheld device.
Our new e-books consists of text, images, and are fixed to a specific spot on the page.
And, our e-books are a data files similar in content and structure to a word-processing document that comes in a PDF format. To use our e-books, you need to purchase and download it to a device that has a .pdf file reader app, such as ADOBE® or similar on a smartphone, tablet or computer. A PDF, also known as a portable document format, is the format most people are familiar with and used in our e-books. PDFs are known for their ease of use and ability to hold custom layouts. They are the most commonly used e-Book formats, especially by professionals and adult-learners.
You can then access the e-book and read it, or highlight pages and even take side notes.
e-Books Save Money
With no manufacturing, printing, binding or shipping costs, e-Books are cheaper than traditional hard or paper back books.The price of each specialized and highly niche focused e-Book [50-100 pages] is only $25, whereas similar paperback printed books of this type generally cost $145, or more!
National Healthcare Decisions Day (NHDD) exists to inspire, educate and empower the public and providers about the importance of advance care planning. NHDD is an initiative to encourage patients to express their wishes regarding healthcare and for providers and facilities to respect those wishes, whatever they may be.
NHDD was founded in 2008 by Nathan Kottkamp, a Virginia-based health care lawyer, to provide clear, concise, and consistent information on healthcare decision-making to both the public and providers/facilities through the widespread availability and dissemination of simple, free, and uniform tools (not just forms) to guide the process.
NHDD is a series of independent events held across the country, supported by a national media and public education campaign. In all respects, NHDD is inclusive and brings a variety of players in the larger healthcare, legal, and religious community together to work on a common project, to the benefit of patients, families, and providers. A key goal of NHDD is to demystify healthcare decision-making and make the topic of advance care planning inescapable. Among other things, NHDD helps people understand that advance healthcare decision-making includes much more than living wills; it is a process that should focus first on conversation and choosing an agent.
As of June 2016, The Conversation Project has been responsible for the management, finances, and structure of NHDD. NHDD’s founder, Nathan Kottkamp, continues to be involved in NHDD and provides leadership by ensuring the maintenance of NHDD’s high quality resources and support for the community.
DEFINITION: What is advance care planning for financial advisors and lawyers?
Advance care planning involves discussing and preparing for future decisions about your medical care if you become seriously ill or unable to communicate your wishes with your estate planning attorney or financial advisor. Having meaningful conversations with your loved ones is the most important part of advance care planning. Many people also choose to put their preferences in writing by completing legal documents called advance directives.
What are advance directives?
Advance directives are legal documents that provide instructions for medical care and only go into effect if you cannot communicate your own wishes.
The two most common advance directives for health care are the living will and the durable power of attorney for health care.
Living will: A living will is a legal document that tells doctors how you want to be treated if you cannot make your own decisions about emergency treatment. In a living will, you can say which common medical treatments or care you would want, which ones you would want to avoid, and under which conditions each of your choices applies. Learn more about preparing a living will.
Durable power of attorneyfor health care: A durable power of attorney for health care is a legal document that names your health care proxy, a person who can make health care decisions for you if you are unable to communicate these yourself. Your proxy, also known as a representative, surrogate, or agent, should be familiar with your values and wishes. A proxy can be chosen in addition to or instead of a living will. Having a health care proxy helps you plan for situations that cannot be foreseen, such as a serious car accident or stroke. Learn more about choosing a health care proxy.
Think of your advance directives as living documents that you review at least once each year and update if a major life event occurs such as retirement, moving out of state, or a significant change in your health.
Advance care planning is not just for people who are very old or ill. At any age, a medical crisis could leave you unable to communicate your own health care decisions. Planning now for your future health care can help ensure you get the medical care you want and that someone you trust will be there to make decisions for you.
Advance care planning for people with dementia. Many people do not realize that Alzheimer’s disease and related dementias are terminal conditions and ultimately result in death. People in the later stages of dementia often lose their ability to do the simplest tasks. If you have dementia, advance care planning can give you a sense of control over an uncertain future and enable you to participate directly in decision-making about your future care. If you are a loved one of someone with dementia, encourage these discussions as early as possible. In the later stages of dementia, you may wish to discuss decisions with other family members, your loved one’s health care provider, or a trusted friend to feel more supported when deciding the types of care and treatments the person would want.
What happens if you do not have an advance directive?
If you do not have an advance directive and you are unable to make decisions on your own, the state laws where you live will determine who may make medical decisions on your behalf. This is typically your spouse, your parents if they are available, or your children if they are adults. If you are unmarried and have not named your partner as your proxy, it’s possible they could be excluded from decision-making. If you have no family members, some states allow a close friend who is familiar with your values to help. Or they may assign a physician to represent your best interests. To find out the laws in your state, contact your state legal aid office or state bar association.
Will an advance directive guarantee your wishes are followed?
An advance directive is legally recognized but not legally binding. This means that your health care provider and proxy will do their best to respect your advance directives, but there may be circumstances in which they cannot follow your wishes exactly. For example, you may be in a complex medical situation where it is unclear what you would want. This is another key reason why having conversations about your preferences is so important. Talking with your loved ones ahead of time may help them better navigate unanticipated issues.
There is the possibility that a health care provider refuses to follow your advance directives. This might happen if the decision goes against:
The health care provider’s conscience
The health care institution’s policy
Accepted health care standards
In these situations, the health care provider must inform your health care proxy immediately and consider transferring your care to another provider.
Other advance care planning forms and orders from doctors
You might want to prepare documents to express your wishes about a single medical issue or something else not already covered in your advance directives, such as an emergency. For these types of situations, you can talk with a doctor about establishing the following orders:
Do not resuscitate (DNR) order: A DNR becomes part of your medical chart to inform medical staff in a hospital or nursing facility that you do not want CPR or other life-support measures to be attempted if your heartbeat and breathing stop. Sometimes this document is referred to as a do not attempt resuscitation (DNR) order or an allow natural death (AND) order. Even though a living will might state that CPR is not wanted, it is helpful to have a DNR order as part of your medical file if you go to a hospital. Posting a DNR next to your hospital bed might avoid confusion in an emergency. Without a DNR order, medical staff will attempt every effort to restore your breathing and the normal rhythm of your heart.
Do not intubate (DNI) order: A similar document, a DNI informs medical staff in a hospital or nursing facility that you do not want to be on a ventilator.
Do not hospitalize (DNH) order: A DNH indicates to long-term care providers, such as nursing home staff, that you prefer not to be sent to a hospital for treatment at the end of life.
Out-of-hospital DNR order: An out-of-hospital DNR alerts emergency medical personnel to your wishes regarding measures to restore your heartbeat or breathing if you are not in a hospital.
Physician orders for life-sustaining treatment (POLST) and medical orders for life-sustaining treatment (MOLST) forms:These forms provide guidance about your medical care that health care professionals can act on immediately in an emergency. They serve as a medical order in addition to your advance directive. Typically, you create a POLST or MOLST when you are near the end of life or critically ill and understand the specific decisions that might need to be made on your behalf. These forms may also be called portable medical orders or physician orders for scope of treatment (POST). Check with your state department of health to find out if these forms are available where you live.
At enrollment, Medicare in the future could offer three advancedirectives with goals of care: DirectiveA: CONSENT to treat — inpatient medical treatment DirectiveB: CONSENT to comfort — home bound holistic care DirectiveC: CHOOSE against medical advice — outpatient palliative resources.
Posted on April 3, 2023 by Dr. David Edward Marcinko MBA
Spending Money for Comfort and Safety
By Rick Kahler MS CFP®
Want to increase your independence in retirement? Save money? Live safely in your own home? Then buy a new car. No, this isn’t a scam or a seedy sales pitch. In certain cases, a new car can be a wise use of your retirement dollars.
Introduction
As regular readers of the ME-P know, I’m a big fan of frugality. Spending less than you earn is a crucial strategy for building wealth. Continuing this frugal lifestyle in retirement can also be a good way to be sure of having enough money to last for the rest of your life.
Some retirees, though, take it too far. Under-spending can be a threat to retirement as much as overspending, especially when it affects your comfort and safety.
As more of my retired clients move into their later years, I am becoming increasingly aware of one kind of retirement spending that can actually be considered more of an investment than an expense. This, for elderly people or adult children caring for elderly parents, is spending money to make their homes and activities safer.
Safer Spending
One immediate benefit of this kind of spending is being able to live more comfortably and with less anxiety. A second benefit is financial. Helping elderly parents stay in their homes and live independently for as long as possible can save money in the long term by reducing medical costs and long-term care expenses. It’s especially important to invest in this type of spending if you live too far away from your parents to provide regular help yourself.
Some of the ways to invest relatively small amounts to provide more comfort, safety, and independence for elderly parents are obvious. Or, carpet slick tile or hardwood floors to reduce the risk of falls. Upgrade older appliances to newer ones with safety features like automatic shutoffs or warning signals. Add basic safety aids like stair railings and shower bars. Repair hazards like worn carpets, uneven steps, or broken sidewalks. Provide emergency alert buttons. Install phones in several rooms.
Other Considerations
Some less obvious ways to foster safety and extend independent living might require a bit more spending. Such expenditures can be a good use of retirement income if they extend parents’ ability to live independently. Here are a few possibilities to consider:
1. Buying that new car. Safety features like GPS navigation systems and backup cameras can allow elderly people to hold onto their drivers’ licenses longer without putting themselves or others at risk.
2. Paying for gym memberships or exercise classes. Increasing strength, balance, and flexibility can help prevent falls and possibly even help stave off dementia.
3. Taking care of ears and eyes. Hearing aids and corrective lenses may not be cheap, but good hearing and eyesight can help people drive more safely, avoid falls, and take care of themselves and their homes.
4. Remodeling. Moving the laundry room to the main floor or replacing bathtubs with walk-in showers can make homes safer and more comfortable.
5. Hiring help. Many of us equate in-home help for the elderly with home health care. Certainly, hiring aides to help with cooking, bathing, and other needs as people become frail is an important option. But well before that time, it makes sense to get help with a host of other services that become harder or even dangerous to do as we grow older. Hire a house cleaner. Find someone to do yard work, home maintenance, and heavy cleaning jobs (especially if they involve ladders) like window washing.
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Assessment
Spending that creates safety belongs in any retirement budget. It’s a good way to use your financial independence to help maintain your physical and mental independence.
Conclusion
Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.
Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com
Posted on March 22, 2023 by Dr. David Edward Marcinko MBA
By Staff Reporters
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According to HealthcareBrew, thousands of doctors are expected to reach retirement age in the next three years, and their replacements won’t be physicians. Instead, physician assistants (PAs) and nurse practitioners (NPs) will increasingly provide primary care services, according to a report from consulting firm Mercer.
By 2026, 21% of family medicine, pediatric, and obstetrics and gynecology physicians—or about 32,000 doctors—will be 65 or older, and Mercer anticipates about 23,000 physicians will leave the profession permanently. At the same time, demand for primary care physicians is expected to grow 4%, the report found.
PAs and NPs—also called advanced practice providers (APPs) or physician extenders—are highly trained medical professionals. To become a PA, you have to have both a bachelor’s and a master’s, some clinical work experience, pass the Physician Assistant National Certifying Exam, and then apply to get licensed in your state (you know, easy peasy). It takes seven to nine years to go through that process, compared to 11+ years to become an MD.
To become an NP, you must have both a bachelor’s and a master’s in nursing, become a registered nurse, and pass a national NP board certification exam. It takes between six to eight years to become an NP.
Compared to physicians, PAs and NPs are “considerably younger professions with less than half the retirement risk,” the Mercer report stated. Roughly 40,000 PAs and NPs join the workforce annually.
“We’re certainly going to see increasing demand for APPs,” David Mitchell, a partner in Mercer’s career consulting business and a specialist in the healthcare industry, told Healthcare Brew.
While most state licensing boards require a physician to oversee APPs, both PAs and NPs have the authority to do many services primary care physicians do, like seeing and diagnosing patients, ordering lab tests, and writing prescriptions, said Mitchell.
Posted on March 3, 2023 by Dr. David Edward Marcinko MBA
By Staff Reporters
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The US Senate passed a disapproval resolution formally killing a Department of Labor rule that encourages private retirement plan fiduciaries to consider environment, social and governance (ESG) factors when making investment decisions for over 150 million Americans. ESG is a framework that helps stakeholders understand how an organization is managing risks and opportunities related to environmental, social, and governance criteria (sometimes called ESG factors). ESG is an acronym for Environmental, Social, and Governance. ESG takes the holistic view that sustainability extends beyond just environmental issues. While the term ESG is often used in the context of investing, stakeholders include not just the investment community but also customers, suppliers, and employees, all of whom are increasingly interested in how sustainable an organization’s operations are.
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Stocks Shake Off Fed Uncertainty, Rise in Interest Rates: U.S. equities rallied into the close to finish near the highs of the day, as investors appeared to shake off the persistent rise in interest rates. The markets also digested some earnings reports, as shares of Dow member Salesforce jumped after topping expectations, and Macy’s also moved solidly higher after besting the Street’s forecasts.
However, disappointing guidance from Best Buy took some of the luster of its earnings beat. Elsewhere, the economic calendar added to the Fed uncertainty, as jobless claims unexpectedly dipped, while Q4 productivity was revised lower and unit labor costs were adjusted to the upside. Treasury yields continued their ascent, and the U.S. dollar gained solid ground, while crude oil prices edged higher in choppy trading, and gold was slightly lower.
Asia finished mixed, and Europe posted gains across the board, as the global markets continued to wrestle with recent data.
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Finally, Marc Benioff is bracing for a recession that shows shades of the dot-com crash and financial crisis. The Salesforce CEO is shifting his focus from sales and deals to efficiency and profitability. Benioff warned that falling stocks and recession fears dampen corporate spending.
FINANCIAL ADVISER WANTED: New York’s Belfer family, which gained riches from oil, is racking up quite an investing losing streak. They lost billions in Enron’s collapse and were clients of Bernie Madoff, and now it’s come to light that they were shareholders in FTX.
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CPAs WANTED: Just as tax season kicks off, US firms are facing a national shortage of accountants, forcing them to look overseas for workers to look over your W-2. More than 300k accountants and auditors have quit in the last two years, per the WSJ.
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CMPs NEEDED: The Certified Medical Planner® program was created in response to the frustration felt by doctors in small and mid-sized practices that dealt with top financial, brokerage and accounting firms. These non-fiduciary behemoths often prescribed costly wholesale solutions that were applicable to all, but customized to few, despite ever changing needs.
Learn why brokerage sales-pitches and/or internet resources will never replace the knowledge and deep advice of a collegial Certified Medical Planner® professional.
Posted on January 24, 2023 by Dr. David Edward Marcinko MBA
INTUIT
By Staff Reporters
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Married couples have the option to file jointly or separately on their federal income tax returns. The IRS strongly encourages most couples to file joint tax returns by extending several tax breaks to those who file together.
In the vast majority of cases, it’s best for married couples to file jointly, but there may be a few instances when it’s better to submit separate returns.
Posted on January 21, 2023 by Dr. David Edward Marcinko MBA
By Staff Reporters
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As the US just crashed into the $31.4 trillion debt ceiling as the Treasury Department began taking what it called “extraordinary measures” to prevent the government from defaulting on its debts and sparking an economic crisis.
These measures are a series of deep-cut accounting moves that allow the Treasury to continue making its payments. They include:
Suspending reinvestments into government funds for retired federal employees, such as the Civil Service Retirement and Disability Fund.
Selling existing investments in those funds to free up more outstanding debt.
And while these measures definitely aren’t ordinary…they probably aren’t so “extra,” either. The Treasury has resorted to them more than 12 times since 1985, including during the last debt-ceiling standoff in 2021.
Still, these steps amount to chugging water after eating a ghost pepper—the pain will return. Treasury Secretary Janet Yellen said her extraordinary measures will last through early June, giving lawmakers about five months to work out a deal to raise the debt ceiling.
NOTE: The US has never defaulted on its debt, but even the threat of it could be disastrous. The country’s first credit downgrade in history came during a debt-ceiling showdown in 2011.
Remember, in 2023, do not trigger the US estate and gift tax. Last year’s inflation, the highest in decades, means married couples can now hand their heirs almost $26 million tax-free, $1.7 million more than in 2022 and $2.4 million more than in 2021.
The hike in the lifetime estate-and-gift tax exemption — adjusted for price growth annually by the Internal Revenue Service — is the largest since 2018, when the amount was doubled by Republican-passed legislation signed by former President Donald Trump the prior year. As a result, the individual exemption, which is easily shared between spouses, has rocketed to $12.9 million from $5 million in 2011.
But, richer Americans may be running out of time to pass on this much wealth. The exemption is slated to be cut in half in three years, when provisions of Trump’s tax law are set to expire. While even $26 million is a drop in the bucket for the ultra-rich, the exemption’s size shows why generational wealth transfers — estimated by research firm Cerulli to total almost $73 trillion in the US through 2045 — go largely untouched by the government.
Plus, financial advisors may use loopholes and leverage to multiply the amount of tax-free money available to heirs.
Posted on December 28, 2022 by Dr. David Edward Marcinko MBA
By SMART ASSET
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If shrinking your tax liability is high on your list of priorities, a few states stand out. The winners in the list below either have no state income tax, no tax on retirement income, or a substantial discount on the taxes levied on retirement income. But that’s just the start.
While several additional states have no state income tax, the states that made our list also have favorable sales, property, inheritance, and estate taxes.
Alaska
Florida
Georgia
Mississippi
Nevada
South Dakota
Wyoming
If those seven locations aren’t ideal, consider the next tier of tax-friendly states. Tax benefits aren’t quite as high as those above, but they do stand out in one specific category: no taxes on social security income.
That’s not to say they don’t make up for it in other areas, however. Washington State, for example, has no state income tax, but does have a 6.5% state sales tax. Still, it’s always beneficial to avoid income tax when possible.
“Physicians who don’t understand modern risk management, insurance, business, and asset protection principles are sitting ducks waiting to be taken advantage of by unscrupulous insurance agents and financial advisors; and even their own prospective employers or partners. This comprehensive volume from Dr. David Marcinko and his co-authors will go a long way toward educating physicians on these critical subjects that were never taught in medical school or residency training.” —Dr. James M. Dahle, MD, FACEP, Editor of The White Coat Investor, Salt Lake City, Utah, USA
“With time at a premium, and so much vital information packed into one well organized resource, this comprehensive textbook should be on the desk of everyone serving in the healthcare ecosystem. The time you spend reading this frank and compelling book will be richly rewarded.” —Dr. J. Wesley Boyd, MD, PhD, MA, Harvard Medical School, Boston, Massachusetts, USA
A Required Minimum Distribution (RMD) is an amount of money the IRS requires you to withdraw from most retirement accounts, beginning at age 72. Due to the Coronavirus Aid, Relief, and Economic Security (CARES) Act, RMDs were not required in 2020, but RMDs are required in 2021 and each year after. RMDs can be an important part of your retirement income strategy.
October is National Financial Planning Month—an ideal time to plan your financial future. The end of the year is approaching and a new one will soon begin, so this is the right time to think about what you have done in 2022 and what you could do in 2023. You might want to do something new; you may want to do some things differently.
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GREAT NEWS: But what about financial planning specificity for physicians, nurses and all medical professionals?
Posted on October 23, 2022 by Dr. David Edward Marcinko MBA
By Staff Reporters
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The IRS just said that the maximum contribution that an individual can make in 2023 to a 401(k), 403(b) and most 457 plans will be $22,500. That’s up from $20,500 this year.
People aged 50 and over, which have the option to make additional “catch-up” contributions to 401(k) and similar plans, will be able to contribute up to $7,500 next year, up from $6,500 this year. That’s means a 401(k) saver who is 50 or older can contribute a maximum of $30,000 to their retirement plan in 2023.
The IRS also raised the 2023 annual contribution limits on individual retirement arrangements, or IRAs, to $6,500, up from $6,000 this year. The IRA “catch-up” contribution limit remains at $1,000, as it’s not subject to an annual cost of living adjustment, the IRS said.
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