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Slick TV ads often make financial planning and wealth management sound simple, but it’s usually not. Managing wealth requires knowing a lot about highly technical topics, like taxes, government regulations, and finance as well as history, psychology and how to communicate with loved ones about sensitive issues. This article highlights some of the knowledge needed to manage wealth and why it’s often so daunting without the help of an independent personal financial advisor who is familiar with your situation.
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Understanding The Federal Reserve Mandate To End Inflation
The Federal Reserve System, the nation’s central bank, has a dual mandate to pursue maximum employment and maintain price stability. These two priorities are currently treated equally, but that was not always the case. In fact, the Fed’s bias toward maximizing employment was a critical driver of the stagflation that plagued the U.S. in the late 1960s and 1970s. Recognizing the need to balance price stability and maximum employment, in 1977, Congress revised the Federal Reserve Act.
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Fed Governor Kugler Details Inflation And Economic Outlook
The 12-month inflation rate, as measured by the personal consumption expenditures (PCE) index, was 2.6% in December, down from its peak of 7.1% in June 2022, and the six-month rate for PCE inflation was even lower, at 2%, which is the target rate set by the Federal Reserve.
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Why Rates May Not Be Cut Until June
The cost of a loan to buy a home, car, college education, and achieve the American Dream is staying the same for now. As expected, Federal Reserve Chairman Jerome Powell said the central bank did not lower loan rates following the Fed’s Wednesday, Jan. 31, 2024, policy meeting.
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Practical Suggestions For Achieving Your 2024 Resolutions
New Year’s resolutions usually fail because they‘re often too hard to achieve. After six months, only 10% of people who make resolutions achieve them or remain committed to them, , according to a study by Dr. Mark Griffiths, a Chartered Psychologist and Distinguished Professor of Behavioral Addiction at the Nottingham Trent University. What can you do to make financial, medical, or other personal resolutions more likely to be achieved?
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A Sign Of Progress In Solving U.S. Economic Problems
The Federal Reserve appears to be pulling off a feat most experts did not believe it could: ending its aggressive inflation-fighting campaign of 11 interest rate hikes without tipping the U.S. economy into a recession.
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Fed Keeps Rates Unchanged; Expects Easing In 2024
To promote transparency and free markets, the Federal Reserve System began publishing the opinions of the 19 U.S. central bankers that decide interest rate policy.
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Have You Logged Into Your Social Security Account?
Have you logged in to your Social Security account? Creating an online account at SSA.gov is an important first step in understanding your retirement income situation. However, only about 60 million of the 160 million individuals in the U.S. labor force who have Social Security accounts have created a way to access the Social Security Administration’s website.
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The Great Fake Out Of 2023 Is Poised To Extend Into 2024
All year long, the economy and stock prices have fooled experts and consumers, outperforming expectations month after month.
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Test Your Financial Planning IQ
The five questions below are a challenge meant to allow you to assess your knowledge of investing, tax and financial planning. If you have been following our news stream, this quiz draws on familiar ground. The answers are below.
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Planning Briefs
Financial Consumer Alert: Long-Term Care Insurance Policies
Published Thursday, February 23, 2023 at: 8:28 AM EST
Forty percent of Americans over the age of 65 suffer from a physical or cognitive disability and the number of those requiring long term care is growing sharply. However, buying insurance that will pay for long-term care a decade or two from now involves actuarial calculations and is an area of personal finance where professional guidance can be particularly important. This is an alert about long-term care insurance (LTCI).
LTCI policyowners have been forced for many years to accept lower benefits or pay more to keep their policy’s current benefits. Even though the insurance business is regulated by state government authorities, and insurers are required under the law to request approval before changing a policyowner’s benefits or raising premium prices, most rate hike requests by insurers receive full or partial approval.
To be fair, rising health care costs and changing medical technology have made LTCI policies difficult for insurers to price. According to a study published by Milliman, the actuarial services firm, in March 2022, the average increase approved by state regulators was 29%, and price hikes ranged from 5% to more than 60%.
In addition, pricing what it will cost to pay for a policyowner’s nursing home, home-care, and other benefits 10, 20 or 30 years from now depends on complicated statistical modeling. Insurers customarily require health records to assess an individual’s risk of heart disease, dementia, cancer, and other chronic diseases before providing a policy proposal. Thus, the actuarial math involved in selling LTCI is much more complicated for insurance companies than selling a life insurance policy. Life insurance involves one risk: mortality. In contrast, long-term care insurance involves two risks – bad health as well as mortality.
In addition to price hikes, according to the Milliman report, LTCI insurance carriers also often were approved to reduce benefits on policies, lowering the maximum benefit allowed daily, shortening the length of the period benefits will be paid, lengthening the time you must wait before benefits begin, and reducing inflation protection. Only about 11% of policyholders elected a reduced benefit option; the majority accepted the price hike to keep their benefits the same.
Many LTCI companies also offer a reduced paid-up benefit, with no further premiums due, but fewer than 5% of policyholders elected this option, according to the Milliman study. Negotiating a cash buyout of an LTCI policy is an uncommon option, but it can be negotiated with some insurers, which should be a consideration if you are hit with an unexpected LTCI price hike.
For consumers, evaluating long-term care insurance policies makes it wise to get access to actuarial software tools like those used by insurers to price LTCI policies. Fortunately, there is an app for that. Using software, we can help you determine the relative value of the options that your insurance company is offering to you. If you would like to access software factoring in health, age, and other risk variables personal to you to help you price LTCI, please contact us.
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