Health reform has significant public support
Some key findings from the 2009 Health Confidence Survey from the Employee Benefit Research Institute:
- Between 68 percent and 88 percent of Americans either strongly or somewhat support health reform ideas such as national health plans, a public plan option, guaranteed issue, expansion of Medicare and Medicaid, and employer and individual mandates.
- Those experiencing health cost increases (53% of those with insurance) tend to say these increases have negatively affected their household finances. In particular, they indicate that increased health care costs have resulted in a decrease in contributions to a retirement plan (32 percent) and other savings (53 percent) and in difficulty paying for basic necessities (29 percent) and other bills (37 percent).
- Many consumers report they are changing the way they use the health care system in response to rising health care costs. Seventy-nine percent of those who experienced increases in the amounts they are responsible for paying under their health insurance plan say these increased costs have led them to try to take better care of themselves, and 77 percent indicate they choose generic drugs more often. Sixty-seven percent
also say they talk to the doctor more carefully about treatment options and costs and 64 percent go to the doctor only for more serious conditions or symptoms. One-quarter (25 percent) also report they did not fill or skipped doses of their prescribed medications in response to increased costs.
Clearly, many American households are trying to do what they can to contain health care costs–even if that means endangering their health.
We’re pretty much hitting the limits of what individual effort can do. It’s time for lawmakers to step up and create affordable, universal coverage.
Parents, write your wills
Guardian angel
There may or may not be a custody battle brewing over Michael Jackson’s kids. (His mother was granted temporary custody of the three, ages 7 to 12, and is seeking to make that permanent.)
But there may be a battle over YOUR kids if you die without a will or other estate document that names a guardian. Even worse: your kids could wind up in foster care.
Sometimes parents put off this necessary chore because the partners can’t agree on a guardian, or simply because they don’t want to deal with the possibility of their own deaths. Get over it. Your children are the ones who will suffer if you don’t get your act together.
Quicken WillMaker costs $40 and will give you the legal documents you need. If your estate is complicated or you have contentious relatives, you may want to invest in the services of an experienced attorney.
But do it now. Don’t leave it to fate, or the courts.
For more, read:
- Who will take your kids if you die?
- 3 legal documents you shouldn’t live without
- 5 big myths about the estate tax
Are you on target–or totally missing the point?
Target-date funds can be a good choice for people new to investing, or those who simply don’t want to mess with the details of picking asset allocations and rebalancing their portfolio. Many big-company 401(k) plans now offer target-date funds, as do most big mutual fund companies and brokerage firms.
These funds do all the heavy lifting for you, gradually adjusting the investment mix over time so you take less risk as you approach your “target date”–typically a year near when you plan to retire.
But apparently a lot of people have misconceptions about target-date funds and what they can accomplish.
Behavioral Research Associates interviewed 250 Americans and found that many thought the investment option offered some kind of guarantee. For example:
• Over 60% of employees say that investing in target-date funds means they will be able to retire on the target date.
• 38% think target-date funds offer a guaranteed return.
• 30% of workers think they can save less money and still meet their retirement goals if they invest in a target-date fund.
• Over 23% of workers believe that there is little to no chance that they will lose money either before or after the target date.
• 41% think there is little to no chance of losing money in any one-year period, and
• 70% think they are equally as likely or less likely to lose money in any one-year period, as compared to investing in money market funds.
Obviously, none of these misconceptions is true. Target funds adjust your risk over time, but they certainly don’t eliminate it. Even when you approach your retirement date, your target fund may still have half or more of its assets in stocks.
That doesn’t mean you should bail on your target-date fund, but–as with all investments–you should understand the real risks and rewards.
You can CLICK HERE to read the researchers’ comments to the SEC and Department of Labor about their findings.
For more on this topic, read:
- One-fund retirement: Buy and forget
- Don’t shy away from target-date funds
- Target-date funds come under fire
What percent of U.S. households are in financial trouble?
One of the reasons I hate the bogus statistic that “the average American has $9,000 in credit card debt” is that it paints such an inaccurate picture of U.S. household finances. (In reality, more than half of American households have no credit card debt, according to the Federal Reserve; the median owed for those that do was $3,000.)
But clearly, plenty of people have big problems with debt, and finances in general. Here are just some of the relevant stats:
- 3.1 million households started the foreclosure process last year, and 861,664 families lost their homes, according to RealtyTrac.
- Over 1 million personal bankruptcy cases were filed in 2008, and the American Bankruptcy Institute predicts 1.4 million more this year.
- 14.5 million people were officially unemployed in May, for an unemployment rate of 9.4%. Some economists expect that rate to peak at just over 10%.
- About 15% of U.S. households, or 17 million families, funneled more than 40% of their incomes toward debt payments in 2007, the latest year for which Federal Reserve statistics are available. The 40% mark is considered a “compelling indicator of distress” by the Fed.
- 28% of U.S. households had “no spare cash” after paying bills in 2005, an ACNielsen poll found.
- About 46% of U.S. households carry credit card debt, according to the Fed. Card debt seems to peak among households headed by people in their 40s; of that group, 14.3% owe $10,000 or more.
To me, the two most worrisome stats are the 15% that owe 40%, and the 28% that live paycheck to paycheck. These are the households who were living on the edge before the recession, and are most likely to tumble off.
My gut feeling is that about a third of U.S. households are in financial distress; for about half of those, the distress is acute.
Couples need to be in sync on money, retirement
Communication about finances is one of the keys to a happy marriage, as I wrote in “7 steps to take before you wed.”
Unfortunately, most of the couples recently surveyed by Fidelity Investments are falling short, at least when it comes to their own finances.
More than half of the older, affluent couples (aged 45 and up, with incomes of $75,000 and above) surveyed said that one of the best pieces of advice they would give to newlyweds is to make all financial decisions together. But fewer than half (45 percent) of the same couples reported making decisions jointly about day-to-day finances. Only 15 percent of couples feel confident that both of them could assume responsibility for their joint finances if necessary.
These couples often weren’t on the same page about their retirement finances, either. Key findings:
- 60 percent of couples do not agree on their retirement ages
- Almost half don’t agree on whether they will continue to work in retirement
- More than 40 percent don’t agree on their expected retirement lifestyle
Time to start talking to each other and working things out. You need a plan that both of you can agree with and understand. Here are some of my columns with tips to get you going:
