MWBoone & Associates Wealth Management blog

A Long-term Care Insurance Primer

2008-05-08T23:24:14Z

As millions of Baby Boomers head into their retirement years, it’s surprising how few actually know that the government provides little more than a few weeks of financial support for home-based or nursing home care when the average person needs it for at least a year.]]>
A 2006 Genworth Financial Survey says the national average private room rate at a nursing home – the most expensive care option – was $194.28 per day/$70,912 annually.

Long-term care insurance (LTC) may be one solution for those who need to bridge the gap between their savings and the actual costs they’ll face.

Determining and paying for long-term care is almost too complex a topic to be covered in a short article like this, which is why it makes sense to discuss your individual situation with a CERTIFIED FINANCIAL PLANNER™ professional. Here are some of the questions you need to answer before investing in long-term care insurance or other options:

What resources do you have? We’re not just talking about money here. While care giving puts a strain on family, it’s important to consider whether family and friends are truly willing and able to help with your care, which can provide a considerable financial and emotional benefit. Also, if you live in a community with reliable volunteer resources to help, that’s something to note, though today’s services may not be there tomorrow.

How old are you and your spouse and what’s your health history? People in good health purchasing long-term care insurance at the age of 55 usually get the most affordable deal in LTC insurance. But an individual’s family health history and current health status are the real determinants of what your LTC insurance policy will cost – or if you’ll qualify for coverage at all. Also, it’s important to note that 40 percent of long-term care is provided to individuals between the ages of 19 and 65, so the need for care can strike at any time.

Are you a single female? Again, personal and family resources come into play here, but since women typically live longer than men – and they still earn less on average than men – women should take a heightened interest in providing for their long-term care safety net. Long-term care insurance might be a good solution given their other investments and their health history.

What types of services are covered? Over the course of time, long-term care policies have evolved to place more emphasis on home-based care or assisted living, since most people would choose to recover or live out their last days in a familiar environment. A basic LTC insurance policy pays for assistance with activities of daily living including eating, dressing, bathing, toileting, incontinence, and transferring (bed to chair, etc.). Each policy lists the types of services that are covered under nursing home care and under home health care. Homemaker services are generally covered and other services as listed in the policy.

What triggers coverage? A qualified LTC policy won’t go into effect until the covered individual can’t perform two tasks of daily living for a period, typically 90 days, or when that person needs substantial supervision related to cognitive impairment. This is where you have to read the fine print since some policies are more restrictive than others. More affordable policies generally take longer to kick in. See if coverage for other physical ailments is available as part of the policy and what per-diem or monthly allowances are offered.

What if I never want to go to a nursing home? The idea is to cover every eventuality. The best-designed LTC policies will pay the same amount of benefit whether care is received in a long-term care facility, an assisted living facility, an adult day care center, or in the home. Some policies do offer reduced percentages for home health care versus nursing home care, but it’s a better idea to keep full percentages on home health care benefits since most people would rather stay in their homes.

What’s the record of particular companies in this business? Over the past generation, more companies have gotten involved in the LTC insurance business, and it makes sense to see not only who the leaders are at the time you’re buying and what they’re offering, but how financially healthy these companies are and have been over the course of time. You’ve probably heard of insurance companies that have gone out of business and stranded customers. There’s no restriction on that happening with LTC providers, so check their ratings and financial history very carefully.

2008 — This column is produced by the Financial Planning Association, the membership organization for the financial planning community.

Copyright © 2008 MWBoone and Associates All Rights Reserved. MWBoone and Associates is a Registered Investment Advisor Investment Management services are not available through this web site but are described at www.mwboone.com. Securities offered through LPL Financial Member FINRA/SIPC.

Economic Statistics failed to Satisfy the Gloom and Doomers

2008-05-07T15:47:38Z

A wide array of statistics and policy actions were reported this week that failed to satisfy the gloom and doomers. Economic statistics, while weak, are generally not falling off a cliff, and continue to support my view that we can avoid an economy wide recession. It’s still too early to declare victory over the gloomy ones, but many parts of the economy are looking stable, and in fact, looking up.
]]> One big report covered first quarter GDP, showing a first quarter rise in real GDP of 0.6%, matching the fourth quarter increase. Not a big increase, but also not the decline typically associated with recession. The employment report for April showed a small drop in payroll employment of 20,000, but it also showed a reversal of prior rises in the unemployment rate, falling to 5% from March’s 5.1%. Certainly not the kind of big gains associated with vibrant economic growth, but also not the nosedive I would associate with a slide into recession.

We got another read on inflation. The broadest measure of inflation, annualized change in the GDP price index, showed a rise of 2.6% in the first quarter with the “core” (excluding food and energy) GDP price index up 2.0%. Both inflation measures are lower than in the fourth quarter. Continued low inflation gives the Federal Reserve room to cut interest rates, and they did, dropping the fed funds rate to 2% on Wednesday. They also announced further actions to shore up bank balance sheets today.

As I have said before, I still remain very concerned about the direction of oil prices and the dollar exchange rate. Oil prices well about $100 per barrel continue to place a heavy burden on U.S. consumers. They are responding by cutting back, with gasoline use, compared to last year, down the last three months. But consumers are also slowing other purchases. The dollar may be bottoming; it hit a record low in mid-March and, like the equity markets, subsequently moved higher. Lower oil prices and continued dollar gains would, I think, be very beneficial to the economy and financial markets.

On the company earnings front, with 371 of the S&P 500 companies having reported, total earnings are down 14% compared with Q4 2007, but the decline is concentrated in the financial sector, where earnings fell 69%. Eight of the remaining nine sectors show increases, ranging from a high of 23% in Technology to a low of 4% in Health Care. (The other earnings decline was in Consumer Discretionary.) Adding it up, the entire non-financial group was up about 10%. Forward earnings expectations are for another overall decline in Q2 (more financial sector write-downs) and then gains in Q3 and Q4; the Q4 2008 earnings growth expectation is a rise of 53%. That huge rise is mainly due to the very depressed earnings level in Q4 of 2007, but it does show how large the financial sector hit has been.

All in all, it has been a pretty good couple of months for equity markets, earnings and the economy. While we are still down about 1.9% on the Dow and 4.0% on the S&P500 year to date, we are up a fair amount from the lows in mid-March. We are near the end of the first quarter “earnings season” for S&P 500 companies and are again seeing a major divergence – excluding financials, company earnings look strong. I will continue to watch all of these indicators closely, but for now at least, I think things are looking up. As always, please call me with any questions or concerns.

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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult me prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

Copyright © 2008 MWBoone and Associates All Rights Reserved. MWBoone and Associates is a Registered Investment Advisor Investment Management services are not available through this web site but are described at www.mwboone.com. Securities offered through LPL Financial Member FINRA/SIPC.

The Strategic Petroleum Reserve: Stop Filling It!

2008-05-01T19:49:04Z

"On April 10th, Senator McCain stated that the Bush Administration should halt oil purchases for the Strategic Petroleum Reserve (SPR). He makes a very good point. Over the last eight months..."

To read the rest of Lincoln Anderson's newest market update, please click on the link below:

http://www.mwboone.com/blog/LincolnAnderson_SPR.pdf

Do Stock Prices Rise More Often Than They Fall?

2008-04-30T20:01:01Z

" The Subprime mortgage crisis that began in August of 2007-and a series of other financial sector events that battered stocks for months - will likely be remembered as a very turbulent time for investors. But, there is more than a century of proof that despite periodic downturns in stock prices, ....."

To view the he rest of this article from Oppenheimer, please click on the link below:

http://www.mwboone.com/blog/Stocks_Oppenheimer.pdf

Why do Houses Cost So Much?

2008-04-24T21:53:41Z

This is an article from the Seattle Times discussing one of the reasons why housing prices are so high. To see this article, please click on the link below:

http://seattletimes.nwsource.com/html/businesstechnology/2004181704_eicher14.html

Tax Freedom Day® today

2008-04-23T22:06:39Z

America Will Work Three Days Less to Pay Taxes in 2008 than in 2007; Stimulus Rebates Push Date of Celebration Up

Tax Freedom Day® will fall on April 23 in 2008, according to the Tax Foundation's annual calculation using the latest government data on income and taxes. That’s three days earlier than in 2007. Stimulus rebates and a projection of slow growth in 2008 are the principal reasons for the earlier celebration.

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According to the latest report “Americans will work longer to pay for government (113 days) than they will for food, clothing and housing combined (108 days). In fact, Americans will work longer to afford federal taxes alone (74 days) than they will to afford housing (60 days). As a group, Americans will also work longer to pay state and local taxes than they will to pay for food.”

Tax Freedom Day® came as soon as April 17th under Ronald Reagan, moved all the way back to May 3rd in President Clinton’s final year, and improved to a recent best of April 16th in 2003 before giving back a number of work days. Residents of Washington and California will have to wait for their day of freedom as both states are in the five highest taxed in the nation, partially because of the high incomes earned. Washington residents will be free on April 29th, and California residents on April 30th. Remember also that lower income Americans individually celebrate an earlier Tax Freedom Day ® than higher income Americans, which can easily find they are working to pay taxes well into May.

You can read the full report and see the methodology used here http://www.taxfoundation.org/files/sr160.pdf .

Our Green Roots

2008-04-22T16:50:24Z

So what can a firm that helps people with their finances do to celebrate Earth Day? Actually, we ask ourselves this question all year around and what follows is what we have come up with. Maybe it will encourage you as you think through your choices. Liz and I are avid backpackers and students of the natural world, as are a number of people here in the firm, so environmental issues are very important to us.

]]> Apart from the politically divisive debates about creating new environmental laws, reducing waste has always made sense and considering the total long term cost of a decision, including the waste and energy required is simple common sense. We are continually focusing people on the long term impact of their life decisions, and environmental concerns are part of any long term cost and benefit structure. Like ignoring health care costs or lower risk tolerances as we age, not calculating in environmental costs is a big mistake.

We are very fortunate in that we don’t produce any physical products so our pollution output is tiny compared to most businesses. No factories, no cups, no shopping bags, no products in the refuse bins, no oil and no gas. I wish we could stop the copious amounts of annual reports and proxies we all get and we will continue to push for that, but we do not control that process. We do however consume electricity to run our computers so we look to buy Energy Star rated machines and either power them down or leave them in sleep state depending upon which is recommended for energy efficiency. We use e-documents where possible and when we do print documents and plans all are printed two sided when possible. We shred and recycle all possible paper and carry home other recyclables that our building does not handle.

The most unusual thing we do to help the environment is that every single person in the office carpools or takes the bus. As a firm, for the past five years or so we have bought unlimited King County Transit bus passes for all employees and we have 100% participation in bus riding or carpools and have for a few years. We also donate money regularly to organizations including the Nature Conservancy and the Wilderness Awareness School.

These are small things really, in the scope of our work, but it truly is small decisions like these that add up to big results over time. That’s the power of compound interest that we are always teaching. C.S. Lewis, the Oxford don, put these concepts together brilliantly when he wrote,

“Good and evil both increase at compound interest. That is why the little 
decisions you and I make every day are of such infinite importance.The 
smallest good act today is the capture of a strategic point from which, 
a few months later, you may be able to go on to victories you never dreamed 
of”.  

~ from Mere Christianity

Cimate Change: Special Report

2008-04-22T14:43:28Z

"Earth Day marks the anniversary of the birth of the modern environmental movement. This movement can cite some important successes. Environmental efforts established many years ago are paying off with ....... "

To see the rest of this LPL article on how how climate changes affect investors, please click on the link below:

http://www.mwboone.com/blog/LPL_EarthDay.pdf

Northwesterners Using Less Gas

2008-04-18T16:00:30Z

"Residents of Washington, Oregon, and Idaho cut per capita gasoline consumption by 11 percent from 1999 to 2007, or nearly a gallon a week on average, according to a new report by Sightline Institute, a sustainability think tank".

To see the rest of this Puget Sound Business Journal article, please click on the link below:

http://www.bizjournals.com/seattle/stories/2008/04/14/daily27.html?f=et80&ana=e_du

FDIC Insurance up to $2 million

2008-04-17T22:10:59Z

LPL Insured Cash Account Program - FDIC insurance up to $2 million for joint account holders

With the recent financial debacle, you may be asking “Is my “safe” money safe?” Where do you save or invest money for liquidity and security? Many people would reply they use savings accounts, money market accounts and certificate of deposit (CDs) for these purposes. But is the money truly safe? ]]>
In the past couple years we have seen financial insolvency (i.e. failure) in some firms and major headline stories of recognizable financial firms suffering. What happens if you have money at a place that fails? One of the most important aspects to evaluate is whether your money has FDIC (Federal Deposit Insurance Corporation) coverage. Generally FDIC coverage only protects you up to $100,000 in any one bank or $200,000 for a joint account. Learn more about FDIC at:

http://www.fdic.gov/deposit/deposits/insuringdeposits/index.html

The LPL Insured Cash Account Program offers you a high level of FDIC insurance coverage by spreading your cash deposits over a network of well-capitalized banks (FDIC insurance up to $1 million for single account holders and $2 million for joint account holders). Let us know if we can assist you with your money. Attached is more information about the Insured Cash Account.

Please click on the link below:

http://www.mwboone.com/blog/Insured_Cash_Account_Program.pdf

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult me prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

MWBoone & Associates' Aimée Huff, CFP, CFA on King 5 News

2008-04-16T16:40:37Z

On Friday March 14, 2008, King5 News did a piece on the current market situation and interviewed MWBoone's & Associates own Aimée Huff, CFP, CFA for the piece. Please click on the link below to see the full clip:

http://www.king5.com/video/index.html?nvid=227257

]]> These opinions are for general information only and are not intended to provide specific advice for any individual. To determine what may be appropriate for you, consult your financial professional prior to investing .

LPL's Weekly Commentary

2008-04-15T17:26:53Z

LPL's John Canally has put out his weekly economic update. To see this article, please click on the link below:

http://www.mwboone.com/blog/WeeklyCommentary_4_14_08.pdf

Lincoln Anderson's Weekly Update

2008-04-11T16:12:49Z

Well, one of my least favorite days of the year – April 15 – is approaching. So if I sound a little grumpy, it’s because of our looming tax deadline, poor equity performance over the first quarter, market volatility, high oil prices and further revelations of egregious behavior by some big banks and mortgage originators. The S&P 500 stock price index fell 9.9% over the first quarter, with all 10 sectors down. Employment also fell over the quarter, with payroll employment down 232,000 and the unemployment rate up slightly to 5.1%. Does this data signal the onset of a recession? Possibly, but if so, I continue to expect it will be mild. The Federal Reserve has been very aggressive with interest rate cuts and really big balance sheet operations to take risk off bank and primary dealer balance sheets.

]]> I continue to think the year will turn out better for the economy and financial markets than the scary headlines suggest. I have heard a large number of what I consider to be silly comments and forecasts. No, I do not think we are returning to the Great Depression. No, I do not think this is the worst economic crisis since then. And no, I do not think that the last nine years constitute the “lost decade”.

Yes, the S&P 500 stock price index has only recovered to Q1 1999 levels. However, behind the still obviously lagging stock performance, we have seen the Price/Operating Earnings ratio for the S&P 500 cut nearly in half due to S&P earnings nearly doubling over the last nine years. That, to me, represents an enormous reduction in market risk. A lot of hard work by U.S. companies and their workers produced this rise in earnings, and it has been done with generally careful attention to staying competitive and controlling costs. I consider that to be a big plus for economic and financial market prospects. Certainly, we have serious problems on some big bank balance sheets because of very poor business decisions. However, even if mortgage security related write-downs were to rise to a trillion dollars (unlikely in my opinion), the two trillion dollar improvement in the aggregate non-financial company balance sheet over the last nine years provides a huge offset.

And then there is the real world. Real GDP is up 26% over the last nine years. Employment has increased by 10 million. Labor productivity, the engine behind real wage gains and staying competitive in the global economy, has increased 26%. Real after-tax income per capita has increased by 17%. Even home prices, down lately, are still up 44% from nine years ago. And real U.S. household net worth is up 20%. Lost decade, my foot. I remain guardedly optimistic on U.S. financial market performance and will continue to monitor the economy closely for further signs of recession. As always, please call me with any questions or concerns.

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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult me prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

Copyright © 2008 MWBoone and Associates All Rights Reserved. MWBoone and Associates is a Registered Investment Advisor Investment Management services are not available through this web site but are described at www.mwboone.com. Securities offered through LPL Financial FINRA/SIPC..

Prepare for Your Power Years!

2008-04-04T15:01:30Z

MWBoone & Associates, LLC, presents: Prepare for Your Power Years. This is a workshop that is aimed at helping you learn how to live your dream.

“I have been helping clients for over two decades and this is the best life planning presentation I have seen

~ Michael W. Boone, CFP, CFA

]]> Today, for the young professional, increased longevity, much higher levels of health and vitality, and the assumption of continued personal growth are redefining this generation’s expectations of this new stage of life. Whether you want to begin or change careers, start a new business, spend more time volunteering, buy a home, or sail around the world, you’ll be better prepared if your finances are in shape. Dreams are driven by cash flow, and luckily time is your greatest ally in planning to fund your dreams.

Learn how to fund for tomorrow’s possibilities, develop a life-stage plan, and discover how to prepare for your Power Years!

For more information, click this link:

http://www.mwboone.com/library/Power_Year_Flyer_6.pdf

Raging Bull: The Technological Sector

2008-04-04T14:44:38Z

There are still many reasons to like Tech, though heightened recession risk warrants some caution. To see these reasons and the rest of the article, please click on the link below:

http://www.mwboone.com/library/Raging_Bull_3_18_08.pdf