Health

Healthcare Costs in Retirement Can Add Up

June 5, 2019 By Doug Carey Leave a Comment

It’s no secret that the cost of health care in retirement is probably the biggest unknown hovering above most retirement plans. Pre-retirement, the biggest unknown expense for many families is often higher education for kids. Will they get scholarships? Will they attend a state school (and get relatively affordable in-state tuition)? Or will they get into a great, out-of-state college with no financial help at all, and need help from Mom and Dad or go into extraordinary debt? That’s a tough figure to budget for.

Similarly, most of us can’t know with any reasonable degree of certainty what kind of health issues we’ll run into as we age. We generally need to hope for the best and prepare for the worst, as they say.

To that end, Fidelity Investments has produced a new study about healthcare costs in retirement.

The “too long, didn’t read” summary: Fidelity estimates that a 65-year-old couple retiring today should be prepared to spend $285,000 in medical expenses during retirement. For a single person, it’s in the $135,000-$150,000 range.

Fidelity makes the assumption that you will be covered by Medicare parts A and B, which covers hospital and medical insurance. So that $285,000 figure is in addition to basic Medicare coverage.

Hopefully the fact that you’ll have to pay anything out of pocket even if you’re covered by Medicare is not a surprise. If you want coverage for prescription drugs and dental care and lots else besides the very basics, you’ll likely be paying into a Medicare Advantage Plan (Medicare Part C) on an ongoing basis.

In the study, Fidelity has a hypothetical 35-year-old couple putting away about $2,800 annually in a Health Savings Account (HSA) until they are 65. Fidelity says these contributions, assuming 7% returns annually, would shoulder the anticipated burden. I used WealthTrace’s financial planning application to run Fidelity’s assumptions through a retirement plan, and Fidelity has it right.

To Be Taken With a Grain of Salt—and an HSA

To quote Fidelity’s study, “We recognize that when today’s 35-year-olds retire in 2049 their medical costs could be more than this year’s estimate, and the U.S. health care system could potentially look dramatically different.”

Yes, that’s for sure. A similar sentiment might apply to pretty much anything predicted to happen that many years out. The costs could be more; they could be less. The point is to start to do something to prepare. If you don’t end up needing the money for health care, great–you’ve saved it and it has compounded in value and you can use it for something else.

Fidelity would love it if you opened up an HSA with the company–that’s why they did this study, after all. They want your investment assets. But just because this is something of a sales pitch on their part doesn’t make it a bad idea.

If you’re not familiar with HSA’s, you can get some details about them here. They are similar to IRAs or 401(k)s in that you save the money on a pre-tax basis. But with an HSA, your withdrawals will not be subject to any tax if you use the money to pay health care costs. (If you use the funds to pay for something else, it will be taxed as income and you’ll be hit with a 20% penalty up to age 65; the penalty goes away if you’re over 65.)

If you’re allowed to have an HSA and have the resources to fund one, it’s definitely worth considering. You may not be eligible–you have to have a high-deductible insurance plan, with a $2,700 deductible for a family currently ($1,350 for an individual). It also probably makes sense to first contribute as much as you can to other qualified tax-deferred accounts such as IRAs (currently $6,000 before 50, $7,000 if you’re 50 or older) and 401(k)s ($19,000 before 50, $25,000 if you’re 50 or older). If you have those accounts topped up, and you’re eligible, an HSA should be next on your list.

The future is as unknowable as ever. That applies to health care costs as well as potential health issues down the road. What we do know is that having a plan in place to deal with the unknowable is always preferable to being entirely unprepared.

Abortion Bans: The Economics of Ending a Pregnancy

May 24, 2019 By Amanda Blankenship 1 Comment

It seems the news is nothing but controversial these days. Most recently, a number of states have imposed strict abortion laws and even bans in some cases. This has caused an absolute uproar across the nation. While the ending of a life is undoubtedly sad and morally questionable, the economics behind ending a pregnancy is something everyone should consider.

Abortion Statistics to Consider

Believe it or not, abortions in the United States have dropped by almost half in the last 20 years. This is largely due to contraception being more widely available. However, those birth control methods are still not enough to completely avoid abortion.

Around 2 percent of abortions occur because of incest or rape (about 15,000 per year). Most of the women (85 percent) are not married and half are under the age of 24.

Planned Parenthood, which is often singled out for its abortion services, tends to focus on preventing pregnancy rather than eliminating it. In fact, only 3.4 percent of its business is abortion services.

Twenty-five percent of women will have an abortion before they turn 40 years old. Abortion bans could have a larger impact than you’d imagine – far beyond the civil unrest we are experiencing now.

How Abortion Bans May Impact the Economy

Moral stances aside, abortion bans could mean a hefty impact on your wallet and the economy as a whole. Thousands of women have already taken to social media to discuss why they may have had an abortion in the past and explained how much worse off they’d be economically had they had the child.

“I didn’t know what I would do with a baby,” said Jeanne Myers. “I was horrified. I had no job. I would have been in no financial position to care for a kid.” While she admitted there was grief over the lost child, she also stated she wouldn’t have been able to get where she was today had she not made that decision.

Other women who have shared their stories online were in their teens and totally unprepared for motherhood, as most women are at 15 and 16 years old. In some cases, the women seeking abortions already have another child and don’t have the means to have another. Others would like to have a child once they are better off financially.

Three out of four women who seek out abortion services are already low-income. Adding a child into the mix would only increase their financial woes. Most of the time, they wind up on government assistance, living in low-income housing, and unable to work because they can’t pay for childcare to enable them to work.

Myers, who is quoted above, eventually had two children. Her first daughter was born three years after her abortion when she was married and she and her husband both had jobs. This enabled them to have the time to prepare and take care of their child without government assistance.

Final Thoughts

Of course, there are moral stances where abortion is concerned. No one wants to think about killing a child. Most women deal with grief afterward but when it boils down to it, it gives them the ability to better provide for their families financially in the future.

At the same time, they are relieving the economy and society of the burden of having to support them through assistance or through foster care (where the government still pays the family to care for the children). Not every mother can put their child up for adoption after carrying them nine months, nor is every child adopted. Abortion bans will force individuals who are not financially prepared to have children to do so, furthering the cycle of poverty and potentially hurting the economy even more.

More importantly, banning abortions will drive many women to unsafe and unhealthy ways to deal with an unwanted pregnancy. In many cases, these bans do not even protect those who have been raped or are victims of incest.

No matter your stance on the matter, abortion bans will have a hefty impact on the economy and, eventually, your taxes and wallet as well.

Financial Psychology: Do You Have a Money Disorder?

May 22, 2019 By Kathryn Vercillo Leave a Comment

Let’s face it: most of us struggle with finances. Dealing with our money is a confusing thing. It’s often fraught with emotion. Even when we have significant knowledge about personal finance, sometimes we get overwhelmed by the reality of our money. Problems can crop up in so many ways. For example, we may be great at budgeting but find it challenging to talk to our family members about money. However, for some people, those challenges rise to the level of a money disorder.

What is a Money Disorder?

Dr. Brad Klontz has co-authored a book called “Mind Over Money: Overcoming the Money Disorders that Threaten Our Financial Health.” In this book, he explains that a money disorder is a destructive pattern of thoughts, emotions, and actions that relate to money. They are distorted beliefs about money. They undermine us, causing behavior that limits or sabotages us financially.

Financial Flashpoints May Cause Money Disorders

Klontz argues that “financial flashpoints” are at the root of these disorders. He says,

“Financial flashpoints are painful, distressing, and/or dramatic life events associated with money that are so emotionally powerful, they leave an imprint that lasts into adulthood.”

In some cases, the flashpoint may be a single traumatic event. For example, if your family experienced a sudden job loss that caused the financial crisis and left you homeless, then that might be your financial flashpoint. However, the flashpoint can also be a more persistent situation as well as one that’s subtler.

For example, if you grew up internalizing certain unhelpful messages about money (such as “money is the root of all evil”) then that could be your flashpoint. This understanding is similar to other types of trauma. For example, someone may develop PTSD because of a single violent event such as a rape while someone else may experience PTSD as a result of chronic insidious mental abuse.

Similarly, we can develop money disorders for different reasons. Furthermore, we may not immediately recognize their root cause.

Types of Money Disorders

In his book, Klontz outlines three broad types of money disorders. There are different types of specific problems that fall under each category.

1. Disorders of Worshipping Money

These types of money disorders related to people who have self-destructive behaviors related to earning and spending money. Specific money disorders in this category include:

Compulsive shopping
Gambling
Hoarding
Overspending
Workaholism

It’s important to note that there is some crossover between other mental health issues and money disorders. For example, hoarding may be more about an anxiety issue than a money disorder. Likewise, gambling may be more about addiction than specifically about money. A professional can help you work through these nuances.

2. Disorders of Avoiding Money

Some people obsess over money whereas others want to avoid it entirely. For example, one subcategory here is “financial denial.” If you’re the kind of person who never knows how much money you have in the bank or what you owe on loans then you might struggle with financial denial.

Financial rejection is another subcategory of avoidant money disorders. This is an emotional reaction toward acquiring money. If you feel guilt whenever you earn or save money then you might be dealing with this type of avoidance issue.

Chronic underspending and excessive aversion to financial risk are also disorders related to avoiding money.

3. Relational Money Disorders

Many of us struggle to connect with others when it comes to money. Think about it – how many of the fights in a marriage are about finances? However, this can rise to the level of a money disorder. Sub categories include:

Financial dependence, which means leaving our finances up to someone else instead of dealing with them ourselves
Financial enabling, such as when a parent continues supporting an adult child even though the parent can’t afford to do so. Notably, the financial dependent is often in a relationship with the financial enabler.
Financial incest, which relates to manipulation and emotional abuse related to finances (typically in a parent-child relationship)
Financial infidelity, which has to do with lying to your partner about spending

In other words, these problems aren’t just general fights about money. Many people disagree over money. Most of us struggle at least a little bit to talk properly about money. However, when it rises to the level of emotional abuse, lying, or destructive behavior to or from another person then it may be a money disorder.

Do You Have a Money Disorder?

Most of us have financial challenges in the “normal” range. However, “normal” is a tricky word. Just like with mental health, there’s not a “right” and “wrong” but rather there is a spectrum.

For example, each of us has experienced some kind of sadness or grief that in the moment could look a lot like depression. Then there are people who live with ongoing life-threatening depression. A large number of people live somewhere in the middle, dealing with shorter bouts of depression during their lifetime. These things are each different. They can’t be treated the same. However, they exist on a spectrum and we can all learn from the lessons at each part of the spectrum.

Similarly, some people have very serious money disorders. Some people are perfectly comfortable with all aspects of their finances. Most of us exist somewhere in the middle. We can all learn from the lessons at any part of the spectrum. That said, if you feel that you do truly have a money disorder, it’s important and okay to ask for help.

How to Get Help for a Money Disorder

There are therapists available who specialize in helping people who are struggling with financial issues. Whether or not you want to use the term “financial flashpoints” the experiences we’ve had with money in the past can definitely negatively shape our experiences with money in the present time. Working through your beliefs, fears, and history around money can help you improve not only your feelings about finances but the status of your wealth as well.

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Can CBD Oil Help in Treating Heroin Addiction?

May 21, 2019 By Amanda Blankenship Leave a Comment

The opioid epidemic has cost the United States economy more than $1 trillion since 2001. It is projected to cost the U.S. more than $500 million over the next three years, should the current numbers continue to trend upward. This has sent researchers scrambling for a way to help treat individuals with heroin and opioid addiction. A recent study found CBD oil may be an answer.

What is Cannabidiol?

Cannabidiol, also known as CBD oil, is the non-psychoactive ingredient in marijuana, not to be confused with THC. THC is the ingredient in hemp that would make you feel “high.” CBD, on the other hand, has no psychoactive effects and, more recently, researchers have found it can help treat other medical conditions as well.

CBD oil has been shown to have a beneficial impact on anxiety, depression, acne, pain relief, and even heart disease. More recently, it has been found to help treat patients with heroin addiction. It has been shown to help reduce cravings in addicts and relieve their anxiety when coming down as well.

“The intense craving is what drives the drug use,” Yasmin Hurd, the lead researcher on the study said. “If we can have the medications that can dampen that [craving], that can greatly reduce the chance of relapse and overdose risk.”

Using CBD Oil to Treat Heroin Addiction

Currently, medications used to treat opioid addition like methadone and buprenorphine curb cravings. However, only one-third of patients in the U.S. receive these medications as treatment. Additionally, only one in five individuals in need of treatment are receiving any kind of therapy to help them with their addiction.

These two medications are approved by the U.S. Food and Drug Administration, but there are still obstacles in getting them distributed to those in need. Not to mention methadone and buprenorphine are still opioids that require close treatment and regular visits to the doctor. So, you’re really just trading in one burden for another.

The Study

For the most recent study, Hurd and her colleagues took a look at 42 individuals with a recent history of heroin use. All of them were recruited from halfway houses and social service groups. None of the people involved in the study were using methadone or buprenorphine.

The study’s participants had used heroin for an average of 13 years. Most of them had been clean for less than one month when beginning the study. During the entire study, they had to refrain from heroin use completely.

All of the study’s participants were divided into three groups. One group was given 800 mg of CBD. The second group was given 400 mg and the third group was given a placebo. Each individual was given one dose a day for three consecutive days. Then they were followed for two weeks. Over the span of two weeks, each participant was shown videos of nature as well as drug-related images. After they saw the videos, they were asked to rate their craving for heroin.

Researchers found that a week after the last administration of CBD had two or three times reduced cravings, compared to the placebo group. Heart rate and cortisol (the stress hormone) levels were both reduced in individuals given CBD oil as well.

CBD Shows Promise

In the study, researchers used Epidiolex. Epidiolex is the first FDA-approved cannabis-based medicine. With many of the products on the market right now, the exact concentration of CBD is unknown, and some may have additives. However, Epidiolex is regulated and the exact concentration is known. This was key to the study’s findings. There were very few bad reactions. Some individuals experienced mild diarrhea, headache, and fatigue.

Hurd has run a pilot study prior to this two-week experiment. Her next step is to perform a longer-term study. She hopes to follow participants for up to six months with CBD oil treatment.

“This is an extremely significant paper. We need to utilize every possible treatment in helping people with chronic pain to find other ways to manage their symptoms and in people with opiate addiction to find relief,” said Dr. Julie Holland, a psychiatrist in New York. “CBD not only manages the anxiety and cue/craving cycle, it also diminishes the original pain and inflammation that leads to opiate use in the first place.”

While many questions still need to be answered, Hurd and her colleagues believe this is a good start to really looking at CBD oil as a treatment for heroin addiction. “Ultimately, “this can really help save lives,” she said.

Readers, what do you think about the latest findings?

How to Declutter If You Hate Marie Kondo

May 20, 2019 By Kathryn Vercillo Leave a Comment

Marie Kondo offers what is known as the Konmari method of decluttering your house, which seems to polarize people. She’s a best-selling author—evidence that many, many people love her decluttering methods. Ever since Netflix came out with her television show Tidying Up, though, articles seem to crop up everywhere with complaints about her methods. Her approach doesn’t work for everyone, but that’s okay. There are many different ways of decluttering your home. You don’t have to take her approach.

Understanding the Konmari Method

Personally, I like a lot of what Marie Kondo has to say. (I’m not a fan of the TV show, but I like her books.) I think that even if you don’t appreciate everything about her or want to use her method entirely, there are some great lessons she has to offer. In fact, I think that sometimes when people say they don’t like her method, they actually just haven’t dug into it well enough to understand it.

For example, Project Runway mentor Tim Gunn was recently quoted widely as being anti-Kondo. Marie Kondo is famous for saying that you should only keep objects that “spark joy.” Gunn was cited in numerous articles as saying something akin to, “Roget’s Thesaurus doesn’t spark joy, but I want to keep it.” I think this sweeping statement misses the point. I think at some level, if he’s using that thesaurus and he relates to in terms of how it improves his writing or reading, then it does spark joy.

What I Took Away From Marie Kondo’s Method

In any case, before we dig into alternatives to Marie Kondo, I’d like to say that these are the things I personally find useful in her method:

She practices gratitude. She appreciates each item, even if she doesn’t want to keep it. I think this is a good practice.
It’s helpful for me to take all like items out and look at them together. This doesn’t work for everyone. Some people find it overwhelming. However, I like to see exactly what I’m dealing with all in one spot.
I like the “spark joy” concept. It doesn’t always work for me. My medications don’t spark joy, but they’re a necessity. So I think it’s too simplified. But it’s a helpful method for deciding about things I’m unsure about keeping.
Some of Marie Kondo’s very specific organizing tips are helpful. She has cute methods for folding and storing clothing that I really like.

4 Other Helpful Approaches to Decluttering

Marie Kondo is the name on everyone’s lips right now. However, there are many different methods of decluttering. Some of them have names. Others are just tried-and-true methods. I think it’s worth it to review many different options to find what works for you. You don’t have to use one method singularly and in its entirety. You can pick and choose what works best for you. Here are four different approaches to consider:

1. Your House is a Container

Dana K. White is the author of the book Decluttering at the Speed of Life: Winning Your Never-Ending Battle with Stuff. My favorite takeaway from this book is the idea that every space in your home is a container. Each container can only hold what it holds. Every similar item should go in one container. You should start filling the container with the things you most want to keep.

For example, your bookcase is a container. It can only hold X amount of books. Every single book in the house should fit in this container. In other words, you shouldn’t have extra books on nightstands, in boxes, etc. Take all of the books out and start placing them in the container. You should put the ones you most want to keep in there first. If the container is full, and you want to add a book, then you need to remove one you like less.

Your container may be bigger or smaller. For example, if you have a whole library in your house, then it may contain multiple bookcases. The library is the container. In contrast, the container might be just one shelf. For example, all children’s books might go on on only that shelf. Each room is a container, each space in the room is a container, and that container might have smaller containers such as shelves or drawers.

2. The ClutterBug Organizing Style

Blogger and author Cassandra Aarssen has identified four different types of “ClutterBugs.” When you know your type, you gain a better understanding of the different things that matter to you in terms of organizing. Organizing and decluttering aren’t quite the same thing, but they go hand in hand. The four types of ClutterBugs, briefly, are:

Bee: Believes in a perfect organizing system and wants their items in sight.
Butterfly: Likes simple, quick organizing tools and wants their items in sight.
Cricket: Loves detailed organizing systems with very little clutter in sight.
Ladybug: Likes simple, quick organizing tools but wants items out of sight.

So, for example, it’s helpful for me to know that I like really simple organizing systems. If a system requires too much work or effort, I won’t bother. That means I’m either a butterfly or a ladybug. Since I like my items out of sight, I’m a ladybug. Therefore, decluttering is easier for me when I have simple systems for out-of-sight but accessible storage (such as bins inside closets).

3. Love It? Use It? Need It?

I’m not sure if this system has a name or if there’s a person attached to it. It’s something I heard about years and years ago and have always turned to when making decisions. Basically, for each item in the house, you ask yourself if you love, use, or need it? If it’s none of those three, then you get rid of it. It’s similar, in a sense, to Marie Kondo’s concept of “sparking joy,” but it has more leeway for other items. For example, Roget’s Thesaurus might not spark joy for Tim Gunn, but if he uses it, then he can still keep it. Likewise, I need my meds, so I keep them.

I find this helpful when decluttering non-physical items as well. For example, when I’m cleaning up my finances, I can turn to these questions. I need electricity. I use my Hulu account. As for “love,” well, I love certain magazine subscriptions but could get rid of others to save money.

4. Swedish Death Cleaning Method

Like the Marie Kondo method, the Swedish Death Cleaning method has grabbed attention in recent years. There’s a popular book about it by author Margareta Magnusson. The idea is that you approach decluttering with awareness that if you died, someone you love would have to deal with all of this stuff. Ultimately, it’s a minimalistic approach; you keep what is most meaningful and let go of the rest.

Admittedly, I haven’t tried this one, yet. However, I think it might work particularly well for my collection of writings and journals. If I die, someone will have to go through this. As a writer, I want more control over what’s kept, where it goes, etc. Therefore, I should start uncluttering that stuff now. It’s also a good reminder to properly store passwords, important financial information, etc.

Why Declutter At All?

I happen to love decluttering. When my space is cluttered, my mind feels cluttered. (Conversely, when I’m mentally cluttered, my space gets that way as well.) I find that my health is better when I declutter. However, not everyone feels that way. Some people love having a lot more stuff than I prefer. That’s okay. Find what works for you. With that in mind, though, there are some good reasons to declutter. It’s worth considering them and seeing if they hold true for you. For example:

If your home is so cluttered that you can’t find things, then you might spend money on duplicate items.
When clutter starts to make you feel smothered, it’s time to find a different way of doing things.
Physical clutter often shows up as disorganization in other areas of life, including finances and mental health.
You might have an urge to declutter but ignore it because it’s overwhelming.

Processed Foods Are Adding to the Number on the Scale: New Study

May 17, 2019 By Amanda Blankenship Leave a Comment

A new study found processed foods may actually have a more profound impact on weight gain than initially thought. Ultra-processed items led to weight gain within just two weeks. Because these foods are typically cheaper, individuals who are unable to buy organic, more expenses foods may have the highest risk of obesity due to the foods they can afford.

Previous Findings

Processed foods include things like soda, packaged snacks, meat nuggets, many frozen meals, and other foods high in additives.

Previous studies have linked processed foods to obesity, intestinal inflammation, cancer, autoimmune diseases, and possibly even death. Despite these findings, processed foods still make up 57.9 percent of the food intake in the United States.

“Previous studies have found correlations between ultra-processed food consumption and obesity,” Kevin D. Hall, from the National Institute of Diabetes and Digestive and Kidney Diseases, said.

Hall and his colleagues led the most recent study to compare unprocessed and processed foods. The study was published in the journal Cell Metabolism.

The Latest Study

To conduct the study, the research team took a look at 10 men and 10 women. All study participants stayed at the clinical center for 28 days. Half of the individuals involved in the study were given ultra-processed food for the first two weeks of their stay. The rest of the participants received unprocessed foods during the two-week timeframe. After two weeks, the groups switched.

All of the participants ate three meals each day. Researchers instructed them to eat as little or as much as they’d like. Snacks and bottled water was available to them throughout the day as well.

What they found was that individuals on the ultra-processed food diet ate around 508 calories more every day than when they were eating unprocessed food. Because of this, each of them put on about 2 pounds, most of which was body fat. Those on the unprocessed food diet lost 2 pounds during the two-week timeframe. They also saw an increase in gut hormone peptide YY. This hormone typically decreases hunger.

Why Are Processed Foods Bad?

The weight gain seen in the study participants may come from several factors, according to Hall. Individuals in the processed food group ate much faster, consuming an additional 17 calories per minute than their unprocessed counterpart.

“Ultra-processed foods contribute to more than half the calories consumed in the USA, and they are cheap and convenient options,” Hall stated.

Because it accounts for such a high amount of the U.S. population’s food intake, Hall is pointing to socioeconomic changes as an answer.

He concluded the study’s paper by saying, “However, policies that discourage consumption of ultra-processed foods should be sensitive to the time, skill, expense, and effort required to prepare meals from minimally processed foods — resources that are often in short supply for those who are not members of the upper socioeconomic classes.”

What do you think about the latest findings about processed foods?