Tag Archives: gainesville florida

The Middle East, Iraq, and the United States

OK, you’re sick and tired of this issue and want it to go away. But it never does and it may never, at least not in our lifetimes. So I challenge and urge you to read a recent interview and the comments made.

As someone who started life amid bombs raining down from time to time, I’ve been conscious and fearful of armed conflict since my earliest days. As a three year old, I can remember waking up one morning under the dining room table next to my mother. She had decided the table might provide at least some protection if a bomb hit nearby.

As an American citizen since 1959, I’ve been here as VietNam engulfed us and evolved, along with Somalia and Iraq and Afghanistan and all the many “little” conflicts along the way. I didn’t want to go to VietNam but received notice in the fall of 1960 to appear for my draft physicial. I remember driving to Ocala, getting on a bus with a bunch of other 19 year olds and we drove to Jacksonville. But I failed my physical and was given a 1-Y status instead of 1-A. So I’ve not served in the military.

Today we have a bunch of neocons and other ‘conservatives’ pushing for us to go to war with Iran. None of them will see a minute of combat like will the current crop of recruits. They seem to think dropping a few bombs on Iran and sending several hundred special operations troops will cause Irans’ national ambitions to suddenly change and conform to our version of democracy and lifestyle.

The map above is a link to the interview sent to me by my son. It is a compelling summary of how we got to where we are now, who the players are, and how we might move this whole idea forward to benefit all of us.  I urge you to read it, think about what is said and the implications, and not overlook the comments section that follows. Click the map above or click HERE NOW.

THOUGHT FOR THE WEEK – April 23, 2015

life insuranceThere is a positive correlation between the age of the advisor and the age of the client. I have few clients who are millenianals, but many who are roughly my age. And while I spend a lot of time helping them massage their retirement portfolios, one of the issues that surfaces frequently are the taxes that have to be paid. Too much of Americans’ retirement assets are contained within their IRAs, 401(k)s and other qualified plans. Like their health care, their retirement is almost totally under the control of the Federal Government.

* Where they can invest
* When they can take out the proceeds
* When they must take the proceeds
* How much they must take
* And, what the taxes will be

Combine that with the regulations around Social Security and the rules of their pensions (if they have one) and retirement planning isn’t about getting the most out of your assets, but rather how to get penalized the least from the Federal Government.

Perhaps I am being a little overdramatic; but all too often I see situations where clients would be much better off if they had more non-qualified investments and pension strategies when retirement time comes around. That’s why using Index Universal Life makes so much sense to successful younger clients who are looking to put away money out of the reach of the tax man with no risk in a down market and nice results when the S&P performs.

Imagine a Roth IRA (after-tax money going in, but coming out tax-free), but not part of the Government program;

* No restriction on how much you can contribute
* No tax on the appreciation
* Interest credited up to 13% when the S&P is cookin’
* Minimal cost to guarantee no losses
* Tax free income in retirement
* And, tax free distribution of whatever is left at death

I should be talking from experience, but unfortunately, when I should have been doing this, they weren’t available. They require discipline and an awareness that life is fleeting. I’ve got lots of good memories, but damn, how time flies.

Recently an advisor associate in California penned this next paragraph to share with me and others. He was talking to us as financial planners who take ourselves seriously. This is what he said:

“You really should offer these plans to your younger clients who are trying to put away annual savings for retirement. We just showed one to a 42 year young business man. He will be investing about $30k per year to build a retirement account for himself. Some of that will go into a qualified plan but we suggested he put $10,000 per year into the insurance strategy. We minimized the insurance to the legal minimum but still it gave him over $1/4 million to start. By the time he is 65 he will have put away $240k and if the S&P only averages 6.8% he will have over $450k in his account and will be able to take over $27k per year tax free in retirement. With safe money interest rates so low and unlikely to rise in the foreseeable future, and the stock market bouncing every which way like a football landing on a hard surface, clients are quickly appreciating the safety, efficiency and predictability of these plans.”

Call, text or email me if you want to know more…

Rioting In The Streets Of Gainesville?

retirement_roadMy Comments: The blog post title above comes from me; the one that actually accompanied the article is Public Pensions Face New Challenges As We Live Longer. Huh?

As a financial planner, I try to make people aware of the existential threats we face as we all grow older. These threats are things that “might” happen, may not happen, but if they do can be devastating to individuals and families. If you are already dead, you can skip this blog post, but if not, then…

No one seems upset that modern medicine has resulted in more of us living longer lives than could have been expected when we were born. Along the way, many of us worked for organizations such as the State of Florida or somewhere in corporate America. Or maybe the City of Gainesville or the Sherrif’s Department. We participated in a pension plan that promised benefits based on our years of service and sometimes our level of pay.

The promise typically included a schedule of monthly payments for either our lifetime, a number of years, and might have included a contingency benefit to our spouse. All well and good. But the calculations to make those promises did not take into account the fact that our lives now end much later than they did in years past.

The net effect of this is a shrinking of the pool of money available to make those payments. I’m not talking about Social Security here, where there is an obvious parallel, but the pensions paid to the millions of Americans who toiled for years at large companies like General Motors and the hundreds of thousands of smaller places.

Non-public pension plans are grossly underfunded across this nation. Part of that is the very low interest rates that ‘safe’ investments earn and have earned for the past decade. And pension funds are required to invest their pools of money in ‘safe’ investments. Revenue is going to have to come from somewhere or there is likely to be rioting in the streets.

My personal opinion, having watched this growing problem for a number of years, is that the author is somewhat blind to the problem and suggesting there is no reason for alarm. Tell that to the elderly couple whose pension check from a local plumbers union somewhere in Ohio just got cut in half.

There are millions of people across these 50 states with situations like this and to pretend they don’t exist is a potential violation of the social contract all of us have as citizens of these United States. Unfortunately, too many of them rely on Fox News to help them interpret what is going on.

April 10, 2015  by Marlene Y. Satter

Certain mortality projections would increase life expectancy by 2.3 years and reduce the funded ratio of the nation’s public pension plans to 67 percent.

That’s according to a just-out brief from the Center for State and Local Government Excellence, “How Will Longer Lifespans Affect State and Local Pension Funding?” which concludes that, while the impact of longer lives is not exactly a positive for funds, there’s no imminent threat to pension funding levels.

It explores what public plan liabilities and funded ratios would look like under two alternative scenarios:

1. If public plans were required to use the new mortality tables designed for private sector plans; and

2. if public plans were required to go one step further and fully incorporate expected future mortality improvements.

The brief’s key findings include:
• Using the private-sector standard, public plans underestimate life expectancy by only 0.5 years, reducing the 2013 funded status of state and local plans from 73 percent to 72 percent.
• Incorporating future mortality improvements would increase life expectancy by 2.3 years and reduce the funded ratio of public plans from 73 percent to 67 percent.
Plans’ liabilities are affected, of course, by the longevity of their members, and the brief explores the degree to which liabilities are affected, calculating that “state and local pension plans would see their liabilities increase by 3.5 percent for each additional year of life expectancy.”

When the differences among longevity tables are factored in, it becomes clear that some plans, because of the way they calculate life expectancy, will be more greatly affected by a change from one table to another, while other plans will not see such drastic effects.

The public sector, the brief said, is going to great efforts to make sure its life expectancy assumptions are up to date. Reassuringly, the brief said, “The question underlying this analysis is whether outdated mortality assumptions are a serious problem among state and local plans. The answer appears to be ‘no.’

THOUGHT FOR WEEK – April 15, 2015

rolling-diceMy Comments: As usual, talking about long-term care with clients, friends and family members is often a difficult conversation. As a financial planner for whom the need for personal long-term care is an increasing possibility, I’m sensitive to articles I run across that offer choices. Here is one of them.

I know this looks and smells like a sales pitch. But if this issue is on your mind, take 3 minutes to watch the video that comes up when you click on the dice image above. Call me or send an email if you want to know more.

Another way to manage the financial risk of long-term care. By Gene Pastula

There is a lot of risk inherent in the long-term care issue. As an advisor, the most imbarasing risk is that long-term care will require the draw down of a client’s portfolio at a time when the market is not performing well. That could happen you know. Putting linked-benefit life into the portfolio not only takes that risk off the table, but the fixed/guaranteed nature of the cash value also helps reduce the volatility risk that clients fear more as they continue to age.

Top 10 reasons your clients would like to have a linked-benefit strategy in their portfolio…if you would just suggest it.

1. They want to keep their money in their estate so they can pass it on to their children

2. Their ability to stay at home when they need care, surrounded by familiar surroundings and loved ones is greatly increased.

3. If a nursing home is the best solution, “cost” will not be the determining factor in choosing the appropriate one. Keeps peace in the family.

4. They like the fact that companies offer geriatric care management rather than paying fees to attorneys and other specialists

5. By recommending these products for their portfolio you have additionally become a source of expert advice for recommending care providers and other local assistance via the carrier.

6. They won’t have to depend on their children to make the right choices as they will have professional assistance.

7. They will never put their children in a position of having to choose between the high cost of long term care for one parent and protecting the assets of the healthy parent.

8. They will know that no harm or ruin will come to a spouse or family member’s health or lifestyle by making them a primary caregiver.

9. Frees up time for family members to serve as advocates for their parent’s medical and care giving needs, versus being the caregiver. Changes dramatically the quality of time a chronically ill person spends with family members.

10. Kids are more likely to use care that is pre-funded allows the children to get the best possible care for mom or dad without risking it dwindling their inheritance.

The author continues: “Last week I presented LTCi and Linked Benefit life to a full house luncheon seminar. In a little back-and-forth with the audience, we discussed a comparison to purchasing a lottery ticket. But every one of my tickets will win an average of 150% of the cost of the ticket and some will win up to 450% or more. TAX FREE! They agreed that comparing Linked-benefit to winning lottery tickets is pretty close and should make it sell like hotcakes. (Do hotcakes really sell that well??) The point being, that’s when clients understand the value in committing some of the money in their portfolio to products like TLC, or MoneyGuard or Asset Care instead of Banks, Bonds and Money Market accounts…or in many cases, even stocks, they readily embrace the idea. There was no consensus on whether or not we would still have to buy them lunch to get them to come and hear about it.”

America Will Lose Patience With European Appeasement

My Comments: It is much easier to imagine a future as an extension of the past as seen in our minds than to visualize a future with totally new and different dynamics. This is where I have a problem with leaders like Israel’s Netanyahu, with the likes of Rand Paul and others on the right.

They seem unwilling to recognize that the coming years will be dramatically different from those in the past and simply want to turn back the clock. You only need to look at the life of my grandparents as they grew up, married and had children in the late 1800’s and the lives their children lived in the 1920’s and ‘30s. Never mind my life in the 40’s and 50’s. The shifts in what they experienced as “normal” are almost like night and day as I look back.

The issues faced by my children and grandchildren to advance themselves in society will demand different skill sets, different rule sets, and a different mind set if they are going to be happy and productive citizens. The sooner we elect leaders who are sufficiently imaginative and willing to articulate this perspective, the more comfort I will have as my life ends.

( Some of you will note that I’ve been absent for a week or so. I’ve been trying to find a way to legitimately use this site to help promote my business activities without infringing on my ability to simply express ideas that I want to share. If any of you have any ideas about this, I’d like to hear from you. – TK )

Robert D Kaplan April 7, 2015

Why should Washington defend a continent that will not defend itself, writes Robert Kaplan

Appeasement is an age-old tactic of diplomacy. It can be a defensible one, but not as a frame of mind for an entire continent. Yet no word captures the general mood of Europe better than appeasement.

Europeans, it has been said, cherish freedom but do not want to sacrifice anything for it. Only about half a dozen of Nato’s 28 members spend 2 per cent of output on defence, the alliance’s guideline level. When Vladimir Putin’s Russia undermined the strategic state of Ukraine, they stood and watched.

This is of a piece with the EU’s inability to deal with its own economic difficulties. Whatever they may claim, each member follows its own national interest without asking what is best for Europe. Decades into the project, there is still no chill-up-your-spine loyalty to Europe. There is simply no larger purpose and nothing to fight for, other than providing for the good life under welfare state conditions.

Europe has been reduced over the decades to a regulatory regime. Yet a rules-based order, however much it protects the rights of the individual, is not a replacement for conviction: rather, it must evolve out of a healthy and determined national purpose. A supranational purpose might exists in Brussels but not on the European street.

Because of their anaemic sense of national purpose, European elites have in several countries ceded measurable ground to the far right or the far left, resulting in a lumpen and populist form of nationalism. Elites are often stranded in the middle, seeking ways to appease both Mr Putin and their own, homegrown extremists. Lumpen nationalism, defeatism and a latent anti-Semitism all flow together.

Europe’s elites are post-historical. Living in history means living in a world of constant threat where there is no nightwatchman to keep the peace among nations, so nations must keep the peace themselves by maintaining a balance of power. But for 70 years Europe has relied on the US to do exactly that: guarantee its security, so that Europe can spend relatively little on defence and relatively much on providing for the good life. Seventy years is much longer than the distance between the end of the Napoleonic Wars and the outbreak of the Franco-Prussian war; or between the end of that conflict and the outbreak of the first world war.
For 70 years Europe has relied on the US to guarantee its security, so it can spend less on defence and more on the good life.

This American security umbrella will not stay up for ever. Barack Obama’s alleged lack of resolve in dealing with Mr Putin may say less about the US president’s own foreign policy than about a gradual shift in US opinion. Why should America defend a continent that will not defend itself?

The last of America’s second world war veterans will soon be dead. The European-oriented elites that have influenced foreign and defence policy in Washington are gradually being replaced by bright young men and women — many of them the offspring of immigrants from Asia and Latin America — who bring with them different family histories and emotional priorities. This coincides with the security challenges and opportunities that America encounters outside Europe, particularly in Asia, where American allies are willing to maintain robust, deployable militaries.

Or take Israel, a country with which the American public has for more than half a century been stubbornly sympathetic, whatever its often-misguided politicians do to inconvenience US policy. This is (among other things) the result of Israel’s stiff national resolve and gutsy, demonstrated willingness to defend itself.

Gutsy is not a word one would use to describe Europe’s political class. And unless that changes, no US president will be as committed to Europe as his predecessors were during the cold war.

The writer is a senior fellow at the Center for a New American Security

The Monetary Illusion

Global Nominal GDP Growth, as Measured in Dollars, Is Projected to Decline

global-growthMy Comments: It has been argued that Wall Street is corrupt and greedy and doing its best to create further income inequality in this country and across the globe. And that as a result, we should hold Wall Street accountable, send people to jail and reform the system. It’s suggested that only the Democrats can do this if they control Congress and the White House. I’m a liberal, and it’s not that simple.

Wall Street is playing the cards it has been dealt. I’ll agree they have done their level best to get good hands, but the responsibility for this falls on us as voters. If you want a more level playing field, you cannot avoid the voting booth. They say ignorance is bliss, but ignorance in this case will also be painful.

Until recently, during my 50 years as a marginally productive citizen in these United States, I’ve enjoyed an increasing standard of living. I feel that standard is now eroding, and by the time I’ve died, the prospects for my children and grandchildren will be less promising than were my prospects when I was their age. I’ll do my best for them, but I’m running out of time.

March 27, 2015 by Scott Minerd, Guggenheim Partners

The long-term consequences of global QE are likely to permanently impair living standards for generations to come while creating a false illusion of reviving prosperity.

A version of this article first appeared in the Financial Times.

As economic growth returns again to Europe and Japan, the prospect of a synchronous global expansion is taking hold. Or, then again, maybe not. In a recent research piece published by Bank of America Merrill Lynch, global economic growth, as measured in nominal U.S. dollars, is projected to decline in 2015 for the first time since 2009, the height of the financial crisis.

In fact, the prospect of improvement in economic growth is largely a monetary illusion. No one needs to explain how policymakers have made painfully little progress on the structural reforms necessary to increase global productive capacity and stimulate employment and demand. Lacking the political will necessary to address the issues, central bankers have been left to paper over the global malaise with reams of fiat currency.

With politicians lacking the willingness or ability to implement labor and tax reforms, monetary policy has perversely morphed into a new orthodoxy where even central bankers admittedly view it as their job to use their balance sheets as a tool to implement fiscal policy.

One argument is that if central banks were not created to execute fiscal policy, then why require them to maintain any capital at all? Capital is that which is held in reserve to absorb losses. If losses are to be anticipated, then a reasonable inference is that a certain expectation of risk must exist. Therefore, central banks must be expected to take on some risk for policy purposes, which implies a function beyond the creation of a monetary base to maintain price stability.

Global Nominal GDP Growth, as Measured in Dollars, Is Projected to Decline
With a surging U.S. dollar and growth remaining sluggish in much of the world, Bank of America Merrill Lynch forecasts that world output measured in dollars could fall in 2015 for the first time since the financial crisis. Over the past 34 years, this has happened just five times.

What kinds of risk are appropriate for a central bank? Well, the maintenance of a nation’s banking system would plainly be in scope, given the central bank’s role as lender of last resort. The defense of the currency as a store of value and medium of exchange is another appropriate risk. This was the apparent motivation of Mario Draghi, European Central Bank president, for his famous promise to defend the euro at all costs in the summer of 2012. The central bank balance sheet has proven a flexible tool limited in use only by the creativity of central bankers themselves.

In response to those who argue against the metamorphosis of monetary policy into fiscal policy, one need only point toward the impact of quantitative easing (QE) on interest rates. The depressed returns available on fixed-income securities, largely as a result of QE, are acting as a tax on investors, including individual savers, pension funds, and insurance companies.

Essentially, monetary authorities around the globe are levying a tax on investors and providing a subsidy to borrowers. Taxation and subsidies, as well as other wealth transfer payment schemes, have historically fallen within the realm of fiscal policy under the control of the electorate. Under the new monetary orthodoxy, the responsibility for critical aspects of fiscal policy has been surrendered into the hands of appointed officials who have been left to salvage their economies, often under the guise of pursuing monetary order.

The consequences of the new monetary orthodoxy are yet to be fully understood. For the time being, the latest rounds of QE should support continued U.S. dollar strength and limit increases in interest rates. Additionally, risk assets such as highyield debt and global equities should continue to perform strongly.

California Senate Panel Endorses Bill Allowing Terminally Ill To Commit Suicide

My Comments: Modern medicine has resulted in a dramatic extension of life expectancy, but that does not necessarily mean quality of life improvements. I suspect we only see and hear about those over 90 who still manage to work out daily and interact clearly with those around them. I suspect I may not be one of those.

I’ve discovered that as I age, and reflect on people I’ve known whose names appear in the local paper’s obituary notices, especially those younger than I, that end of life issues really need to be addressed.

My father died fairly quickly (months) after a series of heart attacks while looking after my mother who was increasingly demented. He was younger than I am today. She hung on for several more years, but for most of them, had absolutely no clue what was going on around her. Society needs to come to terms with this and develop acceptable alternatives.

Jessica Calefati / March 26, 2015

SACRAMENTO, Calif. — Legislation that would allow terminally ill Californians to take their own lives cleared a major hurdle Wednesday, winning the approval of the state Senate Health Committee on a party-line vote.

Senate Bill 128 was written for Brittany Maynard, a young California woman whose public struggle last year with aggressive, inoperable brain cancer and her choice to end her life sparked international debate about the morality of assisted suicide.

The Senate committee’s endorsement of the bill came after more than two hours of emotional testimony that moved lawmakers and others seated in the packed hearing room to tears.

“Being a good mother meant letting (her) go when everything inside of me screamed, ‘Hold on,’” said Maynard’s mother Deborah Ziegler, who didn’t support her daughter’s choice to die until she started watching her suffer.

Supporters of California’s so-called right-to-die legislation say a change is desperately needed to give the terminally ill greater control over deaths that will otherwise be gruesome and painful, while opponents say the measure is poorly crafted and would foster abuse of the elderly.

“Do not mistake temporary popularity with wisdom,” said Warren Fong, president of the Medical Oncology Association of Southern California and an oncologist. Prescribing life-ending medication would violate a doctor’s oath to do no harm, he said.

“We’ve asked oncologists, ‘Would you do it?’ and they all say ‘No,’” he said.

Democratic state Sen. Lois Wolk, a sponsor of the legislation, said she was “thrilled” with the committee’s 5-2 vote in favor of the measure, but said she knows the proposal’s path to becoming law will be rocky.

Gov. Jerry Brown, a practicing Catholic, hasn’t taken a position on the bill but may oppose it for religious reasons. The California Catholic Conference released a scathing statement Wednesday afternoon following the committee vote, saying it would continue to “actively and vigorously” oppose the bill.

“We understand and share the concern for the dying expressed at today’s hearing. It is a natural impulse for human beings,” said Ned Dolejsi, executive director of the California Catholic Conference. “But when someone asks for assistance in killing themselves, it is really a call for help, care, and compassion during the dying process.”

Earlier Wednesday, an advocacy group and the family of Maynard, a former East Bay resident, released a video that was recorded a few weeks before her death last year in Oregon from brain cancer. She argued that all terminally ill Californians should have the right to die comfortably at home.

The ease she sought wasn’t available in California, her home state, but Maynard and her family are fighting for change.

“How dare the government make decisions or limit options for terminally ill people like me,” Maynard said in the video, speaking in a calm, steady tone.

“Unfortunately, California law prevented me from getting the end of life option I deserved,” she said. “No one should have to leave their home and community for peace of mind, to escape suffering and to plan for a gentle death.”

Wolk and other sponsors of the proposed legislation — Democratic state Sen. Bill Monning and Democratic Assemblywoman Susan Talamantes Eggman — released the video footage Wednesday morning at a Sacramento news conference.

Speaking to reporters, Maynard’s mother and widower urged lawmakers to back the measure and support Compassion and Choices, an advocacy group that publicized Maynard’s story and is fighting for death with dignity laws in statehouses across the country.

“Life is more than breathing air in and out of your body,” said Ziegler. “The definition of a good life and a good death varies person to person. Californians need the freedom to deal with terminal illness as they determine.”

Maynard’s husband, Dan Diaz, conceded that death with dignity is not the right choice for everyone, but having the choice is vital to preserve fairness and decency for the terminally ill, he said.

“What my wife did on Nov. 1 was by her design,” Diaz said, referring to the date Maynard took life-ending medication and died in her sleep. “She avoided a painful, drawn out process and harmed no one else.”

Had Maynard allowed her brain tumor to run its course, her passing would have been the opposite, she said in the video.

“I want to leave this earth in my home, in the arms of my husband and my parents,” Maynard said in the video. “I cannot change the fact that I am dying, but I am living my final days to the fullest.”

Other terminally ill patients such as Kara Tippetts, a 38-year-old Colorado mother of four, wrote an open letter to Maynard in October urging her not to end her life.

Tippetts wrote that suffering can be “the place where true beauty can be known.” She died this month of breast cancer.

Source: http://www.nationalmemo.com/california-senate-panel-endorses-bill-allowing-terminally-ill-to-commit-suicide/?utm_source=Sailthru&utm_medium=email&utm_term=MM_frequency_six&utm_campaign=Morning%20Memo%20-%202015-03-26