"To be too certain of anything is the beginning of bigotry." -- Novelist Abdulrazak Gurnah

Sunday, January 26, 2020

Things I Just Don't Understand

     We live in confusing times. And I for one am not afraid to admit it.

     It wasn't long ago when we knew how the economy worked. Prosperity was good. Jobs were good. Ambition was good. We saved for the future and aspired to live more affluent lives than our parents did. We agreed on a set of moral and social principles. Politeness was good. Consideration was good. Narcissism was bad. Insults were bad. Crime was bad.

     But everything has become much more muddied in our modern times. For example:

     The Federal Reserve worries about deflation, and for years has been trying to get the inflation rate up to 2%. According to the Bureau of Labor Statistics the 2018 inflation rate was only 1.9%, and for 2019 it barely rose to 2%. So if this is the case, how can there be, according to many sources including the Atlantic, a "cost-of-living crisis" because of "ballooning rents, sky-high child care prices, spiraling out-of-pocket health-care fees and heavy educational debt loads." How can there be a "cost of living crisis" when there is no inflation?

     And how it is that people are up in arms about global warming, yet Americans are now buying more gas-guzzling SUVs than ever before? For the first time, in 2019, more trucks than cars were sold in America, while electrics and hybrids together make up just 8% of the market. Meanwhile, we plug more computers and more air conditioners into the electric grid, which leads power companies to burn more coal, oil and gas, sending yet more hydrocarbons into the atmosphere.

     Then all the experts worry over how the planet is going to accommodate our ballooning population, now at 7.8 billion people and climbing to 10 billion in the next 30 years. I recently read The Sixth Extinction by Elizabeth Kolbert which suggests that global warming is the least of our problems. We will starve to death or catch a fatal communicable disease even before we drown in the rising waters.

     Yet at the same time experts wring their hands over our low birthrate. The United States is not producing enough children even to replace our population. Neither are Europe, China or Japan. So our economy won't grow. Our standard of living will decline. And there will be nobody to support us in our old age.

     I read a piece from NPR the other day. Here we are in the age of instant communication, with phones and texting and Facebook, Instagram, Twitter and a myriad of ways to connect with other people. And yet, according to NPR, we as Americans suffer a loneliness crisis. Older adults are especially vulnerable since many live in isolation at the very same time they are dealing with the loss of a spouse or close friend or relative. Loneliness, in turn, has led to higher suicide rates, especially among the elderly, and mostly especially among elderly men.

     But loneliness is not restricted to the elderly. One study by the insurance company Cigna found that about half of Americans view themselves as lonely. And somewhere between 20% and 40% are beyond lonely, classified as "socially isolated."

     Another report from San Diego State University said that increased use of social media is actually correlated with increased feelings of loneliness. Is it possible that sometimes the answers to our problems are actually causing the problems?

     Maybe it's time to get back to some basics. Maybe we don't need a big, hulking SUV just to get around town. Maybe we can put the credit card away for a while -- both personally and nationally -- and realize what our parents told us, that money doesn't grow on trees. Maybe we should unplug our computers, at least for a while, and go for a walk with some friends, read a book, and be polite during conversations with our neighbors and fellow countrymen.

Sunday, January 19, 2020

Best States to Retire In -- 2020

     Okay, we all know that these lists are flawed. First of all, for most people, the best place to retire is right where they are already living, where they have family and long-time friends. If retirees do move it's often to follow children or grandchildren who have moved away, usually for a job.

     Then there is the category of "state," which can be quite uninformative. Living in New York City is an entirely different experience from living in the Finger Lakes region of upstate New York. Coastal California is a whole other world compared to the Central Valley.

     Nevertheless, a state ranking does provide some useful information. For example, when we retired we wanted to stay in the Northeast, near friends and at least some of our family - but not someplace super-cold like Maine or Vermont. We looked at several towns in New Jersey, including a couple on the Jersey Shore. We took a few trips to Maryland and the Washington, DC area. But we discovered that housing and taxes are just as high, if not higher, in New Jersey and Maryland as they are in New York and Connecticut. So we eventually focused on Pennsylvania, where taxes and the cost of living are lower, there are plenty of cultural opportunities, and we're still within shouting distance of our old haunts.

     So with that in mind, I ran across several new state rankings for retirement in 2020. As you might expect, they do not always agree with one another, mostly because they use different criteria. Some focus on affordability; others use weather or quality of life as the most important factors.

     Even using the same factors, they don't always make sense. For example, listed as the "most expensive" states to retire in are: New York, Vermont, New Jersey, Rhode Island and Minnesota. Where are California and Hawaii, two states with the highest cost of living?

     So with all those caveats, here is a summary on the Ten Best states, and the Ten Worst, based on an "observational study" averaging several other studies to come up with a general, overall list. If your state is not among the Ten Best or Ten Worst, you can assume it's about average in terms of weather, affordability, quality of life and access to health care.

     The Number 1 state for retirement is no surprise: Florida. Almost everyone ranks it number one, including the almost 100,000 retirees who move there every year for the low taxes, the low cost of living, the warm weather and generally good health care (although not everyone likes Florida, see Why I'll Never Move to Florida.)

     Two states tie for the Number 2 position: Iowa and Idaho. They're not for people who like warm weather, but they offer other benefits such as low cost of living, low crime rates and good access to health care. But these two states might be considered undiscovered gems. On average, only about 6,000 retirees move to Idaho in a year, and fewer still to Iowa.

     Two other surprises on the Top Ten list are North Dakota and New Hampshire, both of which suffer bitter winters, but enjoy low cost of living, low crime rates and ready access to health care.

     Rounding out the Top Ten best states for retirement are: Vermont, Nebraska, Pennsylvania, North Carolina and Texas.

     As if to confirm these rankings, a separate list rates the best "places" to retire. Florida scores four cities among the top ten (Ft. Myers, Sarasota, Port St. Lucie and Jacksonville). North Carolina has two: Ashville and Winston-Salem. Texas (Dallas), Michigan (Grand Rapids) and Pennsylvania (Lancaster) each have one on the list.

     A surprise (to me at least) is that, of the five or six Top Ten lists I consulted, only one mentioned Arizona as a great state to retire in. But retirees themselves seem to disagree. Arizona ranks second behind Florida as the state where most retirees actually move.

     And the Ten Worst?

     New Mexico, Maryland and Connecticut rank among the ten states that are tough on retirees.

     Ranked even worse are New York, Rhode Island, New Jersey, California, West Virginia, Illinois.

     And, by general consensus, the absolute worst state to retire in is . . . Louisiana.

     But before you start to argue with me, consider this. There are three states that rank as one of the Top Ten places to retire on one list, and then as one of the Ten Worst on another. They are Hawaii, Alabama and Tennessee. That's, no doubt, because different lists emphasize different criteria. If you have a lot of money and don't mind living on an island, then Hawaii might top your list. If you're a country music fan, maybe Tennessee.

     If you don't find any of this satisfying, then maybe you'd consider one of the top countries to retire to, at least according to one list: Spain, Portugal, Switzerland or New Zealand. In the end, it's all up to you.

Thursday, January 16, 2020

Do We Need Life Insurance?

     Last week I went to the dentist, which in a perverse sort of way got me thinking about insurance -- maybe because getting insurance is about as much fun as going to the dentist. But like going to the dentist, it’s something we need to do.

     So of course we all have health insurance (or we'd better!). If we own a car we have car insurance. If we own a home we have home insurance, and if we rent we might have renter's insurance, at least if we own clothing, jewelry or electronics that are worth anything.

     What about long-term care insurance, or life insurance? Personally, I have long-term care insurance; I do not have life insurance. I gave up life insurance when I retired, about the same time my dependents went off to college and started work.

     But there are other reasons to have life insurance, so I arranged to consult with Brett Wilson, vice president of Ethos, a new company that avoids traditional insurance agents to provide "easy access to modern, simple and ethical life insurance." Wilson himself, with an MS in management from Stanford University, has a decade-plus experience in the insurance industry.

     I started off by admitting that I have no life insurance and asking why I would need it.

     If you don’t have any financial dependents, and don’t have any debts that loved ones would have to assume -- and you also have funds set aside for funeral expenses -- then it isn’t necessary to purchase a life insurance policy. But if you do have dependents – for example, a spouse who is not eligible to continue receiving your pension, or a child who depends on you for college tuition – then you should strongly consider life insurance.

     Okay, so what kinds of life insurance are there? I’ve heard of term insurance, but I know there are others.

     There are two broad categories of life insurance: term life insurance and permanent life insurance. The main objective of term insurance is to provide protection for a specific period of time – presumably the time when you are financially responsible for anyone else such as a spouse or children. The main objective of permanent life insurance is the accumulation of capital, and it generally requires higher premiums than term life insurance. Examples of permanent insurance are whole life and universal life insurance.

      Most of us who are retired no longer have dependents. But I’ve heard that some life insurance can provide long-term care payments. Is that true?

     First of all, to explain, typical stand-alone long-term care insurance policies provide benefits only when the insured needs long-term care. Benefits are provided for services assisting them with activities of daily living like bathing, dressing and eating. To qualify, policyholders have to meet certain criteria such as the inability to perform two or more daily activities, or be diagnosed with cognitive impairment. These services can generally be used at home or in an assisted living environment. The downside to long-term care policies is that they are only accessible when the insured suffers from a qualifying condition. If long-term care services are not needed, benefits are not payable.

     Some life insurance policies combine the death benefit of a life insurance policy with “living benefits” to provide the insured with care while still living. They are sometimes referred to as “combo policies.” These policies (or attached riders) allow for the acceleration of the death benefit related to specific qualifying conditions such as long-term care or terminal illness. The insured can request that a portion of the death benefit be made available for medical bills or long-term care. Accelerating the death benefit will of course reduce the amount payable at the time of death.

      Is there any role for life insurance in estate planning?

     Yes, there can be. Death benefits paid from life insurance policies are generally not subject to federal income tax and, in many cases, state inheritance taxes. There may also be tax benefits associated with the investment component of permanent life insurance policies, although they can be complex. It's a good idea to seek the advice of a tax expert when thinking about this.

     So if I need, or want, life insurance, how much should I get?

     It depends on your financial circumstances. You can compare your current debts and financial obligations against your assets and aim for life insurance to cover the difference. So ask yourself if your spouse or partner could assume any debt payments (like a mortgage) and living expenses in your absence. If they have their own income, how long would that sustain them in the event of your death? Have you already put away money for your own funeral costs? Again, you want to cover with life insurance what you can’t cover with the assets you leave behind.

     One last question. If we buy life insurance now, how can we be assured that 10 or 20 years from now, when we die, that the company will still be around and able and willing to pay benefits?

     Ethos partners with industry giants including Legal & General America as carriers, as well as reinsurance companies like RGA, to make sure the financial assets are sufficient to pay benefits for many years into the future.

     So, I'm convinced that life insurance can be complicated, but it can also be important. Right now, Wilson told me, some 70% of families in the U. S. would go bankrupt within three months if their primary breadwinner died. As a result, more and more people end up relying on crowdsourcing tools like GoFundMe, just to raise money for funeral costs. I, for one, would not want to leave my partner or loved ones with that burden.

     I'm not promoting Ethos. I have not dealt with them. And I probably will not get life insurance, mostly because I already have long-term-care insurance. But this is all something to think about, to discuss with your loved ones and perhaps your financial adviser. And I have to say, if I had it to do over, I might just go another way.

Sunday, January 12, 2020

Baby Boomer State of Mind

     Remember the old Billy Joel song, New York State of Mind, which he wrote while riding on a Greyhound bus, about returning to his hometown after having been away for a few years? "I know what I'm needing," he croons, "and I don't wanna waste more time ..."

     This week Baby Boomer bloggers also seem to know what they need -- to return to the basics and focus on the fundamental aspects of their lives. They "they don't wanna waste more time" on political or personal arguments, shallow everyday distractions, or the superficiality and wastefulness of crass consumerism.

     Carol Cassara of A Healing Spirit, for example, realizes that the world has turned into a snappy and sometimes ugly place to have a conversation, and sometimes we find ourselves behaving in ways that don't line up with our values. When this happened to her, as she tells us in Why Don't You Try Being Human? she turned to words from the sage Ram Dass to help her be patient with herself and understand that she is "still on her path."

     Rebecca Olkowski with BabyBoomster.com delves into the idea that Baby Boomers who face challenges will do better and be happier if they learn how Being Adaptable Will Get You Through Life's Biggest Challenges. It's easy to become stuck in our ways, she says, especially when we're older. So she offers a number of practical tips on how navigate our way through the changes in our lives.

     Jennifer of Untold and Begin has similar concerns, and in How Do I Know My Vision Board Works she introduces us to the concept of the Vision Board which can help us set and meet our goals. And not coincidentally, she came out with a book on January 1 called Goal Planning and Vision Boards that might help us keep to our New Year's resolutions.

     Meryl Baer of Six Decades and Counting knows that most of us are concerned about staying mentally sharp as we age. We want to continue to be able reason, comprehend and remember even as the years tick by. So in Is Adult Conversation Possible? she recounts her experience, as she puts it, "in an interesting program that engages folks of all ages in spirited, educational conversation."

     (Spoiler alert: The program is Socrates Cafe, and I can second Meryl's recommendation since it's a course that B and I got involved with last year. We're hosting a new Socrates Cafe this spring at our local Center for Learning in Retirement.)

     Meanwhile, on The Survive and Thrive Boomer Guide, Rita R. Robison turns to another kind of waste. The consumer and finance journalist reminds us of the importance of reducing our use of plastic containers. In Single-Use Food Packaging she points out that much of our packaging contains dangerous materials, and the way food packaging is made and how much we use and throw away produce massive environmental problems.

     Finally, Laurie Stone of Musings, Rants & Scribbles used to wonder if the old saying was true that we discover who we really are as we age. But as the years have crept by, she's discovered that some of her personality traits seem not only hardwired, but more pronounced. In As You Grow Older, Do You Become "More"? she analyzes seven ways that she has gotten worse (or better) in her 60s. We do change as we get older, she concludes. But do we also become more of what we were to begin with?

     So like Billy Joel, perhaps we've been out of touch, behaving in ways that don't line up with our values, so we're rediscovering who we really are. "It comes down to reality . . . a little give and take . . . " Cause we're in a Baby Boomer state of mind.

Thursday, January 9, 2020

Two Useful Guides

     You may have heard that the federal government has made a few tax and Social Security changes for 2020.

     If you're like me, you haven't paid much attention. But I saw a clear and useful summary on my friend Jeremy Kisner's website, and so I thought I'd pass on the links -- for those who want an easy guide to the new rules.

     The first reference guide is called 2020 Important Numbers. It provides all sorts of information, including the revised tax brackets, standard deductions for both single and married taxpayers, Social Security annual limits, retirement plan annual limits, estate and gift tax limits . . . and a raft of other numbers, all in a quick easy-to-read format.

     The second guide, called 2020 Social Security Cheat Sheet focuses on everything you need to know about Social Security, including maximum benefits, how much benefits are reduced for retiring early, earning limits for people collecting Social Security.

     Anyway, don't rely on me. Check out the two guides. You might need to zoom in on the computer to see them better. You might also want to print them out for future reference -- for this is an information world we live in, and so it's information that gives us both prosperity and empowerment.

Sunday, January 5, 2020

Answers to: Do You Know Your Facts?

     I begin each year on this blog with a quiz. (See previous quizzes on side-bar to the right, under "Pages"). If you haven't already seen my last post Do You Know Your Facts? from Jan. 1, then make sure to go take the quiz first, then you'll be ready to see the answers.

     So here we go: The answers to the quiz, with some brief explanations.

     1. C. The official poverty rate in 2018 (latest figure available) was 11.8%, or approximately 38 million people, which was down from the previous year's rate of 12.3%. In 2010, at its height, the poverty rate was 15%. The 9.7% figure is the 2018 poverty rate for people age 65 and older -- the lowest rate for any age group.

     2. B. The U. S. Dept. of Housing and Urban Development estimates that a little over 500,000 Americans are homeless. About two thirds stay in emergency shelters or temporary housing, about one third are on the streets or in abandoned buildings. The place with the highest rate of homelessness is Washington, DC, followed by Hawaii, New York, California, then Oregon, Washington, Nevada and Massachusetts. The good news: homelessness is down among all groups in the past ten years, especially veterans and families with children.

     3. C. The Pew Research Center analyzed income data and for 1980 classified exactly 59% of Americans as middle class, while 26% were lower income and 15% were upper income. Since then the middle class has decreased to 52% of Americans. The lower income group has expanded by 3 points to 29%. The upper income group has increased by 4 points to 19% of the population.

     4. D. The level was up to $11.4 million in 2019. For 2020 it's been increased to $11.58 million. So if your estate is worth $8 or $10 million your beneficiaries get it all tax free as far as the federal government goes.

     5. B. The wealthy can shield over $11 million from federal estate tax (and over $23 million as a couple). But Social Security beneficiaries start to be taxed when their "combined income" goes above $25,000 per year as a single, and $32,000 as a couple. The Social Security thresholds were set in 1994. If adjusted for inflation, the thresholds today would be about $44,000 for singles and $56,000 for couples.

     6. C. 101. Out of 435 members, 101, or 23.2% are women, with 88 Democrats and 13 Republicans. In addition, there are four non-voting women delegates  -- two Democrats and two Republicans -- representing Washington, DC, American Samoa, Puerto Rico and Virgin Islands.

     7. D. There are 85 men for every 100 women age 25 - 29 with a college degree. Men catch up a little bit later on, earning 90 doctorate degrees for every 100 earned by women.

     8. D. While the number of people with dementia has increased because of the increase in the 65-and-over population, the rate of dementia among the elderly has actually decreased to 8.8%, largely because of higher levels of education. Higher education levels are generally associated with better health, including mental health.

     9. A. According to the Centers for Disease Control, the current obesity rate in America is 40%, affecting some 94 million adults. Obesity leads to an extra $147 billion in medical costs associated with diabetes, heart disease and some forms of cancer. In general, obesity rates are higher in middle-income people compared to either low or high income people.

    10. D. Decreased by about 30%. There were 23,000 murders in 1980 compared to a little over 16,000 in 2018 (the latest U. S. figure) -- and that's with a much larger population. The murder rate has actually dropped more, by about half. The bad news: before 1980 firearms accounted for a little over 50% of murders; now they are used in over 70% of murders.

    11. D. The Centers for Disease Control tallied 26,020 drug-related deaths in 2007. Ten years later the number had exploded to 70,237.

    12. D. According to ITOPF, a non-profit group of insurance oil-pollution compensation funds, the number of oil spills declined during the 1980s and have been few and far between since the mid-'90s, averaging only half a dozen annually in recent years.

    13. B. Get dangerously warmer. While we are spilling less oil, we are burning more. Almost all experts agree that the world is warming, though they disagree on how much -- estimates range from 3 degrees to 7 degrees Fahrenheit by late in this century. That may not seem like a lot, but it's enough to raise sea levels 8 to 20 inches which would put a lot of our beaches and coastal cities under water.

    14. C. Ulysses S. Grant (The initials give it away!) So insulting a president is nothing new. Grant, who placed 21st in his West Point class of 39 graduates, went on to become a Civil War hero, a notorious drunk, corrupt president and bestselling memoirist.

Wednesday, January 1, 2020

Quiz: Do You Know Your Facts?

     One article in last Sunday's New York Times proclaimed: "Everything has only gotten worse ..." while a few pages later a headline from the usually critical Nicholas Kristof told us, "This Has Been the Best Year Ever (Again)."

     So what are we to believe?

     I read an important book published last year called Factfulness by Hans Rosling. His message is that we need to rely on facts to inform us about the world, not our fears, emotions, or any rules of thumb or the popular media. All these sources feed into our prejudices and preconceived notions -- whether we're man or woman, young or old, Democrat or Republican -- and give us a distorted view of the world.

     In his book Rosling offers a quiz to test the reader's knowledge. For example, he asks: "In all low-income countries across the world today, how many girls finish primary school? A. 20%; B. 40%, or C. 60%." What do you think?

     Hans Rosling, who died in 2017 at age 68, was a Swedish physician and professor of international health. My quiz below is inspired by his book, but I've tried to focus my questions more on the United States. Still, the questions will hopefully illustrate his point that we need to know the true facts, not the facts as massaged by politicians, corporations, the internet or the media. That's the only way we can respond to real problems, and not get paralyzed by unfounded fears or misdirected sympathies.

     The answer above, by the way, is C. 60% of girls even in low-income countries get at least a primary school education. Most people think the number is lower than that -- an example of how we often believe things are worse than they really are.

     So put on your thinking cap. Here's the quiz:

1. What is the poverty rate in America today?
A. 15%    B  12.3%    C  11.8%     D. 9.7%

2. How many homeless people are in the U. S.?
A. 1 million    B. 500,000    C. 200,000    D. 100,000

3. Since 1980 the share of Americans judged to be middle class by the Federal Bureau of the Census has:
A. Increased significantly    B. Increased slightly    C. Decreased a little bit    D. Decreased drastically

4. In the year 2000 the federal estate tax kicked in for estates worth over $1 million. In 2020 the threshold is:
A. Still $1 million    B. $10 million    C. $11.4. million    D. $11.58 million

5. At what income level do Social Security benefits start to become taxable for a single person?
A. $0.00 (it's all taxable)    B. $25,000    C. $32,000    D. $60,000

6. How many women currently serve in the U. S. House of Representatives?
A. 154    B  132    C  101    D 87

7. For every 100 women age 25 - 29 who have at least a college degree, how many men of the same age have a college degree?
A. 124    B. 104    C. 96   D. 85 

8. In the year 2000 11.6% of people age 65 and over suffered from dementia. The latest figures show the rate of dementia among the elderly is:
A. 18%    B. 14%    C 11.6%    D. 8.8%

9. Currently the obesity rate in America is:
A. 40%    B. 30%    C 25%    D 12%

10. How have the number of murders per year changed over the past 40 years?
A. Almost doubled    B. Increased by about 20%    C. Remained about the same    D. Decreased  by about 30%

11. In 1999 there were 16,849 deaths due to drug overdose in America. What's the latest figure (as of 2017)?
A. 15,387    B. 22,200    C 36,010    D. 70,237

12. The number of major oil spills by tankers (defined as 1000 tons or more) was 636 in 1979. By 2016 that number decreased to:
A. 535    B. 121    C. 37    D. 6

13.  Global climate experts project that over the next 50 years the average temperature will:
A. Get slightly warmer    B. Get dangerously warmer.  C. Stay about the same   D. Get colder

14. The phrase: "The U. S. in his initials stands for 'Unbelievably Stupid'" refers to which president?
A. Gerald Ford    B. George W. Bush    C. Ulysses S. Grant    D. Donald Trump

     Come back in a few days for my next post to see the answers, which will offer both good and bad news . . . but also help us recognize progress when we've made it, and point us in the right direction when we're trying to solve ongoing problems.