Insurance Quotes & Advice

Many Americans have had their retirement planning severely impacted due to the recent economic downturn.  Equity markets have lost over 40% off their record highs and it will take some time for that to recover but another looming problem for retirees on the horizon.

The record setting deficit this year and the ballooning national debt could come back to haunt seniors and other soon to be retired individuals.  When the economy does finally recover, somebody is going to have to pay up for the big bill the government is currently running up.

Unfortunately this will likely mean higher taxes sometime in the next few years.  Studies have shown that for many seniors, taxes are already their highest single expense, eclipsing healthcare costs by a large margin.

Tax considerations should be a major factor when planning for retirement and the likely changes will have a significant impact.  I think we are going to see a big growth in tax shelters as individuals try to reduce their tax liability.

Even those who don’t face retirement for sometime will have to rethink how they plan because we are seeing a lot of troubled companies eliminating 401k matching, which has been a staple for decades.  Since nothing has been done yet to address the future insolvency of Social Security, in some ways it may be even harder to plan for those who still have quite a few years until retirement.

Every ones situation is different and it is important for everyone to talk to your financial planner and discuss how higher taxes in the future could affect you.

President-elect Barack Obama and his team will be next in line to try to fix the nation’s bloated and costly healthcare system.  Despite the fact that the government is pouring out money at a torrential pace to try to save the financial system, one of the stated goals of the incoming administration is a massive overhaul of a healthcare system which has left over 45 million Americans uninsured.

Former Democratic Senate Leader Tom Daschle has been nominated as Secretary of the Health and Human Services Department.  If confirmed, Daschle will become Obama’s point man in the effort to reform healthcare in this country.

Something needs to be done soon because according to reports from the Government Accounting Office, Medicare is set to become insolvent sometime in 2019.  Healthcare cost have been spiraling out of control for decades, far outpacing inflation.

While many politicians are opposed to the idea of a socialized medicine, having 45 million Americans without healthcare insurance is unacceptable for a nation of our stature.  Since emergency rooms must provide care for any person regardless of insurance, much of the burden has fallen on state budgets which are becoming increasingly hard pressed in the wake of disruptions to the municipal bond market over the past year.

Thus far only one state has instituted mandated universal coverage, Massachusetts, and despite paying lower costs for emergency room visits, the state is quickly finding that costs are much higher than was predicted.  Still it can be considered a partial success as the number of uninsured in the state has shrunk dramatically.

Hopefully the new administration can learn from the trials and errors that Massachusetts is currently undergoing in crafting a system that is both cost effective and all encompassing which can provide affordable healthcare to every American.

Although annuity sales are expected  to climb at a steady rate as the baby boomer generation retires, variable annuities have taken a big hit recently due to the recent 40% decline in equity markets.  Variable annuities were introduced by life insurance companies as a way to compete with the growing popularity of mutual funds.

Many financial experts have long criticized variable annuities for their exorbitant fees compared with mutual funds but in difficult economic times like this, their saving grace is their guarantee from loss of the initial principle.  That being said, fixed annuities have surged to the forefront as will likely be the case with the bond market.

Fixed income assets while they won’t offer spectacular gains will provide a steady source of income as equity markets are expected to struggle for some time to come.  A looming concern for investors of annuities will be the solvency of the insurance companies they were purchased from.

The insurance sector like their brethren in the financial services industry have also been hit hard during the credit crisis.  Though no other company has made headlines like the near collapse of insurance giant AIG, still there is great uncertainty in the new year.

For the most part annuities have some limited protection, kind of like FDIC insurance for bank deposits.  However, since insurance is not regulated by the federal government, each state sets it’s own limits on how much is guaranteed in case an insurer goes insolvent.

It will likely take some time for variable annuities to rebound despite the fact that this is one of the few conditions that they will outperform mutual funds.