Student Loan Debt, Long Term Care, Social Security: Some Things to Think About this Month

  • May 4, 2017
Student Loan Debt

Chuck Dudley

Money Matters (May 2017)

By Chuck Dudley

OUT OF CONTROL COLLEGE COSTS

From the April 24 Arkansas Business publication:

At the end of 2015, 44.2 million people had student loan debts, more than double 2004.

Also at the end of 2015, more than 4.7 million borrowers had defaulted on their loans.

Outstanding student loan debt is $1.3 TRILLION….30% more than total auto debt.

“By nature, it’s unsecured debt” Tim Tarvin, law professor at UALR.

“Generally, student loans aren’t discharged in bankruptcy………….”

Comment:

Most people really don’t realize what they are committing themselves to when they borrow for college. For the post part, there is no underwriting, unlike when banks were in the student loan business.

The Arkansas Business editorial entitled: “The Student Debt Bubble” points out that the tidal wave of unsecured debt could swamp the country’s recovery.

From a planning standpoint, excessive debt for young people prevents them from saving, consuming, buying autos and especially houses. This is real.

What to do? Plan better for college. Go to 2 year institutions first. Realize that going to Dad’s alma mater is not a good idea, just to be in the same fraternity. Find a situation that fits the budget, because universities don’t seem to be able to rein in their desires for more revenue.

For most people, college planning should now be a business/monetary decision, not a heartfelt one. And………please pick a major that has a chance to give you some return on your investment.

FROM VARIOUS SOURCES ABOUT LONG TERM CARE

70%………percentage of people 65 and older who will need LTC at some point.

65%……..percentage of older people living with LTC needs who depend exclusively on family and friends

50%……..percentage of people who have LTC needs and no family, and live in nursing homes

$92,378…..median annual cost of private nursing home room in the US.

$82,125…..median annual cost of semi private nursing home room in the US.

47%………percentage of adults in their 40’s and 50’s that have a parent living with them, and still caring for children

Comment:

This is, and will continue to be a big risk to one’s financial well being. There are so many moving parts to mature health care, and most money is spent at the end.

Most folks haven’t given this a thought, and won’t until they have a family member in this situation. Don’t be one of those, plan now for those events, so your family doesn’t have to.

What to do? Explore ways to fund LTC. You can use a lump sum insurance policy. You can attach a rider to a whole life policy that allows you to use some of the death benefit for LTC expenses. There are cost effective and smart ways to do this. Take a look at them today.

SOCIAL SECURITY, WHAT DO YOU KNOW ABOUT IT?

Do you know your full retirement age?

Timing is everything. Should you file early or later?

What happens when a spouse dies? Do you continue to get two incomes?

You can go to www.ssa.gov to create an account. You should do this today, no matter your age. It’s easy to do, and you can look at options. Do this, now………..

Social Security is a form of a pension with some cost of living adjustments. Optimizing your payout, considering we are all living longer, should be a high priority.

There is no blanket, correct answer. Each of our situations is completely different.

Social Security benefits may be taxable, depending on your marital status and earnings from retirement vehicles.

Comment:

This is one of the more complicated issues facing retirees. Not knowing your longevity complicates the issue, for sure.

So, one must have all the facts and scenarios to be able to make an informed decision on when to file and how to do it.

What to do? First, go to the Social Security website and create your account, and get your spouse to do same. This helps you determine your full retirement age, and what your approximate payment options are at different filing dates. Then…………..you can begin to plan ways to fill in the gaps for required expenses in retirement, and have money for the fun things you want to do.

Retirement is not easy, and deserves the same effort you have put into your career.

But you have to start. Now.

An old Chinese proverb expertly conveys this concept: The best time to plant a tree was 20 years ago. The second best time is today.

And, one freebee to end the newsletter today. Take a 10 minute walk a couple of times a day. It’s great to relieve stress and get you focused on what you need to do when you return. Fresh air always does a person good.

ACTION PLAN

If you really want to make sure you have right ideas for moving forward in a positive manner, we will listen. We’ve been able to help families and businesses learn to use money wisely, and we’d like to help you too. We would be honored to visit with you about how to help you and your business. My number is 501-318-0010, or you can send me an email at cdudley@argentfinancial.com.

An hour of your time spent analyzing your situation might make a lifetime of difference

Arkansas Insurance Producer # 1005698

That’s all for this month! If you’ve enjoyed what you read, please share Money Matters with a friend, family member or loved one.

Sincerely,

Chuck Dudley