2020 Changes Affecting Your Finances

2020 could be an important year for your financial planning?

If you are considering buying an insurance-related product, you should listen up! The insurance industry will be implementing - I'll say updating - their insurance pricing guildelines (called mortality tables) as they relate to life insurance, annuities, and similar benefits-based polices.

The reason; American's are living longer. Think 'mortality' which means basically how long you are expected to live. Webster's dictionary defines it as "the relative frequency of death in a specific population; the death rate".

This is BIG news: the last update was in 2001, and the industry had been using those tables to price insurance costs to consumers. Once it is phased in, I see it affecting two types of insurance products being utilized by many of us today.

The good news: Life expectancy's are longer, so life insurance costs are apt to drop. Looking at the Social Security tables on mortality; the government says that in 2000, the average death of a 65 year-old man would occur at 80.9 years, and a women was 84 years. Their 2020 projections are at ages 82.2 for men and 84.7 for women. 


You can also think about this in terms of Social Security. The longer you wait to claim it, the larger your monthly check will be. There are "rumors" out there that the age will be raised to collect social security in the near future. The Government can delay paying you. They can change the rules anytime. Annuities and life insurance are governed by contract law, and not subject to the whims of Uncle Sam or your lawmakers.

The challenge: Living benefits. Think annuity payouts to you, or Long Term Care payments when you can't provide for yourself. Also, the guaranteed "lifetime income" feature of immediate and deferred annuities - and Long Term Care riders on policies will have higher costs because the money will have to be paid out over longer periods. 


In sum, ladies and gentlemen, folks have to act fast to obtain a more favorable solution to their life insurance, annuity and long term care needs. What can you do now?

Get your papers in order. Pull out your policies and arrange a time to review them with me. Perhaps I can help you with a better solution before the rates and terms change.

Thanks for reading. Pass this along to your friends also who may benefit.

Barry L. Unterbrink
Chartered Retirement Planning Counselor
(954) 719-1151 w 
(954) 560-3622 m / text
(954) 642-2253 fax

Time to Play Defense; Protection Outweighs Profits

Today's market action took a chunk of the year-to-date gains off the table, as the stock averages - Dow, S&P 500, and Nasdaq all declined by multiple percents (losses of 2.4 to 3% on those three indexes).

Protection of your money and defensive actions may be warranted depending on your appetite for or aversion to risk. Since the Dow Jones made its recent high in mid-July near 27,300, the defensive sectors of our economy have gained, while the rest show negative returns. 

Of the 10 S&P sectors, 8 are down; just Utilities and Real Estate show gains of about 2.5% each.

Gold's been on a tear, gaining about 8% this month so far, closing in on $1,550 an ounce after today's 2% gain or $30 an ounce pop! I show that a portfolio of 60% stocks, and 20% Gold and 20% bonds would be down about 1% this month vs. being down 4% if you held no gold. That's quite a value. In the past year, Gold's up $340 per ounce or +28%, and if you read my blog - I'm usually harping on owning some Gold to offset your investing risks in stocks.

Bonds were about even to up/down 1/2 percent today. But just look at this chart of the interest rates bonds are now paying. This is the 10 year U.S. Treasury Bond, which pays 1.53% today. It paid over 3% last November. The interest income you receive has been cut in half if you buy the bond today. 

This is very worrisome to savers and investors in bonds, CD's, annuities. It will favor borrowers / debtors with variable rate loans, or for folks refinancing homes, etc. The 30 year conventional mortgage averaged 2.92% last week.

Going out to 30 years, that bond is paying 2.03% today, the lowest in recorded history. Do the math considering the latest 12 month consumer inflation rate of 1.83%.

                       2.03% Government Bond
                     - 1.83% Price Inflation last 12 months
                     ----------
                       0.20% Your Real rate of return on the bond.
                 
Oh, and subtract taxes at just 12% - the lowest tax bracket now.
That would knock off about 1/4th percent off the Bond Yield, so now you your money is moving backward, a 0.05% loss.

Sure, many bonds pay more than 2%, but they are riskier. 
Run the numbers at 3% or 4% bonds and you get a +1% to +2% gain after taxes and inflation.

So in sum, be careful out there. Allocate your money amongst stocks, bonds, Gold and some cash. This 10-1/2 year old BULL market in stocks will end someday. Let's be prepared for the next BEAR market.

Thanks for reading. Pass this link along to those who would benefit please. http://moneyruminations.blogspot.com

Stock Market History, 1920's, 1930's

July 8, 1932

On this date 87 years ago, the stock market FINALLY stopped falling.

July 8th, 1932, is a historically significant day in the USA's financial system. Bet you never heard of that.

It marked the day that the stock market fell to a low never to be evidenced since. 

Most remember the news of the 1929 stock market crash, which touched off the Great Depression. The crash affected all Western industrialized countries. If you are in mid-life or later, either your parents or grandparents experienced this dreary time for the USA first-hand. Ask them about that sometime. If you are young, Google it.


In 1929, the U.S. Economy had just ended a robust 21 month expansion; they called it the "Roaring 20's" if you look back further. The stock market, then represented almost entirely by the Dow Jones Industrial Average, ran from about 100 to 380 from 1922 to 1929.

The U.S.A. and Germany signed the peace treaty, Television was invented, Chrysler Motors founded, and Lindberg flew the Atlantic. Railroads were allowed to leave Government control. Insulin was isolated to treat diabetes. You could still get your booze at the speak-easy if you knew the right people since liquor was outlawed in 1920 for 13 years!

From it's high near 381 on the Dow Jones Industrials Average in 1928, the stock market FELL 89% in value to close at 41.22 on July 8th, 1932.


I'm certainly not predicting that same outcome in the future, but I am not ruling it out entirely. Prices for most things run on demand, fear and greed. We don't know catalyst nor the time of the next major event to unfold.

It would take 25 years for the 1928 stock market highs to be seen again, in late 1954. BUT ... there were HUGE rallies and give-backs during that time, so you had to watch your investments (if you had any money left) closely.

The Dow gained 370%, 128% and 222% in three big rallies during the 25 year span, but also fell to offset that, and ended near Dow 400 late 1954. Here's a chart of that 25 year span.

President Franklin Roosevelt proposed his "NEW DEAL" in 1933, making major changes to our financial system in the early 30's - forming the Securities and Exchange Commission, the Federal Deposit Insurance Corporation (FDIC), and the Social Security Administration, which today still exist and protect investors and workers. 

So you may ask, how much would my money have grown if I owned the Dow Jones Industrial Average at 41.22 in 1932.

Well students, the compound growth rate of that to today's Dow 27,000 is +7.75% per year. If you add the roughly 2% in dividends on the stock you collected, you get to +9.75%, very close to the long-term +10% average annual gain in the stock market often quoted - and a correct statistic.

Class dismissed!