Monday Roundup

A look at various articles making the rounds and current market action.

The picture in the header for this post is not mine, Red Sox legend Fred Lynn Tweeted it out after the Sox clinched the World Series on Sunday night. Long time readers may recall that I grew up in Boston and of course love all the Boston teams. Boston teams have had an amazing century to date with the Sox and Patriots winning four and five titles respectively while the Celtics and Bruins each chipped in with one. While it has been awesome it is important to be in the moment and understand how good it has been which allows for appreciating it all the more. This applies to many aspects of life. Put differently, life is about the journey, not the destination.

Marketwatch had an interview titled Why Are So Many Retired People Miserable? Before getting into the point made there, the idea that older people are miserable seems to be contrary to a lot of other research out there. Here's one from Business Insider that says exactly the opposite.

The point of the Marketwatch piece is about people approaching and then entering retirement without having figured out what comes next which then leads to they're having some sort of negative sentiment whether that's misery or something else.

That retirement is a big transition can't really be a shock. People may or may not be adequately preparing in terms of finances, emotions and what they will do with their time (even if that includes some sort of part time work) but that it is a huge milestone is pretty easy to see.

I have often talked about doing work that you don't necessarily want to retire from (being an investment advisor is one career that lends itself to that) as well as spending time before you retire on things you enjoy doing. I would add to that, learning about new things to spend time on whether as a hobby or in some sort of attempted professional capacity, likewise with volunteer endeavors. In the latest few years I've gotten more and more interested in photography. I made it to my late 30's with essentially no interest in it. I would hope to discover new interests continually as I get older and while this might seem like an obvious solution to finding purpose, I think it may often be overlooked. Start now, don't wait until you retire. As I have said before, waking up on day one of retirement and saying "ok, now what am I going to do" is a bad spot to be in.

Seeking Alpha posted a very brief interview titled The Retirement Healthcare Challenge. This jumped out at me;

A couple retiring in 2018 should budget approximately $13,500 per year for routine health care. At a 5.1% inflation rate, that would equate to $450,000 over a 20-year retirement.

The numbers seem high and the comments on the article delved into why but regardless of the numbers being right or wrong, it should not sneak up on anyone that health expenses loom as a serious financial threat.

I am a huge believer in fitness (vigorous exercise) and healthy diet (cut your sugar intake, carbs=sugar) for two very big reasons. The first one is financial reasons. The quote above says "routine health care" which implies the number does not include insurance costs. Even if that is an incorrect interpretation, Americans spend a fortune on chronic maladies like diabetes, high blood pressure and obesity (metabolic syndrome). If you do some research, you will find a lot of content about the extent to which changes to diet and exercise can reverse all three. I am not saying you should stop taking medicine, you need to draw your own conclusion on that but someone who is no longer overweight and much more fit should explore with their doctor whether they still need their prescriptions for these things. The potential savings would seem to be monumental. Reducing healthcare expenses or maybe just pushing them off for another decade could be a difference maker for a lot of financial plans.

The other reason to make changes to diet and exercise habits is being able to do the things you like for longer, maybe much longer. I like to fight wildfires and do a lot of hiking and my preference is to be able to do and enjoy those things for many years to come. Vigorous exercise and a healthy diet are my best chance for the outcome I want. What do you like to do and what outcome do you want? Chances are being healthier and more fit plays a role into however you answer those questions.

Someone sent me a Tweet with a link to a new service from Broad Financial whereby you open a "checking account" for your IRA which then makes it easy to invest IRA funds in non-standard assets. I immediately thought of buying a house for cash as one possible example but I guess you could buy art, cryptocurrencies, stamps and even baseball cards among others. (the Mays card Tweeted by @wthballs).

I am interested in learning more. Could someone who is 55 or 60 whose house is paid off, sell their house to their IRA, take the cash from the sale to invest and live on it without paying tax or penalty (pre-age 59.5)?

I don't know if selling your house to your IRA can work but I can believe that a small number of people could study it and devise financial plan-enhancing strategies but I am concerned that something like this could end in tears (and legitimate ruin) for many people.

The action in the stock market continues to be weak. I believe part of the equation with these rallies is that they are evidence that participants are not panicking. If that is true then it should mean that whatever this is still has more to go. Any outcome is possible but bottoms are often put in as a function of panic and that does not seem to have happened yet.

Comments