Financially Prepared Physicians

Retirement In Sight for June 2016

R E T I R E M E N T  I N  S I G H T
Presented by Nick Schneider

 

MONTHLY NEWS AND INFORMATION FOR CURRENT AND FUTURE RETIREES
 

JUNE 2016

   

One act of real usefulness is worth all the abstract sentiment in the world.

– Anne Radcliffe

    

GOLF TIP
Get the broom out

If you start topping the ball either because you are a beginner or because you have a negative “muscle memory” associated with taking deep divots, this exercise can help. Every day, take 10 golf swings with a kitchen broom. Focus on brushing the bristles against the floor and reaching and extending your left arm on the follow-through.

 

BRAIN TEASER
The Apple Wrapper Riddle.
A shop sells apples for $1 each. Each apple comes wrapped in a special wrapper. You can trade 3 wrappers for 1 apple. If you have $15, what is the maximum number of apples you can buy?*

 

DID YOU KNOW?
In the 1800s, aluminum was actually worth more than gold

Back then, it was a precious metal: coveted for its light weight, yet very difficult to produce. In 1852, usable aluminum was worth the equivalent of $1,200 a kilogram in today’s terms. By 1900, new and easy ways of creating aluminum had emerged and a kilogram of it cost less than a dollar.5

   

RETIRING WITH A COMFORTABLE LEVEL OF INCOMEIn retirement, your level of income directly affects your quality of life. How can you effectively give yourself more spending power?

From a portfolio standpoint, you can focus on income-producing investments. When you start planning for retirement, you invest with an emphasis on growth. As you transition to retirement, growth remains important – but you also need to seek investments that can potentially create ongoing income streams. In addition, you can plan to make your portfolio more tax-efficient. Too many investors pay too little attention to this factor and leave money on the table.

New retirees sometimes spend more per month than they anticipate. Retiring with an income plan outlining how much money you really need and where it will come from may help you avoid this shock. Longevity and inflation will certainly come into play. The Social Security Administration says that today’s average 65-year-old can expect to live until his or her mid-eighties; about a quarter of 65-year-olds will live past age 90. So across a 20-year retirement, your income must grow significantly to maintain your standard of living, even if inflation proves mild.1,2

HOW MUCH DO WE REALLY KNOW ABOUT ELDERCARE?

As a society, perhaps not as much as we should. In a new Associated Press/NORC poll of Americans 40 and older, 38% of those surveyed said they expected to depend on Medicare “quite a bit” or “completely” for long-term care. In truth, most long-term care is non-medical and Medicare will not pay for it. Just 20% of respondents had any form of long-term care coverage.

While 77% of survey respondents said they would want to be cared for at home if eldercare was necessary, only 18% thought they would turn to family members or friends for no-cost eldercare. The reality is different. By the estimate of the Department of Health & Human Services, unpaid caregivers deliver roughly 80% of in-home eldercare. More states may be ready to give these caregivers a financial break. Right now, California, New Jersey, and Rhode Island are the only states mandating employers to offer them paid leave – but New York will join the list in 2018, and 19 other states are considering such legislation.3

ON THE BRIGHT SIDE
You may spend less during retirement than you think you will. According to an analysis in the Journal of Financial Planning, households headed by 65-year-olds that spend $100,000 a year typically reduce their expenditures 20% by age 80.4

 


Nick Schneider may be reached at Nick@PhysicianAdvisorsLLC.com

Securities offered through Lion Street Financial, LLC. (LSF), Member FINRA & SIPC. Investment Advisory Services offered through Physician Investment Advisors, LLC. Physician Advisors and Physician Investment Advisors are not affiliated with LSF.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty.

* TRIVIA ANSWER: Stumped? Contact me for the answer! Nick@PhysicianAdvisorsLLC.com

CITATIONS.
1 – forbes.com/sites/joeljohnson/2016/05/02/four-strategies-to-maximize-your-retirement-income/ [5/2/16]

2 – ssa.gov/planners/lifeexpectancy.html [6/9/16]

3 – nextavenue.org/expectations-long-term-care-match-reality/ [6/3/16]

4 – cnbc.com/2016/05/26/retirement-spending-good-news-at-last.html [5/31/16]

5 – todayifoundout.com/index.php/2014/05/aluminium-cost-gold/ [5/13/14]


doctors life podcast

The Doctor’s Life Podcast Episode 026- The Correct Way to Withdraw Your Retirement Funds

Do you know there is actually a correct way to withdraw your retirement funds? You’ve been throwing money in so many investment vehicles over the years. Now that you’re ready to capitalize on that money, make sure you withdraw your retirement funds the correct way.

Nick Schneider is back in The Doctor’s Life Podcast studios to run us through withdrawing your retirement funds. All episodes of The Doctor’s Life Podcast are available here, iTunes, Android, and on SoundCloud. Make sure to subscribe and you will be the first to get new episodes of The Doctor’s Life Podcast. Continue reading…


taxes

Volatility Is Not Risk

Volatility Is Not Risk

The two should not be confused.

 Provided by Amber Nabity Stitt

What is risk? To the conservative investor, risk is a negative. To the opportunistic investor, risk is a factor to tolerate and accept.

Whatever the perception of risk, it should not be confused with volatility. That confusion occurs much too frequently.

Volatility can be considered a measurement of risk, but it is not risk itself. Many investors and academics measure investment risk in terms of beta; that is, in terms of an investment’s ups and downs in relation to a market sector or the entirety of the market.

If you want to measure volatility from a very wide angle, you can examine standard deviation for the S&P 500. The total return of this broad benchmark averaged 10.1% during 1926-2015, and there was a standard deviation of 20.1 from that average total return during those 90 market years.1

What does that mean? It means that if you add or subtract 20.1 from 10.1, you get the range of total return that could be expected from the S&P two-thirds of the time during the period from 1926-2015. That is quite a variance, indicating that investors should be ready for anything when investing in equities. During 1926-2015, there was a 67% chance that the S&P could return anywhere from a 30.2% yearly gain to a 10.1% yearly loss. (Again, this is total return with dividends included.)1

Just recently, there were years in which the S&P’s total return fell outside of that wide range. In 2013, the index’s total return was +32.39%. In 2008, its total return was -37.00%.2

When statisticians measure the volatility of major indices like the S&P 500, Nasdaq Composite, or Dow Jones Industrial Average, they are measuring market risk. Trying to measure investment risk is another matter.

You can argue that investment risk is not measureable. How can investors measure the probability of a loss when they invest? Even after they sell an investment, can they go back and calculate what their risk was at the time they bought it? They only know if they made money or not. Profit or loss says nothing about risk exposure.

Most experienced investors do not fear volatility. Instead, they fear loss. They think of “risk” as their potential for unrecoverable loss.

In reality, most apparent “losses” may be recoverable given enough time. True unrecoverable losses occur in one of two ways. One, an investor sells the investment for less than what he or she paid for it. Two, some kind of irrevocable change happens, either to the investment itself or to the sector to which the investment belongs. For example, a company goes totally out of business and leaves investors with worthless securities. Or, an innovation transforms an industry so profoundly that it renders what was once a leading-edge company an afterthought.

Accepting risk means accepting the possibilities of equity investing. The range of possibilities for investment performance and market performance is vast. History has shown that to be true, history being all we have to look at. It fails to tell us anything about the negative (or positive) disruptions that could come out of nowhere to upend our assumptions. A “black swan” (terrorism, a virus, an environmental crisis, a quick evaporation of investor confidence) is always a possibility. Next year, the performance of this or that sector or the small caps or blue chips could be spectacular. It could also be dismal. It could certainly fall in between those extremes. There is no way to calculate it or estimate it in advance. For the equities investor, the future is always a flashing question mark, regardless of what history tells or pundits predict.

Diversification helps investors cope with volatility & risk. Spreading assets across various investment classes may reduce a portfolio’s concentration in a hot sector, but it also lessens the possibility of a portfolio being overweighted in a cold one.

Volatility is a statistical expression of market risk, constantly measured. Volatility, however, should not be confused with risk itself.

Amber Nabity Stitt may be reached at Amber@physicianadvisorsllc.com.

PhysicianAdvisorsLLC.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Securities offered through Lion Street Financial, LLC. (LSF), Member FINRA & SIPC. Investment Advisory Services offered through Physician Investment Advisors, LLC. Physician Advisors and Physician Investment Advisors are not affiliated with LSF.

Citations.

1 – fc.standardandpoors.com/sites/client/generic/axa/axa4/Article.vm?topic=5991&siteContent=8088 [3/31/16]

2 – ycharts.com/indicators/sandp_500_total_return_annual [3/31/16]


doctors life podcast

The Doctor’s Life Podcast Episode 020- Setting Up A Practice (Part 2)

Setting up a practice is hard work. Last week, we spoke about how to do it correctly. There are a lot of people needed and a lot of prep work needs to be done before getting to the point of launching your practice. We want to help you be in the right position to do it.

If you missed part 1, make sure you check it out.

Nick Schneider is back in The Doctor’s Life Podcast studios with part two of setting up your practice. All episodes of The Doctor’s Life Podcast are available here, iTunes, Android, and on SoundCloud. Make sure to subscribe and you will be the first to get new episodes of The Doctor’s Life Podcast. Continue reading…


The Doctor’s Life Podcast Episode 019- Setting Up A Practice (Part 1)

Setting up a practice has probably crossed your mind at least once. But how do you go about doing it? You need the right people and the right situation to be able to pull off setting up a practice.

What makes a practice more successful than another one? Nick Schneider is back in The Doctor’s Life Podcast studios with some advice on setting up a practice and how to make sure it’s done in a right way. All episodes of The Doctor’s Life Podcast are available here, iTunes, and on SoundCloud. If you have an Android device, you can download a podcast player (I recommend Podcast Addict), and it will pull from iTunes. Make sure to subscribe and you will be the first to get new episodes of The Doctor’s Life Podcast. Continue reading…


Medscape’s 2016 Physician Lifestyle Report is Out

Young PhysiciansMedscape’s 2016 Physician Lifestyle Report has been released…and the results are interesting. You can break it down per specialty, but the results are conclusive: doctors are suffering from burnout.

This affects every aspect of a doctor’s life in the workplace and at home, and, according to the report, also affects their own patients. Just think about how many people a doctor sees each week. If the burnout factor is to the point that it is affecting a doctor’s ability to do their own job, this has huge ramifications for people.

Medscape’s Physician Lifestyle Report provides a revealing look at how burnout and bias affect lifestyle and practice. This comprehensive report represents responses from over 15,000 US physicians and reveals details on happiness at home and work, weight and exercise, causes of burnout – and how male and female physicians from 25 different specialties fare on all of these factors.

Check out the entire report here.


doctors life podcast

The Doctor’s Life Podcast Episode 018- Choosing a Financial Advisor

Friends and colleagues have probably told you before to make sure you get a financial advisor. But how do you choose one? There are questions you need to ask your financial advisor candidate while you are developing a relationship. This financial advisor will be with you for the duration of your career and beyond, so it’s something to take seriously.

Nick Schneider is in The Doctor’s Life Podcast studios with those questions that you need to be asking. All episodes of The Doctor’s Life Podcast are available here, iTunes, and on SoundCloud. If you have an Android device, you can download a podcast player (I recommend Podcast Addict), and it will pull from iTunes. Make sure to subscribe and you will be the first to get new episodes of The Doctor’s Life Podcast. Continue reading…


Know Your Malpractice Insurance Options

busy-doctorMax Schloemann of Diederich Healthcare has put together a great piece on your malpractice insurance options.

Whether it’s a change in employment, a move to a new state, or the sale of your practice, almost every doctor will someday need to evaluate malpractice insurance options.  When these times are upon you, you may feel overwhelmed with making decisions in a time crunch.  You still have patients to care for, a life outside of medicine, and now you need to solve your malpractice insurance problem.  Fortunately, you are not alone.  Read on or contact one of our medical malpractice insurance specialists to make sure your medical liability protection transfers seamlessly.

When changing jobs, doctors should seek to better understand their options regarding their medical professional liability insurance.   Those doctors who simply “go with the flow” may end up paying thousands more than someone who proactively works with a true malpractice insurance expert.  Or worse yet, you may find out that you did not secure the proper coverage after you are named in a lawsuit.

There are two basic types of malpractice coverage – claims-made and occurrence.

Claims-made is the most common type of medical malpractice insurance in the country.  When ceasing a claims-made policy, you need to either:  1) purchase tail from the current company, 2) purchase a standalone tail from a competing carrier, or 3) purchase nose coverage back to your current retroactive date when you obtain a new claims-made policy.   Sometimes the option is yours.  Other times, you may be required to buy tail rather than just getting prior acts (aka nose) coverage on your next policy (Pennsylvania is one state that can actually suspend or revoke your medical license if you do not take the proper steps).

Your retroactive date can be thought of as the beginning of an “exposure period.”  As long as you have a policy that covers you back to your retroactive date, you do not need tail.  Once you stop the policy covering the nose, you need to secure tail so that you continue to be covered for anything that occurred on or after your retroactive date.  Examples are provided to help illustrate this concept.

Occurrence coverage is simpler to understand, though less commonly offered.  Carriers find it more difficult to accurately assign premiums to risk exposure with occurrence, so most do not offer it, or it is offered at a higher price than claims-made, making it less attractive to the potential policyholder.   If you are currently covered under an occurrence policy and looking to change jobs, you do not have to worry about covering your tail (at least for now). Continue reading…


doctors life podcast

The Doctor’s Life Podcast Episode 017- Cash is King

Cash is king. We’ve all heard this, but why is it true?

Having cash is a difference maker, but Nick Schneider is back in The Doctor’s Life Podcast studios to tell us exactly why cash is king. All episodes of The Doctor’s Life Podcast are available here, iTunes, and on SoundCloud. If you have an Android device, you can download a podcast player (I recommend Podcast Addict), and it will pull from iTunes. Make sure to subscribe and you will be the first to get new episodes of The Doctor’s Life Podcast. Continue reading…


doctors life podcast

The Doctor’s Life Podcast Episode 016- The Job Search Process

As your career enters and exits multiple stages, there will be times when you enter in to the job search process. It can be daunting if it is your first time or your final time. It is a task where you need to know what to look for and what to ask for.

Justin Nabity is in house with the to help you through the job search process. All episodes of The Doctor’s Life Podcast are available here, iTunes, and on SoundCloud. If you have an Android device, you can download a podcast player (I recommend Podcast Addict), and it will pull from iTunes. Make sure to subscribe and you will be the first to get new episodes of The Doctor’s Life Podcast.