Living Longer: Health Care, Life Insurance and Retirement Costs for U.S. Citizens

At first glance, one would tend to assume that living longer is a blessing. One gets to spend more time enjoying the company of loved ones, see grandchildren grow up, etc.. However, it’s also worth wondering how current standards of longevity for U.S. citizens tie in with the hefty costs of medical care, the issue of purchasing life insurance, and the cost of retiring. Let’s take a look at how much we’re actually spending on health care compared to other countries, how longer lives impact our life insurance premiums, and whether or not we should all just find a different country to retire to.

Health Care Costs in the U.S.

ID-10044424Obamacare was definitely not the first time the issue of health care costs cropped up in the United States – far from it, in fact. For decades now, Americans have been complaining that getting access to medical services in their own country was far less affordable than going abroad for treatment, surgical interventions, and other types of medical care. Yet Obamacare did glean a ray of hope, in terms of more affordable medical expenses on the home front for many Americans. Though the reform has already come into force as of the date this article was written, it’s still interesting to note [Read more...]

How States Stack Up

If you have ever considered moving to improve your income or lifestyle the following info-graphic might help clarify your choices. It covers median household income by state ( the yellow states have the highest median income and the orange states have the lowest).

It also covers Housing costs, number of millionaires, poverty rate, well being index, employment rate, tax burden, minimum wage and GDP.

By clicking on an individual state you can see all its results at once in the right hand column.   See also: Cost of Living, State Employment and Unemployment Rates and Minimum Wages vs Unemployment.

Inflation: America’s #1 Export

What’s America’s No. 1 Export?

by Bill Bonner

In 1950 the typical working man was able to support a family. Today he can barely support himself because the costs of his main expenses have gone way up. He has to work about twice as long to pay for a new car and a new house.

Health care is worse. In 1950 the cost per person per year was about $100. According to the government’s numbers, prices today are about 10 times higher. So health care should cost about $1,000. Not even close. It’s $9,000.

Sinking DollarIn 1950 the typical father earned about $60 a week. For a family of four, he had to work fewer than seven weeks to cover the year’s health care expenses.

Today how much does he earn? We’ve used the figure $30,000 a year. But it is more complicated than that. A man with a full-time job actually earns, [Read more...]

Highest Grossing Movies Adjusted for Inflation

Inflation Adjusted Movie Film GrossTraditionally, war films, musicals and historical dramas have been the most popular genres and Gone With the Wind held the record of highest-grossing film for 25 years but doesn’t even make it into the top fifty in the modern market. But purchasing power varies widely over the time period since Gone With the Wind was first released in 1939. But the true key to determining how revenues really compare is when you adjust them for inflation.

Highest-grossing films (Nominal)

First we will look at nominal gross box office revenues. That is the actual number of dollars (not adjusted for inflation) earned strictly in the box office. Modern films have an advantage because in addition to box office revenues there are home video sales, pay-per-view sales, and merchandising sales. These revenues can dwarf box office revenues such was the case with Pixar’s movie Cars which was only moderately successful in the theater grossing $461 million but it generated almost $10 Billion in merchandise sales. In addition, box office receipts are [Read more...]

Regarding Gas Inflation

Doug S. Says I’m full of It- Regarding Gas Inflation

I just got the following comment from Doug S.

I saw the chart on how gas prices haven’t really risen when considered with inflation. I am 61 years old, and when I was working in the mid- to late-60s as a high school student, I made $1.60 an hour as minimum wage. Gas was only .25-.35 per gallon (with ‘gas wars’, much of the time cheaper) so with one hour of work I could purchase 5-6 gallons of gas. Now, with a minimum wage of $7.50 or so, you can only purchase a bit more than 2 gallons of gas, depending on the day of the week. Minimum wage has gone up, what, 4.6-5 times or so, but gas prices have gone up 10 times or more. Where am I missing the point???

Based on what I have read, a loaf of bread might have gone up 5-6 times. I do know that you can use figures to make any point you want, but I am not convinced that gas is matching inflation and is ‘less or about the same’ inflated price as it was 40 or 50 years ago. This is garbage. Doug S.

 Inflation Adjusted Gas Prices

My response:

Doug,

I don’t recall saying that gas is currently cheap or that it is less or about the same as 50 years ago. Although it is about the same as 1918.

If you look at the chart [Read more...]

What Does 8% Inflation Really Mean?

By Dennis Miller

Eight percent is not good news. In my latest article I shared some reader feedback from our inflation survey, and in case you missed it, the Money Forever Reader Poll Inflation Rate is 8%. But what does that number really mean for us – seniors and savers trying to protect our buying power? It’s time to read the tea leaves and find out.

Up to Your Ass in Alligators

You may remember the old poster that read, “When you are up to your ass in alligators, it’s tough to remember the goal was to drain the swamp.” You may have felt overwhelmed during the last few years, as the investment options for your retirement portfolio changed. You might read about the benefits of gold and silver one day, then CDs, dividend-paying stocks, and annuities the next. It’s pretty easy to feel overwhelmed, particularly when you cannot afford to put too much of your life savings at risk.

gatorsOne of our readers really drove home the challenges we all face:

“Anyone who has been living on SS [Social Security] checks since 2000 will tell you the same thing. They cannot live on those checks alone, and [have] depended on the interest they receive from their savings accounts or CDs. They cannot do this any longer. They now need to withdraw principal or redeem some CDs just to make ends meet. … [We are] on fixed incomes with no hope of getting a raise. These people understand the effects of inflation more than any other group. These people live with fear every day, understanding they have little control over their financial future, while watching their life savings slowly vanish every year.”

Of the readers who responded to our poll, 1.6% think the inflation rate is 2% or less. On the flip side, the remaining 98.4% must think the government is lying (or in need of a new statistician).

My dear friend Toots, whom I often quote, wrote, [Read more...]

Cost of Living – Fish and Chips

Cost of Living Fish and Chips

Fish and chips still remains the favorite take away meal in the UK despite fierce competition. The exact origins are unknown but it has been established that chips arrived from France during the 18th Century. There was also mention of fried fish and bread in ‘Oliver Twist’ by Dickens, published in the 1830s. The Oxford English Dictionary claims the earliest usage of “chips” in this sense was in Charles Dickens’ A Tale of Two Cities (published in 1859). Fish and chips became standard fare among the working classes in Great Britain due to Cost of Living- Fish Popularthe efficiency of trawl fishing in the North Sea, and the development of railways which allowed fresh fish to be rapidly transported to the heavily populated areas from the ports. The modern fish-and-chip shop (“chippy” or “chipper” in modern British slang) originated in the United Kingdom, although outlets selling fried food occurred commonly throughout Europe. According to one story, fried-potato shops spreading south from Scotland merged with fried-fish shops spreading from southern England. Eventually they came together with the opening of the first fish and chip shop around 1860. Growth in the number of shops was rapid, peaking in the 1930s at around 35,000 shops in the UK.

Price increases

Fish and chips used to be thought of as cheap, as well as convenient, but sadly [Read more...]

Cost of Living

The cost of living or (COL) varies from state to state and city to city and even from neighborhood to neighborhood. Some areas have seen housing costs decrease dramatically in the years since the housing bubble popped in 2008, while others have only fallen slightly. But the Cost of living is more than just housing costs it is the amount of money it will take to  maintain the same standard of living in various places.

Changes in the cost of living over time are often calculated via a cost of living index. Cost of living calculations are also used to compare the cost of maintaining a certain standard of living in different geographic areas. Geographic differences in cost of living can be measured in terms of purchasing power parity rates.

Cost of LivingOur cost of living calculator will help you compare two cities from around the United States. It is not accurate enough to determine neighborhoods but will give you a good idea of how different cities compare. For instance if you’d like to know the cost of living difference difference between Anchorage, Alaska and Auburn, Alabama no problem. You can also enter a job title and salary you will be presented with salary comparisons between locations but that isn’t necessary. The Cost of living Calculator will also give you a cost comparison chart between your destination city and other major cities.

For More Information See:

Cost of Living Allowance (COLA) or Cost of Living Adjustment

Cost of Living, Cost of Gas, Average Cost of Gas Per Month, Inflation   Rate, Inflation

Image courtesy of Stuart Miles/ FreeDigitalPhotos.net

Australia- How to Beat the Health Cover Cut

Health fund members have discovered that the best way to avoid means-testing of the nation’s $5 billion private health insurance rebate is to prepay their premiums.  After the means test on private health fund subsidies was approved by the Senate, almost 2 and a half million health fund members will start paying up to $1300 more each year for health cover starting July 1.  Health insurers all across Australia braced for a huge increase of members choosing to prepay premiums after the Australian Taxation Office sent out letters warning consumers about the changes.
[Read more...]

The Effects of Inflation on Life Insurance

How Life Insurance Works

Premiums on term life insurance are usually paid (monthly, quarterly or annually) for between 10 and 30 years, depending on the particular policy you’ve chosen. One of the ways that life insurance works is that you pay a fixed rate for the length of the policy and the value of the insurance does not change. Whether you die tomorrow or 20 years from now, your beneficiaries would still receive the same dollar amount of insurance settlement. Therefore, if you have a $500,000 term life insurance policy, as long as the premiums are paid it provides  $500,000 worth of coverage from the day you buy it until the day the term ends or it is paid out.

The Effects of Inflation on Life Insurance

Life Insurance InflationIn the U.S., the rate of inflation has averaged between 3 to 4 percent per year. This means that what you can buy with a dollar changes from year to year.  Basically the purchasing power of American’s dollars  decrease by 3-4 percent per year – in direct relation to the inflation rate.  With insurance, even though the dollar amount of the benefit stays the same, the more years that pass, the less the payout will buy for your beneficiary. For this reason, choosing the right amount of term life insurance is more difficult because you have to estimate how big a bite inflation will take out of the eventual benefit.

Due to Inflation the amount of life insurance you buy today will not be worth the same amount ten years from now. Assuming a 3% inflation rate over each of the ten years, your insurance policy would be worth at least 30% less by the time you reach the tenth year and with compounding the effect is even worse. So, after  ten years a $400,000 life insurance policy might only have the purchasing power of $280,000 in today’s dollars.

Thus if you were counting on providing the equivalent of $400,000 to your beneficiary and you lived ten years they would receive the $400,000 all right, but would only be able to buy $280,000 worth of stuff with it.  [Read more...]