Prescription Drug Trends

A gene therapy treatment recently approved by the Food and Drug Administration for use against leukemia is priced at $475,000 for a one-time treatment. While it’s exciting that new treatments, including prescription drugs, appear to be getting closer to curing society’s most lethal diseases, many of us wonder how we can afford them. Even when such treatments are covered by insurance, the pool of insured participants pay the cost in terms of higher premiums.

The way drug manufacturers determine pricing has become a controversial topic. In the past, the average cost to bring a new drug to market was reported to be around $2.7 billion. However, a new study on cancer medications has arrived at a much lower number: a median cost of $757 million per drug, with half costing less and half costing more. Drug companies dispute the study, saying the cost doesn’t take into account research and development investments made in drugs that fail.

Meanwhile, health care costs continue to rise, with the average family health insurance plan rising 3.4 percent in 2016 from 2015, outpacing wage growth. Even in retirement, when most people qualify for Medicare benefits, health care expenses can be high. Recent estimates project that a healthy, 65-year-old couple retiring this year will need $275,000 to cover their health care expenses in retirement. This sum includes paying for Medicare premiums, cost-sharing provisions and out-of-pocket costs, but when you add in over-the-counter medications, dental services and potential long-term care, that figure could be even higher.

Do you have a strategy in place to help pay for health care expenses in retirement? If not, give us a call. Some insurance products such as life insurance and annuities provide various options you may want to consider. We’d be happy to discuss your options based on your unique situation.

As for tackling the issue of high drug prices, states are taking the matter into their own hands. California recently passed legislation mandating transparency related to how the pharmaceutical industry sets drug prices in that state. In April, New York passed a law that requires prescription drug companies to undergo a review when prices rise and discounts and rebates aren’t offered back to the state for rising Medicaid drug spending. Nevada’s legislation more specifically requires a drug pricing process for diabetes medication. The state of Vermont has had a law on the books since 2016 in which drugmakers must provide justification for pricing hikes or they risk being fined.

Meanwhile, another way to tackle the high cost of prescription drugs could be to introduce a major volume player into the mix – Amazon reportedly has been considering entering the prescription drug market. The pricing power that Amazon wields was enough to drive down the price of CVS and Walgreens stock by nearly 5 percent when a report predicting a potential Amazon move was first announced.

Interested in reading more?  Here are some articles that may be of interest to you:

CLICK HERE TO READ THE ARTICLE “Revolutionary gene therapy approved for leukemia – at $475,000 price tag.” 

CLICK HERE TO READ THE ARTICLE “What Does It Cost to Create a Cancer Drug? Less Than You’d Think.”

CLICK HERE TO READ THE ARTICLE “Employers push health care costs onto workers.” 

CLICK HERE TO READ THE ARTICLE “Expect to spend more on health care in retirement — even if you’re well.” 

CLICK HERE TO READ THE ARTICLE “California just passed a new law that tackles the rising cost of prescription drugs.”

CLICK HERE TO READ THE ARTICLE “New York State Wants Its Prescription Drug Money Back – Or Else.”

CLICK HERE TO READ THE ARTICLE “‘More is possible’: A bunch of states are taking on high drug prices, and it could start hitting drugmaker profits.”

CLICK HERE TO READ THE ARTICLE “Are prescription drugs the next target for Amazon?” 

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Raymond C. Lantz, Jr. is the president and founder of USA Wealth Group, Inc. Ray has many years of experience advising clients in retirement and sophisticated tax planning strategies, multi-family and commercial real estate projects, and legacy planning. Ray is a graduate of Clark University, holds a law degree from Boston College, and a master of laws in taxation from Boston University. You can hear him every Sunday on Money Wise with Ray Lantz on WBSM 1420AM or on the Radio Pup app. 

Best Places to Live in Retirement

Many retirees believe the best place to live in retirement is right in their own home. Let’s explore some of the “best places” where that home might be located and what it might look like.

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It’s worth noting that the retirement experience varies widely. Some people have the money to relocate or buy a second home. Some people have plenty of retirement funds but choose to remain where they are. Come talk to us if you’d like help in creating a retirement income plan to assist you with figuring out what you may be able to afford.

According to a study by U.S. News & World Report on the top states for people 65 and older, Colorado is the best place in America to spend your retirement years. The study evaluated which states are most effective at helping retirees meet their health care, financial and community involvement needs.

If you have a specific retirement haven in mind, be sure to do some research about it. For health care services, for example, U.S. News publishes a guide to the best hospitals with a searchable database. To learn about a locale’s cost of living, consider the Council for Community and Economic Research’s Cost of Living Index. To get a feel for an area’s year-round climate, check out the interactive climate data tools at the NOAA National Centers for Environmental Information.

Relocating after retirement can be difficult for some people, especially those with close friends and family ties to an area. If this is a concern for you, consider a short-distance move. Perhaps move to a nearby town that has less hustle and bustle, and more outdoor and cultural activities. If your motivation is to downsize, you may even be able to do that in your own community. In this case, you can get rid of the big house and accompanying maintenance chores and expenses, but stay close to family and friends.

Consider where you might be able to access personal help as you age, and the best way to procure that help. For example, you could relocate to a neighborhood near a nursing or medical school, and hire a student to help you if needed. If you have an extra bedroom, consider offering free or low-cost accommodations in exchange for personal aid. Even when we don’t need help with health care needs, as we age it never hurts to have someone we know and trust around to help maintain the house and lawn, drive or run errands, or just check in for conversation.

Think long term – not what your health is like right now, but what it could be like 20 years from now. In other words, having stairs may increase your chances of a fall. They also will be difficult to use if mobility is an issue. For some, the solution may be to buy a single-story home with the idea of avoiding those potential problems.

Another option to consider may be to sell your home and rent a smaller home. This could allow a retiree to pocket equity from the home sale and keep expenses low enough for current income sources. Renting also may eliminate the risk of a large maintenance cost or unanticipated repair.

These are all long-term considerations people should think about with regard to the “best place to live in retirement.”

Interested in reading more?  Here are some articles that may be of interest to you:

CLICK HERE TO READ THE ARTICLE “Best States: Aging in America Ranking.”

CLICK HERE TO READ THE ARTICLE “Find out Where You Should Retire.”

CLICK HERE TO READ THE ARTICLE “Retirement Living: Renting Vs. Home Ownership.” 

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Raymond C. Lantz, Jr. is the president and founder of USA Wealth Group, Inc. Ray has many years of experience advising clients in retirement and sophisticated tax planning strategies, multi-family and commercial real estate projects, and legacy planning. Ray is a graduate of Clark University, holds a law degree from Boston College, and a master of laws in taxation from Boston University. You can hear him every Sunday on Money Wise with Ray Lantz on WBSM 1420AM or on the Radio Pup app. 

Innovating to Solve Problems

The 2017 hurricane season was one of the most active of the new century, and scientists are predicting hurricanes will likely get more intense in the decades to come. But these predictions for worsening conditions in the future may pave the way for stronger innovation.

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For example, the governor of Puerto Rico, which was devastated by Hurricane Maria in September, suggested the island rebuild its power resources into a microgrid. This strategy means that power outages caused by storms would be more localized so a huge area isn’t impacted when one system goes down. It also would accurately pinpoint which grids need repair and better assign resources so that power can be restored more quickly.

The microgrids could be powered by alternate and renewable resources such as wind and solar energy, which would be better for the environment and less expensive for residents. This type of innovation could avoid the need to completely rebuild infrastructure the next time a major hurricane hits the region.

There are two issues when considering the catastrophic nature of a disaster like a hurricane. The first is societal – how do we restore power and other infrastructure after a crisis? The second is personal – how do we recover when our homes are damaged or demolished? While we seek and embrace innovations that can lessen the damage caused and hasten our recovery, the current solution is to insure against losses that can devastate us financially.

Other issues that are cropping up in today’s society are spurring innovation. For example, researchers say the U.S. workforce participation rate is declining. In fact, a recent analysis found that one-third of prime-age men not in the labor force have a disability. Rising incarceration rates have impeded the workforce even after release, due to criminal records.

Furthermore, increasing numbers of baby boomers are retiring each day, and younger generations might not have, at this point, the skills and experience to take their place. With so many critical issues converging, who will work America’s jobs?

Enter robotics, artificial intelligence and machine learning. Today’s technology not only has robots and computers performing a wide range of routine physical work activities better and more cheaply than humans, but they are increasingly capable of providing cognitive insights that were once considered too difficult to automate. This includes sensing emotion, driving vehicles and even making decisions. Scientists project that automation is poised to change the daily work responsibilities for a spectrum of jobs, including miners, landscapers, commercial bankers, fashion designers, welders and even CEOs.

It’s worth considering both the pros and cons of automated labor. While this type of innovation may create a less expensive workforce for American companies, it also reduces the overall tax base. Which leads us to the question: Will the remaining human workers have to pay higher taxes to cover government programs and expenses, or will companies need to pay taxes on robot workers?

Interested in reading more?  Here are some articles that may be of interest to you:

CLICK HERE TO READ THE ARTICLE “Why This Hurricane Season Has Been So Catastrophic.” 

CLICK HERE TO READ THE ARTICLE “Puerto Rico is using an unusual method to restore power after the hurricane.”

CLICK HERE TO READ THE ARTICLE “What we know – and don’t know – about the declining labor force participation rate.”

CLICK HERE TO READ THE ARTICLE "Bye Bye Boomers: Who Will Fill your Workforce Gap?” 

CLICK HERE TO READ THE ARTICLE “Harnessing automation for a future that works.” 

CLICK HERE TO READ THE ARTICLE “Why robots should pay taxes.”

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Raymond C. Lantz, Jr. is the president and founder of USA Wealth Group, Inc. Ray has many years of experience advising clients in retirement and sophisticated tax planning strategies, multi-family and commercial real estate projects, and legacy planning. Ray is a graduate of Clark University, holds a law degree from Boston College, and a master of laws in taxation from Boston University. You can hear him every Sunday on Money Wise with Ray Lantz on WBSM 1420AM or on the Radio Pup app. 

Investing for the Long Term

What does the phrase “long term” mean to you? For children, long term can mean waiting for Christmas or summer vacation that feels like a million years away. For young adults, long term may reference how long it takes to pay off student loans. As we get older, we begin to understand that long term can be a really long time – even decades. We may wonder where the years went. Suddenly we’re in our 50s, 60s, 70s or older. Long term tends to be a subjective phrase depending on what stage you have reached in life and what your goals are.

When it comes to investing, its meaning is only marginally clearer. In other words, if we’re encouraged to invest for the long term, how long is that – 10 years, 20, 30? It largely depends on what your financial goals are – a house, college tuition for the kids, retirement and so on. We take the time to help clients define their financial goals and then create strategies using a variety of investment and insurance products to custom suit their needs and objectives. Give us a call so we can work with you to help you pursue your long-term goals.

It’s worth noting that even an experienced investor can’t say for sure whether they’ve got the right mix of investments for the long term. Take, for example, Jack Bogle, the founder of The Vanguard Group. He recently responded to a question he received from a young investor concerned about how potential catastrophes would impact his portfolio. Bogle replied by sharing his own portfolio mix (50/50 indexed stocks and short/intermediate bond indexes) but said that half the time he worries that he has too much in equities, and the other half that he doesn’t have enough. “We’re all just human beings operating in a fog of ignorance and relying on our common sense to establish our asset allocation,” he wrote to the investor. 

The S&P 500 has nearly quadrupled in annualized returns since its low in 2009. Several prominent market analysts and investment firms suggest this means it’s about time for a market downturn. The question is, if you’re a long-term investor, do you sell in anticipation of a correction? After all, if the point is to buy low and sell high, it makes sense to take gains while prices are at their highest before they begin to drop. Or does it?

That’s not what long-term investing is about. The reason returns over 30 years tend to outperform those from, say, five years, is that time is what typically smooths out those periods of volatility. If we continue investing automatically, we may end up buying during those periods of price drops and we can potentially make stronger gains as prices rise again.

If we base our investment decisions on when the market will take a turn for the worse, we could end up missing out on the future gains that could have been made. Long-term investing may involve patience, unlike children who anxiously await the holidays.

Investing involves risk, including the potential loss of principal.  No investment strategy can guarantee a profit or protect against loss in periods of declining values. It’s important to consider any investment within the context of your own goals, risk tolerance, investment timeline and the composition of your overall portfolio. This information is not intended to provide investment advice.

Interested in reading more?  Here are some articles that may be of interest to you:

CLICK HERE TO READ THE ARTICLE “Stocks and the meaning of 'long term.'”

CLICK HERE TO READ THE ARTICLE “An investing legend who’s nailed the bull market at every turn sees no end in sight for the 269% rally.” 

CLICK HERE TO READ THE ARTICLE “‘Unnerved’: These 5 Big Wall Street Players Are Predicting a Downturn.” 

CLICK HERE TO READ THE ARTICLE “Should You Invest As Usual When Stocks Are This High?” 

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Raymond C. Lantz, Jr. is the president and founder of USA Wealth Group, Inc. Ray has many years of experience advising clients in retirement and sophisticated tax planning strategies, multi-family and commercial real estate projects, and legacy planning. Ray is a graduate of Clark University, holds a law degree from Boston College, and a master of laws in taxation from Boston University. You can hear him every Sunday on Money Wise with Ray Lantz on WBSM 1420AM or on the Radio Pup app. 

Savings and Investment Updates

The American College of Financial Services recently posted some surprising results from its Retirement Income Literacy Quiz. Nearly three-quarters of respondents ages 60 to 75 failed the test with a score of 60 percent or less.

The quiz included topics such as which expenses are covered by Medicare and long-term care insurance and what age people should start drawing benefits from Social Security. If you’re not familiar with the answers to questions such as these, we invite you to schedule a consultation so we can help you delve into retirement planning. There are many factors to consider beyond where to invest and how much you’re saved. Retirement is about preserving and distributing assets, as well as understanding the impact of longevity.

Let’s take a look at some other retirement-oriented questions that are important to answer. For example, do you know how long you have to work for your company before you can keep matched contributions to your 401(k) plan? Some companies that sponsor a 401(k) require employees to work around two to three years before employer-matching contributions are vested. If you leave the company before then, those matches won’t be added to your account balance – even if you maintain the plan with that employer after you go to work for another one.

It’s worth noting that 401(k) and other employer-sponsored retirement plans may be considered for tax reform. Recent discussions have included eliminating the tax-deferred status of retirement plan contributions, which represent a four-year tab of $583.6 billion that Congress could spend elsewhere. The discussions are in the very early stages, but things can happen quickly in Washington these days, so it’s an issue worth watching.

For those in the military, on Jan. 1, 2018, the military’s new Blended Retirement System goes into effect. Starting that day, all military personnel whose length of service spans one to 12 years will have one year to make an irrevocable choice between the old and new retirement plans. Service members who started before 2006 will automatically remain in the old plan, which offers a generous pension complete with inflation adjustments. However, anyone joining the military starting next year gets enrolled automatically in the new program, which combines reduced pension benefits with up to a 5 percent match of personal contributions to the government’s Thrift Savings Plan (TSP).

If you haven’t saved enough money to retire yet, you may be thinking you’ll just keep working until you have enough. However, according to a recent survey of 1,002 retirees, 60 percent said the timing of their retirement was unexpected, citing reasons such as health issues, job loss, or the need to care for a loved one. While working longer is a worthy goal, it’s good to develop a financial plan that helps provide for possible contingencies just in case you have to pivot to “Plan B.”

Content prepared by Kara Stefan Communications.

Interested in reading more? Here are some articles that may be of interest to you:

CLICK HERE TO READ THE ARTICLE "Most Seniors Flunked a New Retirement Quiz. Could You Do Better?” 

CLICK HERE TO READ THE ARTICLE "How Long Does It Take to Vest in a 401(k) Plan?” 

CLICK HERE TO READ THE ARTICLE "What Is Washington Doing to My 401(k) Tax Break?"

CLICK HERE TO READ THE ARTICLE "What U.S. Military Need to Know About Their New Retirement Plan."

CLICK HERE TO READ THE ARTICLE "60% of Americans Have to Retire Sooner Than They’d Planned."

Raymond C. Lantz, Jr. is the president and founder of USA Wealth Group, Inc. Ray has many years of experience advising clients in retirement and sophisticated tax planning strategies, multi-family and commercial real estate projects, and legacy planning. Ray is a graduate of Clark University, holds a law degree from Boston College, and a master of laws in taxation from Boston University. You can hear him every Sunday on Money Wise with Ray Lantz on WBSM 1420AM or on the Radio Pup app.