Kuwait is abandoning its peg to the US dollar according to FT Alphaville. There have been a couple of small countries in the middle east that have done likewise in the last year or so and there have been other countries that have re-weighted their reserve baskets to reduce dollar exposure.
None of the individual stories along these lines has significant impact but they do speak to the idea that slowly the dollar is becoming a little less important on the world stage, a point I have been writing about for a couple of years.
This puts upward pressure on interest rates. Obviously rates are now low but that does not mean the pressure from less demand is not there. I continue to believe that US rates will move to the higher end of what is historically normal. This has the potential to slow things down so that maybe our growth rates will look a little more like western Europe. This may not be great news but it is not an apocalyptic death blow by any means.
The investment implication is one I have been writing about for a long time which is lower than average investment returns in the US creating the need to learn about and invest in foreign markets.
Of course if this is wrong and "Goldilocks" lives in the US stock market, all the better.
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6 comments:
Couldn't find an "add a comment" link on your previous post about healthcare costs in retirement. You quoted "a financially normal retired couple that spend $11,640 per year on various medical coverages including long-term care insurance. They also set aside another $3000 for "uncovered costs."
You stated that $11K seemed high to you.
My wife and I are both retired, young and healthy with high deductible BCBS policies in AZ which we pay for. Over the last seven years, since I retired, we have averaged almost $12K per year in medical expenses. The BCBS policies cost about $6K per year and the other $6K per year is in out of pocket expenses for Doctor visits, tests like endoscopy and colonoscopy which go against the high ($5K per year per person) deductible and a couple of typical, minor surgeries (for aging retirees) which also go against the deductible.
My experience is that the costs quoted in the WSJ article are reasonable and prudent if you don't have company supplied healthcare.
I know it's hard to believe that at 41, Roger, but it's much more believable when you turn 60.
Forgot to mention in my previous comment that about $2K of the annual $12K medical expenses is premium for a long term care policy. It still adds up to about $12K per year any way you slice it.
strange about the comment function--not something I did intentionally.
Exactly my point, I don't have the right perspective. This is an inkling of knowing what I don't know...that is what my healthcare expenses will be.
Everyone has variables like this in their future financial needs.
Re: “Kuwait is abandoning its peg to the US dollar ...”
A “Federal Reserve Note” is not a U.S.A. dollar. In 1973, Public Law 93-110 defined the U.S.A. dollar as consisting of 1/42.2222 fine troy ounces of gold.
Roger,
I've been doing a ton of research lately on retirement planning and have found there are so many unknowns it's almost impossible to estimate retirement income needs unless you're just about ready to retire. Just think of all projections these estimates are based on (rates of return on your investments, inflation, healthcare costs, life expectancy, tax rates, etc.) If you are off just a little on any one projection your plan could blow up.
Here's what I've found on healthcare costs: Under Medicare’s current rules, EBRI estimates that a couple aged 65 TODAY will need $300,000 to cover medical costs if they live to age 90. A recent study by Fidelity Investments estimated that an average person beginning retirement TODAY will need $216,000 to cover their healthcare costs for 20 years. Note, these estimates seem to increase significantly each time there is a new study.
Healthcare costs are increasing at 7.5% annually. What's worse, that rate of increase is accellerating.
The guy I posted about last week (Bud Hebeler) believes it isn't irrational to estimate that you will need 100% of you pre-retirement income.
OT.
A poster a short while back asked about investing in India. The Nightly Business Report on PBS is running a segment on investing there all this week.
http://www.pbs.org/nbr/site/features/special/IndiasPromise_special/
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