Sunday, October 26, 2014

401k fees....Do you really know how much you pay?

Now, this topic is often times discussed in the media, but does an average John Q. Public (in our case, JQ Public, MD) know what exactly he/she is paying for a privilege of having  his retirement money to be exposed to the vagaries of the market?
My unscientific poll of my colleagues shows that 99%  of them are oblivious. Seeing the outrage on my face when I spoke about those fees, they politely  nodded their heads, but that was it.
To me, the asset-based fee of 0.33% PLUS monthly maintenance fees (that's what our 401k plan extracts-if not expropriates) amount to nothing less than a highway robbery.
Given the market projected return (risk premium, on top of risk free rate of 2.5% delivered by Treasuries), the asset based fee alone amounts to at least 10% of return!!
And we are not even talking about the expense ratios f the funds contained in 401k (average expense ratio is about 1-1.3%).
So right there, we're giving up close to 50% of potential return, while owning the 100% of risk.
But what else is there for retirement vehicles for middle class? (gasp)

Monday, August 11, 2014

State deferred compensation

For those of us who might be working in any shape of form for the State ( NY/NJ/CT etc..), and not necessarily full time- enough to get a small paycheck, which is often the case if your work for the " XXX State University Hospital" in any capacity:
you might be eligible to contribute to your  State deferred compensation program. No match, of course, by the State- just your own hard-earned, but pretax dollars. And that's on top of your annual limit of  $17,500 for 2014 you might be  already contributing to your private 401(k) through the "private" part of your work, up to the limit of, yes, another $17,500, totaling  $35,000/yr (without counting the match, or contributions by your employer). Now, that's a retirement planning!
(Anecdotally, most people who work for the State never heard of this, by the way)

Most mutual fund there are (relatively) decent, with low expense ratios, and they have my beloved index funds- by the way, yet another study came out showing how "great" active mutual fund managers are performing in the long run..  Will write about it in the next post...

Here's a website for those fortunate ones in NY State:

And for NJ:

Tuesday, August 5, 2014

Obamacare is here. Now what?

In  health management class I took last Spring for my  MBA, we were perusing this website our Professor found for us: , where you can plug in your income numbers, your age/family size , without revealing any of the sensitive info (SS#, real income etc.) required for a real sign up at the now famous health exchanges.
 This is all to see what Obamacare product you can buy, how much it will cost, what kinds of copay/co-insurance you're looking at etc.
Most Obamacare plans are quite restrictive, patients (insureds in insurance parlance) can only use a very narrow HMO style system, copays are high... ( I didn't know it before, but apparently there's an annual out of pocket limit on all of these Obamacare products, the max. being in the range of $12,500 per family/yr). The low-income earners do get some tax subsidies

I think it was a clever trick on the part of the government to "outsource" the uncompensated care costs onto the heads of the medical providers and hospitals, forcing them to chase after unpaid (and large) copays, coinsurances and deductibles.
"Stayin' alive" and afloat for an independent practitioner is becoming even tougher then.