People’s Opinions Matter

The talking heads on CNBC and some of the other more neutral media outlets are talking about the signs we are already seeing of increasing confidence in the economy from the tax cut. This is the highest level since November of 2000. People are starting to see a little more in their paychecks this week, which brings a nice warm feeling this time of year.   For many working Americans, even $30/paycheck can be the difference between eating out, buying a new shirt…or doing nothing!  We seem to have been fighting off a stock market correction since the lows of Feb 9^th.  Many analysts believe that businesses have more money to feed the economy and resist the correction. Others are concerned about the possibility of up to 4 more increases in the Fed Rate.

The reason that we taxpayers need to do a self-check on the happiness scale is that the bad news has been so bad for so long that it doesn’t seem to get the attention it deserves these days. Things are getting better in the tax code, but if this doesn’t work….

What do we mean?

These tax cuts are a “bet” that we as a country are making.  The “bet” is that since we can’t seem to curb our spending at the federal level, we will be able to grow our way out of all of our government obligations through a larger tax base. The tax cut was $1.5 trillion.  At an average tax of 20%, we need to grow the economy $7.5 trillion to break even on the cut. The 2016 GDP was $18.624 trillion, meaning we need to grow the economy by 40.27% to break even. Ahh, the magic of numbers!  Only a politician can make those numbers meet.

However, we have other issues to compound this problem. We have 20+ trillion dollars in federal debt. Add the promised nearly 13 trillion dollars (some say more some say less) out in future Social Security obligations. Now, factor in another 25-40 trillion (again, some say more, some say less) in unfunded expected health care obligations through Medicare and Medicaid.   How much more do you think we will need to grow our income to cover all of this?

Does anyone else see a problem here?

What if you and your spouse maxed out all of your credit cards, applied for more credit cards and maxed those out as well? Then to fix this, borrowed money on your house with a balloon mortgage note, then borrowed money from your parents. Then you solve the problem by saying “We’ll reduce our revenue and hope for the best!”

Don’t misunderstand, stimulating the economy is a very good thing! Putting more spendable dollars in the hands of Americans will do just that.  The best solution would be to spend less at the same time we are achieving more growth, but that’s not looking possible with today’s political process.

Toss in the towel?

Should we all just toss in the towel and give up?  No, not at all.  Just look down the road to the finish line in 2025, when the tax cuts are expected to expire.  If we have paid down enough debt to solve these problems, or at least make them more manageable, we will all be happy!  However, if instead, we are still in the same spot or worse, it will be time to cut the leg off the patient to save his life.  What will that look like?  Possibly a drastic reduction in all welfare programs. Remember, Social Security, Medicare and Medicaid are essentially welfare. We could see increasing the Social Security retirement age to 70, 75, or 80?  End Medicare as we know it, move the enrollment age back 3-4 years, or make premiums 40% of income for everyone over 65?   No one believes these things would be allowed to happen.

I certainly do not believe politicians are capable of making hard decisions.

It will likely be more likely this. All 401K, IRA, 403B…any retirement plan or retirement savings will need to be taxed at the same rate they were when you deferred them with a minimum rate of, let’s say 20%.  This means no 0% tax, no 10% tax, and no 12% tax.  Those are all set to expire at finish line 2025 and go back to 2017 rates.

So, what should YOU do?

Granted, it’s all opinion.  One possible goal will be developing a plan to expose all of your pretax accounts to taxation in a strategic manner over the next several years and before the finish line is reached in 2025.  Then, when the next sweeping tax changes happen, you would have no pretax dollars left. You could have only “tax-free” dollars that have already been taxed by the government, and cannot be taxed again!  If you don’t get yourself to “no pretax money” before 2025, some guess that the US government will do it for you.

Go see a tax planner, today!

“Plan Early and Plan Often!”™

Tax Rule Changes

With regards to your tax, mortgage interest deduction is always claimed on schedule A of your federal return. So, the first observation is that many people will simply no longer get any value from their mortgage interest because the new standard deduction is twice as much as before.  In 2018, the new tax rule dictates that second mortgages and Home Equity Lines of Credit (HELOC) are no longer deductible.  When “HELOC” interest became deductible they were not so common and had smaller balances but over the last several years they have become a popular way to fund the giant college spending needs for many, and for others, they have become a popular way to finance vacation homes and even investment property.

So, what can you do to fix this problem?

First, relax! The changes are not necessarily going to mean an increase in taxes at all.  In fact, many people may see a lower tax bill because of the increased standard deduction.   However, anyone with a large amount of HELOC debt should sit down with a tax planner and look at alternatives.  People who used HELOCs to pay for college or are currently using it because they felt they would not qualify for student loans may now want to find a college planner and really try hard to find that kind of loan. Educational loans are still deductible on a part of the tax return that is not connected to schedule A. So you might still enjoy that deduction as well as the big increase in the standard deduction.  People who used it for investment property might go and seek out a commercial mortgage to replace the HELOC. Even with generally higher rates and closing costs it could be beneficial.  Moving the interest to a line expense on your Schedule E (investment property schedule) and off your Schedule A might more than make up for the cost associated with getting the new loan.

There are also many lesser-known but very smart bank products out there to replace both a traditional mortgage and HELOC and wrapping them into an “All in One Loan”. This is a primary mortgage and still fully deductible but also leaves HELOC like access to equity.  That access could be used for either investment, for college funding, or whatever you fancy.  More importantly, it applies payments to principle first, before interest, helping people to pay off a home potentially much faster than a traditional mortgage without making larger payments.   See http://www.aiosim.com/Simulator/GetStarted for additional information.

Lastly, the mortgage interest deduction is now limited to the first $750,000 in principal loan amount (it was previously a $1,000,000 limit).  That’s not a problem for people who had already established their mortgage before December of 2017. They are “grandfathered”.  Going forward, it is simply “buyer beware” that $750,000 is the new deduction limit.  If you can afford a million dollar plus home then you are likely smart enough to find a creative way to buy the mortgage down to $750,000 loan.  You could also take out two loans, one for $750,000 and another for the balance. The tax law does not prevent you from buying a 1.5 million dollar home. You simply cannot get a tax deduction for any mortgage above $750,000.

As I write this I can hear the wheels turning. UNDER NO CIRCUMSTANCES would it ever make sense to take money from pre-tax accounts like 401(k)s to pay down mortgages or fund refinances or purchases. The lack of a deduction would be a small penalty in comparison to the financial suicide of taking retirement money out while working.

So, what is the summary of the information dump above?  Go see a Tax Planner!

“Plan Early and Plan Often!”™

There are a lot of potential options. Are you choosing the right one?

More of us find ourselves facing health care decisions for ourselves, our parents or loved ones regarding whether to provide assistance in the home or in a group facility.  About 40% of people reaching age 65 will eventually need Long-Term Care (LTC).  As you reach your mid-80’s the rate is much higher. A question you have to ask yourself is how you want to receive your care and how much control you want to have.  Funding home health care is critical to all of us!

As medical advances help us living significantly longer, more and more of us will find ourselves in a position that requires home health care.  This care can require either medical or non-medical assistance.  Medicare only covers short-term, prescribed home health care for certain services. Typically, after 100 days of Medicare assistance, you are required to pay your own way.  This is why many LTC Insurance policies have a 90-day deductible to prevent a lapse in coverage between potential Medicare coverage and self-coverage.

Non-medical care in Arizona averages over $22/hour.  To make the math simple, let’s assume a cost of $20/hour.  That equals $480 per day and $14,000 per month for full-time care.  If you are just wanting 4 hours per day it drops to a paltry $2,400 per month.  That is more than most house payments.

My goal with this writing is to discuss and inform on potential ways to fund home care.  In an effort to keep this of reasonable length, I’m only listing some of the pros and cons of each.  The decision on which is best for any situation is a personal one based upon each individual’s financial situation.  This is why I suggest you work with a financial advisor knowledgeable in all aspects of the topic.

A list of the major potential funding mechanisms and a non-exhaustive discussion of each follows:

• LONG-TERM CARE INSURANCE

  (LTCi) can assist with these payments.  If you bought the policy since 2000 and if you need assistance with at least two ADL’s, it is likely that home health care is covered. It is unlikely that it can cover more than part of your costs.  The reason is that most coverages considered group setting rather than home care.  Group settings are much less expensive to provide assistance.  Regardless, only about 7.5% of care (of any kind) will be covered by insurance.  LTCi Statistics. Most benefits are tax-free as well.

  • This is a form of health insurance that is specific to LTC needs. If you have a policy and are deficient in 2 of 6 Activities of Daily Living or have dementia, these benefits will begin payout after the contractual deductible period.  Many modern policies pay for home care.  Many older policies do not pay for anything below a nursing level of care.  If you have a policy and it covers home care, you should use it immediately.  After years of the insurance company getting into your pocket, it makes no sense to “wait until later”.  This is the time to get into the insurance companies pocket! If you have this kind of insurance. Use it!
  • Benefits Modern policies can provide a significant benefit to supplement your home-care needs. Some policies have cost of living increases and can provide quite a nice monthly base against expenses. Also, in certain circumstances, a portion of your premium might be deductible.  Talk with your tax accountant.
  • Drawbacks: There will be a waiting period on the policy before it takes effect. Commonly 90 days, it could be quite a bit longer.  The policy may reimburse expenses or it might provide indemnity.  This could affect your payout.

If you do not have LTCi (and few do own policies) or your benefits have run out or the benefits do not fully cover your needs, you shall be funding the balance of care from your assets.  Assets refer to basically anything with a potential cash value.  Here is a list of common assets and information on how to use them wisely:

• HOME

  Yes, your home is a countable asset in any calculation. There are a couple of potential ways to access this asset’s value.  One is to sell your home and move into an apartment or with relatives.  This could potentially fund care for many months. The second method would be a Reverse Mortgage.  With a reverse mortgage, you can either take a lump sum or monthly payments. Again, consulting a financial advisor with no direct benefit from the mortgage is a great option.

  • BENEFITS: A home is often a person’s largest asset and may represent your largest pool to draw upon.

  • DRAWBACKS: Selling your home defeats the purpose of having care delivered in the place you are most comfortable. While a reverse mortgage allows you to stay in your home, it doesn’t give you access to 100% of the value of your home.

• SAVINGS

  This would include bank savings, CDs, collectibles, brokerage accounts, etc.  Generally, taxes have been paid on this money and after a “rate of return” analysis, we can determine exactly what you need to earn and fund care without drawing the account down.  Or, how long the accounts will last at your expected rate of expenditure.

  • If Mrs. Jones was earning 5% on her accounts and using $5,000 a month for home care, she would need at least $1,200,000 in her accounts to fund care from her earnings alone. If that $1.2 is in CD’s at 1% the calculation obviously changes. She will be spending the corpus of her accounts at $4,000/month in the beginning. Remember, the cost of care increases over time.
  • Under the same scenario, if Mrs. Jones only had $400,000, her savings would be exhausted in 97 months or just over 8 years.
  • BENEFITS: You remain in control. If nothing changes the outcomes are easily calculated and the financial advisor knows the rate of return required to protect both the client and their accounts.  Also, this money would have already been taxed and not require extra money for taxes be withdrawn to meet your monthly needs.
  • DRAWBACKS: If you do not have enough money in the beginning, it requires an unreasonable rate of return to protect the account and client.  This will put you into a spend-down of your accounts and possibly into Medicaid at some point. Believe me, you do not want to have yourself or a loved one in Medicaid if it can be avoided.

• IRA’S AND OTHER QUALIFIED ACCOUNTS 

  These accounts can be held in any of the account types listed under savings. The difference is that this money has never been taxed and will be upon withdrawal from the account.  As with the previous example, a “rate of return” analysis should be conducted to determine the necessary return required to meet your needs.

  • BENEFITS: This is often a great place to withdraw money for care. If care is medically necessary, it should be at least partially deductible on your federal and state returns.  Because of this, your taxes owed may be offset by medical expenses.  This can be quite positive for heirs if there will be an estate remaining.  It is much better to inherit a regular savings account than an IRA.
  • DRAWBACKS: If your expenses are under 10% of your adjusted gross income, there is not going to be a federal deduction.

• ANNUITIES

  Annuities can be either qualified or non-qualified. As a contract between you and the insurance company, they each have different rules, but they also have commonality.

  • Living Benefits are an income benefit that pays for either a period or guaranteed for your life. Some are a “withdraw” benefit and others require annuitization. Each contract is different and should be analyzed by a professional.
  • Critical Care Benefits are benefits (usually a rider) that can be applied if you go into care. Each has a different value and triggering mechanism. When triggered, these often allow you greater free access to your principal. Some require only ADL’s and others require that you are moved into outside care.  Again, evaluation by a professional is your safest route.
  • ANNUITIZATION is in effect the creation of a pension with your annuity assets. You give your asset to the insurance company and the insurance company guarantees you a payout (pension) for either a period of years, life or joint lives.  Contact an advisor for your best choice and to be given further explanation.

• LIFE INSURANCE WITH LTC BENEFITS

  A few companies have designed life insurance products around a LTCi base.

  • Pure LTC  based universal life policies guarantee you a base amount of both life insurance and LTC insurance.  You are usually guaranteed your full premium back at death (life insurance) and a leveraged amount for LTC that goes up over time.  These are complex and mostly based upon age, sex of the applicant and time that passes between purchase and use.
  • Rider base LTC policies are very common.  They allow access to a portion of your death benefit for LTC purposes.  An example might be 2% of the death benefit per month until the policy is exhausted in about 50 months.  These are a good way to hedge a death benefit against potentially needing care. Many of these are good for home care.

• ALTERNATIVE INSURANCE BENEFITS

  • LTC Annuities are annuities that leverage your annuity deposit. Each one is different, but most pay the LTC benefit at a stated monthly rate over a stated period.  Example: $1500 per month for 36 months.  Many contracts increase the rate of payout the longer you have your money held in the annuity.
  • LTC Annuity Benefits are a particular benefit that might double your annuity payout during the time you are in care for between 5 years and life.
  • Life Insurance Critical Care Benefits. Some life insurance policies are designed to fund LTC from early withdrawals from the death benefit and others are designed specifically to be LTC vehicles. Either is a great source of LTC funds.

• LONG-TERM LIFE CARE BENEFITS

  • These benefits are relatively new to the long-term care arena. Life Care Benefits are benefits gained from selling your life insurance policy (either term policies or whole life) to a company that deposits the purchase price into an escrow account held in your name. This account can only be used to pay for LTC needs.  You will have to talk with a specialist.

I cannot reiterate enough that it is critical for you to work with a skilled and knowledgeable advisor.  One with experience in all aspects of creating LTC income and who understands your goals and needs.  The analysis is one of funding mechanisms, not selling products.

You should never call an insurance company without the assistance of a professional.  You may believe that you are asking the correct question, but often you are not.  Because of liability, the company will answer the question you ask rather than guide you to the questions you should ask.

Feel free to contact me and I should be able to put you in touch with a specialist in your area.

Plan Early and Plan Often™

There are a lot of potential options. Are you choosing the right one?

More of us find ourselves facing health care decisions for ourselves, our parents or loved ones regarding whether to provide assistance in the home or in a group facility.  About 40% of people reaching age 65 will eventually need Long-Term Care (LTC).  As you reach your mid-80’s the rate is much higher. A question you have to ask yourself is how you want to receive your care and how much control you want to have.  Funding home health care is critical to all of us!

As medical advances help us living significantly longer, more and more of us will find ourselves in a position that requires home health care.  This care can require either medical or non-medical assistance.  Medicare only covers short-term, prescribed home health care for certain services. Typically, after 100 days of Medicare assistance, you are required to pay your own way.  This is why many LTC Insurance policies have a 90-day deductible to prevent a lapse in coverage between potential Medicare coverage and self-coverage.

Non-medical care in Arizona averages over $22/hour.  To make the math simple, let’s assume a cost of $20/hour.  That equals $480 per day and $14,000 per month for full-time care.  If you are just wanting 4 hours per day it drops to a paltry $2,400 per month.  That is more than most house payments.

My goal with this writing is to discuss and inform on potential ways to fund home care.  In an effort to keep this of reasonable length, I’m only listing some of the pros and cons of each.  The decision on which is best for any situation is a personal one based upon each individual’s financial situation.  This is why I suggest you work with a financial advisor knowledgeable in all aspects of the topic.

A list of the major potential funding mechanisms and a non-exhaustive discussion of each follows:

• LONG-TERM CARE INSURANCE

  (LTCi) can assist with these payments.  If you bought the policy since 2000 and if you need assistance with at least two ADL’s, it is likely that home health care is covered. It is unlikely that it can cover more than part of your costs.  The reason is that most coverages considered group setting rather than home care.  Group settings are much less expensive to provide assistance.  Regardless, only about 7.5% of care (of any kind) will be covered by insurance.  LTCi Statistics. Most benefits are tax-free as well.

  • This is a form of health insurance that is specific to LTC needs. If you have a policy and are deficient in 2 of 6 Activities of Daily Living or have dementia, these benefits will begin payout after the contractual deductible period.  Many modern policies pay for home care.  Many older policies do not pay for anything below a nursing level of care.  If you have a policy and it covers home care, you should use it immediately.  After years of the insurance company getting into your pocket, it makes no sense to “wait until later”.  This is the time to get into the insurance companies pocket! If you have this kind of insurance. Use it!
  • Benefits Modern policies can provide a significant benefit to supplement your home-care needs. Some policies have cost of living increases and can provide quite a nice monthly base against expenses. Also, in certain circumstances, a portion of your premium might be deductible.  Talk with your tax accountant.
  • Drawbacks: There will be a waiting period on the policy before it takes effect. Commonly 90 days, it could be quite a bit longer.  The policy may reimburse expenses or it might provide indemnity.  This could affect your payout.

If you do not have LTCi (and few do own policies) or your benefits have run out or the benefits do not fully cover your needs, you shall be funding the balance of care from your assets.  Assets refer to basically anything with a potential cash value.  Here is a list of common assets and information on how to use them wisely:

• HOME

  Yes, your home is a countable asset in any calculation. There are a couple of potential ways to access this asset’s value.  One is to sell your home and move into an apartment or with relatives.  This could potentially fund care for many months. The second method would be a Reverse Mortgage.  With a reverse mortgage, you can either take a lump sum or monthly payments. Again, consulting a financial advisor with no direct benefit from the mortgage is a great option.

  • BENEFITS: A home is often a person’s largest asset and may represent your largest pool to draw upon.

  • DRAWBACKS: Selling your home defeats the purpose of having care delivered in the place you are most comfortable. While a reverse mortgage allows you to stay in your home, it doesn’t give you access to 100% of the value of your home.

• SAVINGS

  This would include bank savings, CDs, collectibles, brokerage accounts, etc.  Generally, taxes have been paid on this money and after a “rate of return” analysis, we can determine exactly what you need to earn and fund care without drawing the account down.  Or, how long the accounts will last at your expected rate of expenditure.

  • If Mrs. Jones was earning 5% on her accounts and using $5,000 a month for home care, she would need at least $1,200,000 in her accounts to fund care from her earnings alone. If that $1.2 is in CD’s at 1% the calculation obviously changes. She will be spending the corpus of her accounts at $4,000/month in the beginning. Remember, the cost of care increases over time.
  • Under the same scenario, if Mrs. Jones only had $400,000, her savings would be exhausted in 97 months or just over 8 years.
  • BENEFITS: You remain in control. If nothing changes the outcomes are easily calculated and the financial advisor knows the rate of return required to protect both the client and their accounts.  Also, this money would have already been taxed and not require extra money for taxes be withdrawn to meet your monthly needs.
  • DRAWBACKS: If you do not have enough money in the beginning, it requires an unreasonable rate of return to protect the account and client.  This will put you into a spend-down of your accounts and possibly into Medicaid at some point. Believe me, you do not want to have yourself or a loved one in Medicaid if it can be avoided.

• IRA’S AND OTHER QUALIFIED ACCOUNTS 

  These accounts can be held in any of the account types listed under savings. The difference is that this money has never been taxed and will be upon withdrawal from the account.  As with the previous example, a “rate of return” analysis should be conducted to determine the necessary return required to meet your needs.

  • BENEFITS: This is often a great place to withdraw money for care. If care is medically necessary, it should be at least partially deductible on your federal and state returns.  Because of this, your taxes owed may be offset by medical expenses.  This can be quite positive for heirs if there will be an estate remaining.  It is much better to inherit a regular savings account than an IRA.
  • DRAWBACKS: If your expenses are under 10% of your adjusted gross income, there is not going to be a federal deduction.

• ANNUITIES

  Annuities can be either qualified or non-qualified. As a contract between you and the insurance company, they each have different rules, but they also have commonality.

  • Living Benefits are an income benefit that pays for either a period or guaranteed for your life. Some are a “withdraw” benefit and others require annuitization. Each contract is different and should be analyzed by a professional.
  • Critical Care Benefits are benefits (usually a rider) that can be applied if you go into care. Each has a different value and triggering mechanism. When triggered, these often allow you greater free access to your principal. Some require only ADL’s and others require that you are moved into outside care.  Again, evaluation by a professional is your safest route.
  • ANNUITIZATION is in effect the creation of a pension with your annuity assets. You give your asset to the insurance company and the insurance company guarantees you a payout (pension) for either a period of years, life or joint lives.  Contact an advisor for your best choice and to be given further explanation.

• LIFE INSURANCE WITH LTC BENEFITS

  A few companies have designed life insurance products around a LTCi base.

  • Pure LTC  based universal life policies guarantee you a base amount of both life insurance and LTC insurance.  You are usually guaranteed your full premium back at death (life insurance) and a leveraged amount for LTC that goes up over time.  These are complex and mostly based upon age, sex of the applicant and time that passes between purchase and use.
  • Rider base LTC policies are very common.  They allow access to a portion of your death benefit for LTC purposes.  An example might be 2% of the death benefit per month until the policy is exhausted in about 50 months.  These are a good way to hedge a death benefit against potentially needing care. Many of these are good for home care.

• ALTERNATIVE INSURANCE BENEFITS

  • LTC Annuities are annuities that leverage your annuity deposit. Each one is different, but most pay the LTC benefit at a stated monthly rate over a stated period.  Example: $1500 per month for 36 months.  Many contracts increase the rate of payout the longer you have your money held in the annuity.
  • LTC Annuity Benefits are a particular benefit that might double your annuity payout during the time you are in care for between 5 years and life.
  • Life Insurance Critical Care Benefits. Some life insurance policies are designed to fund LTC from early withdrawals from the death benefit and others are designed specifically to be LTC vehicles. Either is a great source of LTC funds.

• LONG-TERM LIFE CARE BENEFITS

  • These benefits are relatively new to the long-term care arena. Life Care Benefits are benefits gained from selling your life insurance policy (either term policies or whole life) to a company that deposits the purchase price into an escrow account held in your name. This account can only be used to pay for LTC needs.  You will have to talk with a specialist.

I cannot reiterate enough that it is critical for you to work with a skilled and knowledgeable advisor.  One with experience in all aspects of creating LTC income and who understands your goals and needs.  The analysis is one of funding mechanisms, not selling products.

You should never call an insurance company without the assistance of a professional.  You may believe that you are asking the correct question, but often you are not.  Because of liability, the company will answer the question you ask rather than guide you to the questions you should ask.

Feel free to contact me and I should be able to put you in touch with a specialist in your area.

Plan Early and Plan Often™

Recent discussions about bringing jobs back to America has me thinking a sad thought: Is it possible that these jobs are gone forever?

Productivity is essentially a measure of output/input and is usually measured as the (value of output)/ (cost of labor).  Any business owner recognizes the importance of increasing that number.  Looking at the chart below, you can see the DOL has recorded steady increases since WWII.

The question is: How have we gotten here?  Is it possible that you are working 5 times as hard as your grandfather?  I don’t think so!  Are you working 5 times smarter?  I find it doubtful if working smarter could account for this much increase.  My grandfather was a pretty smart guy.  So, there must be another reason!

Here’s where we’re running into a problem.  As the chart below shows, between 2009 and 2016, US manufacturing output was up over 20% while hiring only increased 6%.  How can this be?  I see several reasons: Increased utilization of robotics or automation, better equipment, and the fact that these factories just learned how to get by with fewer employees. The reality is that we’ve lost more jobs to machines than either Mexicans or Chinese.

The truth is that there just isn’t anything to do about the changing tide in employment.  We’ve all know that 30 years and a gold watch at retirement went away with traditional pensions.  Populist politicians will not change the tide.  Those jobs are gone dow the same path as the horse and wagon.  People do not pick cotton by hand anymore.  Nor do we use two men, cross-cut saws to cut down trees (if I can help it).  It is neither bad nor good.  It just IS!

If you might think that we’re the only ones suffering, last year, I read about a Chinese manufacturer (for Apple) eliminating 60k jobs to automation.  The logic for any company is obvious.  A 2015 report by Boston Consulting Group (How Robots with Redefine Competitiveness) showed how a spot-welding robot’s cost had dropped from about $182k to about $133k with performance increasing at 5%/year.  The robot costs about $8/hr to operate as compared to a human at $25.  By 2025, they expect the cost to be in the $2 range.

An Associated Press News article reported that estimates show American has shed 7.5M manufacturing jobs since the peak in 1979.  At the same time, factory production has more than doubled.  At the same time, Ball State University’s Center for Business and Economic Research found that trade accounted for 13% of lost factory jobs.  Their research estimates 88% of manufacturing jobs lost were taken by robots and other internal factors. (AP 2016)

The big question isn’t how to get a job to come back that is no longer a job.  We have to move beyond that sort of populist, Luddite thinking and join the future. History is full of examples of businesses and jobs that went away.  If this were 1880, it is likely that you’d know one or more blacksmiths or coopers. Do you know even one?  I bet that you had to look up what a cooper did for a living.

The question should be, “What are the jobs of the future?”  And, “How do I best position myself and my children for future jobs?”

Richard Oxford will be on the Terry Gilberg Radio Show, on 550-AM KFYI, this Saturday night at 8:30pm (PST – Arizona) to talk about planning for college.

Richard is a Certified College Advisor, with College Funding Solutions, He helps families who are seeking college planning assistance want the peace of mind that comes from dealing with an individual who is truly concerned about the student and their educational goals, and who is knowledgeable about the inner-workings of the overall college planning process.

This show may also be heard online live at www.kfyi.com.