Useless Financial Advice

The June 2012 issue of Smartmoney magazine featured two popular types of finance articles – a how-to piece about saving money on health care and an interview with a policy expert about rethinking retirement.  Both of these are big topics in the world of finance; after all rising health care costs and inadequate retirement savings are two things that affect each and every one of us at some point.

I admit that the health care article was thoroughly researched.  In addition to standard advice about negotiating with your doctor and finding cheaper meds via mail-order or getting generics, it has some tips for questioning tests ordered by your doctor, going to physical therapy and timing your dental work in one calendar year to save on your federal tax bill (provided your medical bills exceed 7.5% of your adjusted gross income).

The interview with psychologist Laura Carstensen, an expert on aging, focuses on making the most of retirement.  She offers several “solutions” for overburdened social security system, from increasing the retirement age to creating a “phased retirement” based upon a moderately paced career path with more flexible schedules (assuming this will cause less burn-out and allow us to enjoy work longer).

In my opinion, these types of advice articles, and there are many similar ones that periodically crop up in print and online, are practically worthless because they ignore real solutions that would actually help the majority of people. 

I understand that there are times you can negotiate with your doctors and hospitals.  However, when you’re really, really sick or your loved one is truly sick and facing astronomical costs, are you in a frame of mind to negotiate care and bills?  Most people are not and should not have to. When my European friends have to undergo major surgery or treatments, all they have to focus on is getting better or caring for their loved ones.  When you’re scared and facing new and complex medical terminology, the last thing you want to think about is how you’re going to pay for care.   These types of articles ignore the human side of things, as if it’s negotiating for medical care is the same as a cable bill!  You can throw all the great advice about getting a detailed bill and scanning for medical overcharges but who the hell wants to deal with that during a time of crisis? (And while I’m ranting, who the hell has the time to figure out if their anesthesiologist is also “in network” like their doctor or hospital?)

A friend had a child in intensive care, racking up hundreds of thousands in bills.  Although she had insurance, she still had to pay quite a lot out of pocket.  The worse part is that she did not bring home a completely healthy child.  As she received mysterious bill after bill, she also had to focus on caring for her sick child.  I’ve read similar stories of parents desperately fundraising for their child’s care.  I can’t believe that anyone should have to worry about finances at a time like that.  It’s fine that some people pay more for cable or airplane tickets because they’re bad at negotiating or comparison shopping.  However, this should not be a consideration when it comes to essentials like health care.

In the retirement article, one key point is that we must work longer to make our finances last longer.  The interview states that 88% of people 65 to 74 are healthy enough to work.  Great advice, in theory.  The reality is that the majority of older people who want to work longer simply can’t.  While some climb high enough up the ladder to enjoy respect or can jump into consulting, many more people face age discrimination and are the first to be laid off.  It’s great that 88% of older people could work; however, how many companies are eager to hire these people? The expert also states that longer careers would be possible if we all didn’t work so hard in the “middle” years.   While  I do know people who have opted out to go back to school, which is not really a break, or to travel, most people who ramp down or opt out of work do so to care for kids or parents.   The majority of these people don’t find great jobs after their “break”.  I’m not saying that we can keep the current retirement age or benefits as is, but the typical solutions given in money magazines are not very realistic either.

The lack of reality is what bothers me most about discussions addressing health care in the U.S. and retirement.  They seem to be made by the upper echelons who have little or much less to worry about in terms of finances, with little regard for how the majority of people will be affected.

I’m even more bothered that many regular middle-income people I know seem to feel the same way, especially if they haven’t been personally affected by serious health issues or reached retirement age.  I want to know if they will feel the same if/when they face a serious illness or if they have a sick child.  And when they reach age 70, I wonder if they will re-think how great or easy it will be to work longer….maybe they’ll get lucky and Walmart needs a greeter.

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6 responses to “Useless Financial Advice

  1. You hit the nail on the head… and one of my hobby horses. And the reality is that there is a significant minority of the population who really needs to stop working at age 62. Of course, those folks are also going to die younger. And we could push them off to the DI program, but that process is inefficient and expensive compared to early withdrawal of Social Security. These are really tough problems that government is working hard on addressing.

    It’s a shame that the Republicans blocked (recent Nobel Prize winner) Peter Diamond from serving the gov’t. I’ve never met someone who both cares so much and has the knowledge and intelligence to meet these problems facing the older population head-on. He would have been a force for good.

  2. This is a great post. I have nothing to add but that!

  3. I’ve read many of these same articles and agree wholeheartedly with your post. My reaction upon reading these articles was, “Now give me some advice I can REALLY use.”

    Not only do I want to retire in my early 60s, I want to do so to make way for the next generation. I want them to have opportunities. Although we need job growth we must be honest that for the economy to turn around we also need some attrition — we need one generation to make way for the next.

    So many of such articles really fritter around the edges. Until we can deal with health care and the high and uncertain costs of it, nobody will have a secure retirement. A person can clip coupons, walk, take the bus, or make all kinds of expense modifications in retirement, but health care is a doozie.

  4. Spot on analysis!

    All the articles are for people who actually want to retire someday. I don’t plan to retire, ever. I plan to work as long as I can because I think in general, the being around other people and making plans aspects of work generally keeps elderly folks healthy (depends on the nature of the work of course). That’s not to say I won’t ever find myself in the shitty position where I want to continue to work but can no longer get any clients.

  5. Amen, especially on the health care stuff. Duh. Just duh.

    In the same vein, though not (it sounds) of the quality of either of the articles you mention, I was recently tremendously irritated by a short piece in the AARP magazine (newsletter?) that assured me that knowing how much I needed to save in preparation for retirement was simple. All I need is three pieces of information: (1) how long I will live; (2) my average annual costs/expenditures; and (3) my anticipated rate of return (on investments). Gee, there’s no chance i might not know any of those numbers, is there? In fairness they did offer a few rules of thumb/guidelines for same, but there is, don’t you know, a huge difference between estimating (and being right on average over a decent sized sample or population) and knowing (an individual’s) values.

    Sigh.

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