Health-Care Costs Often Overlooked as a Retirement Expense - by Morningstar Investment Research
Estimating how much one needs to have saved up in order to retire can be difficult. But among the most important--and most overlooked--aspects of retirement planning is health-care costs, which can have a dramatic impact on a retiree's financial picture. Allison Hoffman, an assistant law professor at UCLA, and Howell Jackson, a Harvard law professor, recently published results of a survey of more than 1,700 people ages 40-80 that asked about their expectations for out-of-pocket health-care spending in retirement. The results: More than half significantly underestimated what experts say they are likely to spend on health care once they stop working. Morningstar assistant site editor Adam Zoll caught up with Hoffman and Jackson via email to discuss their findings.
Understanding Capital Gains Tax Brackets
My spouse and I own mutual funds that spin off about $10,000 in capital gains each year. Our income puts us in the 15% tax bracket for capital gains by just a few hundred dollars, but do we have to pay 15% tax on the full $10,000?
Adam Zoll tackled this question, saying many taxpayers misunderstand how the tiered structure of our income tax system works, and this applies not just to the brackets used to calculate taxes on ordinary income, such as salaries and commissions from working, but also to those used to calculated taxes on investment-related income, such as capital gains and dividends. In particular, some assume that the tax bracket they fall into determines the rate they pay on all of their income, but that's not correct.
Among the other topics we addressed this week:
Vanguard Reopens Capital Opportunity to Individuals. Fund run by the topnotch Primecap team is still closed to institutions and intermediaries.
The Importance of Rebalancing. Our second article for young ETF investors focuses on a topic that most tend to overlook.
Our Mostly Patient Approach to Analyst Ratings. See how the Analyst Ratings and star ratings for funds change over time.
Don't Reflexively Reach for a Roth. As appealing as Roth contributions and conversions are, they're not for everyone.
Honey, I Shrunk the Rally. The S&P 500's long march to new highs has helped many core stock funds finally post gains since the index's last peak in October 2007, but not these.
Investing in a Fairly Valued Market. Morningstar StockInvestor editor Matt Coffina explains why a fairly valued stock should outperform both cash and bonds over the long run.
PowerShares Commodity ETF Remains a Top Choice. Although commodities have strug gled recently, this ETF is a good choice for investors optimistic about the sector.
BBH Rolls Out Its First Mutual Fund Since 2002. Plus, Vanguard reopens its Capital Opportunity fund to individual investors, Franklin Templeton rolls out an emerging-markets bond fund, USAA seeks permission to create actively managed ETFs, manager changes at Perkins and Calvert, and more.
Funds That Offer the Worst of Both Worlds. High fees and low returns have made these stock funds poor long-term performers.
Can Janus' Core Funds Keep Up With Its Ambition? The firm is attempting to turn things around at its largest segment.
What Investors Were Researching in March. As the market shrugged off new eurozone worries in March, investors remained focused on finding cheap, wide-moat stocks and income-producing investments.
Fund Face-Off: BlackRock's Health Sciences Funds. We compare two actively managed health and science funds from BlackRock.
Eaton Vance Proposes 'Stealth' Active ETFs. The firm's foray into actively managed exchange-traded funds would involve keeping daily portfolio holdings cloaked. Also, Principal seeks approval to create actively managed ETFs, and Guinness Atkinson requests permission to create passively managed ETFs.
Are Consumer Staples Stocks Reaching an Inflection Point? Valuations in the sector are getting a little frothy these days.
Investors Viewing European Banks With a Wary Eye. Spreads are widening among European-bank bonds, while holders of Cypriot bonds are now at a greater risk of impairment in future bailouts.