With the issue of student loan debt so much in the news, we begin with an article quoting Ben Bernanke on the subject. He explains why the growing debt from student loans is not a threat to the U.S. financial system. Next we talk about a strategy that may become increasing popular for reducing estate taxes, especially if the exemption drops from $5 million to $1 million this year. We follow with an article about long-term care costs, which must be included in retirement planning. Finally, we quote a study by Deutsche Bank about the effects of Central Bank policies in the United States and Europe. It demonstrates how these policies are hurting savers and investors through depressing interest rates.
Student Debt is not a Threat to U.S. Financial System, Bernanke Says – The $1 trillion student loan debt does not jeopardize the U.S. financial system, says Federal Reserve Chairman Ben Bernanke. In comments to teachers at a town hall meeting, Bernanke said that unlike housing debt, most educational debt is backed by the U.S. government. http://www.kansascity.com/2012/08/07/3749416/bernanke-1-trillion-in-student.html
More Families are Using Sale/Lease Back to Reduce Their Estates – One strategy the wealthy are using to reduce their estates is to pass along their homes to the next generation and continue to live in them, paying rent. Such a sale/lease back structure typically has the client paying market rate rent to a Guarantor Trust. This may become more common if Congress allows the Estate Tax Exemption to drop back down to $1 million. http://www.financial-planning.com/news/lease-back-strategy-2680280-1.html
Long-Term Care Cost Must Be Included in Retirement Planning – Long-term care insurance is a key part of a retirement plan. According to a recent John Hancock study, the average cost of such care can range from $39,000 to $86,000 per year, depending on the facility. Ted Sarenski, Chair of the Elder Planning Task Force, has crafted five questions to ask when considering purchasing long-term care insurance. http://blog.aicpa.org/2012/08/cpas-stress-the-importance-of-long-term-care.html
Central Bank Policies Cost Investors – Deutsche Bank estimated that policies implemented by Central Banks here and abroad will cost investors about $163 billion over a decade. Their policies have depressed interest rates and thus hurt savers and investors while helping debtors. http://www.bloomberg.com/news/2012-08-13/financial-repression-will-cost-163-billion-deutsche-bank-says.html
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John R. Day and Bill W. Ennis