Error
  • JUser: :_load: Unable to load user with ID: 563
Monday, 02 April 2012 11:37

Private Health Insurance Rebate Means Tested

Written by

 

The legislation to apply an income test to the 30% private health insurance rebate has passed the House of Representatives and is expected to pass the Senate. The income test will start from July 1, 2012.

Obviously not everyone will be affected, but for those that are, they need to understand that their taxable income, any fringe benefits and superannuation come into the calculation of the income test. I will explain this below.

The legislation gives effect to 2009 Federal Budget announcements concerning the private health insurance rebate and consequential Medicare Levy Surcharge changes. The essence of the proposed changes is to effectively income test the 30% private health insurance rebate for individuals whose income for Medicare levy surcharge purposes is more than $83,000pa and for families where that income is more than $166,000pa.

To achieve the means testing, the legislation proposes to introduce three new "Private health incentive tiers" with effect from July 1, 2012. If the legislation is passed, then from that date, individuals and families may not be eligible for the full 30% rebate for their private health insurance premiums. In conjunction with this, also from July 1, 2012, the rate of Medicare levy surcharge for individuals and families without private patient hospital cover may increase depending on their level of income.

The effect of these new tiers would be that the rebate would begin to phase out for individuals who earn more than $83,000pa and for families where that income is more than $166,000pa. There would be no rebate where individual income is over $129,000pa and families over $258,000pa.

For single people aged 65 to 69 years, the rebate is 35% if they earn less than $83,000pa, and for those aged 70 and over earning that income, the rebate is 40%.

For families with more than one dependent child, the relevant threshold is increased by $1,500 for each child after the first.

In future years, the singles thresholds will be indexed to average weekly ordinary time earnings and increased in $1,000 increments (rounding down). The couples/family thresholds will be double the relevant singles thresholds.

For those who think they may be affected by the changes, the income test includes the sum of a person's:

  • taxable income (including the net amount on which family trust distribution tax has been paid, lump sums in arrears payments that form part of taxable income, and payments for unused annual and long service leave); plus
  • reportable fringe benefits (as reported on the person's payment summary); plus
  • total net investment losses (includes both net financial investment losses (eg. shares) and net rental property losses); plus
  • reportable super contributions (includes reportable employer super contributions (eg. under salary sacrifice arrangements) and deductible personal super contributions),

Less:

  • where the person is aged 55-59 years old, any taxed element of a lump sum superannuation benefit, other than a death benefit, which they received that does not exceed their low rate cap.

The rebate can currently be claimed in one of three ways:

  • The health fund can provide the rebate as a premium reduction.
  • Where the full, upfront cost of the private health cover premiums has been paid, people can receive a cash payment from the Government through their local Medicare office or by lodging the claim form by post.
  • The rebate can be claimed on annual income tax returns if the full, upfront cost has been paid.

The changes are significant in a "hip pocket" sense and because of the way in which the income test is calculated, people may need to consult their adviser to see how they may be impacted.

Note: Advice contained in this articler is general in nature and does not consider your personal situation or needs. Please do not act on this advice until its appropriateness has been determined by a qualified adviser.  While the taxation implications of this strategy have been considered, we are not, nor do we purport to be registered tax agents. We strongly recommend you seek detailed tax advice from an appropriately qualified tax agent before proceeding.  The information provided is current as at March 2012.

 

 

Monday, 02 April 2012 11:16

Equity Market Pessimism is at Extreme Levels

Written by

The old saying of buy in gloom and sell in boom is much easier in theory than in practice, firstly because of the emotional aspect of investing and secondly the difficulty investors have in measuring the gloom.

One reliable measure of measure of gloom (and boom) is the equity risk premium.

The definition of equity risk premium is "The excess return that an individual stock or the overall stock market provides over a risk-free rate. This excess return compensates investors for taking on the relatively higher risk of the equity market. The size of the premium will vary as the risk in a particular stock, or in the stock market as a whole, changes; high-risk investments are compensated with a higher premium."

Below is an updated chart of equity market risk premiums for the Australian share market.  This chart highlights that equity market risk premiums are at levels not seen since the depth of despair from the GFC in March 2009 and in fact higher than they were during 1974 and 1980.  The way of interpreting this chart is the higher the risk premium, shares are cheaper, and the lower the risk premium, the more expensive they are.



You will also see that historically, following peaks in the equity risk premium there have been significant share market rallies such as that experienced during 2009 which saw the market rise by around 25%.

Much of the cause for pessimism relates to Europe and we remain of the view that a workable medium term plan for Europe can be found.  If this risk was reduced, one would expect equity risk premiums to drop which would result in an increase in share prices.  Arguably most if not all tail risk if already priced into the sharemarket.

Clearly we are not in boom times, which is why we have a bias to buy (selectively) not sell at this point.

Note: Advice contained in this articler is general in nature and does not consider your personal situation or needs. Please do not act on this advice until its appropriateness has been determined by a qualified adviser.  While the taxation implications of this strategy have been considered, we are not, nor do we purport to be registered tax agents. We strongly recommend you seek detailed tax advice from an appropriately qualified tax agent before proceeding.  The information provided is current as at March 2012.

 

 

 

 

 

 

 

Thursday, 12 April 2012 16:55

Important to scratch the surface when investing

Written by

All too often we hear the generalist who says "buy healthcare because of the ageing of the population" or "can't lose in bricks and mortar".

When investing it is critical to scratch below the surface and avoid being tempted by the generalist.

Europe is currently an excellent study for this as the generalist would probably be saying that Europe is a basket case and investors should avoid it at all costs.  Upon digging below the surface however it can be seen firstly that not all of Europe is a basket case.  This is represented by the graph below whcih shows the GDP (commonly used to measure strength in an economy) of various European countries over the past 5 years.

While it is clear that the Greek economy is in poor health, the German economy is enjoying the cheap Euro that assists their exporters such as BMW.  While talking of BMW, we read from the Wall Street Journal that the waiting list in China to buy a BMW is 6 months and that BMW is making considerable money exporting cars to China.  Fund managers including Platinum Asset Management have made a significant amount of money from investing in BMW while the generalist would have missed the opportunity.

We encourage investors to "scratch below the surface when considering investments".

Note: Advice contained in this article is general in nature and does not consider your personal situation or needs. Please do not act on this advice until its appropriateness has been determined by a qualified adviser.  The information provided is current as at March 2012.

Wednesday, 21 March 2012 10:36

Why would you want an iPad?

Written by

What is an iPad – why would you want one?

An iPad is basically a portable computer that is capable of sending emails, accessing the internet and running a range of applications such as Street Directories, Woolworths, Kobo electronic book reader and thousands more.

The beauty of an iPad is that it weighs only 600 grams and operates through touching the screen, which means that you don’t have to be a computer programmer to operate one.

There are essentially two types of iPad, the first is 3G and the other is Wifi.  The 3G version simply means that the iPad is capable of connecting to the internet by itself, and the user would simply purchase a 3G data plan from a provider such as Telstra.  The Wifi version means that the user can connect to the internet using a Wireless Internet Network either in their house, or many companies provide free wireless networks such as McDonalds.

iPad 2 has been around for approximately 12 months now and is superseded by the latest iPad which is simply called “ïPad”.  The main differences are that the latest iPad has a higher definition screen, front and back camera’s that are of better quality than the iPad 2 together with a faster internal processor.

iPad 2’s are still on the market and have been discounted in price.  For more information about the iPad refer to the following link.  http://www.computerdepot.com.au (ask for Mark Cunningham - he is very knowledgable and helpful)

What could you use it for?

  1. Those who travel and want a light weight device to allow them to send and receive email and access the internet.
  2. Those who travel can use the iPad as a Street Directory/GPS device
  3. iPad 2 comes with a camera which allows you to video conference with family members or business associates using “Face Time”.
  4. iPad can store and edit photographs and be used to display them as a picture frame
  5. Magazine and newspaper subscriptions are available on iPads

 

Monday, 19 March 2012 16:29

The US housing sector turning the corner

Written by

Introduction

Starting with the bursting of the technology bubble in 2000, the fortunes of the US economy have waned.  Since then, the US has seen two recessions with the last being the worst since the 1930s, a rising trend in unemployment, the bursting of a corporate debt bubble with the tech wreck and the bursting of a housing debt bubble with the sub-prime mortgage crisis. So it’s little wonder  the US share market has been spinning its wheels  in a secular bear market. Some commentators even talk of a permanent decline for the US.

The high level of US public debt, ongoing private sector deleveraging,  less business friendly policies, demographic trends and the absence of extreme share market undervaluation suggest the secular bear market in US shares may not be over yet. That said, it would be dangerous to write the US off. Many did this in the 1970s only to see it roar back with vengeance in the 1980's and 90's .

More importantly, there are some signs of light at the end of the tunnel for the US in manufacturing, oil production and housing. This note takes a look at these sectors, focusing on the latter as housing was the original driver of the global financial crisis.

US manufacturing renaissance

Recently there have been numerous examples of companies setting up manufacturing plants or expanding production in the US over locations in Canada, Mexico, Japan or the emerging world. These include Maserati, Toyota, Honda, Nissan, Kia, Intel, Whirlpool and Caterpillar. In fact for the first time in over 35years, annual growth in manufacturing employment is exceeding employment growth elsewhere in the US economy. The key drivers of America’s manufacturing renaissance are restrained unit labour costs in manufacturing (which have been unchanged for the past 30 years), rising wages in emerging countries, the low US dollar (US$) after a decade long slump, and cheap energy prices helped  by surging natural gas supply. While it’s early days yet, America’s manufacturing renaissance has further to go.

Surging oil production

US natural gas supply has been surging for years resulting in low prices. More significantly, a few years ago US oil production quietly bottomed and is now on the rise again thanks to a surge in shale oil production. The US has huge reserves of shale oil and advances in fracking technology (by which shale kilometres below the surface is fractured  using explosives, allowing oil to be released and flow to the surface) and oil prices around US$100 per barrel are making it economic for these reserves to be tapped. Some even see the US becoming self sufficient in oil again in the decades ahead.

US housing bottoming

A collapse in the US housing sector was at the core of the sub- prime mortgage crisis in the US which subsequently morphed into the global financial  crisis. US house prices and housing construction surged into the middle of the last decade as lax lending standards underpinned a huge surge in home ownership. Boom turned to bust, starting around 2006 as housing supply started to surge and it became harder for sub-prime borrowers to refinance their loans. Foreclosures rose, made worse in turn  by rising unemployment as the whole process fed on itself. The subsequent slump has seen a 34% plunge in house prices. This has seen the volume of private residential investment collapse by about 60% from its peak in the mid 1990s, resulting in a huge  drag on US gross domestic product (GDP) growth.

Why the worst is likely over for US housing

There are good reasons to believe that the US housing market  is bottoming and starting to recover.

The first thing to note is that most  US housing indicators have stabilised. Home sales have been bouncing along a bottom since 2009. Housing starts  and permits to build new houses have been bottoming since late 2009. Furthermore, the National Association of Home Builder’s conditions index has now broken out on the upside, pointing to a rise in starts ahead.


 

Second, the number of vacant homes is now starting to fall sharply. Over time the equilibrium number of vacant homes has increased in line with the rising population. This is proxied by the long-term trend line in the next chart. It can be seen that the gap between the actual number of vacant homes and its long-term trend is now closing rapidly. Related to this, household formation is likely to rise sharply. Since 2006 it has been running well below that implied by population growth and has collapsed  from a record 2 million to around 700,000 last year. This reflects  tough economic conditions causing young people to stay at home  with their parents for longer and is likely to rebound as economic  conditions improve. If the number of vacant homes continues to decline at the same rate as the last couple of years and household formation picks up then  the overhang of housing will likely be gone by year end.


Third, the stock of unsold new homes has largely vanished.  It is now at its lowest level since the 1950s. This seems  more extreme when it is compared with the fact that the US population has more than doubled since then.


Fourth, while the US mortgage foreclosure rate remains high, the delinquency rate is slowing as are the number of new foreclosures, pointing  to a decline in foreclosures ahead.


Finally, housing affordability has reached a record level. While this has not been acted upon given the excess supply of housing and tough economic conditions, we are likely to see greater demand for houses as the excess supply dwindles and economic conditions improve.


Similarly, house price to income and house price to rent ratios have collapsed, pointing  to good value in US housing.


The improvement in US house price valuation measures stands in stark contrast to the still very overvalued Australian housing market…but that’s a different story. Note both the US and Australian charts use OECD data for consistency.


The bottom line is that the US housing market  appears to have bottomed with recovery in both activity and prices likely.

What a recovery in US housing would mean?

A recovery in US housing has several implications.

  • First, by reversing a significant drag on the US economy it should help perpetuate economic recovery.
  • Second, this is likely to be reinforced by a boost to US household weatlh as house prices stailise and recover.
  • Third, residential construction is a key user of raw materials like copper, therefore a recovery in US housing construction should boost global commodity demand.

Concluding  comments

While the secular bear market  in US shares that began 12 years ago may have further to go, there are a number of positives suggesting there is light at the end of the tunnel. In particular the US housing sector appears to be bottoming.  This is an important investment theme, but is difficult to play from Australia.  Magellan and Platinum Asset Management have their portfolios positioned with this information in mind.

Taken from an article written by Dr Shane Oliver, Head of Investment Strategy and Chief Economist - AMP

Important note: While every care has been taken in the preparation of this document, AMP Capital Investors Limited (ABN 59 001 777 591) (AFSL 232497)  makes no representation or warranty as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator  of future performance. This document has been prepared for the purpose of providing general  information, without taking account of any particular investor’s objectives, financial  situation or needs.  An investor should, before  making  any investment decisions,  consider the appropriateness of the information  in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This document is solely for the use of the party to whom  it is provided.

 

 

 

 

 

We recently provided advice to a young couple Rob and Simone who were both around 40.  They have two young children under the age of 10 and Rob has a daughter from a previous marriage who is now 20 and financially independent.

Rob was diagnosed with a terminal illness and given only a short time to live when he saw us and he wanted to ensure that his financial affairs were in the best condition they could be before his death.  Rob’s will simply left all of his assets to Simone but upon exploring the family structure it became clear that Rob’s adult daughter may seek to contest Rob’s estate which could prove costly and stressful (other than to lawyers).

This situation reinforced the need to be clear on ownership of assets when estate planning and yet we are constantly amazed at those who seek to undertake estate planning without regard for ownership.

Their assets consist of:

Asset                                                     Owner                                  Value

House                                                   Joint (Joint Tenants)       $600,000

Car                                                         Simone                                 $25,000

Superannuation                                  Rob                                        $650,000

(including insurance)

Shares                                                  Rob                                        $30,000

Unused Leave                                   Rob                                        $50,000 (after tax)

The key issue at stake was to limit the value of assets paid to the estate that could be subject to a legal contest.  We would add that prior to Rob’s ultimate death, his adult daughter openly discussed how she would like to use his superannuation monies to buy a house with her boyfriend, completely disregarding her father’s wishes.

Let’s examine what could potentially be paid into Rob’s estate and we begin by confirming that as their house is owned jointly as joint tenants, ownership will pass to Simone.  The only assets that could pass to Rob’s estate could be his superannuation, unused leave and his shares.

In order to restrict the assets paid to the estate, we ensured that Rob completed a binding death benefit nomination to his superannuation fund that directs the trustees of the fund to pay the superannuation benefit to Simone.  If this was not done, the decision about who to pay superannuation proceeds to, would be made by the trustee of the super fund.  In the event of a dispute between Simone and the adult daughter, this could lead to the trustee taking the view that they simply pay the superannuation to the estate and remove the possibility of being caught in the middle of a dispute.

Rob’s shares were sold and the proceeds paid to Simone.  The alternate course of action would have been to simply transfer ownership to Simone, but Rob wanted to sell the shares anyway.

This effectively meant that the only asset that was to be paid into Rob’s estate was his unused Leave entitlements.

Whether Rob was sufficiently insured is not for discussion in this article.  We are focussed solely on ensuring that the ownership of assets was such that they were not to be paid into Rob’s estate and subject to a legal contest.  With the exception of unused leave entitlements this has been done.

Effective Estate Planning is all about ensuring that your assets go to where you intend, in the most tax efficient manner and the most effective manner.  When planning your estate it is critical that your adviser consider the ownership of your assets in addition to your family structure.

Note: Advice contained in this article is general in nature and does not consider your particular situation or needs. If information contained is not appropriate to you at this stage please pass on to family and friends who may benefit. Please do not act on this advice until its appropriateness has been determined by a qualified adviser.

 

It is believed that there is currently around $1.4 trillion in Australia in Cash and Bank Deposits in Australia as some investors have sought a safe haven.  This is more than the total value of assets currently held in the entire Australian Superannuation System.

For those seeking income from their investments however, the below chart shows the after tax income from investing $100,000 in 1995 into a basket of Australian Shares (blue bars) compared to investing into a cash deposit that returns the RBA cash rate which is currently 4.25% (red bar).

The green bar is the level of income received when the value of franking credits from Australian shares is included.  Franking credits from the tax already paid by a company before paying a dividend, which is effectively returned to the taxpayer through the tax system.  Effectively this means that with the company tax rate at 30%, a 5% fully franked dividend equates to around 7.1% in pre-tax income when those franking credits are included.  We have produced a video on our YouTube channel for those who wish to explore this aspect in more detail.



Click Image to enlarge

 

This chart clearly shows that for long term investors seeking income, that the after tax income from Australian Shares measured since 1995 is now providing around 3 times as much income compared to an investor who invested the same amount into a cash deposit.

Given that there are very juicy dividends on offer in the current investment environment such as Telstra paying 8.6% fully franked dividend (which is equal to more than 12% on a pre-tax basis), this is food for thought.

 

Note: Advice contained in this article is general in nature and does not consider your personal situation or needs. Please do not act on this advice until its appropriateness has been determined by a qualified adviser.  While the taxation implications of this strategy have been considered, we are not, nor do we purport to be registered tax agents. We strongly recommend you seek detailed tax advice from an appropriately qualified tax agent before proceeding.  The information provided is current as at March 2012.

 

Monday, 20 February 2012 11:28

Italians & Tax

Written by
  • On 30 December 30, 2011 80 tax officials launched a raid at Cortina D'Ampezzo.
  • They traced the owners of 133 luxury cars: 31.5% had declared incomes of less than 22k EUR + 12% between 22k and 50k
  • Another 118 were owned by companies: 16% had declared losses, 31% had declared income of under 31k
  • Spot checks carried out on hotels etc: one boutique (revenue 1.6m EUR), could not produce a single receipt
  • Black Economy estimated at 17.5% of GDP
  • National Debt of 120% of GDP
  • Primary fiscal surplus of 1.7%, aims to increase to 5% from 2013

Interesting statistics, one would assume correcting tax evasion would massively help Italy's National Debt problem.

These statistics are sourced from Hunter Hall

Thursday, 16 February 2012 14:37

Meet the Marriage Killer

Written by

Ken Mac Dougall bit into the sandwich his wife had packed him for lunch and noticed something odd—a Post-it note tucked between the ham and the cheese. He pulled it out of his mouth, smoothed the crinkles and read what his wife had written: "Be in aisle 10 of Home Depot tonight at 6 p.m."

Mr. Mac Dougall was renovating the couple's Oak Ridge, N.J., kitchen, and his wife had been urging him to pick out the floor tiles. He felt he had plenty of time to do this task. She felt unheard.

"I thought the note was an ingenious and hysterical way to get his attention," says his wife, Janet Pfeiffer (whose occupation, interestingly enough, is a motivational speaker), recalling the incident which occurred several years ago. Her husband, a technician at a company that modifies vehicles for handicapped drivers, didn't really see it that way. "I don't need a reminder in the middle of my sandwich," he says.

Nagging—the interaction in which one person repeatedly makes a request, the other person repeatedly ignores it and both become increasingly annoyed—is an issue every couple will grapple with at some point. While the word itself can provoke chuckles and eye-rolling, the dynamic can potentially be as dangerous to a marriage as adultery or bad finances. Experts say it is exactly the type of toxic communication that can eventually sink a relationship.

 Why do we nag? "We have a perception that we won't get what we want from the other person, so we feel we need to keep asking in order to get it," says Scott Wetzler, a psychologist and vice chairman of the Department of Psychiatry and Behavioral Sciences at Montefiore Medical Center in New York. It is a vicious circle: The naggee tires of the badgering and starts to withhold, which makes the nagger nag more.

Personality contributes to the dynamic, Dr. Wetzler says. An extremely organized, obsessive or anxious person may not be able to refrain from giving reminders, especially if the partner is laid back and often does things at the last minute. Other people are naturally resistant—some might say lazy—and could bring out the nagger inanyone.

It is possible for husbands to nag, and wives to resent them for nagging. But women are more likely to nag, experts say, largely because they are conditioned to feel more responsible for managing home and family life. And they tend to be more sensitive to early signs of problems in a relationship. When women ask for something and don't get a response, they are quicker to realize something is wrong. The problem is that by asking repeatedly, they make things worse.

Men are to blame, too, because they don't always give a clear answer. Sure, a husband might tune his wife out because he is annoyed; nagging can make him feel like a little boy being scolded by his mother. But many times he doesn't respond because he doesn't know the answer yet, or he knows the answer will disappoint her.

Nagging can become a prime contributor to divorce when couples start fighting about the nagging rather than talking about the issue at the root of the nagging, says Howard Markman, professor of psychology at the University of Denver and co-director of the Center for Marital and Family Studies. For 30 years, Dr. Markman has researched conflict and communication in relationships and offered relationship counseling and marriage seminars. He says that while all couples deal with nagging at some point, those who learn to reduce this type of negative communication will substantially increase their odds of staying together and keeping love alive. Couples who don't learn often fall out of love and split up.

Research that Dr. Markman published in 2010 in the Journal of Family Psychology indicates that couples who became unhappy five years into their marriage had a roughly 20% increase in negative communication patterns consistent with nagging, and a 12% decrease in positive communication. "Nagging is an enemy of love, if allowed to persist," Dr. Markman says.

The good news: Couples can learn to stop nagging. Early in their marriage, Ms. Pfeiffer, now 62, repeatedly reminded her husband about household tasks and became more demanding when he ignored her. "If I was asking him to take care of something that mattered to me and he was blowing me off, that made me feel like I didn't matter," she says.

Mr. Mac Dougall, 58, says the nagging made his muscles tense, he would become silent and his eyes would glaze over in a "thousand-yard stare." "Her requests conveyed some sort of urgency that I didn't think was needed," he says. "If I said I was going to get to it, I would definitely get to it."

Ms. Pfeiffer decided to soften her approach. She asked herself, "How can I speak in a way that is not threatening or offensive to him?" She began writing requests on Post-it notes, adding little smiley faces or hearts. Mr. Mac Dougall says he was initially peeved about the sandwich note but did show up at Home Depot that evening smiling.

Ms. Pfeiffer sometimes writes notes to him from the appliances that need to be fixed. "I really need your help," a recent plea began. "I am really backed up and in a lot of discomfort." It was signed "your faithful bathtub drain." "As long as I am not putting pressure on him, he seems to respond better," Ms. Pfeiffer says. Mr. Mac Dougall agrees. "The notes distract me from the face-to-face interaction," he says. "There's noannoying tone of voice or body posture. It's all out of the equation."

The first step in curbing the nagging cycle, experts say, is to admit that you are stuck in a bad pattern. You are fighting about fighting. You need to work to understand what makes the other person tick. Rather than lazy and unloving, is your husband overworked and tired? Is your wife really suggesting she doesn't trust you? Or is she just trying to keep track of too many chores?

Noreen Egurbide, 44, of Westlake Village, Calif., says she used to give her husband frequent reminders to take out the garbage, get the car serviced or pick up the kids from school. "I thought I was helping him," she says. Jose Egurbide, 47, often waited a while before doing what she asked. The couple would argue. Sometimes Ms. Egurbide would just do it herself.

A few years ago, they got insight into their nagging problem after taking a problem-solving assessment test, the Kolbe Assessment. Ms. Egurbide, a business coach, learned she is a strategic planner who gathers facts and organizes in advance. Herhusband, an attorney, learned that he is resistant to being boxed into a plan. Now, Ms. Egurbide says, "I don't take it personally when he doesn't respond." "There is a sense of recognition about what's happening," Mr. Egurbide says. "It's easier to accommodate each other."

Source: WSJ reporting

By: Elizabeth Bernstein

Thursday, 16 February 2012 10:18

Depression in Retirement

Written by

 

Depression in Retirement

There are many stresses in life that may lead to depression, and growing old can be a key one. One very important for those suffering from depression is to know that it is not normal, and rarely will they come through it without professional help.

In older people, one trigger for depression is difficulty in the transition from a productive working life to retirement. For others, the loss of a spouse can progress from grief to depression.

As we age we experience many disappointments: the death or illness of friends and family, loss of mobility, uncertain financial security, medical bills and so on. These events can lead to depression.

Most people can overcome these obstacles, but for others they may be more significant and, especially if they are compounded, they may seem insurmountable. While a 'sadness' may pass following an event, depression is very deep-seated, and can leave you feeling down, unable to make decisions, with a general feeling of malaise. It affects you both physically and mentally.

Clinical depression is a psychological problem that should not be ignored, but treated as soon as possible with counseling or psychotherapy.

While most older people are content with their lives, as many as three percent of over-65s experience clinical depression. On the bright side however, around 80 percent of them can be successfully treated with psychotherapy. For some medication gives excellent results.

There are several types of clinical depression:

1. Dysthmyia - a type of depression that may persist for a long time before diagnosis.

2. Reactive depression - which occurs after a major loss or in response to a serious life event.

3. Major depression - this serious form of the illness renders the sufferer almost incapable of carrying on everyday life. A person may experience this once in their life, or it may recur. Counseling and medication are often used in combination in this instance.

4. Bipolar - this often referred to as manic-depressive illness and manifests itself as severe mood swings, alternating from extreme highs to lows. Bipolar disorder usually first appears when a person is in their twenties but may not be diagnosed until as late as their fifties.

Some symptoms of depression

If you suspect the following symptoms of yourself or a loved one, you should consult a health professional with your concerns and request an evaluation.

· A persistent sad or anxious mood

· Loss of energy and Loss of pleasure in previously enjoyed activities

· Sleeping and eating problems

· Uncharacteristic feeling of pessimism

· Feelings of helplessness, worthlessness or guilt

· Unpredictable and excessive crying

· Fractiousness and irritability

· Excessive grief that extends beyond three months

· Extremely 'low' periods followed by excessive 'highs'

· Racing thoughts and fat speech

· Decreased need for sleep

Getting help

The most difficult part of getting help for sufferers is the person themselves. People with depression often believe that it will go away in time, that they can manage it, or that they are too old to change. Others believe there is a stigma attached to having what is essentially a mental illness.

The truth is that it is highly treatable problem and dramatic improvements can be seen in a matter of weeks. Antidepressant medication, psychotherapy, or a combination of the two are the usual methods of treatment, depending on the severity and nature of the illness.

Family doctors, clinics and family medical centers can provide diagnosis and treatment for depression, but a consultation with a psychologist should also form part of the treatment process.

Do remember that feeling depressed, especially in your retirement, is not normal and that any pessimistic or 'empty' feelings that persist for more than a few weeks should be investigated by a health professional.

By Kerry Finch

Article Source: http://EzineArticles.com/1220969