Archive for October, 2007 Page 2 of 4



For Women, Greater Obstacles to Retirement

The New York Times, October 23rd, 2007

VICKIE ELISA was ready to jump at the offer of a consulting position —
and a $40,000 raise — in Washington six years ago. But a benefits
expert whom she worked with at the DeKalb County Board of Health in
Atlanta stopped her short. The new job had no pension plan, the expert
pointed out, whereas Ms. Elisa would be eligible for one from the State
of Georgia that would pay as much as 90 percent of her salary after she
retired.

“I never ran the numbers that way,” said Ms. Elisa, now 49. “I always said, ‘I don’t need to think about this till I’m 60.’ ”

Since
turning down the consulting offer, Ms. Elisa has done a lot more
thinking about retirement. Instead of retiring in three years at 52,
she is planning to work until she is 57 or even 61, which would
increase her pension by at least 21 percent. She is also planning to
put future 401(k) contributions into more aggressive stocks.

More
women are doing such retirement financial analysis, for good reason.
They can’t afford to retire. Whether they have a traditional pension or
a 401(k) plan, women consistently enter retirement with about half as
much money as men do.

The explanations have been known for
years. Women generally earn only about 80 percent of what men earn.
That hurts because the formula for a traditional pension is based on
income, while the lower earnings make it harder for women to put money
aside in a 401(k).

Yet those skimpier 401(k)’s must stretch over a longer time frame, as women outlive men by about five years, on average.

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For Love and a Little Money

The New York Times, October 23rd, 2007

BY the time Frederick A. O. Schwarz Jr. retired from Cravath, Swain
& Moore in 2002, he was financially set. He was already an author,
he already had a distinguished track record in public service and
philanthropy and, of course, he was the great-grandson of a toy magnate.

So when Fritz Schwarz — the name he greatly prefers — joined the nonprofit Brennan Center for Justice at New York University
Law School, he seriously considered volunteering his services. He
decided against it, and negotiated a salary, albeit one below what a
starting lawyer makes.

He never got a raise, and last year, when
the Brennan Center ran into a budget crunch, he gave up his pay. But in
principle, if no longer in principal, he thinks the salary made sense.
“An organization and a person are simply more committed to each other
when the person is paid,” he said.

Clearly, Mr. Schwarz has
bought into the concept of paid volunteerism. The phrase may sound
oxymoronic, but an ever-growing number of retirees and nonprofit
executives say it is an apt description of the way modern retirees view
nonprofit work. And while no one has gathered statistics on the
tendency, experts say there is a good chance that the automatic link
between doing good and working for nothing has been permanently
severed.

“People used to say, ‘Here I am, what do you need done?’ ” said Deborah Russell, director of work-force issues for AARP. “Today’s retirees say, ‘Here’s what I do well, how can you use it, and what will you pay?’ ”

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Exotic I.R.A.’s: Leaving Stocks and Bonds Behind

The New York Times, October 22nd, 2007

BRIAN HARRIS makes a 30 percent annual return on his Roth individual
retirement account, but his money is not invested in a soaring
biotechnology stock or a hot currency fund.

Instead,
Mr. Harris, a music teacher from Tucson, owns about 25 marimbas,
xylophones and timpani. Using the money in his retirement account, Mr.
Harris buys the instruments for less than $1,000 each. He then rents
them to his students for up to $60 a month. The rental income flows
straight back into the I.R.A.

“It’s a good way for me to have
income without paying tax on it,” said Mr. Harris, 38, who played with
the Tucson Symphony Orchestra for 12 years before turning to full-time
teaching seven years ago.

It may be surprising, but it is true:
No law dictates that retirement plans be invested in stocks, bonds and
mutual funds. In fact, the government allows investors to put the money
in their I.R.A.’s and Roth I.R.A.’s into almost anything, be it
condominiums or airplanes. A growing number of Americans are doing just
that, through so-called self-directed I.R.A.’s that steer clear of
mainstream investments.

There are no official numbers on how
much of the country’s $4.2 trillion in I.R.A. funds is invested in
nontraditional assets, but four of the largest custodians of
self-directed I.R.A.’s — Fiserv,
Sterling Trust, Equity Trust and Entrust Administration — together
manage about $15 billion in such accounts. They say the volume has
soared in the last five years.

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The Future Is Drying Up

The New York Times, October 21st, 2007

Scientists sometimes refer to the effect a hotter world will have on this country’s fresh water as the other water
problem, because global warming more commonly evokes the specter of
rising oceans submerging our great coastal cities. By comparison, the
steady decrease in mountain snowpack — the loss of the deep
accumulation of high-altitude winter snow that melts each spring to
provide the American West with most of its water — seems to be a more
modest worry. But not all researchers agree with this ranking of
dangers. Last May, for instance, Steven Chu, a Nobel laureate and the
director of the Lawrence Berkeley National Laboratory, one of the
United States government’s pre-eminent research facilities, remarked
that diminished supplies of fresh water might prove a far more serious
problem than slowly rising seas. When I met with Chu last summer in
Berkeley, the snowpack in the Sierra Nevada, which provides most of the
water for Northern California, was at its lowest level in 20 years. Chu
noted that even the most optimistic climate models for the second half
of this century suggest that 30 to 70 percent of the snowpack will
disappear. “There’s a two-thirds chance there will be a disaster,” Chu
said, “and that’s in the best scenario.”

In the Southwest this past summer, the outlook was equally sobering. A
catastrophic reduction in the flow of the Colorado River — which mostly
consists of snowmelt from the Rocky Mountains — has always served as a
kind of thought experiment for water engineers, a risk situation from
the outer edge of their practical imaginations. Some 30 million people
depend on that water. A greatly reduced river would wreak chaos in
seven states: Colorado, Utah, Wyoming, New Mexico, Arizona, Nevada and
California. An almost unfathomable legal morass might well result, with
farmers suing the federal government; cities suing cities; states suing
states; Indian nations suing state officials; and foreign nations (by
treaty, Mexico has a small claim on the river) bringing international
law to bear on the United States government. In addition, a lesser
Colorado River would almost certainly lead to a considerable amount of
economic havoc, as the future water supplies for the West’s industries,
agriculture and growing municipalities are threatened. As one prominent
Western water official described the possible future to me, if some of
the Southwest’s largest reservoirs empty out, the region would
experience an apocalypse, “an Armageddon.”

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Gingrich Bill cracks down on Care Homes

Lebanon Daily News, October 18th, 2007


Senior citizens and their families would have an easier time obtaining information about inspections and violations at long-term-care homes under a “buyer-beware” bill being pushed by a local lawmaker.


Lebanon County Rep. Mauree Gingrich authored the bill that would require all long-term facilities to post certain information prominently.

Homes would have to post inspection reports from the past year, their operating license and any violation notice or other legal action taken by the state. They would also have to post the Web site for the state Department of Public Welfare, which would be required to provide the same information on its site.

Gingrich said she wants to make it easier for people to get information about long-term-care homes so they can decide which ones to choose.

She said the need for her bill will continue to grow in a state with nearly 2 million residents over the age of 65, the nation’s third-highest elderly population.


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‘Terror-free’ investing draws public pension plans

Investment News, October 16th, 2007

Across the country, states are considering plans to apply “terror-free” investing strategies to their public pensions.

Under the policy, the funds would be required to limit — or
eliminate altogether — investments in companies with ties to countries
such as Iran, North Korea, Sudan and Syria.

By the end of August,
16 states had enacted or were considering enacting legislation that
would prohibit or curtail their public-funds investments in companies
doing business with Iran, according to a report from the Center for
Retirement Research at Boston College in Newton, Mass.

But critics of the terror-free movement insist that public funds aren’t the place to implement foreign policy.

Missouri
was among the first to introduce anti-terror investing in some of its
public funds. In 2004, the Missouri State Em-ployees’ Retirement System
put an anti-terror policy in place. The public pension fund serves some
100,000 past and present state employees.

Last year, Missouri
State Treasurer Sarah Steelman introduced a terror-free strategy to the
state’s cultural fund and directed some $8 million of the Missouri
Investment Trust into a fund that divested assets with connections to
Iran, North Korea, Sudan and Syria.

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Scrutiny for Insurers of the Aged

The New York Times, October 3rd, 2007

The top-ranking Republican on the Senate Finance Committee has asked 11
long-term care insurance companies to explain “troubling data”
regarding how policyholders’ claims are handled and paid.

In letters sent this week, the senator, Charles E. Grassley
of Iowa, referred to data collected by the National Association of
Insurance Commissioners, which indicated that nationwide complaints
about long-term care insurance rose 92 percent from 2001 to 2006. The
data also indicated that complaints involving claim denials resulted,
in a majority of cases, in reversals that favored consumers.

“This is a pattern of error not typically found in other lines of health-related insurance,” the association wrote.

Senator Grassley has asked the largest long-term care insurers, including Genworth Financial, Conseco and Penn Treaty American Corporation,
to provide detailed information on how policyholder claims, inquiries
and denials are handled and whether employees receive rewards for
denying claims.

In March, The New York Times reported
that some long-term care insurers had established procedures that made
it difficult, if not impossible, for some policyholders to be paid.
That article, which focused on Conseco and Penn Treaty, was mentioned
by Senator Grassley in his letters to insurers and by the House
Committee on Energy and Commerce when it started a similar
investigation in May.

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Long Term Care Insurance:   
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Blood Test Might Spot Alzheimer’s Early

Health Daily News, October 15th, 2007

An international team of scientists
has developed a blood test that could reveal which patients with mild
cognitive impairment will go on to develop Alzheimer’s disease.

If replicated and validated — and assuming the development of
effective treatments against Alzheimer’s in the future — such a test
could open the door to medicating at-risk patients earlier and slowing or
limiting neurological damage, explained Dr. Allan Levey, chair of
neurology at Emory University, Atlanta.

“If it can be replicated, then we will find out how important [the
study] really is,” said Levey, who was not involved in the research.

The findings were published in the Oct. 14 online issue of Nature
Medicine
.

According to the Alzheimer’s Association, Alzheimer’s is a progressive,
fatal brain disease that affects almost one in eight individuals over the
age of 65.

Yet there currently exists no early diagnostic screen for Alzheimer’s
disease
. Diagnosis today is based not on blood chemistry, but on a
combination of psychological and imaging tests. Many of those who present
with mild cognitive impairment (MCI), will ultimately develop Alzheimer’s
disease, but others never do.

“Currently, it’s very difficult to know who will progress to
Alzheimer’s and who will progress to other diseases, or which won’t
progress at all,” said Levey. “Ideally, one wants to be able to know at
the stage of mild cognitive impairment, or even earlier, if someone is
destined to get Alzheimer’s disease.”

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This isn’t your grandfather’s retirement

The Seattle Times, October 15th, 2007

No generation in history will affect our nation’s future more than
the baby boomers — all 78 million of those born between 1946 and 1964.
It’s hard even for me to fathom, and I’ve been writing about it for
years.

Thanks to this group’s gargantuan size (a quarter of our
population), this moving bulge of bodies, sandwiched between much
smaller age groups, is about to change the face of retirement forever.

The basic facts: In 2000, Americans 65 or older accounted for 12
percent of the population. In 2030, that figure will climb to nearly 20
percent. Yet in 2075, when every boomer is dead, people 65 or older
will be 23 percent of the population. The numbers will go up, not down.

What we’re about to experience is a permanent transformation in the
age structure of America, according to Peter G. Peterson, former
chairman of the Federal Reserve Bank of New York and one of my favorite
social critics. (He’s also the author of “Running on Empty,” Farrar,
Straus and Giroux, $24.)

The shift is the result of two immutable forces that have been going
on for decades and will continue: declining mortality and declining
fertility.

This “demographic tsunami” has no precedent.

There’s a litany of institutions and supports that will soon be
overwhelmed — Social Security, Medicare, assisted living, our doctors’
offices — yet the issue is barely on the public’s radar.

But I worry about something else: Who’s going to work at our stores,
offices, nonprofits, restaurants and schools? Who’s going to drive the
buses, teach our kids or, for pete’s sake, write our newspaper columns?

The answers aren’t yet clear, and the forecast remains mixed:

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African-American Investors Remain Behind in Retirement Savings

Financial Planning.com, October 15th, 2007

The average black male in America currently has
$35,454 less saved in his retirement fund than his white counterpart,
according to the 2007 Ariel-Schwab Black Investor Survey as reported
October 11 in New York City. The summit celebrated a decade of Ariel
Mutual Funds teaming up with The Charles Schwab Corp. for the survey,
which compares the African-American population’s attitudes and
investments to those of whites. This is the first year the study has
surveyed current retirees as well as full-time workers.

The
study looked at 1,008 working Americans and 604 retirees. Throughout
the past decade, African-American investors remain extremely
conservative in their investments. Their participation in the stock
market has dropped from 64% last year to just 57% this year, the same
percentage that participated 10 years ago. Only 10% of blacks are
investing more than $500 per month into any sort of retirement account,
as opposed to 22% of whites.  In addition, whites are more than three
times more likely to roll over to an IRA or qualified plan than blacks,
says Charles P. Nelson, Senior Vice President of Great-West Retirement
Services in Greenwood Village, Colo. Much of the black population
believes real estate is the path to wealth, with 45% of blacks citing
it their most important overall investment.

CULTURE OF REAL ESTATE
John Rogers, chairman, chief executive officer and chief investment
officer at Ariel Capital Management and Ariel Mutual Funds, calls the
real-estate preference a cultural choice. “A lot of people in the
African-American community don’t have the opportunity to learn about
the stock market,” he says. “There is a real lack of exposure. It’s the
first time we’re getting into investing so, of course, we’re going to
be more conservative and naturally cautious.”

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