Broker Check

October 15, 2005

Will Boomers Ever Retire?

         In a recent study by Merrill Lynch, 75% of baby boomers see a paycheck in their retirement years.  42% plan to switch between work and leisure; 6% plan to work full time, 13% intend to start their own business; 16% will work part time.  Only 17% plan never to work for pay again.  Journal of Accountancy. August 2005, p. 21

The Real Danger in Consumer Debt

          According to Dr. David Kelly, the Senior Economics Advisor for Putnam Investments, the real danger in consumer debt is for Baby Boomers who are accumulating debt rather than assets in their 40s and 50s because their retirement will become "a more distant and less financially appealing prospect."
          From our observations, we see Boomers underinvesting in these critical years; the result will be that they cannot retire in their 60s because they will not have accumulated enough assets for a comfortable retirement. Dr. David Kelly, Putnam Investments website, 8/15/05
          You might want to discuss investment ideas with Howard Lisch.

Plan For Your Retirement Now

           According to the Employee Benefit Research Institute, almost 33% of Generation Xers and almost 50% of all young workers have not begun to plan or save for retirement.  People between the ages of 21 and 30 are the most unprepared.
          About 40% of employees age 21 to 30 seek financial advice from friends and relatives and 46% do not talk to anyone. 8/1/05

Fringe Benefit Misconceptions

          A recent study from Metlife showed that over 33% of employees ages 21 to 30 and 28% of all workers believe their companies spend less than $1,000 annually toward each individual's health insurance and almost 50% of the respondents believe the annual figure is les than $2,000.
          Companies are actually spending an average of $7,200 annually for family coverage and around $3,000 for single coverage.
          Metlife also points out that while employees express concern about not having enough money to pay their bills or losing their income stream, 54% of workers say they value intermediate term benefits such as paid vacations more than income protection products such as retirement plans (30%), disability benefits (26%), life insurance(24%) and long term care (8%). 8/1/05
          We believe this study should be a wake up call to employers so that the actual cost of the benefits is communicated to the employee or to eliminate benefits that are not being valued by the employees.  Another option would be to provide a menu of benefits that the employee could choose from with each assigned a dollar value and the employee having only a total value of dollars to choose with.

Shred At Your Own Risk

          The U.S. Supreme Court's recent decision that Arthur Andersen & Co was wrongly convicted for witness tampering was good news for businesses.  The case partly dealt with whether an Andersen in house attorney should have told employees working for client Enron Corp. to comply with Andersen's 30 year old document handling policies.  The attorney's advice, issued just as government investigators were gearing up their Enron probe, resulted in massive document shredding.
          The high court did not address the question of whether the Andersen attorney's advice was proper.  But the justices did say that as long as there is not an intent to commit a crime, an attorney is correct to simply offer legal advice.  It is also correct for companies to have valid document retention and destruction policies.  A key question in the Andersen case revolved around document retention policies that stated not just when materials should be saved but, when they should be destroyed.
          Regardless of what happens in criminal cases, one key issue remains and that is keeping or destroying documents in anticipation of civil litigation.  In the recent Morgan Stanley case, financier Ronald Perelman claimed he lost the entire value of his investment in Sunbeam Corp. because Morgan Stanley, which was advising Sunbeam, failed to disclose accounting fraud at the company.  The judge ruled that Morgan Stanley "sought to Thwart discovery" by failing to produce e-mails and other documents as ordered.
           Because of these cases, companies should have a concrete policy in place for e-mails.  It was e-mailed advice that led to the criminal indictment of Arthur Andersen, and it was lost or misplaced e-mails that primarily led to Morgan Stanley's calls.  Law Technology News August, 2005, p. 52

Go Figure!

          The new highway law reduces the 10% federal tax on fishing rods to a maximum of $10 for poles purchased after September 30, 2005. I didn't know fishing poles were taxed! The Kiplinger Tax Letter Vol. 80, No. 16 8/12/05
          Send me an e-mail for the most outragious items which are taxed that you know of. 

          If you have any questions about the foregoing or any other financial matters, pleae call us.
          Remember, We're Here For You !!