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Economics 101
"Stressed States Are Forcing Workers to Retire Later"
Wall Street Journal, August 1, 2010
Call it a "solution" of sorts to the states'
budget and pension crises. Facing no other alternative, new state
workers are being forced to work longer in order to receive their still
quite generous pension benefits. In 2010
alone,
ten states have voted to raise the respective retirement ages for their
workers. President Obama's home state of Illinois-generally
considered to be among the most labor
friendly-recently raised the retirement age for new workers from 60 to
67. For Illinois teachers, the increase is even more
dramatic-from 55 to 67!
Generally speaking, these changes
affect only new hires, as existing workers are protected under union
contracts. But should the states' fiscal woes continue, expect
the unions to come under pressure to negotiate.
With the
newspapers full of stories of cities and states cutting back services
and in some cases laying off vital personnel like police officers and
firefighters, it's hard to justify paying an able-bodied man or woman
in their early 50s not to work. Nationally, we see the same
debate taking place. There is constant talk about raising the age for Social Security and Medicare benefits.
Internationally,
the story is the same. The European "social model" has come under
relentless attack as crisis-wracked governments look for ways to pay
their bills. Even France, the proud fountainhead of the welfare
state, have proposed raising the retirement age from 60 to a still
quite generous 62. So what are we to take away from all of this?
As
we like to say, with crisis comes opportunity. City and
state pension benefits had gotten out of control during the boom
years. Now, they are being brought under control. This is a good thing for the long-term fiscal health of our country.
The
same could be argued at the household level. The last three years
have been hard, but Americans as a whole have used this time to hunker
down, trim some fat out of their budgets, and pay down their
debts. The housing bust also stopped the inexorable growth in
size and energy inefficiency of American "McMansions." New homes,
when they are sold, tend to be smaller and more modest.
So, the
challenge to you is: Sit down and write a way in which you can
turn these times of crisis into an opportunity. The opportunities
are out there. You just have to find them. |
Steps to Retirement Planning
Things to Love About Finances - Not That Much
In
the interest of non-discrimination, over the course of the next few
months, this column will contain pointers, tips, and tricks for those
whose interest in financial matters might be even less than they like
to admit. For all you financial wise-guys, don't let this keep you from
reading, but these few columns will be directed at those who think they
have no aptitude for financial matters . 1. The "B" word. We're going to
start with "budget." Stop making that face. A budget doesn't have
to be a bummer. The task is insufferable if it relates only to denial
and belt-tightening. The unfortunate truth is that not having a budget
(or call it a spending plan, if that eases the pain) probably means you
are dropping bundles of cash on stuff that really doesn't matter much
to you.
Key- Try author Richard Jenkins's 60%
Solution. It basically goes like this. 60% of your income should go to
"committed expenses" such as mortgage, food, car payments, utilities,
etc. 10% should be "fun money," another 10% for irregular expenses
(like short-term savings), 10% for retirement savings, and 10% for
long-term saving and/or debt reduction.
2. The "B" word, Part
II. I'm really not trying to kill you here, but directing your
cash doesn't have to be an ordeal. How will you know what your monthly
"committed expenses" add up to? How much do you have left in your "fun
money" allocation before getting paid again?
Key-
Enter the wonderful world of technology, where online banking and
direct deposit make it easy to move your money around. Try Intuit's
Quicken or Microsoft's Money to make reviewing your budget a snap. |
| Contact Us
202 West 7th St.
Carroll, Ia 51401
Email:
phone:
866-792-6668 (toll free)
712-792-6400 (local)
fax: 712-792-6670 |
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Alphabet Soup
If you went on the TSP website in July, you were
greeted by a new sight/site. The long-awaited rollout of the updated
website for TSP participants has finally arrived.
Some of the
changes you notice immediately are the easy access to your account
information (now on the home page) and fund returns, all the latest
updates are shown under the bulletin board section and a much cleaner,
overall look.
The calculators have gotten a facelift too. In
addition to the existing calculators for loans and TSP annuity
calculations, they've also added a link to OPM's previously buried
Ballpark Estimator.
For more information on allocating your TSP in volatile times, contact my office.
federal.info@sklenar.com |
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Not Average
The national unemployment rate as of 6/30/10 is
9.5%. No US state has a 9.5% unemployment rate as of 6/30/10. The
closest are Arizona and New Jersey, both at 9.6%
(source: Department of Labor) |
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TSP Returns
July 2010
G Fund
July: .23%
YTD: 1.84%
F Fund
July: 1.22%
YTD: 6.53%
C Fund
July: 5.76%
YTD: (.11%)
S Fund
July:
6.07% YTD: 6.15%
I Fund July: 9.66%
YTD: (4.81%)
LIFECYCLE FUND RETURNS
L Income July: 2.01%
YTD: 1.89%
L 2010
July: 1.77%
YTD: 1.81%
L 2020
July: 4.47%
YTD: 1.22%
L 2030
July: 5.29%
YTD: 1.11%
L 2040
July: 5.94%
YTD: .94%
Returns courtesy of : |
Government Watchdog
The state of California has 307 plants and animals on its endangered, threatened and rare species list. Colorado has 30.
(source: US Fish & Wildlife Service).
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Last month's 4th of July quiz asked about the original signers of
our nation's Declaration of Independence. The Declaration of
Independence was drafted and signed by 56 representatives of the
colonies. The first to respond with the correct
answer was Judy Koenig from the Omaha VA Medical Center.
Congratulations, Judy and thanks to all who responded!
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These
players were the first father/son team to play together. They added to
their records by hitting home runs "back-to-back" in the same game.
For fastest reply, respond to:
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Letter from the Editor Current law has the Bush tax cuts expiring at the end of 2010. You may wonder what that has to do with you.
If
you are in the 25% tax bracket for 2010 - you won't be in 2011 if the
tax cuts expire, because the 25% bracket is eliminated. You'll
automatically be in the 28% and possibly the 31% bracket!
The
debate now being whispered in Congress is whether we can afford to let
the tax cuts expire vs. whether we can afford not to. While it would be
nice to have additional tax revenues to start whittling away at the
overall deficit, there is a fear that increasing taxes will throw the
economy back into a tailspin.
Whether the tax cuts are extended
or not, the message for the average American is to look at protecting
your assets from future tax increases by utilizing Roth IRAs now.
Enjoy the rest of your summer!
Cordially,
John Sklenar
CPA/PFS, CFP
ChFEBC - Chartered Federal Employee Benefits Consultant
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