Are Aging Boomers Our Economic Lifeline?

Here’s a statistic that might take you for surprise: For every three older workers, a vacancy for a young person opens up due to the economic wealth older people create.1

That’s the word from Dr. Alexandre Kalache, an expert on the aging demographic and President of the International Longevity Centre in Brazil. According to Dr. Kalache, “Statistics show all too clearly why we cannot afford to stick our heads in the sand and continue to view older people as a sickly burden rather than a valuable resource.”

Kalache refers to “productive aging” as a means not only to emerge from our current economic setback, but as the only way we can truly prepare for the epidemic of aging populations on a worldwide scale. We already know that the generation nearing retirement age tends to have high educational levels and a lot more experience than their younger counterparts, thus maturity has an important role to play in the future of our economic growth.

[CLICK HERE to read the article, “What if we fail to provide for our ageing population?” at World Economic Forum, April 5, 2012.]


[CLICK HERE to read the article, “How the Baby Boomers Are Reinventing Old Age” at Huffington Post, April 4, 2012.]

In its global brief for World Health Day (April 7), the World Health Organization stated that good health must lie at the core of any successful response to aging. “If we can ensure that people are living healthier as well as longer lives, the opportunities will be greater and the costs to society less,” the report observed.

[CLICK HERE to read the World Health Organization report, “Good Health Adds Life to Years: Global brief for World Health Day 2012,” at]

Senior Income
The U.S. Social Security program was established 130 years ago, back when few people lived to age 65. Today, few people even expect to retire by age 65. In Brazil, where pension income has been available for only the last 15 or so years, seniors use their money to provide for their families. They buy food and resources (such as a sewing machine) to help their children make a living. Because of this, they are a critical resource to the family, which has a vested interest in keeping them healthy, happy and involved.

While not suggesting that seniors work 9-to-5 until age 95, Dr. Kalache suggests we modify the way we approach work and long-term careers. Workers who live long lives should not burn out, but rather remain productive, innovative, and valued.

Here in America, as well as all over the world, the youth culture is glorified and celebrated. Even in the workplace where experience should reign, youth has its advantages. A recent report by the Global Agenda Council on Ageing Society observed that, “in a society with fewer younger people relative to mature workers, an organization’s ability to succeed may hinge on whether it can attract and retain mature workers.” The publication offers the following recommendations to this end:

• Establish employment conditions and compensation terms that make it desirable to keep working
• Create age-friendly working environments
• Include flexible working practices, such as career breaks, part-time work and flexi-place working
• Encourage health and well-being promotion, such as supervised fitness programs
• Offer continuous learning opportunities to update skills

[CLICK HERE to read the report, “Global Population Ageing: Peril or Promise?” at the World Economic Forum website,, 2012.]


Whether you work well past traditional retirement age because you need the income or because you simply can’t imagine being idle and unchallenged for potentially another 30 years after you retire, it appears that productive aging is an inevitable part of our future. Articles are published every day about how there are currently jobs available, but employers can’t find qualified candidates to fill them. It just seems like perhaps some of the more valued qualities in older workers have been overlooked.

If you’re considering earned income as a valid component of your financial future after retirement age, give us a call to discuss how that strategy can compliment the rest of your portfolio.


1 Dr Alexandre Kalache, “What if we fail to provide for our ageing population?” April 5, 2012.




Headlines, Shmedlines

This headline recently caught my eye, “George Bush Sr. Rocks Purple Socks and Quotes Kenny Rogers in His Endorsement for Romney.” The brief article led me to a video at YouTube (linked below) of former senior President Bush’s recent endorsement of the Republican candidate. His wife Barbara sits in and reminds him of Kenny Rogers’ song lyrics, “You’ve got to know when to hold them, know when to fold them.” The former president also happens to be wearing lavender socks.


[CLICK HERE to view the video, “Former President Bush Backs Romney,” at, March 29, 2012.]


It’s kind of fun headline, and a good example of journalists using a quick soundbyte to get your attention, no matter how ridiculous it sounds. It’s not likely Walter Cronkite would have uttered “rocks purple socks” in his nightly newscast decades ago. But mass media has evolved over the last 15 years to become less formal and a tad more sensational. Today’s daily dose of news offers so many more mediums than the days of the morning newspaper followed up by 30 minutes of local news and the weeknight national newscast. Today, you can receive a 24/7 stream of global news by television, computer, or even your cell phone.


Silly and serious news stories intermix with unfettered ease. Type a few keywords into an internet search engine and you’ll receive (literally) millions of headlines with little distinction between credible news services and a tweeting 14-year old who reads The Drudge Report. Bloggers sometimes offer more insight and expertise than credentialed journalists, and uploaded videos capture everything from the President’s State of the Union address to Congressman Bobby Rush wearing a hoodie during his Congressional speech on racial profiling.


[CLICK HERE to view the video, “Congressman Bobby Rush Reprimanded for Hoodie Worn During Trayvon Martin Speech,” at, March 28, 2012.]


When was the last time you saw a headline that read, “Buy low, sell high!” or, “Invest for the long-term.” Those don’t make very compelling headlines. While you may agree with the strategy, you’re probably more tempted to check out the story with a headline that reads, “‘Buy Low, Sell High’ is a Lie” – just to see what’s up with that.


[CLICK HERE to read the article, “Headlines can cause more harm than good,” at, March 28, 2012.]


[CLICK HERE to take the quiz, “Decision Making and the Availability Heuristic,” at Annenberg Learner, retrieved March 30, 2012.]


But buried amidst breaking news headlines like, “Batman pulled over in Lamborghini,” you’ll find plenty of informational articles. Alas, they may have less dazzling headlines like, “Preparing for a Dividend-Tax Hike,” or an alliterative tongue twister such as, “Investors stick with stocks as stellar quarter ends.” Despite the tease, you’ll get an update on market news and perhaps a nugget of an idea to follow up on.


Ultimately, the news is good for learning about new trends and ideas, but less so for actionable advice. Working with an advisor is a far more personalized way to evaluate which financial moves are most likely to meet your unique needs, tolerance for risk, and timeline for achieving your goals. Please give us a call if you’d like to discuss your specific situation.




A Kinder, Gentler America

We’ve been through some tough years and many folks are still struggling. While recently we’ve seen signs of economic improvement and a decrease in unemployment, increased gas prices and little movement in home real estate values may still be weighing heavy on our minds.


So with this post we’re focusing on positive stories in the news lately. Some of these issues are highly controversial, but even in the wake of great debate, we should recognize the potential for what’s good and what’s possible.


Random Acts of Corporate Compassion

Corporations tend to give away money – at least partly for the tax deduction, but it’s appreciated nonetheless. And, most of the time, they’ll admit when they’ve made a mistake and compensate customers or shareholders in kind. So I enjoyed reading this news story about a compassionate clerk who works for bankrupt American Airlines. She realized a frequent flyer businessman would miss his flight – albeit by and large through his own fault. Regardless, she did some quick thinking to expedite his route to the boarding gate under the radar so as not to upset other customers. You can read about it here:


[CLICK HERE to read, “Is Kindness a Strategy?” at Harvard Business Review, March 22, 2012.]


Sure, her methods may be suspect, but her heart was in the right place. That might be something you could say about a lot of what’s going on in America today. Both the government and large corporations appear to be trying to balance the scales between helping people and still making a profit.


Take, for instance, Bank of America’s pilot plan to help curb the sting of foreclosure by renting houses back to their previous owners. On one hand, it may be aggravating to be a homeowner in this situation. But on the other hand – logistically – avoiding the expense of having to move, providing stability for a family to stay in its home, and the advantage of paying less each month than the previous monthly mortgage … that’s got to be worth something.


[CLICK HERE to read, “BofA Tests an Option to Foreclosure,” at The Wall Street Journal, March 22, 2012.]


Now let’s consider the greatly debated Patient Protection and Affordable Care Act (PPACA)–. The article below points out some interesting improvements underway regardless of whether or not the Act is repealed.


“This is probably the most transformative period I’ve lived through,” says Dr. David Longworth, chairman of the Medicine Institute at Ohio’s Cleveland Clinic. He was referring to the number of insurers, hospitals, and doctors forming alliances and adopting new procedures to provide higher quality care and reign in exploding health care costs. According to the chief clinical officer at insurer UnitedHealthcare, “This changes the business model, changes the reward and payment system for better care and better health at lower cost.”


Granted, for every pro-PPACA article there’s a scathing repudiation, but for now we’re seeking examples of what good can come from what’s generally considered bad – in this case, exploding health care costs. Indeed, if insurers are working with medical providers to bring costs down in the spirit of the current law, well that’s a good thing, right?


[CLICK HERE to read the article, “Obamacare Has Already Transformed U.S. Health Care” at, March 22, 2012.]


And finally, even the IRS is doing its part to become a kinder, gentler government entity. It recently announced penalty relief for qualifying taxpayers through its Fresh Start plan. This latest announcement on the heels of our depressed economy does give one pause to ask, will wonders never cease?


[CLICK HERE to read the article, “IRS cuts penalties; but don’t forget the forms,” at, March 13, 2012.]


Please contact us if you’d like to discuss ways to make the most of your money in 2012.




What Inflation Feels Like

If you exclude gas prices, recent data from the Labor Department reveal that inflation isn’t exactly taking off. In fact, food prices were unchanged for the first time in 19 months. The Labor Department reported that the Consumer Price Index rose 0.4% in February after advancing 0.2% in January. Gasoline accounted for more than 80% of the rise.


But because driving is such a pervasive part of American culture, we can’t ignore the impact higher gas prices have on our personal budget. This is one reason why consumer sentiment sunk lower in mid-March. Against expectations of a small increase, the Thomson Reuters/University of Michigan preliminary index of consumer sentiment fell to 74.3 from 75.3 last month. That’s the lowest level thus far this year.


According to Bernard Baumohl, chief global economist at the Economic Outlook Group, gas prices play havoc on consumer sentiment more so than other inflationary signs. “Less than 5% of take-home pay actually goes to paying for gasoline,” Baumohl pointed out in a recent interview with Knowledge@Wharton, “But gasoline prices have a much greater psychological impact on consumers because they see on a daily basis how much the price of gasoline goes up. It’s advertised on so many signs.” The uptick in prices thus has a “palpable impact” on consumers.


[CLICK HERE to read the article, “Consumer Sentiment in U.S. Drops on Gasoline Prices: Economy” at, March 16, 2012.]


[CLICK HERE to read the article, “Beyond the Gas Price Blame Game, a Thorny Case of Supply vs. Demand,” at Knowledge@Wharton, March 14, 2012.]


Was Last Year Really That Bad?

The American Institute of Economic Research (AIER) recently published findings about inflation that may strike closer to home. The entity claims that annual inflation numbers appear more contained due to the impact that technology and globalization have on big-ticket items.


For example, the average inflation rate for 2011 was 3.02%.[1] However, check out the 2011 price increase of some of the every day items we spend money on, courtesy of AIER’s Everyday Price Index (EPI):


·          Ice cream, 9.0%

·          Peanut butter, 27%

·          Beef, 18%

·          Coffee, 19%

·          Video rentals, 15%


Somehow, while we notice we’re paying those higher prices in the grocery store, they don’t aggravate us quite as much as a twenty-cent increase in gas prices.


[CLICK HERE to read, “The EPI Reflects Basic Economic Change” at, March 1, 2012.]


On one hand, we don’t want to pay higher prices at the supermarket and gas pump, because that digs into our already strained household budget. But on a larger scale, we want to promote economic growth – which is why the Federal Reserve Board is keeping base interest rates so low – to help fuel new jobs in the country. Higher prices can at times be highly annoying and inconvenient, but in moderation it’s a good thing.


[CLICK HERE to read, “Gasoline lifts U.S. inflation, dents confidence” at Reuters, March 16, 2012.]


[CLICK HERE to check out an upcoming series of lectures by Fed Chairman Bernanke about the Federal Reserve and the Financial Crisis. You can find out more and access links to the live video at The live lectures are scheduled for 12:45 p.m. ET on March 20, 22, 27, and 29th, with transcripts and video recordings available later.]


The Federal Reserve has observed that the recent spike in oil prices will likely push up inflation – but only temporarily. As such, it predicts that inflation is likely to run at or below its 2% target over the “medium-term.”


Please contact us if you’d like to discuss ways to make the most of your money in 2012.




[1] Bureau of Labor Statistics, 2012.


The Scoop on Rising Oil Prices

Fidelity Investments is taking a positive view of the recent rise in oil prices – saying it’s due to the economic recovery. In recent years, soaring gas prices have often been blamed on rising military conflict in oil-rich nations in the Middle East. But according to Fidelity, recent activity indicates that the current oil rally has more to do with a global economic recovery.


Apparently, global dependence on oil has spurred innovation in new oil production techniques in the United States. In fact, these unconventional technologies (such as fracking) have helped the U.S. become the lowest-cost provider of oil and natural gas in the world, for the first time in 40 years.


[CLICK HERE to read the article, “What’s driving oil prices up?” at Fidelity Viewpoints, March 2, 2012.]


[CLICK HERE to view the video, “Dow CEO: U.S. can be an energy exporter,” at, March 2012.]


Other experts are keeping a closer eye on military turmoil, nonetheless. While there’s recently been an oil embargo on exports from Iran by Western nations, the general opinion is that this is unlikely to have a significant impact on price since other nations, such as China, are lined up to buy Iranian oil. However, since Iran sits on the most globally strategic supply route for oil supply (the Straits of Hormuz in the Persian Gulf), the threat of military conflict remains a huge issue.


[CLICK HERE to read, “Oil and Gasoline Prices Rise Again: How High and How Long?” at Advisor Perspectives, March 8, 2012.]


[CLICK HERE to read the report, “Oil Market Dynamics and the Fear Factor” at CME Group, March 2, 2012.]


Gas Taxes

As if rising oil prices isn’t enough, a new study reveals that some states could stand to update their gas tax to produce more revenue for state construction projects. The 50-state analysis report, conducted by the Institute on Taxation and Economic Policy, calls for some states to modernize their state gas taxes and peg those taxes to grow with the cost of transportation construction. States that were cited as remiss in updating gas taxes include Virginia, Maryland, New Jersey, Massachusetts, Iowa, Oklahoma, South Carolina and Arizona.


[CLICK HERE to read, “Study Sees State Gas Tax Rate Go Down 20%,” at, February 26, 2012.]


For now, it appears we could be in for another few months of more expensive gasoline, but the expectation is that prices will plateau later in the year. Please contact us if you’d like to discuss ways to make the most of your money in 2012.




1 Institute on Taxation and Economic Policy, “Building a Better Gas Tax,” 2012.




Social Media and the IPO World

Facebook, Zynga, Yelp. Words that held no special meaning ten years ago are now daily news headlines. Social media has pervaded nearly every aspect of our society, from the young to the old, from business to consumers, from virtual to mobile – from elementary school students to institutional investors. Currently, social networking is the most popular online activity worldwide.1


More than half of America59%is on a social network.2 In fact, social media is so mainstream that many people have grown tired of it. They check their Facebook wall once or twice a month. They occasionally track blogs and tweets without posting comments. Yet regardless of how active users may be, just by opening an account on a company’s website they become a commodity for that company. And commodities are bought, sold, traded and – as is perfectly demonstrated through the new Facebook IPO – used to set a value for a company’s worth.


Scheduled to hit the sales block in May, Facebook’s proposed public offering values the company at $75 billion to $100 billion. For a start-up founded in 2004 by a college-dropout, that’s a pretty astounding achievement. According to its filing, the social media site boasts 845 million monthly active users who contribute 250 million photo uploads and 2.7 billion comments a day.3


According to a recent article from Wharton, the Facebook IPO will make many of its employees enormously wealthy – and that’s one reason why the IPO may be a tough act to follow. Wharton legal studies and business ethics professor, Kevin Werbach, observed that “It’s difficult to retain employees who have already made millions of dollars on their stock options.” You can read more analysis of the Facebook IPO at the links below.


[CLICK HERE to read the article, “The $100 Billion Facebook Question,” at Knowledge@Wharton Today, February 2, 2012.]


[CLICK HERE to read, “The Ultimate Guide to Facebook’s IPO,” at Bloomberg Businessweek, February 9, 2012.]


[CLICK HERE to view the video, “3 things you don’t know about Facebook,” at, March 2012.]


Zynga is the social gaming developer that hosts “Farmville,” “Cityville,” and “Words with Friends” on Facebook, currently generating 12% of Facebook’s revenues. About 240 million users play a Zynga game at least once a month, a statistic that helped launch its own IPO valued at around $7 billion back in December 2011.4


[CLICK HERE to view the video, “Zynga launching game network,” at, March 2012.]


[CLICK HERE to read, “Zynga Dumps the Training Wheels,” at Bloomberg Businessweek, March 1, 2012.]


Just recently Yelp, an online consumer-reviews site, offered an IPO valued at $900 million. The company’s shares began trading at $15 on Friday, March 2, 2012. The eight-year old global website provides a platform for consumers to share their personal opinions of just about anything, from restaurants and hotels to doctors, churches, high schools and even strip clubs. Yelp attracts 66 million users a month and, by the end of 2011, had posted 25 million personal reviews.5


[CLICK HERE to read, “Yelp soars 66% on first day of trading after IPO,” at USA Today, March 2, 2012.]


[CLICK HERE to view the video, “Yelp IPO soars! Are you kidding me?,” at, March 2, 2012.]


New trends and opportunities hit the market every day. Please contact us if you’d like to discuss suitable alternatives for your financial future.



1 comScore, January 2012.

2 Pew Research, June 16, 2011.

3, February 1, 2012.

4, “Zynga shares close below IPO price,” December 16, 2011.

5 USA Today, “Yelp soars 66% on first day of trading after IPO,” March 2, 2012.





Retirement: The Real Picture

According to a new report from the Employee Benefit Research Institute (EBRI), on average retirees spend about 80% of what working households spend.1 In other words, in retirement you should count only needing about 80% of the annual income that you earn in the decade prior to retiring.

What’s interesting, though, is that you’re more likely to spend more than that 80% during the first phase of retirement, and less than 80% in the latter years. The early years of retirement tend to be the most expensive because new retirees are healthier and more mobile. While daily transportation expenses may decline since you’re no longer commuting to work, you may have increased expenses if you plan on extensive travel. According to the EBRI study, spending on things like vacations and entertainment tend to be higher for younger retirees. 1

[CLICK HERE to read “Are you saving too much for retirement?” at; November 30, 2011.]

[CLICK HERE to read the report, “Expenditure Patterns of Older Americans, 2001-2009,” from Employee Benefit Research Institute, February 2012.]

As you get older, your spending habits will change. For example, early on, most retirees spend about 9%-11% of their income on health care. But once they get around age 85, that percentage increases to about 18%.1 While your health care expenditures may increase, spending on entertainment, transportation, and even clothes and food will likely decrease. Consider these numbers1:

·         The average household headed by someone age 45 to 54 spends 57,788 a year

·         Average expenditures for the 55-to-64 age group are $50,900

·         From age 65 to 75: $41,434

·         Households headed by those over 75: $31,529

That means that even if you do need 80% or more of your working income in your first years of retirement, it’s not likely you’ll need that forever.

Tips for Saving

General wisdom says you should start planning for your retirement when you get your first job and can participate in a 401(k) plan. However, as you get older, you have to ramp up those plans and efforts. The article below from US News & World Report gives you a step-by-step roadmap to follow to properly plan for retirement needs at appropriate times in your life.

[CLICK HERE to read the article, “10 Important Ages for Retirement Planning,” at US News & World Report, February 21, 2012.]

Saving for retirement isn’t easy. One way financial theorist/psychologist Daniel Goldstein advocates staying motivated is by taking a look at your future self. Not just in terms of what you’ll own and be able to do, but also at what you will physically look like. In a published paper, he tested levels of commitment to retirement savings goals by showing participants interactive pictures of themselves that had been aged by 20 or 30 years. Apparently, actually seeing what you may look like as a senior can be very motivating.

If you own an iPhone, iPod touch, or iPad, you can try out this exercise for yourself with an app from AgingBooth. Check it out at the link below.

[CLICK HERE to read the article, “Retirement tips: Here’s how to save more now,”, February 21, 2012.]

[CLICK HERE to download, “AgingBooth,” at PiVi and Co. ($0.99), February 2012.]

Give us a call for help finding ways to both get motivated and plan for your different phases of retirement.


1 Employee Benefit Research Institute, “Expenditure Patterns of Older Americans, 2001-2009,” February 2012.



Follow the Money? How About Follow the Jobs.

Why is the job market recovery so slow?


We know why real estate values remain low: Potential homebuyers can’t commit to buying a house when they’re out of work or afraid they might get laid off.  And then there are workers whose salary increases have been frozen for a couple of years now, or those with a personal debt-to-income ratio that prevents them from qualifying for a new mortgage. There are even people who are gainfully employed but can’t wait to quit their job as soon as some better ones come on to the market. On that front, Pew Research reports that 49% of adults ages 18 to 34 say they have taken a job they didn’t want because of economic conditions.1  Simply stated, there are lots of reasons few people want to buy a home now regardless of how low mortgage rates go or how many tax incentives are offered.


But the job market – what’s its excuse? We’ve heard so much about how companies have reigned in expenses, restructured debt, and produced healthy balance sheets with cash flow. So why aren’t they willing to expand and start hiring?


Last year, the McKinsey Global Institute projected the U.S. would experience five years of “jobless recovery” before getting on its feet again. Five years. That kind of makes the phrase “jobless recovery” a bit of an oxymoron, doesn’t it? How can the economy truly recover without jobs? Everything depends on it – consumer spending, the residential real estate market, business growth and expansion and, subsequently, market returns.


In an article published in the March 2012 issue of the Harvard Business Review, the author points out that:


As in a classic market failure, individual firms are not shouldering the true costs of their actions. They benefit from minimizing their own labor costs while society picks up the tab for their lack of investment in human capital: slow economic growth, unemployment, welfare, and so on. Then there’s the tension between short- and long-term objectives: Activities that make sense for individual firms at one end of the value chain right now (for instance, shipping jobs overseas and cutting costs wherever possible) can backfire at the other end. Down the road, the middle class may not be robust enough to create demand, and the workforce may not be trained well enough to drive innovation.



[CLICK HERE to read, “An economy that works: Job creation and America’s future,” at McKinsey and Company, June 2011.]


[CLICK HERE to read, “A Jobs Compact for America’s Future,” at Harvard Business Review, March 2012.]


For the United States to return to full employment, McKinsey predicts the US economy will need to create 21 million jobs by 2020. Fortunately, there is good news. Certain industries are projected to expand over the next few years, and these are where we can expect job growth.

According to Industry Leaders Magazine, about one-third of job hiring companies expect to add new jobs in the next six months. Sectors slated for job growth include the healthcare, finance, information technology, and skilled labor positions in construction and manufacturing industries.


According to Simply Hired’s 2012 U.S. Employment Outlook, metropolitan areas with the highest increases in new jobs include Raleigh/Durham, Birmingham, Norfolk/Newport News, Louisville, Sacramento and Oklahoma City.


[CLICK HERE to read “Some Big Companies Creating New Jobs in 2012: Which Companies?” at Industry Leaders Magazine; December 16, 2011.]


[CLICK HERE to read the report, “U.S. Employment Outlook, January 2012,” from, January, 2012.]


Please give us a call if you’d like to discuss incorporating a “Follow the Jobs” theme into your investment portfolio.



 1 Pew Research Center, “Young, Underemployed and Optimistic,” February 9, 2012.




Taking Stock of U.S. Stocks

You’ll often hear financial advisors say the biggest investment risk is not having enough money accumulated by the time you retire. That’s all well and good, but it’s not really actionable advice. On the cusp of our nation’s recovery, there are strong reasons to view U.S. equities as the key to the future – both in leading economic growth worldwide and in helping each of us meet our retirement goals.

Warren Buffett certainly thinks so. Fortune magazine has published an adaptation of his most recent letter to Berkshire Hathaway shareholders. It offers a fascinating discussion on how the concept of risk is largely misunderstood – and how he views risks when it comes to making investment decisions.

In a provocative statement, Buffett claims that, “Investments that are denominated in a given currency include money-market funds, bonds, mortgages, bank deposits, and other instruments. Most of these currency-based investments are thought of as ‘safe.’ In truth they are among the most dangerous of assets.”

He goes on to explain that the combination of personal income taxes and the ‘invisible inflation tax’ (not to mention investment expenses) can strip an investor’s return to the point of little to no real purchasing power. Buffett also takes aim at investment in assets that will never produce anything, but rather rely on the hope that someone else will pay more for them in the future. He asserts that fear of currency collapse is what motivates investors to move to sterile assets, such as gold (which he likens to the widespread investment in Tulips in the 17th century).

An outright fan of long-term equity investing, Buffett presents a strong case for productive assets, such as businesses, farms, or real estate. He believes that in the future, the U.S. population will “move more goods, consume more food, and require more living space than it does now. People will forever exchange what they produce for what others produce.”

[CLICK HERE to read, “Warren Buffett: Why stocks beat gold and bonds” at; February 9, 2012.]

Dividend Aristocrats

In its “Investment Ideas for 2012,” Morgan Stanley Smith Barney’s Global Investment Committee (GIC) reinforces Buffett’s position with an endorsement of U.S. large cap growth stocks and ‘Dividend Aristocrats.’ These aristocrats are represented in the S&P 500 Dividend Aristocrats Index, comprised of 42 large-cap, blue-chip companies that have raised dividend payouts annually for at least 25 years. According to the latest GIC report, “In a period of record-low money market and bond yields, dividend-paying equities can offer an attractive source of income.”

[CLICK HEREto read Morgan Stanley Smith Barney’s latest “On the Markets” market commentary; February 2012.]

Tech on Track

One sector on track for stable growth in the near term is information technology. SmartMoney recently posted an article offering four reasons why even risk-averse investors may find this sector more stable than other options. One reason: Since many companies have deferred technology investments since the 2008 financial crisis, they’re ready to increase spending now. According to the article, “Technology has become more of a necessity, and companies can only delay investments for so long. That helps make the sector more stable.”

While you’re at the SmartMoney website, check out this fun tool that gives you an at-a-glance, comparison view of sector performance through various visual filters.

[CLICK HERE to read, “Tech Stocks: Safer Than You Think” at; January 30, 2012.]

[CLICK HERE to tool around with the “Map of the Market” at; February 2012.]

If you’re interested in strengthening your U.S. equity allocation for 2012 and beyond, please contact us to schedule a portfolio review and consultation.


*This information is not intended to provide actual investment advice. It is important that your unique situation, goals and objectives be evaluated before such advice can be offered. Please seek a professional specializing in these areas regarding the applicability of this information to your situation.



Annuities Anew: New Proposals, More Options

According to a 2011 Retirement Survey from Wells Fargo & Company, 25% of middle class Americans say they will need to work until at least age 80 to live comfortably in retirement.1

With fewer companies offering pensions in this day and age, there is more reliance on money saved through 401(k) plans to provide income during retirement. However, since defined contribution plans didn’t become mainstream until the 1980s, we are only now witnessing the first wave of retirees expected to draw significantly from this type of plan – and it remains to be seen whether they will provide adequately for today’s longer life spans.

Given the ongoing state of our slow economy, we’re approaching somewhat of a crisis with millions of baby boomers standing at the precipice of retirement. As such, policymakers are thinking the employer plans could use a little tweaking to become a more viable – and reliable – source of income.

The U.S. Departments of the Treasury and Labor recently proposed new rules to boost the potential for employer-sponsored plans to last throughout retirement. There are three specific guidelines:

1.   Make it simpler for defined benefit pension plans to offer a combination of lifetime income and a lump sum distribution – or “partial annuitization.” This would allow retirees to maintain a portion of their savings invested should they need an emergency sum, while at the same time convert the balance to an annuity stream of income that may continue paying out as long as they live.

2.    Make it easier for retirees to convert part of their 401(k) plan to purchase an annuity stream of income starting at age 80 or 85. This is called a “Longevity Annuity.” The reason this matters is because, when assured that you’ll have enough money to last throughout your most senior years, you can use your other assets to budget for a shorter period of retirement – with perhaps a more robust lifestyle.

3.   The guidance defines plan and annuity terms designed to automatically protect spousal rights without requiring spousal consent before the annuity begins. To date, how spousal protection rules apply has been unclear when an employee selects a deferred annuity within a 401(k) plan – and this has discouraged plan sponsors from offering annuity options before now.

[CLICK HERE to read the Treasury Fact Sheet, “Helping American Families Achieve Retirement Security by Expanding Lifetime Income Choices” from the US Department of Treasury; February 2, 2012.]

There are a wide variety of annuity contracts on the market – and none of them are simple. This is one product where the advice, “do not try this at home” may be prudent. To determine if an annuity is a good fit for your situation, and to figure out which one to choose – whether as part of an employer plan or one you own independently – it’s important to consult with an experienced advisor. Choices include immediate annuities (start paying out right away), fixed annuities (guarantee a fixed interest rate), variable annuities (rely on investment growth over time before paying out), and indexed annuities (earn a percentage of indexed returns with a guaranteed minimum2).

[CLICK HERE to read “Designing a Monthly Paycheck for Retirement;” from the Society of Actuaries; 2012.]

[CLICK HERE to read “Don’t outlive your savings: How annuities can help” at; February 2, 2012.]

If you’re interesting in learning more about how to convert your retirement savings into a reliable stream of lifetime income, please contact us.


1 Wells Fargo; Wells Fargo Retirement Survey, November 16, 2011.

2 Guarantees are based on the claims-paying ability of the issuing insurance company.