Money Money Money

The 401(k) crisis is getting worse:

Tim Egan has been working since he was 14. He’s now 56 and has spent most of his career as a restaurant manager. He has virtually nothing saved for retirement and, until last month, never had a 401(k) account.

Little wonder: Only two of the 20 restaurants where Egan has worked in the past four decades had retirement-savings plans.

“The restaurant business is what I’m good at, but few owners, especially of small places, offer retirement benefits, no matter how much money you help them earn,” says Egan, who worked his way up from dishwasher to waiter to bartender before rising to manager 20 years ago.

Egan’s story isn’t unusual among the legions of Americans who work part time, switch jobs frequently or earn their livings at small companies, which generated two-thirds of all new jobs last year. Even as people live longer and must save more for old age than prior generations, most can not depend on any help from employers. Almost half of U.S. workers didn’t have a company-sponsored retirement plan in 2013, compared with 39 percent in 1999, according to an analysis of Census Bureau data by the Schwartz Center for Economic Policy Analysis at the New School for Social Research in New York.

These states are the most financially ready for retirement:

Where in America are people the most ready for retirement, financially? Looks like it's the east coast.

Delaware ranks as the most prepared state for retirement, according to data by Personal Capital, an app-focused financial advisor. Personal Capital users in Delaware have the highest average amount of savings to date, at $286,277.

ID thieves love millennials. Here's why:

Millennials have grown up with technology playing a leading role in their lives and as a result are quick to embrace the latest and greatest device, app or social network. But that comfort with technology puts them at particular risk for identity theft at a time when the criminals are getting increasingly greedy.

Consider this: According to the Javelin Strategy 2015 Identity Fraud report, thieves stole $16 billion from 12.7 million U.S. consumers in 2014. That amounts to a new identity fraud victim every 2 seconds, according to Javelin.

And, Americans age 20-29 make up 15% of identity theft complaints, according to a 2012 study by the Federal Trade Commission.

God Wishes You The Best Of Good Buys

“Verily I say unto you, That a rich man shall hardly enter into the kingdom of heaven. And again I say unto you, It is easier for a camel to go through the eye of a needle, than for a rich man to enter into the kingdom of God.” Jesus Christ

From ETFs get religion: New FaithShares funds target Christian denominations by Sheryl Nance-Nash:

Increasingly, people are choosing to put their money where their values are, and that sentiment isn't lost on money managers. Just this week, the first of three exchange-traded funds targeted at Christian investors hit the market. Two more will launch next week.

Two Recent News Items

From Tom Golisano "Moves" To Florida Over High NY Taxes:

The Buffalo News reports, "Golisano told a gathering of Rochester business executives that he will remain as owner of the Buffalo hockey team, but he is fleeing the Empire State to avoid paying $13,000 a day in state income taxes.

From Buffalo crash probe focuses on pilot fatigue, low pay:

Officials with Continental's regional carrier, Colgan Air Inc., acknowledged at the hearing that Shaw was paid about $23 an hour and had a salary of $16,254, although she could have earned more if she worked extra hours.

She previously had a second job working in a coffee shop.

Got An IRA?

From How much do you know about IRAs? by Robert Powell:

Make no mistake about it: The IRA is America's savings vehicle of choice. In 2007, assets in such accounts totaled $4.75 trillion, more than any other type of retirement account, according to an Employee Benefit Research Institute study published Wednesday.

That's the good news.

The bad news is that most Americans still don't have a clue about IRAs, even though they've been available for more than 25 years. Most Americans -- even those who don't have access to a 401(k) plan at work -- don't contribute to an IRA.

Just 10% of eligible taxpayers contributed to IRAs each year from 2000 to 2004, according to EBRI. And much of the growth in IRAs comes from rollovers (when a worker leaves his employer and transfers his 401(k) to an IRA) rather than new contributions.

So, it would appear that Americans still have much to learn about IRAs. Here are the best features - and least-known facts -- about IRAs, according to the experts:

Read the rest here.

Congressional Booty

Have you ever wondered why Congress likes to favor the rich so often?

From Frosh Could Join ‘50 Richest’ by Paul Singer and Jennifer Yachnin:

Last week’s elections have created room in one of Washington, D.C.’s most exclusive clubs: Six members of Roll Call’s “50 Richest Members of Congress” will be gone in January.

But fear not — the freshman class of 2009 is bringing reinforcements who appear ready to join the high-rollers on the Hill.

Candidates for Congress file financial disclosure forms that are similar to the annual disclosure forms filed by Members and that carry some of the same caveats. Personal property that is not held for investment purposes — such as second homes — is not disclosed, and the value of each asset is recorded in broad categories that make it impossible to estimate net worth with any precision.

Nevertheless, the disclosure forms do offer a way to compare relative worth of Members, providing a glimpse of some incoming Members who may be worth more than $5 million, which was the minimum for membership in the most recent top 50 list.

The departing Members on the list are: Rep. Robin Hayes (R-N.C.), whose minimum net worth of about $79 million made him the fifth-richest Member last year, but was not enough to win re-election; Sen. Gordon Smith (R-Ore.), who lost re- election by a razor-thin margin, but gets to keep the $29 million that made him the 10th-richest Member; Sen. Elizabeth Dole (R-N.C.), who lost her seat as well as her spot as 19th on the list with $16 million; Rep. Steve Pearce (R-N.M.), who gave up his House seat and 31st place at $8 million in an unsuccessful bid for the Senate; Sen. John Warner (R-Va.) who retired, taking about $6 million in net worth that qualified him for 45th place; and Rep. Rahm Emanuel (D-Ill.), who was No. 50 on the list with $5 million until he agreed last week to become chief of staff to President-elect Obama.

Read the rest here.

Doomed, Or Not Doomed?

Is it the end of the world?

From Time To Batten Down The Hatches by Thomas C. Scott:

My general advice to everybody is the same: Start, right now, battening down the hatches. We're in for an extended period of financial stress and readjustment. I tell clients that even if they think they're OK; even if they can pay their bills; even if their companies have no foreseeable layoffs; they should take steps right now to secure their immediate and long-term futures.

Cut out discretionary spending, downsize, think twice about that new car. If you're having trouble with house payments, give it up now. Walk away and let it go into foreclosure. This is not going to end quickly.

Or is it an opportunity to make some money?

From How Your Portfolio Will Recover by Chuck Saletta:

If anything, the Wall Street Panic of 2008 means you have an even better chance of seeing some extraordinary long-term returns.

In other words, the more the overall market has been hammered, the better your chances of profiting as it recovers.

I’m listening to the voices of experience here (the youngster at 78) and here (the other youngster at 94). I have a feeling that they know what they are talking about.

Private Equity Myth

From Myth-busting Blackstone by David Weidner:

The myth that private equity firms make their money from making portfolio companies leaner and meaner is in danger of getting busted.

Blackstone Group LP posted a net loss of $340.3 million, or $1.27 a share, compared with a net loss of $113.2 million, or 44 cents a share, a year earlier. Revenue was negative $160.3 million, compared with $526.7 million a year ago amid lower values for its portfolio holdings across its corporate private equity, real estate and alternative asset management businesses. See full story.

The losses suggest that despite the industry's claims to the contrary, private equity companies - especially firms as big as Blackstone - are as vulnerable as their corporate counterparts to the deep economic crisis. In essence these firms are little more than souped-up conglomerates that enjoy a tremendous tax break because their portfolio companies are considered investments.

Read the rest here.

The Road To The White House Is Expensive

From Most Expensive Campaign Ever: What Else Could $1.6B Have Bought? by Aaron Task:

With Election Day finally upon us, Henry and I took a step back from the horserace and political handicapping to talk about something that really matters: Money.

According to the Center for Responsive Politics, a record $1.6 billion was raised by all Presidential candidates during this interminably long campaign. (The New York Times says the figure could go as high as $2 billion by Election Day.)

Just for kicks, we did a little research to determine what else could $1.6 billion buy:

• Health insurance for over 130,000 families of four for one year (based on average cost of $12,000 per family per year, National Coalition on Health Care)
• Food for 145,000 families of four for one year (based on moderate cost of $9,500 per family per year, USDA)
• 8 million laptops for the One Laptop Per Child initiative (at $200 each, OLPC)
• Fill the gas tank of an average car 40 million times (based on car with a 15-gallon tank with gas at $2.60/gallon)
• Provide a great cable package for 1.3 million households for one year (Time Warner NYC cable/Internet with one premium channel)

Money For Nothing

Edward McSweegan could have quit his job and started another one somewhere else. He chose not to. Would you consider what he did to be immoral? Or are you OK with it?

From Money for (almost) nothing: Fat paychecks for very little work by Ethan Trex:

…McSweegan claimed that he did nothing for seven years while employed as a scientist at the National Institutes of Health.

In 2003 McSweegan told the Washington Post that he hadn't really been given any job responsibilities since 1996.

Prior to that, he had been a researcher and program officer on Lyme disease, but he was removed from that position in 1995 for arguing with a sufferers' support group.

Although he had a title as director of the U.S.-Indo Vaccine Action Program and a list of nominal duties associated with that role, McSweegan claimed that he only carried out the tiniest of tasks like ordering coffee. In exchange, he received a salary in the neighborhood of $100,000.

When the NIH vehemently disputed McSweegan's story that he simply went to work and did nothing all day, he maintained that he never received any assignments. McSweegan would show up, sit in his office, and read to kill time.

He took up fiction writing to fill his workdays and published a pair of novels he allegedly wrote while at the office. He told CBS in an interview that he also joined a health club near work "just to sort of break up the day."

The most amazing part of McSweegan's story isn't that he managed to stay employed through this seven-year period, but that he received positive performance reviews from his superiors. He wryly explained to CBS, "I guess I'm good at doing nothing."

I wonder if he got his chicks for free?