Tag Archives: Relationships

The Pension Crisis – June 8, 2016 Newsletter

Financial Facts

June 8, 2016

   
pension

 

THE PENSION CRISIS

I’m sure you’ve heard about the problem our country faces with “Social Security, corporate pensions, state pensions, county pensions, municipal pensions…virtually all defined benefit pensions.” The following abstracts from an industry publication really brought it home to me. This is a must read.

OUR COUNTRY’S PENSION CRISIS IN A NUTSHELL – Pension plans that promise a specific benefit in the future are essentially a contract between current and future generations, and those future generations aren’t represented at the bargaining table. As a result, they get stuck guaranteeing the retirement income of their elders while receiving nothing in return. This is the case for Social Security, corporate pensions, state pensions, county pensions, municipal pensions… virtually all defined benefit pensions!

PENSION PLAN PRESS – With IBM freezing its pension plan, a plethora of articles on the dim future of the defined benefit pension plan concept have hit the press. Here is a summation of what you need to know.

Brief history – The corporate pension has been around since the 19th century, but really came into its own in the U.S. in the years just after World War II. The defined benefit plans assumed lifetime jobs with a company, which seemed reasonable at the time, but has long since ceased being the American norm.

Why is it happening? – Companies are trying to become more competitive and adapt to changing times. They must compete with younger companies that never made pension promises or foreign companies where the government provides retirement benefits or there are no benefits at all. IBM is paying about $270 million to make the change but will save $2.5 billion over the next 5 years.

Why now? – Pension crises at steelmakers and airlines have brought the issue to a head, but arcane accounting rules and low, long-term interest rates mean the accounting benefit for freezing a pension is higher than it would be if long-term rates rise.

Who’s most vulnerable? – Salaried employees since companies have to negotiate to cut benefits for workers covered by collective bargaining.

What about earned benefits? – Companies can’t cut pension benefits already earned, but the earned benefits in a defined benefit plan may be a lot less than expected.

Who gets hurt the most? – Workers in their 40s and 50s who have been at the company many years. Benefits build up fastest in an employee’s final years at a company…50% of a person’s pension may be earned in the last five years on the job. Even with bigger 401(k) contributions, these workers may never catch up.

Who isn’t hurt? – Current retirees, younger workers and those who switch jobs frequently.

Freezing versus terminating – Freezing locks the pension in place where it currently stands actuarially and the company is obligated to pay in the future. When employers terminate a pension, they must pay out all of the benefits immediately, either in lump sums or by buying each worker an annuity. Most terminations are due to bankruptcy.

Companies at risk – Those with a large percentage of older, longtime employees; those with employees not covered by a collective-bargaining agreement; those have already cut some retiree benefits in the past.

GOOD RIDDANCE TO DEFINED BENEFITS – Fortune sees the IBM pension plan freeze as the beginning of the end of traditional pensions in the U. S. and editorializes that “corporate pensions are an unstable, unfair and economically perverse means of paying for retirement.”

 

MESSAGES
from the Masters…

FOUR ESSENTIALS FOR HAPPINESS 

by Brian Tracy

 

You may have a thousand different goals over the course of your lifetime, but they all will fall into one of four basic categories. Everything you do is an attempt to enhance the quality of your life in one or more of these areas.

THE KEY TO HAPPINESS

The first category is your desire for happy relationships. You want to love and be loved by others. You want to have a happy, harmonious home life. You want to get along well with the people around you, and you want to earn the respect of the people you respect. Your involvement in social and community affairs results from your desire to have happy interactions with others and to make a contribution to the society you live in.

ENJOY YOUR WORK 

The second category is your desire for interesting and challenging work. You want to make a good living, of course, but more than that, you want to really enjoy your occupation or profession. The very best times of your life are when you are completely absorbed in your work.

BECOME FINANCIALLY INDEPENDENT

The third category is your desire for financial independence. You want to be free from worries about money. You want to have enough money in the bank so that you can make decisions without counting your pennies. You want to achieve a certain financial state so that you can retire in comfort and never have to be concerned about whether or not you have enough money to support your lifestyle. Financial independence frees you from poverty and a need to depend upon others for your livelihood. If you save and invest regularly throughout your working life, you will eventually reach the point where you will never have to work again.

ENJOY EXCELLENT HEALTH

The fourth and final category is your desire for good health, to be free of pain and illness and to have a continuous flow of energy and feelings of well-being. In fact, your health is so central to your life that you take it for granted until something happens to disrupt it.

PEACE OF MIND IS THE KEY

Peace of mind is essential for every one of these. The greater your peace of mind, the more relaxed and positive you are, the less stress you suffer, the better is your overall health.

The more peace of mind you have, the better are your relationships, the more optimistic, friendly and confident you are with everyone in your life. When you feel good about yourself on the inside, you do your work better and take more pride in it. You are a better boss and coworker. And the greater your overall peace of mind, the more likely you are to earn a good living, save regularly for the future and ultimately achieve financial independence.

CONTROL YOUR ATTENTION

Life is very much a study of attention. Whatever you dwell upon and think about grows and expands in your life. The more you pay attention to your relationships, the quality and quantity of your work, your finances and your health, the better they will become and the happier you will be.

ACTION EXERCISES

Here are three things you can do immediately to put these ideas into action.

First, take time on a regular basis to think about what would make you really happy in each of the four areas.

Second, set specific, measurable goals for improvement in your relationships, your health, your work and your finances and write them down.

Third, resolve to do something every day to increase the quality of some area of your life – and then keep your resolution.

QUOTES
from the Masters…

 

On Trust

 

“Trust men and they will be true to you; treat them greatly and they will show themselves great.”

— Ralph Waldo Emerson

“A person will not buy from you until he is convinced that you are a friend and are acting in his best interest. You must make this clear.”

-– Brian Tracy

“To be trusted is a greater compliment than to be loved.”

-– George MacDonald

 

On Values/ Principles

 

“The principles you live by create the world you live in; if you change the principles you live by, you will change your world.”

— Blaine Lee

“Freedom requires that we learn and put into practice the three R’s – Respect, Responsibility, and Restraint.”

— Fr. Brian Cavanaugh, TOR

“Count the cost first. Don’t pay too big a price for pursuing minor values.”

— Jim Rohn

LIFE INSURANCE GIFTS

Estate Ideas

March 9, 2016

LIFE INSURANCE GIFTS

life ins charity

Regardless of your reasons for giving, a gift of life insurance can represent a substantial future gift to a favorite charity at relatively little cost to you. You can:

  • Make a Charity the Beneficiary of an Existing Policy: If you have a life insurance policy you no longer need, you can name the charity as the beneficiary of the policy, meaning that the charity will receive the policy’s death benefit after you die. While there are no current tax benefits to this approach, the value of the policy will be removed from your estate for federal estate tax purposes.

  • Make a Charity the Owner and Beneficiary of an Existing Policy: Instead of simply naming the charity as beneficiary of an existing life insurance policy, you transfer full ownership of the policy to the charity. The charity will then receive the policy’s death benefit after you die. In addition to removing the value of the policy from your estate for federal estate tax purposes, this approach also provides you with current federal income tax deductions.

  • Help a Charity Purchase a New Insurance Policy on Your Life: If you wish to make a substantial future gift to a charity at a relatively low cost to you, another alternative is to consider purchasing a new life insurance policy and name the charity as the policy owner and beneficiary. You then arrange to pay the premiums through gifts to the charity. This approach provides federal income tax deductions and the policy proceeds are not included in your estate for federal estate tax purposes.

Important Note: Most states through their “insurable interest” laws allow a charity to be the owner and/or beneficiary of an insurance policy on a donor’s life. Since state laws do vary, however, it is important to consult with a professional advisor before making a gift of life insurance to a charity. Please contact my office if we can be of assistance.

MESSAGES
from the Masters…

REAPING A MULTIPLE REWARD by Jim Rohn

For every disciplined effort, there are multiple rewards. That’s one of life’s great arrangements. In fact, it’s an extension of the Biblical law that says that if you sow well, you will reap well.

Here’s a unique part of the Law of Sowing and Reaping. Not only does it suggest that we’ll all reap what we’ve sown, but it also suggests that we’ll reap much more. Life is full of laws that both govern and explain behaviors, but this may well be the major law we need to understand: for every disciplined effort, there are multiple rewards.

What a concept! If you render unique service, your reward will be multiplied. If you’re fair and honest and patient with others, your reward will be multiplied. If you give more than you expect to receive, your reward is more than you expect. But remember: the key word here, as you might well imagine, is discipline.

Everything of value requires care, attention, and discipline. Our thoughts require discipline. We must consistently determine our inner boundaries and our codes of conduct, or our thoughts will be confused. And if our thoughts are confused, we will become hopelessly lost in the maze of life. Confused thoughts produce confused results.

Remember the law: “For every disciplined effort, there are multiple rewards.” Learn the discipline of writing a card or a letter to a friend. Learn the discipline of paying your bills on time, arriving to appointments on time, or using your time more effectively. Learn the discipline of paying attention, or paying your taxes or paying yourself. Learn the discipline of having regular meetings with your associates, or your spouse, or your child, or your parent. Learn the discipline of learning all you can learn, of teaching all you can teach, of reading all you can read.

For each discipline, multiple rewards. For each book, new knowledge. For each success, new ambition. For each challenge, new understanding. For each failure, new determination. Life is like that. Even the bad experiences of life provide their own special contribution. But a word of caution here for those who neglect the need for care and attention to life’s disciplines: everything has its price. Everything affects everything else. Neglect discipline, and there will be a price to pay. All things of value can be taken for granted with the passing of time.

That’s what we call the Law of Familiarity. Without the discipline of paying constant, daily attention, we take things for granted. Be serious. Life’s not a practice session.

If you’re often inclined to toss your clothes onto the chair rather than hanging them in the closet, be careful. It could suggest a lack of discipline. And remember, a lack of discipline in the small areas of life can cost you heavily in the more important areas of life. You cannot clean up your company until you learn the discipline of cleaning your own garage. You cannot be impatient with your children and be patient with your distributors or your employees. You cannot inspire others to sell more when that goal is inconsistent with your own conduct. You cannot admonish others to read good books when you don’t have a library card.

Think about your life at this moment. What areas need attention right now? Perhaps you’ve had a disagreement with someone you love or someone who loves you, and your anger won’t allow you to speak to that person. Wouldn’t this be an ideal time to examine your need for a new discipline? Perhaps you’re on the brink of giving up, or starting over, or starting out. And the only missing ingredient to your incredible success story in the future is a new and self-imposed discipline that will make you try harder and work more intensely than you ever thought you could.

The most valuable form of discipline is the one that you impose upon yourself. Don’t wait for things to deteriorate so drastically that someone else must impose discipline in your life. Wouldn’t that be tragic? How could you possibly explain the fact that someone else thought more of you than you thought of yourself? That they forced you to get up early and get out into the marketplace when you would have been content to let success go to someone else who cared more about themselves.

Your life, my life, the life of each one of us is going to serve as either a warning or an example. A warning of the consequences of neglect, self-pity, lack of direction and ambition…or an example of talent put to use, of discipline self-imposed, and of objectives clearly perceived and intensely pursued.

QUOTES

from the Masters…

 

On Relationships

 

“What counts is a way to get along with people that will bring us personal satisfaction and, at the same time, not trample upon the egos of those we deal with.”

— Les Giblin

“My life changed for the better the day I realized that when I gossiped, it ultimately hurt me much more than it hurt the person about whom I gossiped.”

-– Bob Burg

“Technology does not run an enterprise, relationships do.”

— Patricia Fripp

“The best words for resolving a disagreement are, ‘I could be wrong; I often am.’ It’s true.”

-– Brian Tracy

On Courage

“Courage is sometimes frail as hope is frail: a fragile shoot between two stones that grows brave toward the sun though warmth and brightness fail, striving and faith the only strength it knows.”

— Frances Rodman

“It takes as much courage to have tried and failed as it does to have tried and succeeded.”

— Anne Morrow Lindbergh

“To dream anything that you want to dream, that is the beauty of the human mind. To do anything that you want to do, that is the strength of the human will. To trust yourself, to test your limits, that is the courage to succeed.”

— Bernard Edmonds