Have you looked at your pension today?

Even though the left, particularly Obama, love to blame Bush for the housing bubble bursting in 2007-2008 which was actually a result of years of government interference in the housing market, I'm NOT going to blame Obama for what is happening in China this week which is making mincemeat of my pension funds.

 China's economy has become so powerful, the only protection is for us is to have a president and Congress who are capitalists instead of socialists in heart and policy. Socialists only know how to tax the workers to spread the wealth. That doesn't grow the economy.  The irony is that China got this strong by kicking out its communist economists and liberalizing its capitalists. Right now, China's economy is in free fall.

I just got my TIAA-CREF December account report.  I withdrew (by law it's required after 70.5 years) about $4,000, but my gains in investment were about $8,000, so I ended the month at a higher balance than I started with.  That's how every retiree hopes it will work out.  However, the top .01% of the population lost billions on paper this week, and it is now trickling down to  those of us who saved and scrimped during our working years to have enough to retire.  I socked away 15% every month from my paycheck (maximum allowed) in addition to the required amount for the state pension. My health care comes out of my pension, and that's about 13%.  If all I had was a pension, I'd be in poverty.

Investing in Whirlpool

In going through my e-mail this morning I noticed we had purchased 35 shares of Whirlpool (investment advisor) for $5,124.89 at $146.4254 a share (I may own more, but don’t have that information at hand). Whirlpool is the number one major appliance manufacturer in the world, with approximately $20 billion in annual sales, 100,000 employees and 70 manufacturing and technology research centers throughout the world in 2014.  So I took a look at what had been going on and see that Whirlpool had slumped to its 52-week low Friday after it reported weaker-than-expected quarterly revenue, but beat earnings expectations in its latest quarter, thanks to cost cuts and acquisitions that drove European and Asian sales. So I guess to professionals, that’s the time to buy—don’t buy high?

I like the idea of investing in something I know, use, can see, and touch, even though I’m not the one who placed the order. The headquarters are in the mid-west—Benton Harbor, Michigan.  In the past year we remodeled our kitchen and replaced the appliances.  I now have a Whirlpool microwave and refrigerator/freezer, a GE double oven and a Kitchen Aid dishwasher.  I suppose it would be better to have all the same company to get a color match, but in all cases since these were replacements, we had to go with what would fit. The double oven replacement was a nightmare—don’t ever spec one unless you absolutely need it. I wasn’t happy that the new microwave sticks out so much further than the old one which was flush with the cabinets, but after looking at other models, magazine ads, and other homes (my daughter’s), I see they are all that way.

Also, Kitchen Aid is owned by Whirlpool which owns 13 brands, including: Whirlpool, Maytag, KitchenAid, Jenn-Air, Amana, Brastemp, Consul, Bauknecht, and Gladiator. With the housing market rebounding,  sales to new housing installers should rebound in the coming years after a slow down in 2008. If the construction trucks in our condo complex are any indication, remodeling is booming also.

http://investors.whirlpoolcorp.com/

http://www.wikinvest.com/stock/Whirlpool_%28WHR%29

I hope the top 10% continues to do well—they are the ones paying most of the taxes

We have a very "progressive" income tax in the U.S.--the top 10% of earners pay over 70% of the income tax. Because I am a pensioner, my income comes from investments in my state teachers' pension and my 403-b, the 15% of my salary I socked away while I worked. (I'm not eligible for Social Security--that would be "double dipping.") Now I'm with the bottom 50% who pay about 2.3%. I can only live well if Obama and other Democrats don't target investors, risk takers, entrepreneurs, and the big spenders who keep the wheels of the economy moving.

State of the Union feel good throw aways

The president’s SOTU list—pre-K education; “equal pay”, raising the minimum wage or extending unemployment benefits--is not going to address the real drivers of upwardly mobility--marriage before parenthood and a high school education. Head Start after 50 years shows no discernible advantage in learning, behavior, parenting practices, or health outcomes (at $8,000 per child it does supply a lot of jobs) so why add compulsory pre-k education?  Marriage of her parents is a child's best hope to stay out of poverty, but welfare programs discourage mothers from marrying. Raising the minimum wage won't help people who haven't finished high school--it just decreases their employment opportunities. 92% of black teenagers in Chicago can’t find employment; how will raising the minimum wage help them? And the $10.10 minimum for government workers was a throw away since it is a tiny minority with few at that level.

http://townhall.com/columnists/walterewilliams/2013/04/10/black-unemployment-n1561096/page/full

And that new retirement vehicle? That’s puzzled everyone.  Don't look at MYRA if you have a 401-K or IRA. It's government backed securities. The rate of return this past year would have been about 1.4%. If you need more to open an IRA, just save it in your piggy bank and then invest. On your worst day, you'll get more than 1.4%.  The stock market has been going like gang busters since 2010. If there had been a MYRA, the return would have been dismal. http://www.forbes.com/sites/johnwasik/2014/01/30/myra-not-needed-you-can-set-up-your-own-retirement-plans/

Follow the money—or the votes

Seniors are not hurting.

"Sen. Tom Harkin (D., Iowa) has introduced legislation to increase Social Security benefits and build a government-run supplemental saving plan. Sen. Elizabeth Warren (D., Mass.) has so captivated progressives with her demands to raise Social Security payments that she is touted as a potential presidential candidate in 2016."

What this country needs is jobs for young people, not pandering to senior citizens. Today's retirees have been warned since their 30s that Social Security won't be there for them, and most of the couples I know have 5 or 6 streams of income, from a 403-b, or 401-k, or private investments, or annuities, or IRAs, or veterans' pension, or Social Security. There are divorced women living in “committed relationships” still getting financial support from the husband that ran off with his secretary 30 years ago. If they married, they’d lose that. 

Politicians know seniors vote. Especially Democrats.

The Fiscal Cliff

Let Obama take us over the Fiscal Cliff (he's out campaigning for tax increases right now) so people know what he's about. Of course, he will blame the Republicans who want cuts in spending to reduce the debt, but his proposed tax increase which he thinks you voted for will only pay for the government about a week. That’s useless and he knows it.  The purpose was to create class resentment, not revenue.  Then he'll have to come after YOUR paycheck.

http://www.cfr.org/economics/fiscal-cliff/p28757?cid=ppc-google-grant-fiscal_cliff&gclid=CNLQn8na8bMCFYpFMgodhmIAmQ

One of the easiest and most sensible cuts is to raise the age of receiving Social Security and Medicare. It can be gradual so people have plenty of time to prepare.  And which party has shot down that idea consistently—the Democrats.  They want nothing to do with a program that will take power away from the government and put it in the hands of the citizen.

In 1930 the life expectancy for whites was 61.4 and blacks 49.2. Sixty-five for retirement (in an era when many worked their entire life) seemed extremely optimistic. But in 2010 for whites it is 79 and for blacks 75.1. A male retiree, born in 1940, will spend anywhere from 19 percent to 25 percent of his life collecting Social Security benefits (depending on whether he retired at the normal retirement age of 65 or chose early retirement), and a female born in the same year will spend 21 percent to 27 percent of her life collecting benefits.

The biggest old age problem we have is not Social Security, but a less than replacement birth rate, and many people will have no cousins and no nieces or nephews as well as no grandchildren to help them. Families are the original safety net, but the Democrats by pushing contraception and abortion are also weakening this safety net. Maybe YOU have grandchildren, but will they have grandchildren?

http://www.infoplease.com/ipa/A0005148.html

Obama has no intention of saving the United States from its plunge into being Greece or a failed European state.  So don’t look for solutions—just look for higher taxes.

Start saving now, college grads

When I graduated from college I was 21 and 5 months pregnant. I had other things on my mind than saving for retirement.  .  . like rent, food, graduate school, paying off the hospital and doctor bills (it was a pay as you go baby).  I put it off until I was about 48 and the children were launched.  Then I opened a tax deferred account through TIAA-CREF and started setting aside the maximum allowed.  Since I didn’t go back to work full time until about that same time, I was really behind.  If you’re starting out, don’t do what I did.

Here's how interest compounds over time: If you save $10 a day at age 25, you'll have more than $1 million by age 65, assuming an 8% annual rate of return. If you start at age 35, you'll have $445,000. At age 45, you'll only have $180,000.

http://online.wsj.com/article/SB10001424052702304432704577348052844503384.html

Retiree confidence levels change since the Bush years

Some people forget that G W Bush also inherited a recession. The percent of retirees in 2001 who felt very confident or somewhat confident that they had saved and invested sufficiently for retirement ranged from 74% in 2001 to 79% in 2007. In 2008, that dropped to 64% and then to 60% in 2011 as the recession ground on despite a massive influx of federal funding. Link to Research. The gloom and doom in the business community is palpable as they are hit by more and more taxes and uncertainty about health care. Expansion is mostly out of the question, unless you're a petroleum driller in North Dakota. This affects those of us who live on retirement incomes whether Social Security, or defined benefit plans or our own savings/investments. Obviously, two things jump out about those years--the current recession that started in 2007 changed the investing mix and caused retirees to reevaluate their retirement plans and spending, and the baby boomers began entering the retirement demographic.

Those of us who were born before or during WWII whose fathers fought in that war and whose parents were teen-agers or young adults during the Great Depression have a different attitude than baby boomers about saving and sufficiency. We also have benefited from stronger family safety nets and we know the difference between “wants vs. needs." The value gap will expand for Gen-Xers who were accustomed to even more “stuff” replacing spiritual and familial values. In the 1940s and 1950s even children whose parents never took them to church heard Biblical admonitions on values and thrift in school before the Supreme Court ended it in the 1960s. "Don't store up treasures here on earth, where moths eat them and rust destroys them, and where thieves break in and steal. Store your treasures in heaven, where moths and rust cannot destroy, and thieves do not break in and steal.” Matt 6:19-20

Newmont Mining Corporation

I see I've bought 50 shares of Newmont Mining Corporation (NEM), a gold producer, with significant assets or operations in the United States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand and Mexico. Well, I hadn't planned to buy gold for my retirement portfolio, but apparently if you do, you'll be helping me.

Discovery & Development | Newmont Mining Corporation

The public employee retirement plans theft

Lately Glenn Beck has been focusing heavily on the economic problems of the various states. We hear a lot about California; not so much about Illinois. Last night he hit Illinois hard. The state has "borrowed" (stolen) money from all its public retirement funds to support and pay for other programs. I think he showed five. That's illegal to do if you're in business. But has it helped Illinois' budget? Apparently not. How many people do you know who got out of debt by drawing cash from their credit card? I know Pinecrest in Mt. Morris is in trouble because the state can't make its Medicaid payments. Here's the letter I got from the University of Illinois:

"Due to an excessive delay in the payment of our appropriation by the State of Illinois and uncertainty over what lies ahead, your university is facing unprecedented fiscal challenges. In the coming weeks and months, we will be taking a critical look at all aspects of our campus operations, re-examining everything from our administration to small academic units assembled years ago to meet specific needs. An extensive review process will underwrite each decision we make, and every decision will be strategic - designed to transform your university to meet the challenges of the future.

We know that you will have great interest in our work and the resulting decisions, and we invite you to stay connected to the process. Indeed, as we explore the options available to ensure our continued excellence, you may well hear that we are reviewing your college or program. We have created a Web site called Stewarding Excellence @ Illinois as a resource for everyone in the University of Illinois at Urbana-Champaign community. By visiting the site, at http://oc.illinois.edu/budget, you can stay informed of the latest information and activities, and we invite you to offer your ideas through the site's virtual suggestion box.

A final note: we hope also you will urge the Governor and members of the Illinois General Assembly to reach an early solution to the fiscal crisis that now holds Illinois in its grip. As we move forward we pledge to you that all of our decisions on the financial challenges facing this campus and the University of Illinois overall will be guided by our land-grant mission of excellence in teaching, research and public engagement."

Unfortunately, what can the General Assembly do now but raise taxes during a time of high unemployment? A time when instead of focusing on jobs, our federal government just tried to grab more of the economy by taking over health care.

Several times, Beck said, "These people should be in jail," referring to the Illinois legislators who did this. Wonder if he meant Obama who was part of the Illinois General Assembly when some of the theft went on (although he probably wasn't there for the votes)? Beck also noted how many states and municipalities are in trouble because of unfunded federal mandates--and there will be more from EPA. No blame for the present administration for that--these go way back. But there are more to come as the EPA just by-passes Congress.

This study features Colorado and Kansas public employee retirement plans, so it's not just Illinois and California.