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This article by Bart Jackson & Kathleen McGinn Spring was prepared for the June 30, 2004 edition of U.S. 1 Newspaper. All rights reserved.
Forecasting Your Needs For the ‘Golden Years’
‘Any man who dies with more than $10,000 should consider himself a failure,” famed movie idol Errol Flynn was fond of noting. A resounding success by these standards, Flynn measured out his own profligate life so that his vast fortune dwindled merrily down with scant surplus by the time of his demise.
While some might want to say “to heck with the kids” and follow Flynn’s example, no one wants to have the money dry up years — or decades — too soon. But in these intriguingly uncertain times, what can we do about it?
Both a general outline and individualized plans are designed in “Financial Strategies for Successful Retirement,” a four-session Mercer County Community College course beginning on Tuesday, July 6, at 7 p.m. Cost: $80. Call 609-586-9446. Presented several times a year alternately by Larry Parsons, partner in the Princeton office of A.G. Edwards, and investment counselor Keith Becker, who is with Smith Barney in Philadelphia, the course is designed for all ages, and covers every aspect of retirement from initial planning right up through estate management.
Parsons, who leads this class, has found himself in everything from ladies hose to army fatigues in a varied career. Raised in Lumberton, North Carolina, Parson followed generations of relatives to Wake Forest University, earning a B.A. in history in 1966. The Vietnam War was underway at the time, and he opted for an ROTC commission.
Parsons ended up with textile manufacturer J.P. Stevens, managing women’s hose sales for domestic markets and then for European markets. One day in l975, while commuting home to Princeton on the train out of New York, he read in the Kiplinger Letter that personal finance was the up and coming field. Making use of the information, he shifted into selling life insurance for 11 years, then joined Tucker Anthony Investments, before moving on to A.G. Edwards.
Just to read the multi-page outline of Parsons’s course boggles the non-investor’s mind. But he insists it is less a matter of deep market strategy, than of blending a little foresight with common sense.
The profit of now. “The greatest blunder I see in all retirement planning is procrastination,” declares Parsons. Pension benefits can be seriously curtailed by a failure to learn the rules. Also, the earlier you begin tax deferring or joining a payroll plan, the more you will have to go along with that gold watch. Supplemental government plans, and other investment plans, can save the average worker thousands.
Parsons sees the concern over retirement security growing, but then people put off studying and investing. Back in the days when Social Security was launched, few workers lived long enough to take an extended trip through Europe, let alone to spend three decades perfecting their sand trap strategies. Few 50-year-olds worried about retirement planning, and the concept had not even begun to filter down to younger workers. But now, Parsons says, “some of my best clients are in their 30s, referred to me by my own children.”
Golden years budgeting. To manage what you’ve got, first figure out what you will need in your post-working years. The initial step is to set aside all the fear propaganda about runaway medical costs, runaway inflation, and spouses running away with your funds. Forget the fear peddlers and deal in reality.
Some new retirees find that they live just as comfortably on a fraction of what they spent while working. Working demands certain hidden expenses — train tickets, business suits, birthday collections for colleagues, dry cleaning, Social Security taxes, and household help to do what you don’t have time to do. Also, by retirement time most of your mortgage probably will be either paid off or will have dwindled down to a small, manageable amount. Most of your major toys and tools will be bought. Of course, you’ll buy less because after all those years of shopping, you will have run out of storage room. Things just somehow get simpler. Your children will still be a drain, but mostly only an emotional drain.
You will spend more time in the doctor’s office, but medical costs may become more fixed. Even with the recently gutted Medicare programs, inexpensive private co-insurance can bring medical costs in at a fairly reasonable sum. (Hint: Check the web. Many municipalities and other groups have recently set up drug-purchase programs from Canada, which bring prescription medicine to your door at literally half the price.)
Using today’s dollars, make out a few possible future budgets, both for your early retirement years, and for the eventuality that you might want or need to move to a continuing care facility. If you live within the U.S. 1 area, your current home’s value could well provide the capital for an eventual shift into a continuing care facility — but perhaps not in New Jersey. In North Carolina and Florida excellent continuing care facilities can be found at 60 percent of the cost of those in our area.
Yes, some expenses will be lower in retirement, but others will be higher. Do you spend more on weekends, when you have the time to go to museums, movies, and jaunts? If so, the amount you need for “walking around” money may go well up when you stop working. Also, don’t forget to include post-retirement splurges. A few cruises, a new deck for the back of the house, a little boat, dinners out with friends — doubtless you will find some well-deserved way to celebrate your new freedom.
These budgets are only estimates, since the unfactorables of inflation balanced against increased earnings and investment income (or loss) are what make life a gamble. But, armed with some rough figures, you can set up a means of meeting these needs.
Social Security? Parsons has a simple rule of thumb: If you are over 50, count on some. If you are under 50, count on none. The l935 “Temporary Social Security Act” appears to be an insurance company in ill health. In Parsons’ opinion, the young almost definitely will not collect — or will not do so to the degree than their parents will.
Pension complexities. After procrastination, the second biggest blunder on Parsons’ retirement list is failing to fully comprehend government and company pension plans. Most companies now offer employees two separate forms of retirement planning: the pension and the separate payroll deductible 401 (k) (called 403B for non-profit workers).
For the younger employee, probably the greatest pension factor is portability. How much of your pension plan and benefits can you carry with you to the next job? The company itself may offer none, but your professional association or union may offer transfer benefits. In the government and teaching realms, New Jersey workers can carry their benefits to any other job within the state.
Those employees coming into the home stretch should study the full range of pension payout options. Do you want stock or cash? Do you want to include your spouse, or, in some plans, your extended family? Also, what part of your existing benefits, such as medical insurance, can you pick up for what co-payment on your own?
In addition to the pension, many firms offer employees a 401k annuity plan. In accordance with IRS guidelines, the employee can deduct up to $50,000 annually from salary and place it into such accounts, on which taxes are deferred until they retire, and will be presumably taxed at a lower rate. These funds may be matched to varying degrees by the employer. Additional funds may be added by dividends, interest, and growth.
Risk tolerance. How fast and loose do you want to play with your nest egg? Most pension planners and investment counselors now present clients with questionnaires designed to assess just how much risk they are willing to tolerate. Terms like aggressive and conservative typically boil down to what blend of common stock, mutual funds, and bond or bond funds you want.
But Parsons cautions that risk tolerance alone should not decide investment strategy. The times and climate are equally important. For example, currently virtually all economic indicators point to higher interest rates. This will force the value of bonds down, ruining many seemingly “safe” portfolios for the over 55 group. When you receive your pension options, and have to choose what blend of investments you prefer, it might be wise to run it by a trusted broker or a financial consultant.
Payout tips. Most plans offer several payment options that stretch out the pension sum. You can take a lump sum, or it can be doled out over your lifetime, and that of your spouse. Remember, everything is negotiable. If your unique circumstances don’t fit one of the prescribed formats, talk with your employer and the financial people. They may just budge a bit.
The lump sum payout becomes particularly valuable for the individual who expects a continuing family expense after his death. Parsons recalls a client with a $2 million pension, which would have put him and his wife in a good financial position, yet left their autistic child uncared for at their death. The better course was to take the lump sum, invest it, and put some into a trust for their child.
Staggered payments not only fit certain needs but offer a hedge against current economic trends. If you have $100,000 retirement payment coming due, you may arrange to invest in bonds due every two years, beginning in 2006. This laddering spreads the risk.
Finally, keep an eye on your spouse. Most retirement plans that offer a set monthly payout until the death of the employee will also include the spouse, for a somewhat reduced periodic payment. This is fine — if this is your final spouse. For example, assume you reject the $2,000 monthly pension payment for yourself in favor of the $1,500 monthly payment that will continue to roll in until both of you shuffle off. Then, your first wife dies, and you remarry. Your new bride would have no share in the pension.
An alternative, says Parsons, is to take the $2,000 monthly payout from your employer. Then invest that extra $500 in life insurance. This will purchase you a hefty chunk of coverage, and the beneficiary can be continually changed. Your third wife will thank you. But, to continue the gambling scenario, should you die soon after retirement, your first wife could be left in a very bad position.
After all the fiscal study, the old rules still apply. Life is a gamble — accept it, don’t try to change it. Live life in the moment, but don’t be foolishly profligate. And at the end, may we all have the many joys of Errol Flynn — and his luck in spending at just the right rate, too.
— Bart Jackson
You remember all those Christmas cards from the late 1990s? The ones with grandpa beaming down at your toddling infant — or was it grandma? Too blurry to tell. If those splotchy computer images have kept you shunning digital cameras in favor of the old, trusty 35 mm, now may be the time to make the switch. The current wave of digital cameras packs far more power,offers many more features — and costs far less.
For those who have made the digital choice and are now staring blankly at the silver piece of complexity in their palms, a little guidance makes for much more focused memories. A good bet for hand held instruction is “Digital Camera Basics,” a three-session course beginning on Wednesday, July 7, at 9:30 a.m. at Mercer County Community College. Cost: $104. Call 609-586-9446. The instructor is Kathleen Doctor, technical specialist at Hopewell Valley’s Timberlane School. The course is designed for those who have already purchased a camera and want to get the most out of it.
“I was actually slow to switch over to digital, myself,” says Doctor. “But when I saw how I could just hand the camera to my eighth graders and say ‘Go take a lot of photos for the yearbook, kids,’ the benefits came home and I was hooked.”
Doctor, born and raised in Trenton, attended the College of New Jersey, where her degree was in elementary education. Later she earned an M.A. in computer science. As technical specialist for the Timberlane school, she finds digital equipment becoming increasingly standardized, and so idiot proof that even the parents of her junior high students can work it easily.
Film versus digital. Which is better? Well, what do you want to do with your pictures? The biggest disappointment that the average 35 mm owner finds with his new digital camera is that it can’t go the distance. Until you start getting in the very pricey — and physically larger — models, most digital cameras provide a magnification of three, about double what’s seen with the naked eye. If you want to pull in the rhino from across the field, your old 35 mm with its attachable zoom will do the better job.
Artistically, the standard film camera has many advantages. The process of over-exposing and under-developing, used with mathematical precision by Ansel Adams, is one example. However, the multiple-editing capabilities of digital far surpasses those of the standard print. For example, making a composite print of children’s faces from your trip to China is a snap with a digital camera.
Other huge digital advantages include the ability to take scores of pictures without ever reaching for a film canister and the ability to send the results back home — or to the office — instantly. It doesn’t bother Doctor that her students take hundreds of foolish photos before getting down to the real business of doing the yearbook. Unwanted pictures can be deleted at the touch of a button before the important ones are downloaded for editing. No expense is incurred.
Despite the benefits and disadvantages of each, the prime question still remains: who is your audience? If you are creating a few fond memories for yourself and your wife nothing beats the simple, lasting photo album stuffed with precious prints — digital or film. No matter how often the geeks assure you that online is forever, do not believe them — total photo destruction is only a magnetic twitch away. If you want to primarily share your pictures with your friends and family, all of whom are computer literate, digital is great. No matter how scattered they are, each person in your inner circle can see Aunt Marie, her cottage garden, and the family Tuscany vineyards on the day you visit.
However, if you like a really large projection — larger than that provided by your television set — and love the awe created by a grand slide show, hang on to the old 35 mm. While digital projectors have dropped from $5,000 to $2,500 in the last three years, the complexity of their lenses will most likely keep the cost at that high plateau for quite some time.
What money buys. Quality digitals range from approximately $200 to $500, and then take a major leap for those who need the very highest quality, most likely for professional photography. Go up $100 or so from the lowest cost cameras and the extra dollars purchase better resolution, more compact size, flash, more downloading options, and probably the ability to capture sound and motion in short movies.
The resolution of a digital picture is measured in pixels — that is the number of dots per square inch that are colored to produce the varied tones of the graphic image. Back in the late 1990s most digital Christmas cards were being taken and sent out on one megapixel cameras that refined their photos to 1 million dots per square inch. Today even the low end $200 cameras claim 3 megapixels, with the $450 to $500 cameras boasting five and even six megapixels.
Many photographers assume that it’s a case of the more megapixels the better. Not necessarily. On a standard 4 by 6-inch photo, the resolution difference between three and five megapixels is hardly noticeable. Those extra dots generally come in handy, when you are trying to blow your image up, but even this is not always true. Reviewers sometimes find that a camera with, say, three megapixels provides a crisper image in enlargements than does one with five megapixels.
Size issues. The smallest digitals, easily able to slip into a shirt pocket, are often about $100 more than cameras that are larger. But most of the cameras are now so small and light compared with their 35 mm counterparts that size is rarely an issue, except perhaps for backpackers, mountain bikers, and their ilk.
The extras. Here’s where the deals are made. Once you have priced your camera, don’t forget the long list of necessary digital extras. To get your image from the camera you need a memory card, a USB cable, and perhaps some other docking mechanisms, editing software, and a battery pack.
Lithium batteries generally offer more shots than AAs, but check out AAs made especially for digital cameras. They can power hundreds of shots. The lithium batteries can be recharged, which can make their lifetime cost considerably less than that of AAs, but the recharging does require access to electricity, something not always available on vacation trips — or even at graduation ceremonies.
The cost varies with each of these items because each store and each brand offers various elements and rebates in their total package. Doctor warns against buying too much too soon. “Extra docking hook ups and extra readers and the like are things best put off until you see how deeply you want to become involved,” she advises.
Once you have these basic items, you should be good to go. Interestingly, the purchasing of printing capabilities is strictly optional. Most photo stores now offer exquisitely high resolution printing cheaper and better than even the higher priced home units. A good home print produced with an upper end ink jet printer on photo paper will run about a dollar. If you download that shot onto a disc and take it to a retail store or professional lab that same print can cost as little as 29 cents. And in fact, it is no longer even necessary to download. Look for Kodak kiosks into which your memory card can be inserted. Printing photos this way is fast, fun, and cheap. A downside, however, is that the kiosks offer only basic editing.
The shot. Once you learn the basic steps, taking an adequate shot is simple. Yet most digitals demand a little more than point-and-shoot. Because the cameras are so very small and light, photographers tend to jiggle the shots more than with larger, heavier film cameras. While you may not want a bulky tripod, a monopod that doubles as a walking stick helps a lot with stability. Failing that, try leaning against a nearby tree. Then calmly focus, exhale, and shoot. Remember, no amount of editing can repair a blurry or out-of-focus original.
Also what you see is not always what you get. Except for the very cheapest, all digitals have white balance dials that provide the same information as the 35 mm’s built-in light meter. Working these takes practice. However, practice comes easily and at no cost with this technology.
When home photography became all the rage within the leisure class back in the 1880s, adherents could not believe the graphic possibilities and spent hours in their dark rooms brightening, magnifying, tinting, contorting, and generally enhancing the basic images. The quest goes on. Digitals have now returned the common photographer to pictorial independence, allowing him to become his own lab technician, and proudly create his own artwork — and share it instantly.
— Bart Jackson
Two institutions want to sign people up for what they call mini MBA programs. Rutgers Center for Management Development offers an actual Mini-MBA program in an accelerated format this summer. Meanwhile Quality New Jersey claims that those who sign up to be on the Board of Examiners for the New Jersey Governor’s Award for Performance Excellence will get the equivalent of a mini-MBA.
Rutgers’ official Mini-MBA, created two years ago, usually takes 12 weeks to finish. Those who pass the exam get a waiver of three graduate elective credits toward an MBA at the Rutgers Business School in New Brunswick and Piscataway. The first of two sessions meets for five full days on the Rutgers Livingston campus in Piscataway from Monday to Friday, July 12 to 16. Or choose six consecutive Fridays from July 16 through August 20. Cost: $2,495 including all instructional materials. Call 732-445-5526.
QNJ’s Governor’s Award program is modeled after the Malcolm Baldrige National Quality Award; it needs leaders and managers from all New Jersey organizations to assist in assessing applications in business, education, government, health care, and non-profit organizations.
The examiner’s job is a prime opportunity to join a network of professionals interested in improving New Jersey, says Richard Serfass, the new executive director at QNJ. This is his second stint at QNJ. An alumnus of La Salle, Class of ‘63, with a doctoral degree from Temple, Serfass was assistant superintendent of schools in Cherry Hill when he became a national examiner. He was executive director of QNJ in 1997 and 1998, and he replaced Lisa Albitz as executive director on May 24.
Candidates for the job need to be “talented thinkers with broad business or organizational experience, self-starters, team players, and committed to performance excellence,” according to Serfass. The deadline to apply is July 1. Call 609-777-0940 or visit www.qnj.org.
KFC has launched the KFC Kids’ Garden initiative in the Greater Philadelphia area and South Jersey, providing vegetable gardens to more that 12,000 children in YMCA Child Care programs. Through the program, children receive tools, seeds, and a guide to starting their first gardens. KFC and YMCA have collaborated on past programs such as the “Grab Some Knowledge” project and “KFC Colonel Kids.”
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