Timesizing® Assocs. - Homepage
[Commentary] © 2003 Philip Hyde, The Timesizing Wire™, Box 622 Cambridge MA 02143 USA (617) 623-8080

Eroding Retirement, Jan-Feb/2003

2/26/2003   eroding retirement -

2/25/2003   eroding retirement -
  1. Fidelity Investments to give $217 million to top retirees, by John Hechinger, WSJ, C1.
    ...The nation's largest mutual-fund company..\..despite its struggles in a...stock-market decline, will pay out $217m to "a number of senior executives" who retired in January.... A confidential offering document circulated recently to institutional investors...doesn't say...how many..\.. Boston-based Fidelity...also known as FMR Corp. and controlled by the Johnson family and Chairman Edward Johnson III, closely guards its compensation practices..\..
    Several hundred top executives and money managers [do] have the chance to buy stock in Fidelity during their careers, which the company then buys back when they leave the firm. ...The departing executives...are expected to receive their windfall in cash this year, except for about $75m in promissory notes and other debt..\.. The big payout demonstrates the often-rich rewards that can come with long service time at closely held Fidelity.
    ...Some of the execs who retired in January included Vice Chairman James Curvey, a former president and COO who retired after 20 years and remains a director and confidant of the Johnsons; [Hmm, if it's just these 3, they average 217/3= $72 million apiece, far beyond what anyone can spend even if they live to be 100.]

  2. [Then there's the rest of us who have to rely on Medicaid -]
    Getting poor on purpose - States crack down on families that shed assets to get free nursing-home care..., by Michelle Higgins, WSJ, D1.
    States and counties have begun to crack down on people who purposely make themselves poor so the government will pay for their nursing home care.
    For years, thouands of middle-class and even affluent retirees - terrified that long-term healthcare costs would wipe out their savings - have transferred their assets to relatives in order to qualify for Medicaid, the govt's health plan for the poor. Their goal is to make themselves poor by Medicaid's definition, generally meaning they have no more than $2,000 in assets, excluding their house and their car.
    The upshot is that families, in some cases with net worths of $millions, are going through contortions to spend or give away all their money. Some simply write giant checks to their children, while others splurge on their house. Technically, a person can have a $multimillion mansion and still be considered for Medicaid - though many states will try to recoup some of the money after s/he dies....

2/24/2003   eroding retirement - 2/21/2003   eroding retirement - 2/20/2003   eroding retirement - 2/13/2003   eroding retirement - 2/08-10/2003   eroding retirement -
  1. 2/08 Bethlehem Steel seeks to end retirees' benefits, Reuters via NYT, B4.
    ...Bethlehem...which has agreed to be bought by the International Steel Group, said yesterday that it wanted to terminate health and life insurance benefits for substantially all of its retired workers and their dependents...on March 31 for the 95,000 people "because we cannot pay the obligations."
    [In these circumstances, the personal assets of all the executives involved, down to the average net worth of all the victims, should be used to pay the obligations.]
    Bankruptcy court approval is needed to eliminate the benefits....
    [Imagine the recession-clinching impact this will have.]

  2. 2/10 S&P warns firms in Europe over pension funding, by Silvia Ascarelli, WSJ, A12.
    LONDON - In the latest sign of widening concerns over company pension deficits, Standard & Poor's warned that it might downgrade a dozen European companies because of huge unfunded liabilities.
    [So the global, CEO-sloppifying labor glut has degraded Euro companies as well as American.]
    Until now, most of the fears had focused on US and UK companies, but S&P's list includes 7 blue-chip continental firms. For instance, a downgrade of German steel group, ThyssenKrupp could push the company into junk-bond territory....
    The announcement also marks a fundamental shift in S&P's attitude toward long-term liabilities for pensions and other retirement-related costs, such as healthcare costs for US retirees and "end-of-career" bonus payments in France. For the first time, S&P is making good on its threat to treat those liabilities as if they were debts that had to be paid in the future....
    [rather than what? ignorable externalities? or God forbid, assets? In any event, it's yet another blow that makes you wish you had been born 10-20 years earlier so you could hit the retirement window while the global economy still roughly worked - before the world's wealthiest grabbed all the spending power they could - despite having insufficient time to actually spend any substantial fraction thereof - and basically thereby starving the goose that had been laying the golden eggs.]

2/07/2003   eroding retirement -
  1. Where need, finances clash - Income keeps many from assisted living - Elderly priced out of assisted living, by Alice Dembner, Boston Globe, front page.
    Richard Fairchild longs to move but remains in a nursing home.... [photo caption]
    'I came back from the dead. Now, I just want a chance to live.... Assisted living would be ideal for me. Everything's there. They have a nurse available. They remind you to take your pills.' ...

  2. Bush retirement proposals alter landscape - 'Tectonic shift' gives workers new tax-free investment plans, but some options may disappear, by Aaron Lucchetti, WSJ, C1.
    [The Wall Street Journal is still giving the Bushwhacker the benefit of the doubt, but then there's the New York Times -]
    New plans to aid savings may harm financial firms - Small pension managers and insurers at risk - Small businesses may end their retirement programs, by Joseph Treaster, NYT, C3.
    [And his own fellow Republicans are not quite "goin' along to git along" -]
    Republicans tell Bush savings plan is doomed - White House seen signaling willingness to back off initiative, by Jim VandeHei, Boston Globe, E1.
    [Bush does yet another reversal of a stupid idea.]

2/05/2003   eroding retirement - 2/04/2003   eroding retirement - 1/31/2003   eroding retirement - 1/30/2003   eroding retirement -
  1. Bush team weighs big shift in IRA tax policy, by John McKinnon, WSJ, D3.
    [Ohno-o-o Mr. Bill, er, Georgie!]
    [Followup -]
    Bush to propose expansion of IRA-like investments, by Treaster & Walsh, 1/31/2003 NYT, front page.

  2. US Airways seeks reworking of pilots' pension plan, by Mary Walsh, NYT, C1.
    US Airways is planning to ask the government to take over its pension plan for pilots, a step that would sharply reduce their benefits...
    [Hooboy, that government agency is already grossly overburdened - see 1/25/2003 below. So here's the supposedly reassuring "pledge" -]
    but the airline is also pledging to give pilots a rich new retirement plan after reorganizing to make up for the loss.
    The airline has told the pilots that it will take steps either today or tomorrow to begin terminating the underfinanced plan, a step intended to help the airline emerge from bankruptcy....
    [Sounds like the Bushster on war - it would go "the administration has told Americans that despite its underfinanced warplan it will take steps either today or tomorrow or the next day to begin to start to commence to initiate terminating the grace period for Saddam, a step intended to help the administration emerge from its bankrupt ideas for the economy. Well, maybe we shouldn't get too worked up on behalf of airline pilots. The inside subhead on this story (C7) says -]
    A pilot can easily build up a pension of $100,000 a year.
    [Poor babies! No wonder the airlines are bankrupt.]

  3. [and here's another doozy, this one from the Boston Globe -]
    Broken promises - Retired partners of Hill & Barlow to lose pensions, by Scott Nelson, BG, C1.
    John Saltonstall Jr., 86, for many years a major player in Boston politics, is fighting the elimination of his retirement benefits by Hill & Barlow, the law firm for which he worked from 1945 to 1979.... [photo caption]
    [Hey, now that The Great Trashing of American Pensions is reaching the brahmins, maybe we'll see it stopped - as when civil rights marchers finally got some respect and some action once the children of US senators started marching with them - and getting threatened by the KKK & co. just like the plebs.]
    ...Hill & Barlow LLP, the law firm for which he worked...has informed Saltonstall that his company pension runs out this week. Laid low by economic recession and its own lack of direction, Hill & Barlow capped the most volatile 6 months in Boston legal history by voting on Dec. 7 to dissolve itself [see 12/10/2002]. Now the firm's managing partner, Charles Dougherty [must be a real putz], finds himself facing down a long list of creditors while telling a dozen of the firm's former partners - including Saltonstall - that there's nothing left for them....
    [Doncha just LUVVIT when lawyers shaft lawyers?!]
1/27/2003   eroding retirement - 1/25/2003   eroding retirement - 1/13/2003   eroding retirement -

For earlier retirement stories, click on the desired date -

  • Oct-Dec, 2002.
  • July-Sept, 2002.
  • June, 2002 & previous.
    For more details, see our laypersons' guide Timesizing, Not Downsizing, which is available online from *Amazon.com and at bookstores in Harvard and Porter Squares, Cambridge, Mass.

    Questions, comments, feedback? Phone 617-623-8080 (Boston) or email us.

    Top | Homepage