Financial News

Ever thought of the possibility that you could live to be 100?

Maybe you don’t want to hit the century mark, but more of us will, which means that we have to start today to ensure that we have enough money to sustain us in that long retirement.

Unfortunately, most people have no idea how much money it really takes to live a decent retirement.

"If a person retires at age 60, living to 100 means that they could very well be retired longer than they ever worked," said Bryan Clintsman, a certified financial planner at Clintsman Financial Planning in Southlake, Texas.

That scenario is closer than you think.

U.S. life expectancy reached nearly 78 years in 2007, the latest year for which information is available, and has been increasing each year, according to the Centers for Disease Control and Prevention.

"More than half of babies born in rich nations today will live to 100 years if current life expectancy trends continue," experts at the Danish Aging Research Center at the University of Southern Denmark wrote in October in The Lancet medical journal. "And we are not only living longer than before, but those extra years are spent with less disability and fewer limitations on daily life."

That means we’ll need more money to enjoy those years. The challenge is getting people to understand the importance of planning for longevity, say experts.

"Life expectancy now is close to 80, yet less than 20 percent of the American population in their 50s has even tried to design a retirement plan," said Olivia Mitchell, professor of insurance and risk management at the University of Pennsylvania’s Wharton School.

Some people think they’re more prepared for retirement than they actually are, she said. "Far too often people think, ‘I’m rich, I have $50,000 or $100,000 in my 401(k),’ not realizing that if they were really to spread it out in such a way that they wouldn’t run out of money, then they’d have to be very, very cautious," she said.

One of the biggest land mines in retirement is health care, particularly long-term care, Clintsman said.

"With the cost of long-term care approaching $100,000 per year, few retirees’ portfolios can withstand the hit of several years in such a care facility," he said.

"One of the saddest things I see is a married couple who enters retirement at age 65, then one of them comes down with something really cruel like Alzheimer’s, spends the next five years in a facility draining their retirement assets, then dies, leaving the surviving spouse to live on almost nothing for the rest of their retirement."

For that reason, Clintsman recommends long-term care insurance.

Thomas Murphy, a certified financial planner at TEMAA Financial in Dallas, said you should "plan under the assumption that you’re going to need additional custodial care at a certain age, figure out what the cost is going to be, put aside that amount of money for that purpose or buy an insurance policy."

The way to keep from panicking is to start now in figuring out what your financial needs will be. "The first step is to get a current assessment of what your retirement expenses will be and what resources you have to cover them," said Jimmy Perryman, certified financial planner at Perryman Financial Advisory Inc. in Dallas.

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Manufacturing in the Philadelphia region expanded in February for a sixth straight month as orders surged to the highest level in more than five years, another sign that factories are leading the economic recovery.

The Federal Reserve Bank of Philadelphia’s general economic index rose to 17.6 from 15.2. Readings greater than zero signal growth. Measures of employment and shipments accelerated, and inventories expanded for the first time since September 2007.

Surging exports, inventory replenishment and corporate spending on new equipment are fueling a factory-led recovery from the worst recession in seven decades. The manufacturing expansion may spur the labor market recovery needed to boost consumer spending and keep the economy expanding.

“The inventory cycle will continue to add to production levels well into 2010,” said Robert Stein, a senior economist at First Trust Portfolios LP in Wheaton, Illinois. “Manufacturing is doing well pretty much across the board.”

A separate report from the Conference Board today showed the index of U.S. leading indicators rose in January for a 10th straight month, pointing to an economy that will keep expanding through the first half of this year.

The Standard & Poor’s 500 Index increased 0.2 percent to 1,101.53 at 11:11 a.m. in New York. The 10-year Treasury note fell, pushing up the yield five basis points to 3.78 percent.

Other reports from the government showed jobless claims rose by 31,000 to 473,000 last week, while wholesale prices increased 1.4 percent in January after a 0.4 percent gain in December.

Economists’ Forecasts

Economists forecast the Philadelphia Fed’s factory gauge would rise to 17, according to the median of 58 projections in a Bloomberg News survey. Estimates ranged from zero to 23.

The Philadelphia Fed’s employment index rose to 7.4, the highest level since October 2007, from 6.1 the prior month.

The new orders measure rose to 22.7 from 3.2, and shipments climbed to 19.7 from 11.

The index of prices paid fell to 32.4 from 33.2 in January. Prices received increased to 3.7 from 2.7.

The gauge of expectations for the next six months decreased to 35.8 from 43.3 while remaining positive for a 14th straight month.

The overall index number isn’t composed of the individual measures, so some economists consider it a gauge of sentiment among manufacturers.

Two days ago, figures from the New York Fed showed business activity in that region expanded in February at the fastest pace in four months.

Industrial Production

Another Fed report yesterday showed industrial production nationwide rose in January for a seventh straight month. The plant-use rate increased to 72.6 percent, the highest level in more than a year.

The U.S. economy is forecast to grow 3 percent this year, according to the median estimate of economists surveyed by Bloomberg in the first week of February. That follows a 2.4 percent contraction last year as the economy sank into its worst recession in seven decades.

Manufacturers, particularly of exported goods, are seeing a pickup in demand, fueled in part by a 10.7 percent rate of economic growth in China in the fourth quarter.

Latrobe, Pennsylvania-based Kennametal Inc., a maker and distributor of mining, metal-working and energy tools, last month reported an 8 percent increase in fiscal second quarter sales from the prior quarter as the world economy recovers.

“We are continuing to see signs of a slow, but steady global economic recovery,” Chief Executive Officer Carlos Cardoso said on a conference call Jan. 28. “Industrial production activity is higher in most geographical regions, with emerging markets leading the way and mature markets beginning to recover.”

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Japan’s economy grew faster than economists anticipated last quarter, reducing the risk of falling back into a recession even as deflation intensifies.

Gross domestic product rose at an annual 4.6 percent pace in the three months ended Dec. 31, the Cabinet Office said in Tokyo today, more than the 3.5 percent median estimate of economists surveyed. The GDP deflator, the broadest measure of prices in the economy, fell a record 3 percent.

Exports led the expansion, aided by a global recovery that prompted manufacturers from Panasonic Corp. to Nissan Motor Co. to raise their profit forecasts this month. An increase in consumer spending may not last as government stimulus measures fade and households expect prices to keep falling along with their wages, said economist Hiroshi Miyazaki.

“The benefits from the global recovery are spilling over,” said Miyazaki, chief economist at Shinkin Asset Management Co. in Tokyo. “The economy will keep recovering even if the government does little to fight deflation, but the risks are heightening that growth ahead will be slow.”

The yen traded at 90.15 per dollar at 3:20 p.m. in Tokyo from 90.03 before the report. The currency has gained 5 percent in the past six months, eroding exporters’ earnings. The Nikkei 225 Stock Average fell 0.8 percent, extending this year’s losses to 5.1 percent.

The world’s second-largest economy expanded 1.1 percent from the previous quarter, today’s report showed, more than the 0.9 percent median estimate of economists surveyed.

Revised to Zero

Third-quarter GDP was revised to zero from an annualized 1.3 percent growth, reflecting a change in how the Cabinet Office calculates exports and imports on a seasonally adjusted basis to account for the global trade collapse in 2008.

Overseas shipments increased 5 percent from the previous three months, the report said. Net exports, or shipments minus imports, added 0.5 percentage point to growth.

“Risks for a double-dip recession are receding,” Finance Minister Naoto Kan told reporters in Tokyo today. “We’re starting to see some bright signs emerge from the clouds, but we can’t be complacent.”

The GDP deflator’s year-on-year decline was the biggest since records began in 1955. Without adjusting for price changes, Japan grew an annualized 0.9 percent from the previous quarter.

The Bank of Japan, amid pressure from politicians, stepped up its fight against deflation in December, saying it “does not tolerate” price declines. Governor Masaaki Shirakawa and his colleagues, who will decide policy on Feb. 17-18, will keep the benchmark interest rate at 0.1 percent for all of 2010, according to all 17 economists surveyed by Bloomberg last month.

‘More Pressure’

“It’s likely that the Finance Ministry will put more pressure on the BOJ to implement more accommodative policies, highlighting today’s figures that point to deflation,” said Miyazaki at Shinkin Asset business cards. “That pressure is likely to run the BOJ into a corner.”

Compounding the woes from deflation, in the past month Standard and Poor’s has warned that the nation’s debt rating may be cut and Toyota Motor Corp., the country’s biggest automaker, has recalled 8 million vehicles because of accelerator and brake problems.

Kan said yesterday that the government will next month begin debating whether to overhaul the sales tax amid concerns about the widening deficit.

Chief Cabinet Secretary Hirofumi Hirano said today that the government must do its utmost to avoid another recession. Prime Minister Yukio Hatoyama, whose Democratic Party of Japan faces an upper-house election in July, received parliament’s approval for a 7.2 trillion yen ($80 billion) stimulus package last month.

Spearheading Revival

Asia spearheaded the export revival, led by China, Japan’s biggest overseas customer, which grew the most since 2007. U.S. demand is also improving after the nation’s GDP expanded the most in six years last quarter. Still, a report last week showed Europe’s economy almost stalled in the period, underscoring the frailty of the world recovery.

Panasonic, the world’s largest maker of plasma televisions, raised its operating profit forecast by 25 percent this month. Flat-panel TV sales rose 48 percent from a year earlier, driven by purchases in regions including China and South America.

Nissan Motor predicted a return to profit this fiscal year, scrapping an earlier loss estimate, citing government incentives that boosted demand for vehicles in China and Japan. The country’s third-largest carmaker expects net income of 35 billion yen in the year ending March 31, compared with an earlier forecast of a 40 billion yen loss.

A separate report today showed industrial production growth in December was revised to 1.9 percent from 2.2 percent.

Consumer Spending

Spending by consumers, which accounts for more than half of the economy, rose 0.7 percent in the fourth quarter, today’s report showed. Business investment climbed 1 percent, the first positive reading in seven quarters.

The gain in capital spending “signals a turning point in the economy toward a sustainable recovery,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo.

Even as exports improve, Japan’s expansion may lose momentum as the effects of stimulus spending at home fade.

“Consumption has been sluggish if you exclude purchases of autos and flat-panel televisions, which have received a direct boost from government stimulus,” said Ryutaro Kono, chief economist at BNP Paribas in Tokyo. “Many households perceive income declines since late 2008 not just as a result of the economy’s growth cycle but as permanent declines.”

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Novelis Inc. is relocating its North American headquarters from Cleveland to Atlanta, bringing 80 jobs to the city.

The company announced the move late Thursday.

Novelis, an aluminum products giant that has been a major supplier of bottlers of The Coca-Cola Co., said it will consolidate its North American headquarters with its existing world headquarters.

The consolidation, combined with other hires, will bring Novelis’ Atlanta staff to about 220 by the end of 2010.

The company's world headquarters is housed in Buckhead's Lenox Building.

Recently, however, company executives have been touring other Buckhead buildings where they might consolidate and expand, including Two Alliance Center and Phipps Tower. Two Alliance appears to be the frontrunner, and Novelis could be in the market to lease about 100,000 square feet.

"North America is one of our biggest markets, and it just makes good business sense to consolidate these operations at our Atlanta-based corporate headquarters," Philip Martens, president and chief operating officer of Novelis, said in a statement.

Novelis is a $10.2 billion company focused on aluminum products and aluminum can recycling. It has about 12,000 employees in 11 countries.

Novelis selected Atlanta as its world headquarters in 2005 when it was spun off from Canadian aluminum producer Alcan payday loans.

The move is the latest in a series of steps taken during the past year to streamline the company.

“Novelis’ consolidation of North American operations at its Atlanta headquarters provides additional evidence that multi-national corporations thrive in our city,” said Atlanta Mayor Kasim Reed. “Atlanta is a global center of international commerce with a vibrant corporate community. I am delighted to welcome the North American headquarters staff of Novelis to our great city.”

The Atlanta Development Authority and the Metro Atlanta Chamber also helped in the relocation.

Rob Metcalf of Jones Lang LaSalle represented Novelis in its real estate transaction.

“We’re delighted that we could help entice Novelis to expand its Atlanta headquarters. We look forward to a long-term relationship with the company as it continues to grow,” said Gregg Simon, manager of business engagement for ADA. ”Novelis is a wonderful corporate citizen, and its decision highlights the positive business climate offered in the city of Atlanta.”

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Within the next month, a subsidiary of the Erie County Industrial Development Agency is expected to award a new round of loans aimed at aiding minority-run businesses.

David Kerchoff, ECIDA assistant treasurer, said 89 applications were received for this year's $500,000 loan pool, under the minority entrepreneur program. From that, 57 made it to the second round of reviews. A third round whittled the list to 32 potential loan applicants.

From that pool, 10 businesses will likely be selected, Kerchoff said. Loans amounts will vary, according to the company's business plan and needs.

Kerchoff said he expects this year's awards to be named by mid-March.

The loans are run through the IDA's Buffalo and Erie County Regional Development Corp. affiliate. Nine of the 10 businesses that received assistance in the initial 2008 round remain in business. The only failure was the much-publicized One Sunset restaurant on Delaware Avenue, which received a $50,000 loan.

Kerchoff said the IDA remains hopeful it may, someday, see that loan repaid.

"Do we collect it?" Kerchoff said. "It's hard to say at this point."

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Pfizer Inc., fresh from buying fellow drugmaker Wyeth and already deep into integrating its operations, posted on Wednesday a 34 percent jump in revenue, but about $3.2 billion in acquisition charges and higher costs across the board weighed down profits.

The maker of Viagra and cholesterol fighter Lipitor, which paid $68 billion to get Wyeth’s vaccines, biologic drugs and consumer health staples such as Centrum vitamins and pain relievers Advil and Anacin, already has slashed about 4,200 jobs and cut other costs.

New York-based Pfizer said its revenue in the fourth quarter totaled $16.54 billion, half a billion above what analysts were expecting as the recession continues to reduce sales of even prescription medicines. Wyeth products contributed $3.3 billion of those sales. Excluding that boost, revenue was up about 7 percent from the $12.35 billion Pfizer reported in the fourth quarter of 2008, but Pfizer noted that favorable exchange rates boosted total revenue by 4 percent.

Net income amounted to $767 million, nearly triple the $266 million the world’s biggest drugmaker earned a year ago, when results were hurt by a whopping $2.3 billion charge to settle federal charges that Pfizer improperly marketed some of its drugs. That profit is equal to earnings per share of 10 cents, or 49 cents after excluding the acquisition charges and other one-time items.

Analysts were expecting 50 cents a share. The per-share results were reduced somewhat because Pfizer issued new shares to help fund the Wyeth purchase, increasing outstanding shares by about 16 percent.

Pfizer did not provide directly comparable figures on revenue, profit and costs for the 2009 and 2008 periods. The company forecast 2010 revenue of $67 billion to $69 billion.

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Richard A. Anderson, a retired group president for global business services at AT&T Inc., has been elected to the board of directors for Computer Services Inc.

Anderson retired from AT&T in June 2007. He since has served as executive director of the Georgia Regional Transportation Authority. He also sits on several boards, including the board of advisors for Murray State University, Murray, Ky.

In his role with the state of Georgia, Anderson is overseeing the creation of the state’s strategic-transportation plan, according to a news release.

Paducah, Ky.-based Computer Services Inc. (Pink Sheets: CSVI) delivers core banking, payment-processing, Internet, card-services, risk-assessment, fraud-prevention, network-management and regulatory-compliance services to more than 4,600 financial institutions and corporations.

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