GHI
Spring 2004
TM
A publication of the Hanson McClain Retirement Network
Specializing in retirement planning for telecommunication employees
FROM WORK BOOTS TO FLIP-FLOPS....
- about -
T
Hanson
McClain
he Hanson McClain Retirement Network
is a nationwide network of independent
financial advisors specializing in working with
employees and retirees of telecommunication
companies. Advisors
affiliated with the
Hanson McClain
Retirement Network
have helped thousands
of telecommunication
employees plan their
financial future. They
understand how
you are personally
affected by changes in
company pension and savings plans.
Financial advisors affiliated with the
Hanson McClain Retirement Network are
experts in your company’s pension and
savings plans. They live and work in your
community. They conduct educational
workshops and provide individual IPROs
(Independent Personal Retirement
Overviews).
The Hanson McClain Retirement
Network is not endorsed by or affiliated with
any specific telecommunication company or
labor union. You’ll be provided with conflictfree, independent financial advice.
For more information, visit our website
at www.retirement411.com or call us at
1.800.525.8844.
What’s Inside...
2
Stats 411 .................................................. 2
Case Study ............................................... 2
When Is Retirement Right for You?......... 3
Telephone Trivia ...................................... 3
You Think Gas Is Expensive? .................. 3
Deciphering Money Slang ....................... 4
Financial Spring Cleaning ....................... 4
v Money Matters.........................................
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California Couple “Retire” to the Islands
A
fter 27 years with Pacific Bell (now
SBC), first as an operator and later in
administrative services, JoAnn Waddell decided it
was time to retire. She never dreamed that merely
a year later she’d be teaching children in a tropical
paradise. In 1995, she and
her husband Bill (a construction industry retiree)
answered an ad in their
church’s newspaper seeking
volunteers for the Adventist
school on the islands of Yap
and Chuuk in Micronesia.
Each volunteer would
receive a stipend of $200
a month. JoAnn
FEDERATED STATES
and Bill signed
OF MICRONESIA
up for a two-year
engagement.
Micronesia,
or more accurately
the Federated States of Micronesia, is comprised
of 607 small islands in the Western Pacific, about
2,500 miles southwest of Hawaii. Divided into
four states—Yap, Chuuk, Pohnpei and Kosrae—
the islands are part of a U.S. trust territory
commonly referred to as the Eastern and Western
Caroline Islands (see inset).
Upon their arrival in the islands, JoAnn was
assigned to teach kindergarten and work in the
office, while Bill maintained the facilities. The
couple was struck by the rudimentary living
conditions of the native people. “You don’t realize
how good we have it (in the U.S.),” Bill said,
“until you see people who have almost nothing.”
The couple found the work so enjoyable and
fulfilling that they later volunteered for a second
engagement in 1997.
Compared with their hometown of Yuba City,
California, island living was decidedly different.
For one thing, being situated just above the equator
meant high humidity—at times overwhelmingly so
—but the trade winds provided a welcome respite.
The temperature varied
only about ten degrees
year-round—from 85º to
93º and annual rainfall on
the islands of Chuuk and
Yap averaged 140" and
120", respectively. That
is significantly more than
Yuba City’s 22" of yearly
precipitation. So what was
the primary difference
between summer and
winter in Micronesia?
“Just less rain,” said JoAnn.
The islands were also stunningly beautiful.
Tropical flowers bloomed in a variety of bright
colors, and Chuuk is known worldwide as a
diver’s paradise. The blue water is crystal clear:
thirty feet below the surface you can see the
outline of a Japanese ship sunk during World
War II. Other ships lurk in deeper water, some
with tanks and planes still secured to
their decks.
JoAnn and Bill keep in
touch with many of the
people they met on the
islands. The friendliness
of the native people was
one of the things the couple
enjoyed most. At this point, they
don’t plan on returning in the near future—there’s
too much to do at home. “But,” said JoAnn, “we
would go again tomorrow if we were needed.” n
Money frees you from doing things you dislike. Since I dislike doing nearly everything, money is handy. - Groucho Marx
2 v Retirement
411
FINANCIAL 411
MONEY MATTERS
BY SCOTT HANSON
I am 50 years old and
don’t have any savings
for retirement. I make $34,000
a year after-tax income. My expenses are
approximately $30,000 a year. This includes an
$18,000-a-year mortgage. My credit is so bad
I cannot refinance. Is it hopeless for me to think
about having an income for retirement? And if not
hopeless, what can I do now to reduce my chances
of being in the poor senior category later?
Saving for retirement is rarely a
problem with income—it’s a problem
with spending.
The key is to save for yourself before you
spend on yourself. Set aside some money
after 591⁄2, all the money can be withdrawn in
whatever manner desired (including complete
withdrawal, although I don’t intend to do
this) so long as it is properly reported and the
consequent taxes paid. Who’s correct?
There are basically three stages in each
person’s life as it pertains to retirement
plans: those years before age 591⁄2, those years
from 591⁄2 to 701⁄2, and those years after 701⁄2.
When a person is under 591⁄2, there are a
number of restrictions on withdrawing money
from IRAs, 401(k)s, 403(b)s, etc. When a
person reaches 701⁄2, there is a minimum
amount that must be withdrawn from each
retirement account.
But during the time in between those years,
you can do whatever you want.
Throughout your entire life you have just
11 years during which you have total control
over your retirement accounts. You can choose
to take a withdrawal, close out the account
or allow the money to continue to grow. The
choice is yours. Your only requirement is to
report any income that is withdrawn. n
Scott Hanson is a co-founder of the Hanson
McClain Retirement Network. He is a
Certified Financial Planner™ practitioner,
Chartered Financial Consultant, Certified
Fund Specialist and a Practitioner with the
Financial Planning Association.
Scott is also a financial talk show host and
a columnist. His weekly “Money Matters”
column is syndicated nationally.
out of each paycheck. Don’t wait to see if
you have anything left to save after your
expenses, because you never will. Your
wants will become needs and you’ll spend
the money.
The most important thing for you to do
right now is just to start: Start saving some
money for retirement. Start by putting money
in your company’s 401(k), if one’s available,
and if not, open an IRA. You don’t have
to start with much, but you do need to get
started.
You are currently paying more than half
of your income toward a mortgage. With a
payment that high, I’m sure it’s tough for you
to save anything. To make it easier to save
for retirement, you may want to consider
either bringing in a roommate or downsizing to
something that is more affordable.
This is a simple question to which I’ve
seen no straightforward answer: What
rules govern SEP/IRA withdrawals after age
591⁄2 and before age 701⁄2?
For some reason that remains unclear
to me, my CPA seems to think that after
591⁄2, I have to withdraw using one of the
life expectancy tables. My belief is that
STATS
10%
411
Percentage of men who are left-handed
8%
Percentage of women who are left-handed
20%
Percentage of twins who are left-handed
29,141
Number of feet at the highest point of the
earth; the top of
Mt. Everest in
Tibet
4
Number of
millimeters
a year that Mt. Everest “grows”
76.2
Number of years until Mt. Everest is one
foot taller
3,000 to one
Odds of being struck by lightning once in
your lifetime
9,000,000 to one
Odds of being struck by lightning twice in
your lifetime
One to one
Odds of James Caviezel being struck by
lightning while starring in Mel Gibson’s
movie, The Passion
CASE STUDY
Depth of Knowledge Makes Years of Difference
A
long-time telecom company employee
consulted her Hanson McClain Retirement
Network retirement specialist about the
accuracy of her lump sum pension estimate.
The woman was 51 years old, had worked
for the company for 33 years, and wanted
to retire. The company’s pension services
department provided the woman with an
estimate of the lump sum amount she would
receive upon retirement. However, when the
woman’s advisor calculated her own estimate,
she discovered that the company’s figure was
almost $35,000 lower.
The retirement specialist immediately called
the telecom company to check on the discrepancy.
The representative stated that the company’s “age
discounts” applied to this woman. She was only
51 and, therefore, would be discounted one-half
percent for each month she was under the age
of 65. The representative refused to manually
calculate the figure because, in his opinion, there
were no system errors. The specialist, however,
took the time to hand calculate the number, and
came up with the same figure as before.
The specialist told the client to call pension
services again, this time asking for escalation
services. Upon further examination, the client’s
official
company
records
indicated she
had worked
part time for
six years.
In reality,
she had
worked part
time for less
than six months! The end result was that
the retirement specialist’s knowledge of the
telecom company’s retirement plans not only
netted the client $35,000, it made a difference
by allowing her to retire! n
This experience may not be representative of all
clients. Individual results may vary. The Hanson McClain
Retirement Network is neither endorsed by nor affiliated
with any telecom company.
The secret of staying young is to live honestly, eat slowly, and lie about your age. - Lucille Ball
Retirement 411 v 3
Telephone Trivia
1. Color telephones were mass-produced
for the first time in what year?
a. 1947
b. 1954
c. 1961
When Is Retirement
Right for You?
Y
ou’ve thought about retirement for much
of your working life, but how do you know
when it’s time to retire? According to the
University of Maryland Cooperative Extension
Office, you should consider the following
factors before making your final decision.
3. In the U.S., men compose what
percentage of wireless phone users?
a. 25%
b. 36%
c. 54%
Your life expectancy
Your life expectancy is the average number of
years you can expect to live after a given age.
If family members have been long-lived and
you are healthy, you may want to plan for a
longer lifespan and set aside additional funds.
Answers: 1-b, 2-a, 3-c
2. What was the name of the movie
starring Elizabeth Taylor that was a
telephone exchange?
a. BUtterfield-8
b. DIamond-5
c. YOrktown-2
Your health and potential health insurance
With health costs on the rise, you can’t count
on having company-paid health benefits when
you retire. If your retirement plan does provide
health care coverage, make sure you’ve saved
enough money to cover the cost of premiums.
If you know you won’t have coverage, put aside
enough savings to pay for private coverage
until you’re eligible for Medicare.
Your eligibility for full Social Security and
pension benefits
Pension benefits and Social Security will make up
a large portion of your retirement income. Your
financial advisor can help you decide whether to
take your pension as a monthly annuity or in one
lump sum payment. Your Social Security payment
is based on the average of your best 35 years of
work, adjusted for inflation. If you retire too early,
some of those years will be computed as zeros.
If you were born after 1960, you can’t receive
full Social Security benefits until the age of 67.
You can start collecting Social Security at 62
—regardless
of your
retirement
age—but your
payment will
be discounted
for every
month you are
under the age
of 65.
The size of
your savings
Review your
financial statements to determine your current
situation. Consider investing in your company’s
401(k) plan or an Individual Retirement Account
(IRA). Your financial advisor can estimate
how much money will be available to you on
a monthly basis. If you think you’ll need more
income, you may want to revise your retirement
goals or continue saving and delay retiring.
The way you and your family feel about
retirement
Set some goals for your life after retirement. A
big challenge for some retirees is how to spend
their retirement time without getting bored. If
you find yourself with no sense of purpose, you
could be at risk emotionally.
Many of these factors are interrelated.
By working with your financial advisor on a
retirement plan, you can predict more accurately
how much income you will need to meet your
expected retirement expenses. Knowing what
resources you will need can help you decide
when the time is right to retire. n
You Think a Gallon of Gasoline Is Expensive?
With gas prices skyrocketing, we thought we would ease the pain of your next trip to the pump. Here is a comparison of what it would
cost to fill up your gas tank with other liquids.
Lipton Iced Tea, 16-oz, $1.19 ........................................................................$9.52 per gallon
Ocean Spray, 16-oz, $1.25 ........................................................................... $10.00 per gallon
Gatorade, 20-oz, $1.59.................................................................................. $10.17 per gallon
Diet Snapple, 16-oz, $1.29........................................................................... $10.32 per gallon
Evian Water, 9-oz, $1.49.............................................................................. $21.19 per gallon
Scope Mouthwash, 1.5-oz, $0.99................................................................ $84.48 per gallon
Scotch, 10-year-old, single malt, 750ml, $35.99 ........................................ $90.92 per gallon
Pepto Bismol, 4-oz, $3.85......................................................................... $123.20 per gallon
Vick’s Nyquil, 6-oz, $8.35 ......................................................................... $178.13 per gallon
Work is a necessary evil to be avoided. - Mark Twain
Retirement 411 v 4
Does your financial plan need
Deciphering Money Slang...
uring the recent bear
market, three out of four
Americans between the ages
of 50 and 70 lost money in
stocks, according to a 2003
AARP survey. Nine percent
of that group lost half of their
savings. Given these statistics,
many older Americans—and
younger ones, too—may need to
freshen up their financial plans.
Financial planning is not a
one-time venture. It is an ongoing process
that looks at your total financial situation and
makes appropriate adjustments for changes
that occur during your life. If you don’t have
a financial plan already, now is the perfect
time to develop one. A financial advisor can
help you put together a plan to meet your
specific goals and then help you monitor it,
making any needed adjustments later.
Diversification of your investments can
help you realize a return while simultaneously
controlling risk. Keep in mind, however, that
no financial strategy is risk-free or guaranteed
to be profitable. That’s why it’s necessary to
work with your financial advisor to monitor
your plan and investments as changes occur,
Hanson McClain, Inc.
5 Questions to Ask Yourself
ü Have I completed my IPRO or updated
it recently?
ü Have I reviewed my portfolio over the
last 12 months?
ü Am I contributing enough to meet my goals?
ü Has my health or the health of a loved
one changed recently?
ü Have I reviewed my wills and trusts
over the last three years?
Folsom Consultation Office
Roseville Consultation Office
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whether in your life, in the
market or in tax laws. If your
plan is already allocated
properly, your advisor may
suggest that you sit tight and
weather unexpected fluctuations
in the market.
Remember, change is
inevitable. By recognizing that
changes may require financial
adjustments and by creating a
financial plan to provide for those
possibilities, you will likely
lessen unexpected financial burdens. A financial
plan can help reduce anxiety and uncertainty, too,
since you will know that you’ve done your best to
prepare for the future. n
Rocky Ridge Dr.
Dough 1851. Indicated that money was
one of life’s necessities.
Greenback 1861. During the Civil War, paper
money was printed with green
ink on only one side.
Fin 1916. Term for a $5 bill derived
from the Yiddish finef, a word
meaning “five.” “Five-spot” also
sprang from this Yiddish word.
Grand 1920s. Back then, grand was short
for “grand amount,” or $1,000.
Payola 1938. Indirect or undercover
payment (like to a disc jockey) for
a commercial favor (promoting a
particular recording).
Bling bling 1990s. Technically, defined as
expensive jewelry, clothes and other
possessions (but we thought we’d
include it anyway).
D
Sources: American Numismatic Association; Investigations of Slang, by J.E. Lighter, 1997.
Dollar 1500s-1700s. The German thaler—
a large silver coin—was used
throughout Europe and Britain. The
English called them dollars.
Buck 1740s. Originated when deer
hides were being traded with
Native Americans.
C-Note 1850s. Derived from the Roman
numeral for 100.
Sawbuck 1850. This name for a $10 bill is
derived from a sawhorse, whose
crossed legs formed an X, which
is the Roman numeral for 10.
50
Douglas Blvd.
50
3620 Fair Oaks Blvd. v Suite 300 v Sacramento, CA 95864
916.482.2196
1380 Lead Hill Blvd. v Suite 108 v Roseville, CA 95661
916.787.4565
800.482.2196
v
1180 Iron Point Road v Suite 170 v Folsom, CA 95630
916.357.5287
www.moneymatters.com
Hanson McClain is a Registered Investment Advisory Firm. Securities offered through Securities America, Inc.,
A Registered Broker/Dealer, Member NASD/SIPC
This information is provided for educational purposes only. The information is intended to be generic in nature, and
should not be applied or relied upon in any particular situation without the advice of your tax, legal and/or financial advisor.
A publication of the Hanson McClain Retirement Network
400 Plaza Drive u Suite 120 u Folsom, California 95630
Telephone: 800.525.8844 u www.retirement411.com
Middle age is when you’ve met so many people that every new person you meet reminds you of someone else. - Ogden Nash