Your Nest Egg, Mutual Funds, Air Travel, Taxes
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While most Americans are sure that they will have enough money to live comfortably after they retire, their confidence might be unrealistic, according to two recent surveys.
Nearly 75 percent of people think they're well prepared for retirement and more than 75 percent said they were saving for retirement, up from only 61 percent in 1994, according to the 2000 Retirement Confidence Survey. The survey was sponsored by the Employee Benefit Research Institute, the American Savings Education Council (ASEC), and Mathew Greenwald & Associates, an independent market research firm in Washington, DC.
What's more, three-quarters of working Americans expect their standard of living in retirement to be the same as or better than it is today, according to a survey by Keyport Life Insurance. But slightly more than half don't know how much money they'll need for a comfortable retirement, and 26 percent of those who did come up with an estimate thought they could get by with a nest egg of less than $100,000.
In fact, most people aren't well prepared. Many who are saving for retirement have put away less than $50,000, and nearly one-quarter of those have less than $10,000, according to the Retirement Confidence Survey. ASEC estimates that you'll need 70 percent of your current annual gross income to maintain your standard of living in retirement.
A new breed of Web-based investment tools lets you assemble a personal portfoliothink of it as a homemade mutual fundand contribute to it regularly. In effect, you create a basket of stocks, control your own risk level, and decide when to buy and sell. BuyandHold (www.buyandhold.com) and ShareBuilder (www.sharebuilder.com) let you contribute a fixed amount to the basket every month, andsince the account can buy fractional shareseach contribution is spread over the entire basket. You get the diversification of a mutual fund, the freedom to choose what's in it, and the benefit of dollar-cost averaging.
The drawback of these sites is that stock orders are executed only at certain times, which means you might not get the best prices. BuyandHold executes orders twice a day, between 10:30 and 11:30 am EST and 2:30 and 3:30 pm EST. ShareBuilder executes orders just once a week, has no minimum investment, and charges $2 for the periodic contribution, $1 for custodial account transactions, and $5 for one-time investments. BuyandHold charges $2.99 per transaction, with a $20 investment minimum.
If you're not confident about building your own portfolio, check out Foliofn (www.foliofn.com), which offers a selection of prepackaged stock baskets. All you have to do is choose one, though you can still customize it by screening out or adding companies of your choice. Each basket can contain up to 50 stocks. Foliofn bundles the stocks by market sector, investment style, risk level, and geographic region. It also offers special baskets, including labor-friendly, tobacco-free, and environmental-friendly portfolios. With each portfolio, you can add or remove any stock, and sell off stock to balance your taxes and losses. Foliofn charges $295 a year, or $29.95 a month, and has no minimum investment.
It's bad enough that increasing numbers of flights are delayed and cancelled at the nation's airports. More maddening for passengers is the dramatic increase in what's called "taxi-out time," or the time between a plane's departure from the gate and actual take-off. The number of flights that sat on the tarmac for an hour or more increased 130 percent between 1995 and 1999, according to a report by the US Department of Transportation. Last year, nearly 40,000 flights were delayed at least an hour on the tarmac. For passengers on 264 flights, the wait exceeded four hours.
The airports with the worst taxi-out times were Newark, where 6 percent of flights were delayed for more than an hour in 1999; New York's Kennedy and LaGuardia, 5 and 3 percent, respectively; Philadelphia, 2 percent; and Chicago O'Hare, 2 percent. Continental Airlines had the highest number of long taxi-out times, followed by American Airlines and Northwest Airlines.
The DOT says weather caused most of the delays. But airport logistics play a role, too. When takeoffs get backed up, outgoing planes still at the gate are often forced to leave the terminal anywayand wait on the tarmacso that incoming flights don't get backed up on the runway for lack of open gates at the terminal.
Flight delays in general increased 16 percent from 1995 to 1999, to an average of 43 minutes. Baltimore had the worst average delay, 70 minutes, followed by O'Hare at 56 minutes, Washington, DC (Ronald Reagan Airport), at 53 minutes, San Francisco at 53 minutes, and Newark at 50 minutes.
If you're looking for a tax break, consider moving to Casper, WY. Homeowners there have the lowest total tax liability of any metropolitan area in the country. The highest taxes are paid by homeowners in the New York City area. Those are among the findings in a study by Runzheimer International, a Rochester, WI, management consulting firm, which looked at federal, state, and local taxes, and levies for Social Security, sales, real estate and property, and value-added taxes for vehicles.
A family of four in Casper, earning $60,000 a year and owning a $180,000 house, pays $11,342, or 19 percent of its income, in taxes. The same family in New York City's suburbs shells out $16,244, or 27 percent of income. The New York area has an 8.25 percent sales tax, and its property and state income tax rates are among the nation's highest. In contrast, Casper has no state income tax, a sales tax of only 5 percent, and one of the country's lowest property tax rates.
|Metro area||Total annual taxes||Precent of income|
|New York City||$16,244||27.1%|
|Bergen County, NJ||14,283||23.8|
|Metro area||Total annual taxes||Percent of income|
Yvonne Wollenberg. Financial Beat. Medical Economics 2000;19:15.