Do we need a U.S. Retirement Czar?

The short-sighted, tactical nature of America has always felt odd to me. Consider the stock market. Over the past few decades, ‘analysts’ have taken great pride in judging companies by quarterly numbers. Long term vision and corporate strategy really didn’t seem to be a critical component of the analysis, and now we find large U.S. corporations that made their numbers in very recent quarters and were winners on Wall Street need huge bail-out packages to avoid bankruptcy.

Maybe the bigger problem is that individuals don’t think long term either. Much of America is over-leveraged with various mortgage scams (that were always too good to be true) and large credit card debt. As unemployment goes up and the government tries to mandates lower wages for workers of the companies getting bail-outs, I wonder how most of America is going to support retirement. By the way it’s important to remember Social Security will need a bail-out soon.

It’s got to be a perfect storm—across the board declines in investments, precipitous decline of real estate values, increased unemployment, lower wages, possible collapse of pension programs, and a culture focused on immediate gratification with little regard for saving. How will retirees and near retirees deal with financial weakness and ever increasing longevity? Clearly they can’t.

People approaching retirement age will need to continue working, and people in retirement will likely go back to work. In the standard supply & demand model, this would suggest a larger labor force to further drive down wages further reducing ability to save further accelerating the economic decline. Current news reports already feature stories about retirees choosing between food and heat. It probably won’t get better in the short term. Even with the new administration’s focus on infrastructure jobs (rebirth of the WPA?), efforts are still directed as short term jumpstarts to the economy without correcting root cause issues.

Since it’s time the future is given a higher priority, it’s probably time for yet another ‘czar’. Maybe Retirement Czar isn’t broad enough, but someone needs to finally address Social Security. Someone should understand the magnitude of unfunded pension liabilities in the U.S., which will probably make the current bail-out numbers look small. More importantly, the government needs a cabinet level position to consolidate strategy and advocate saving. The Retirement Czar will need to lead a very visible marketing and education program as well as push for innovative legislation, adjustment of the tax code, and creation of new financial products to assist with a direction of long term savings growth and a more guaranteed income for retirement.

Rick Huebner is President & CEO of VISTECH.com, a technology company based in Hartford, CT.

Go to VISTECH.com for information on new and innovative technology solutions for the retirement income market.

Connecticut's Budget Problems

There’s been a lot of buzz in Connecticut about the impending budget deficits. I’ve served on a few committees for the state and seen many presentations over the last few years and am really not that surprised. I believe data and demographic trends suggest this was inevitable…but probably accelerated by the various unfortunate situations created in the financial industry.
Obviously everything seems simple to the outsider, so I’d recommend the following 3 point plan to adjust the glide path of Connecticut:

1. Reduce CT Government Spending & Liabilities. More often than not, decisions to cut costs are focused on service reductions. Connecticut needs to understand the current economic environment is a new trend, not an anomaly. We need to reduce government and increase services. Tax revenue will continue to decrease as the demographics change. Connecticut needs to reduce administrative overhead in the legislative and executive branches, reduce perks, and certainly eliminate the defined benefit programs that will only continue to escalate unfunded liabilities on the balance sheet. Clearly it’s about permanent staff reductions and strategic outsourcing.

2. Define the State. I guess ‘The Land of Steady Habits’ is the de facto state slogan and does shed light on the ‘why’ of our current situation. The State hasn’t taken much initiative to differentiate itself among other states that invest heavily in attracting and retaining specific businesses and jobs. It does not encourage business investment and is in fact well known as ‘unfriendly’ to business. Given our size, it might be prudent to invest in that ‘one thing’ to make Connecticut stand out…maybe it’s hedge funds or fuel cells or nanotechnology, but it probably should be some effort that can be adequately funded and supported by our available resources.

3. Get on the BandWagon. 2009 brings great opportunity as the new administration promises a billion dollars for innovation programs and hundreds of billions for infrastructure build-out. Now is the time to correct our transportation deficiencies. Let’s spend the effort to plan a rail system that delivers a one hour commute from Hartford to both New York & Boston. Let’s leverage that to also deliver local service to ease traffic congestion and link the State’s various tourist attractions. Let’s plan a strategic fix to the route 95 nightmare. Let’s make sure to invest in building the case for using federal money to evolve Connecticut infrastructure now….and then, when the money comes, let’s be accountable for the projects, getting them done without the cost overruns and the bad press that surrounded recent transportation initiatives.

Rick Huebner is a proud resident of the State of Connecticut as well as President & CEO of VISTECH.com, a technology company based in Hartford, CT.

Go to VISTECH.com for information on our website design, network support, and unified communications offerings as well as our time reporting/issue tracking and retirement income software applications.

Bail Outs--Out-of-the-Box Approach?

One day last week on my drive into work, the talk radio guys were interviewing someone who had taken a full page ad in USA Today to advertise his solution to mortgage defaults. (see http://remortgageamerica.blogspot.com/) His post seems to make sense, if in fact Washington is really interested in directly helping "Main Street".

Along these same lines, it might be interesting to position all of the current and up-coming bail-out money toward individuals who will then deliver business or relief to the industries in crisis. For example, Ford, GM, and Chrysler are clearly on the verge of bankruptcy. Without debating pros and cons, let's assume it’s a good idea to provide assistance.

Instead of allocating $15B now and probably $100B over the next 2 years to the failing U.S. auto manufacturers…and having 38% ($18B) allocated off to overhead*, why not subsidize $10,000 of any vehicle purchase from the ‘Big 3’ for the first 5M U.S. taxpayers who sign up. The program could provide more incentive for hybrids and might also have different levels of subsidy based on income.

In any case, the price tag would be $50B. It would directly benefit individuals. For Ford, GM, and Chrysler it would generate new car sales and create 5M new customers, which should be much more valuable than a loan package.

Rick Huebner is President & CEO of VISTECH.com, a technology company based in Hartford, CT.

*I attended an interesting discussion on Afghanistan recently. The speaker had spent 5 years working with the Afghan people to assist with building educational programs. He noted that 38% of all U.S. money allocated to Afghanistan never leaves the U.S. So from here on out, I’m going to assume 38% of all U.S. aid is absorbed into bureaucracy and overhead…sounds reasonable.

Go to VISTECH.com for information on our website design, network support, and unified communications offerings as well as our time reporting/issue tracking and retirement income software applications.