WASHINGTON, DC- U.S. Senators Bob Casey (D-PA), a member of the Senate Special Committee on Aging, and Herb Kohl (D-WI), Chairman of the Senate Special Committee on Aging, today introduced a bill to help protect seniors from investment fraud.  The Senior Investor Protections Enhancement Act would increase penalties for those who commit securities violations against people who are at least 62 years old.

“Everyday, older Americans are targeted for investment scams and they see their life savings go down the drain” said Senator Casey “Pennsylvania has the second highest number of residents over the age of 65 and we must take care of them.  This legislation will help better protect our older citizens from being targeted from fraud.”

“Many seniors are discovering that their life savings may not be enough to last them throughout their retirement.  As they turn to investments to bridge the gap, seniors need to know that they can trust the people who handle their money,” said Senator Kohl.  “This bill will ramp up the punishment for those who advantage of older Americans’ well-earned retirement savings.”

Americans over the age of 65 control an estimated $15 trillion in assets, a large portion of which are investable.  Seniors have difficult and complicated decisions to make on how to stretch their savings throughout their retirement.  Their assets remain at risk from traditional fraud and Ponzi schemes.  Recently, seniors are increasingly offered many new but complicated investment tools such as reverse mortgages and various annuity products.  While these products can be very valuable to Americans generally and seniors specifically, they can also be abused by unscrupulous actors.    

Additionally, many older Americans are targeted by con artists who seek to exploit them through manipulation and fraud.  Seniors already account for more than half of all investor complaints received by state securities regulators.   The U.S. Securities and Exchange Commission (SEC) has reported that they are working to improve their ability to prevent fraud and abuse where possible and prosecute it where necessary.   

Under the Senior Investor Protections Enhancement Act, penalties for existing securities violations could include an additional $50,000 civil fine for each violation that is primarily directed toward, specifically targets, or is committed against a senior.  Under the legislation, seniors are defined as persons age 62 or older, the age at which most retirement savings become available for use and investment.  

The bill would increase penalties for those who commit securities violations against seniors - violations could include selling them products that are unsuitable for their age, failing to disclose fees, lock-ups of cash or large penalty charges, switching investments sold with the one marketed or other material aspects of the investment.  The bill would not interfere with legitimate investment advisors who recommend products and investments appropriate for their customers.

Last September, the Aging Committee held a hearing to examine some of the questionable practices used by so-called senior financial investment specialists in order to gain access to the retirement savings of older Americans.  An investigation conducted by the Committee revealed that many seniors targeted by such unscrupulous salesmen have lost their life savings because they were steered toward investment instruments that were unsuitable for them, given their retirement needs and life expectancy.

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NEW YORK — Your dividend check is probably in the mail.

While the number of companies slashing or eliminating dividends has increased due to crises in the housing, mortgage and credit markets, a great many others continue these quarterly payouts, and some are even raising them.

Dividend-paying stocks remain a safe and attractive holding for investors seeking relief from the seemingly interminable onslaught of negative economic news. For elderly investors on a fixed income, dividends provide an essential stream of steady income — regardless of the vicissitudes of equity markets.

“A company with a long and consistent history of raising annual dividends is the best defense against a weak economy,” said William Schultz, chief investment officer at McQueen, Ball & Associates Inc., in Bethlehem, Pa. “A solid, dividend-paying policy reflects a financially healthy company that is able to grow its earnings in any and all market environments.”

Howard Kornblue, who once ran a mutual fund for Pilgrim America that focused solely on dividend-paying stocks, also believes such securities will serve beleaguered investors very well in today’s jittery environment.

“We sought out companies that not only raised their dividends annually, but also had strong balance sheets, no significant long-term debt and were engaged in businesses with solid outlooks,” he said.

Scott Schluederberg, a portfolio manager at Hardesty Capital Management, thinks the current environment for dividends is “fantastic,” as long as one holds a reasonably diversified portfolio of dividend-paying stocks.

Look around and you will see a wide array of companies boosting their dividends. Stocks as disparate as Rohm & Haas Co. (ROH), State Street Corp. (STT), Coca-Cola Co. (KO) and Target Corp. (TGT) have all recently hiked these payouts.

Dividend increases come from a broad array of industries, even in these troubled times.

Schultz especially likes two sectors with a plethora of dividend-paying firms: pharmaceuticals and consumer staples.

“There are a substantial number of blue-chip companies in these areas — including Procter & Gamble (PG), Johnson & Johnson (JNJ) and 3M (MMM) — which have rewarded their shareholders with uninterrupted annual dividend increases for almost five decades,” he said. “It all has to do with their ability to generate consistently growing earnings.”

In one of his investment strategies, Schluederberg keeps a basket of stocks called “Trophy Dividend Growers,” comprising blue-chips which pay out a very comfortable portion of their earnings (30% to 50%) as dividends.

“This gives them a good cushion — they can still pay dividends even in the event of an earnings shortfall,” he said. “We also consider earnings expectations. If the payout ratio starts going above, say, 70% of earnings, then we become concerned and consider exiting the position. We want to make sure the dividend is safe.”

In this strategy portfolio, the collective dividend yield is a very robust 5.2% (versus 2.2% for the overall market). Typically, the yield of this strategy is between 3.5% and 4.25%. “Dividends don’t fluctuate the way stock price does,” Schluederberg noted.

His “trophy dividend” growers include Anheuser-Busch Cos. (BUD). “We bought that stock in the upper $40s when it yielded close to 3%,” he said. “Its value was fully realized when InBev acquired it for $70.”

The best dividend-paying industries, Kornblue asserts, are companies engaged in utilities, essential consumer products, health care, pharmaceuticals, energy, food and beverages. “The managements of these companies are eager to maintain their dividends because they know many of their shareholders invest in them primarily for the dividend yield,” he noted.

But some companies can no longer afford the luxury of handing out dividends.

S&P recently reported that 97 publicly-traded companies (of the 7,000 it tracks) cut their dividend in the second quarter, versus just 18 in the year-ago period. This was the largest figure since the second quarter of 1990, when 108 companies reduced their dividend payouts. Moreover, companies posting dividend increases amounted to 455, a 16% drop from the year-ago period.

Kornblue, now senior portfolio manager at Alpha Fiduciary Generational Wealth Management in Scottsdale, Ariz., thinks dividends will become scarcer as the economy continues to falter. As such, to play it safe, he suggests that dividend-seekers completely avoid stocks in a few distressed industries, particularly financial services, auto makers and home building.

Although the phenomenon of high-profile financial services companies — notably Citigroup Inc. (C), Wachovia Corp. (WB) and Washington Mutual Inc. (WM) — reducing or eliminating dividends has grabbed headlines, the scenario in the overall sector isn’t all that dire.

In fact, according to S&P, for the first half of the year, 7.9% of financial issues shaved their dividends (versus 2.9% for non-financials.) More telling, 20.9% of financial stocks actually hiked their dividends. Still, the losses incurred by the unfortunate shareholders of those financial firms that slashed payouts have been enormous — on the order of $13 billion, S&P estimates.

As for financial services stocks that continue to pay dividends, investors should be extremely cautious. Schultz cites US Bancorp (USB), which has faithfully raised its dividend 36 consecutive years, an impressive stretch. “Given the turmoil in the banking industry, we are waiting to see what they do in the fourth quarter,” Schultz noted.

Kornblue also thinks things will get worse for the financial sector, citing the deepening credit crisis, slowing economy and the ever-unfolding mortgage meltdown. Many financial stocks still paying a dividend carry unsustainably high yields, he warns, strongly suggesting dividend cuts are inevitable.

“There’s a lot of uncertainty here, especially among mid-sized banks,” he said. “More shoes may drop as we learn more about the full extent of their exposure to toxic mortgages.”

But not all financials are bad, Schluederberg insists, especially those companies that have diversified operations, have avoided risky acquisitions, or have too much exposure to mortgages. For example, he likes JP Morgan Chase & Co. (JPM), which just posted better-than-expected second-quarter results.

“They are well-positioned to survive the current crisis,” he said. “In fact, they served as the backstop for the Federal Reserve’s Bear Stearns rescue. JPMorgan shares have sold off recently, but I think they can sustain their dividend.”

While some investors crave a high dividend yield, this can sometimes be a misleading concept. A steep dividend yield may simply mean that the stock price has fallen too far, but the company is still dutifully paying its dividend. This often equates to an unsustainable situation, because the company may have weakening internal fundamentals and likely will have to cut or abolish the dividend.

“A high dividend yield does not necessarily mean that the company is healthy and fast-growing, although it depends on each individual case,” Schultz said.

“As investors, we are more interested at the rate of growth of the dividend, not the absolute dividend figure itself.”

Indeed, some industries like utilities and big pharma tend to have high dividend yields, but they are hardly “high-growth” industries.

To avoid high-dividend yield traps, Schluederberg looks at future earnings estimates. “If a company is paying a $1 annual dividend and their earnings are forecast to be $1.05, then that dividend is in jeopardy,” he explained.

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By Palash R. Ghosh
A Dow Jones Newswires Column

Interest rates have dropped and it has caused many investors to search for higher income producing investments and is leading many into more complex fixed income products. Not all that appears to be safe is, and those that have read about the credit issues plaguing Wall Street know all to well the negative ramifications misunderstood investments can have on one’s financial present and future.

But we can improve our situations, not by taking on more risk but perhaps understanding the risk in what we own and are contemplating investing in. I would like to go over two simple but yet important concepts in bond investing that many, even savvy stock buyers do not fully understand and therefore under appreciate their importance. It is a bond’s yield to call and yield to maturity. 

Lets start with a simple CD. (Certificate of Deposit) CD’s are time deposits and you agree to invest your money for a certain period of time at a certain interest rate and at the end of that period, at maturity, you receive your money back plus interest earned.

Bonds of all types are available and work in a similar way. You place your money with a government entity or company and receive interest for that period of time and at the end you receive your principal back. There are many types of risks associated with bond investing from credit risk to interest rate risk just to name two but I want to focus on just two parts of the decision on whether a bond is right for you, first Yield to Maturity.

Yield-To-Maturity

When you purchase a bond, the price you pay may be more or less than the maturity value. The values of bonds will fluctuate and on the date of purchase, it could be trading above the maturity or par value, which is called a premium bond, or below it which is called a discount bond. The premium or discount you pay effects the overall return on the investment.

If you paid $950 for a $1000 bond, you paid a discount and the appreciation from $950 to the maturity value of $1000 plus the interest earned needs to be taken into account when evaluating the overall return on the bond. You not only earned the interest, but made $50.

The same holds true for a premium bond. If you paid $1050 for a $1000 bond, you paid a premium. The difference between what you paid over the maturity value would need to be subtracted to find out your overall return. In this case you earned interest but lost $50 on the investment.

When evaluating a bond you may want to invest in, you do not need to figure all this out. Your advisor or company you deal with will be able to tell you the yield to maturity. If a discount bond had a yield to maturity of 6%, and a premium bond had a yield to maturity of 6.1%, all other factors remaining equal, then the premium bond would be a better buy. The total return was better even though I paid more for it.

So it’s not just the interest rate the bond pays, it is also the price you are able to purchase it at that makes a difference.

Yield to Call

The yield to call is determined in the same way as the yield to maturity except the call date is used instead of the maturity date. Most bonds today have call provision which means the issuing organization has the right to redeem, call away (give your money back) earlier than the stated maturity date. They will most likely do this if they can turn around and borrow at a lower rate than they are paying you. Just like you might refinance your home mortgage at a lower rate.

The effects of a discount or premium paid are magnified since the gain or loss, in this case of $50.00 is compressed over a shorter period. Making $50.00 over a shorter period of time is a good thing, losing the $50.00 premium over a shorter period of time is a bad thing and hurts your overall total return.

The interest rate you receive may increase the chances of a call. If a bond has a high interest rate and the current rates are much less, the bond has a greater risk of being called away and therefore a premium bond holds more risks under this environment.

Fortunately, the yield to call just like the yield to maturity is readily available to you from your advisor. When investing in bonds, the price you pay can have a dramatic effect on your return. The higher the yield to maturity on a premium bond does not equate to a better investment if the chances of a call are higher.

Knowledge is king in bond land, don’t be lead by the nose, know what you are buying and understand the risks first, reaching for a higher yield and ignoring the risks could result is a major loss of principal. On Wall Street, there is no free lunch.

For more information on bond investing, please log onto www.livelongliverich.com and don’t forget to sign up for the free newsletter.

Well, perhaps not new but for many unfamiliar. There are CD’s that are available that enable investors to capture higher interest rates than just buying a plain vanilla CD and at a time when rates are down, these structures can prove to be a best of breed when it comes to income and safety.

C.D.’s are time deposits, i.e. you agree to put your funds on deposit with a bank for a stated period of time, during which your funds earn interest at an agreed upon rate. In general, the longer you are willing to leave your money in a C.D., the higher the rate of interest you will receive.

C.D.’s purchased directly from banks are secured by FDIC insurance in amounts up to $100,000 per investor, 250,000 for retirement plans. They typically pay a stated interest rate until maturity. An investor wishing to withdrawal the deposit before maturity will usually be subject to a penalty.

Many securities firms also offer C.D.’s in the form of brokered C.D.’s. They are similar to C.D. s issued directly by banks, in that they carry FDIC insurance of $100,000 per investor and are available in a variety of maturities. They differ because they can be bought and sold prior to maturity which makes them more liquid. The price will fluctuate and could be more or less than what you paid or the maturity value.

Another benefit to brokered C.D.’s is that they usually include a “survivor’s option” which is very important to consider. Although restrictions on this provision may exist, it usually provides for redemption of the C.D. at the maturity value upon the death of the owner, even if this happens well before maturity. This can be an important estate planning tool especially for an older individual who wishes to capture the higher rates associated with longer term C.D.’s but not tie up the money for his/her heirs in their estate. Most of my older clients love this structure and I do too.

Step Up C.D.’s

Step-up CDs feature interest rates that increase or step up to a pre-determined level on a specific time schedule as they approach maturity. The interest rate on these CDs is usually fixed for a period of time, which is followed by a step up to another fixed rate. These steps may occur more than once before a CD reaches maturity.

Let’s look at an example:

Consider a 10 year CD. The first two years it pays a 4 percent interest rate. The next two a five percent interest rate, the next two a six percent interest rate and so on.

Years 1 and 2  4%
Years 3 and 4  5%
Years 5 and 6  6%
Years 7 and 8  7%
Years 9 and 10 8%

This structure usually pays a higher rate that on a short term security and steps up at a moderate rate as the CD moves towards maturity. The downside is that most of these issues are callable on the date of the first step-up. At that point if the bank does not want to pay the higher stepped-up rate it can redeem the bond. It still remains however an attractive structure for those looking for income.

As you can see, CD’s have various structures that offer a higher income stream while still retaining the FDIC insurance and the safety factor many investors seek in their investments. The next time you look to invest, check out the rates on Step-Up and Brokered CD’s. The rates are usually competitive and the safety factor many seek.

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I know that over the years many couples can anticipate what the other feels and thinks about a variety of situations and these successful unions are often the result of a meeting of the minds on many of these issues. But if you are like me, and I suspect many of you are, from time to time, (I am trying to be delicate here as my wife reads this column) caught completely of guard by your spouses reaction to situations you assumed you agreed upon. Since I am a relatively young man, 44 years old, these issues revolve around social issues and not being as sensitive to my wife’s feeling as maybe I should have been. That being said, we do agree on most things.

But when it comes to money and what spouses feel, understand and anticipate, what you expect, well, is probably not what you’ll get.

In a survey conducted with 502 couples that have been married for at least 24 years, with an average age of 54 for men and 53 for women, and nine years from retirement, they had some major disagreements on what to expect and how to get there. 

 61% disagreed on which income source (workplace savings, pensions, Social Security, etc.) would be their primary income source of funds in retirement.
 58% disagreed about whom their spouse would turn to for financial guidance in the event of the other spouse’s death.
 41% disagreed about whether at least one partner would work in retirement.
 39 % differed on the amount of their life insurance coverage.

One way to resolve some of these issues is to sit down and go over some of the more important financial and social issues that will play a major role in your retirement and in your spending habits and expectations. Some questions that each of you should answer separately are:

 How much income can you expect to have?
 Where do you expect to live? Perhaps, where do you want to live?
 What is your vision of retirement? Make sure your goals are in line.
 What is your plan for your estate? Charity? Children? Grandchildren?
 What will we do if one or both of us become ill? Do we want to go to an assisted living center? Nursing home?
 Do you have a living will?

Find the issues that are important to you and write your answers down, once again, I suggest doing it separately, and get back together and compare the results. I also suggest a pot of coffee for this part as I anticipate there to be some answers each of you did not expect from the other.

Another issue is how much of this should you share with your children. I am sure your children are wonderful and would never make a decision that may benefit themselves (i.e. their inheritance) over your good time, but be sure there are those from the “ME” generation that will do just that.

Once you start along this process it is sure to bring up some issues you both will not agree upon. It is best however to identify the issues early and reach a compromise rather that allow your lives to progress towards retirement and collide when it may be too late to adjust.

Communication can be the lifeblood of a successful relationship. Use this process to heighten the level of communication and intellectual debate with your spouse. It will lead to good things and show you care about the others feelings and desires. No amount of disagreement will overshadow that significant benefit to your relationship. 

For more information on retirement planning visit www.livelongliverich.com and sign up for the free newsletter.

After the stock market crash of 1929, thousands of banks failed. In 1933, Congress and then President Roosevelt created the Federal Deposit Insurance Corporation, better known to all of us as the FDIC. A federal government guarantee of deposits. Its effect was to maintain stability and public confidence in the nations banking system.

The failure of Indy Mac Bank has the FDIC stepping in to meet its obligations to payback account holders the value of their insured assets. It is not pretty and as the largest bank failure to date, it is testing the system in a trial by fire way.

But if you believe Senator Barack Obama, that there is “little doubt that the US is likely in a recession” and that swift steps to shore up the housing market are a huge part of that recovery then the FMIC is the obvious answer.

Another stimulus packages and pumping money into Fannie Mae and Freddie Mac are not the answer. The government keeps treating the symptoms and not the disease.

The majority of analysts and economists that look at the problem conclude that stopping home prices from declining is the first step in any recovery. But how are prices to stabilize when lending institutions are pulling back their lending?

As the desire to lend has decreased coupled with higher lending standards and higher levels housing supply, due to a poor economy and foreclosures in some markets, prices can only continue to drop. Actual credit losses and Fannie and Freddie are small compared with their overall portfolio. What they are suffering from is a crisis in confidence.

According to mortgage industry veteran Robert Kofsky, The creation of the FMIC to co-insure FNMA, FHLMC and the Mortgage Insurance Companies against further losses would create new confidence in the mortgage markets, create higher values for mortgage bonds, create additional liquidity for the banks and create additional capital for lending since risk would be reduced by the backing by the FMIC. Using minimum standard qualifying lending requirements, losses would be limited up to a specific dollar amount per property similar to the way the FDIC insurance works now. 

This would provide buyers financing to enter the market with confidence causing home prices to stabilize. Put a halt to or at least reduce write-downs on quality mortgages, create better balance sheets and enable in some cases financial institutions to write-up some exiting investments.

This would further reduce the foreclosures and the cost to the federal government would stay low saving taxpayers money. As it stands now, we are footing the bill for all of it. Rather than pump money into the system to treat the symptoms, let’s cure the disease which is a crisis of confidence. Our history tells us that the creation of the FMIC would have the same desired effect.

Using taxpayer dollars to bail out financial institution or throwing money at the problem like the Treasury and the Federal Reserve seem to do to in their keystone cop response to these situations, finding a viable long-term solution is the only way to cure what ails the financial markets and the economy.

For more information on issues facing retirees and retirement income strategies please visit www.livelongliverich.com.

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The prevailing sentiment among financial planners for several decades now has been that inflation will run at normal levels over time and that investment returns will outpace the erosion of buying power caused by inflation.

But for those at or near retirement, what was supposed to occur has not. Investment returns over the last decade for the S&P have been just over 3 percent. Inflation for real people is 6 percent year over year. Even those that have planned and saved diligently over that period did not plan for such low returns or such high inflation. To be sure the issues facing seniors today are decidedly more complex.

The commonly accepted norms may play out from generation to generation, but today’s retirees unfortunately have to deal with the reality that many will not have enough income generation to last through their investment lives.

This generation can count on Social Security but for 2008, social security payments rose 2.3 percent. Let’s see how far that goes when your air conditioning bill arrives. That sinking feeling many will feel is the realization that they are woefuly under prepared even though they saved and invested like they were supposed to do.

Fact: Americans 65 and older represent the fastest growing group seeking bankruptcy protection.

Fact: In the last 15 years, among households 65 and older, the average amount of credit card debt more than doubled.

Fact: Median amount of mortgage debt for households 55 and older rose 63% in the last 15 years.

Fact: Debt is at an all time high and savings is at an all time low.

Unfortunately, in some cases, hard decisions will have to be made. Will I eat? or sleep well.  Outliving your money is not an option.

So what can you do to help extend the income producing life of your assets? There are several things you can do, basic things that can help. Together, they will add up in your favor.

1) Instead of building debt for fear of liquidating assets, begin a systematic withdrawal from your non-income producing mutual funds. I would rather see you keep the high interest off the books which will eat you alive over time. Your returns through investments may not offset the high cost of that debt.

2) If you have individual stock investments, make sure they pay a dividend so you can receive some type of return and income stream while you wait out a bear market.

3) Use tax-efficient withdrawal strategies from your accounts. Make sure you think of the tax consequenses of your trading activitity. Should that be purchased in my IRA or personal account? Since my tax bracket is low this year, would it be wise to take a larger withdrawal from my IRA instead of the minumum?

4) Ladder your fixed income investments. Invest some in short-term and some in longer-term and some in between. Spreading your investment maturities may increase your income stream.

5) Look into guaranteed lifetime income producing annuities. The annuities of today are not as restrictive or as expensive as those in the past and it may help you sleep at night. Don’t listen to what others say, examine the benefits and costs for yourself and decide if it is right for you and your family.

Every retiree needs to take a hard look at their assets and understand the risks their asset allocation may have on their ncome stream later in life. This is not the time to put your head in the sand. Educate yourself and seek help if you need it. If you examine your options now instead of waitng, it could be the difference between living the retirement you dreamed of, or living in your son-in-laws basement.

For more information about how to create retirement income and easy to use strategies and links to useful information please visit www.livelongliverich.com.

BOSTON– (BUSINESS WIRE) — Unexpected health care costs and inflation are top concerns for pre-retirees and retirees, according to a retirement survey recently commissioned by MFS Investment Management® (MFS®). In line with these concerns, pre-retirees expect to work on average a full decade longer than those already in retirement, with nearly half expecting to work early in retirement and one in three working throughout retirement to bolster their savings.

“Due to the many challenges and concerns facing today’s pre-retirees, they are being forced to reassess what retirement means — working longer and working into retirement,” said William Finnegan, Senior Vice President and Director of Global Retail Marketing for MFS. “We see the changing definition of retirement as a tremendous opportunity for financial advisors to engage their clients about retirement income planning.”

Pre-retirees and retirees alike view unexpected health care expenses and inflation in general as top concerns regarding retirement savings, with more pre-retirees viewing each with greater concern than retirees — 70% to 60% for health care expenses and 64% to 50% for inflation, respectively.

“Inflation concerns — be it outliving ones’ savings, unexpected health costs or lost purchasing power — are clearly on the minds of today’s pre-retirees,” said Finnegan. “We recommend advisors and their clients develop a retirement policy statement, just as they would an investment policy, tailored to the needs and risk tolerance of their clients, which can serve as the basis for a plan designed to help a client’s nest egg continue to grow - keeping pace with inflation while generating the income necessary to meet the challenges of the rising costs of everyday expenses.”

Pre-retirees are redefining retirement. According to the survey, existing retirees retired at an average age of 58, with 40% relying on their pension as the primary source of income. Today’s pre-retirees are approaching retirement differently, fully expecting to work on average a full ten years (age 68) later than current retirees, with roughly the same number relying on pensions (23%) as on workplace retirement plans (25%). While approximately one-quarter (24%) of today’s retirees continue to work or worked early in retirement, nearly half (47%) of pre-retirees expect to continue to work in the early phase of retirement. Of those surveyed, 32% of pre-retirees plan to work throughout their entire retirement as well. That figure drops to one in ten for retirees.

“Baby boomers are going to redefine retirement, and financial advisors need to deepen their involvement in the planning process,” Finnegan added. “With typically low savings rates for the average American and greater potential longevity, combined with the above-cited concerns over inflation, pre-retirees will be living and working longer than previous generations. We are challenged as an industry to develop investment products and strategies to help clients manage their financial picture in a redefined retirement phase.”

Nearly half (46%) of pre-retirees and more than one-quarter (28%) of retirees surveyed reported that neither they nor their advisor have developed a formal retirement income plan, representing a tremendous opportunity for financial advisors. Survey results show that once a conversation about retirement income planning took place, both pre-retirees and retirees took action:

• Half changed investment allocations (53% pre-retirees, 52% retirees);
• One-third (32%) of pre-retirees increased their savings;
• About three in ten consolidated assets to one advisor (27% pre-retirees, 30% retirees).

“Once pre-retirees have engaged an advisor regarding retirement income, many take action,” concluded Finnegan. “In the coming decades, today’s pre-retirees will redefine what it means to be ‘retired’ and extending the planning conversation well into their golden years may benefit them and provide market opportunities for advisors and planners.”

The MFS investor survey was conducted in September 2007, with responses from 204 pre-retirees and 229 retirees, between the age of 55 and 75, who were either working full-time or retired, used a paid financial advisor and reported at least $100,000 in investable assets (excluding retirement and real estate). Similarly, the MFS advisor survey included responses from 206 financial advisors who identified themselves as financial advisors, brokers, investment managers, certified financial planner or wealth managers in September and October 2007. Richard Day Research, Inc., an independent research firm not affiliated with MFS, conducted both surveys and did not identify MFS as the study sponsor.
MFS manages $200 billion in assets on behalf of more than 5 million individual and institutional investors worldwide as of December 31, 2007. The company traces its origins to 1924 and the creation of America’s first mutual fund.

When it comes to investing in bonds, some of the basic concepts regarding bond risks tend to elude investors. Most understand the risks associated with stocks. If you invest in a stock, and its price increases, you make money, if it drops you lose. But bond risk has many different components. One of those risks is how the interest rate and maturity effect bond prices.

The maturity of a bond is the date on which the principal amount is repaid and the issuing organization returns your investment to you. You can buy bonds with maturities as short as one week or as long as one hundred years. Clearly the maturity (or maturities) you select should be aligned with your investment goals.

As a rule, most investors should consider bonds with maturities of 20 years or less. Many investors stagger the maturities of various bonds in a portfolio to create a “ladder structure”. This creates a blend of short-term and long-term maturities and interest rates.

If you hold a bond to maturity, assuming the bond you own is not in default, you will get back your initial investment. Between now and then, as interest rates fluctuate, the price of the bond will also fluctuate. That means the price of your bond will go up and down.

If interest rates rise, the current value of a bond will drop. If interest rates go down, the current value should rise. The relationship between interest rates and bond prices is inverse. The price of a short-term bond will fluctuate less than that of a long-term bond because the shorter the maturity, the sooner you will receive your principal back and the sooner you can reinvest at current rates. The shorter time frame reduces the risk that something can go wrong. Because there is less risk of price volatility with a short-term bond compared to a long-term bond, the interest rate should be lower on the shorter maturity. Shorter maturity, less risk, less interest. Longer maturity, more risk, higher interest rate.

What length of maturity should you buy if you think rates are going higher? The answer, shorter term maturities. The value of short term bonds is more stable in a rising interest rate environment. As rates rise, your portfolio will be more stable and you will have bonds maturing enabling you to reinvest at the current higher rate.

You can find more information about bonds and interest rate risks at www.livelongliverich.com and www.investinginbonds.com.

Explaining what can happen to the price of a bond is complicated and many factors go into the value of securities such as credit risk and trading environments. But as far as the relationship between rising interest rates and bonds are concerned, a picture speaks a 1000 words.

Retirement Professionals and those in the retirement planning stages feel John McCain will best represent retirees and the issues they face.

Marietta, GA: Torrid Technologies along with LiveLongLiveRich.com conducted the poll. Torrid-Tech, a software company in Atlanta that specializes in retirement planning tools, and Craig Rappaport, author of Live Long Live Rich-Creating Your Retirement Paycheck, conducted the poll to take the temperature of the retirement planning community.

The poll suggesting an overwhelming majority of retirement investment professionals and those involved in the retirement process choose John McCain as the presidential candidate that will best represent retirees by capturing 63.3 % of the vote compared with Obama with 22.5% with Clinton viewed as least likely to best represent retirees with 14.2% of respondents

“We were surprised to see such an overwhelming majority vote for John McCain. We really had no idea what to expect so to see one candidate receive such overwhelming support was quite a surprise” said Tim Turner the creator of Torrid Technologies’s Retirement Savings Planner Software.

The poll received 591 responses and has a 95% accuracy rate plus or minus 4 percent.

“Retirement Income and financial security are major issues facing not only those currently in retirement but those planning their retirement as well. The candidate that best articulates a policy appealing to this group will capture a huge demographic group of voters. For the moment, it is John McCain” said author Craig Rappaport.

“With medical expenses and the cost of fuel eating away at retirees budgets this group is getting squeezed and will respond to the candidate that speaks to the wallet when it comes to getting these costs under control.”

23 percent of the respondents were currently retired while 77 percent were not. Torrid Technologies plans to conduct another poll after the democratic presidential nominee is chosen to see which candidate is viewed as most likely to best represent the interests of retirees.

About Craig Rappaport
Author of Live Long Live Rich-Creating Your Retirement Paycheck.
For more information visit www.livelongliverich.com

Craig Rappaport
Author of Live Long Live Rich
610.812.5800
Rappaport@livelongliverich.com