If you’re retiring this year, you will need $250,000 in savings to cover your family’s medical expenses during your retirement, Fidelity Investments announced on Thursday.
That’s up just more than 4% over last year and a 56% spike compared to 2002, when Fidelity first issued its Retiree Health Care Costs Estimate.
Each year Fidelity forecasts what a U.S. couple retiring at age 65 would need to cover their health care expenses during retirement, presuming they qualify for Medicare and do not have an employer-sponsored plan.
The spike in what couples must save can be attributed to higher costs associated with treatment costs, new technologies and general price inflation, said Fidelity, which assists companies in planning their employee benefit programs.
But some experts say the estimate can be misleading because a multitude of factors, including life expectancy, could push costs higher or lower than averages.
"It’s important to recognize that most people aren’t average," said Paul Fronstin, director of health research for The Employee Benefit Research Institute, an independent public policy organization.
And based on Fidelity’s findings, retired couples would spend $10,000 a year over an average 25 to 30 years of retirement, which is on par with what they pay now, says Bill Losey CFP, a New York-based financial planner pay day loan lenders.
Still medical costs are expected to become a larger chunk of retirement expenses and many retirees are still unprepared.
The Fidelity study found that only 3 out of 10 retirees saved specifically to cover health care costs while they were working. And 47% said that monthly out-of-pocket costs and insurance premiums were higher than they had anticipated.
Fidelity reported that average health care costs were $535 a month, or one-fifth of a couple’s total monthly expenses of $2,842.
Though Losey says the figure may unnecessarily scare people, he added that a little fear might not be such a bad thing if it improves awareness and planning, especially in the face of health care reform.
"This statistic is going to scare people," says Losey, "but maybe in a good way that forces people to get off their behinds and eat better, exercise more, and hopefully keep their health insurance costs in check."
White House pay czar Kenneth Feinberg, who has clamped down on executive compensation at the nation’s biggest bailout firms, now has a new target: any firm that accepted a government lifeline.
Unveiling a bold new initiative Tuesday, Feinberg said he would examine compensation paid to top executives at 419 companies made between October 2008 until February 2009, a period when the nation’s financial system was teetering on the brink.
The review is part of an effort to shed light on whether any firms that accepted money under the Troubled Asset Relief Program, or TARP, paid employees any excessive bonuses or awards during that tumultuous period before Congress stepped in and required greater oversight on pay practices at bailed-out firms.
Feinberg is asking each company to provide information on bonuses, retention awards and all other compensation for their senior executives and next 20 most highly-paid employees within 30 days.
Much of his focus though will be on executives earning more than $500,000, Feinberg said during a press briefing, sparing the hundreds of community and regional banks that also took TARP funds.
His review however, could subject paychecks of hundreds of financial executives, who have otherwise been free from leering eyes, to intense government and public oversight.
Among those likely to endure the greatest scrutiny would be employees at Goldman Sachs (GS, Fortune 500), JPMorgan Chase (JPM, Fortune 500) and Morgan Stanley (MS, Fortune 500). All three Wall Street firms are known for paying multi-million bonuses to top performers as well as senior executives in any given year.
And while investors have closely examined pay packages of their top executives, the trio avoided any federal scrutiny after paying back the billions of dollars received under TARP last year.
Morgan Stanley and JPMorgan Chase declined to comment. Goldman Sachs was not immediately available.
To date, Feinberg’s efforts have been focused on the seven firms that required an "exceptional" amount of government assistance. Two of those firms — Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500) — have since repaid all of their bailout funds to the government though.
On Tuesday, Feinberg set 2010 compensation for executives at the remaining firms under his authority — AIG (AIG, Fortune 500), General Motors, its former finance arm GMAC, Chrysler and Chrysler Financial faxless cash advance..
Total pay for those executives would decline by 15% this year, with a larger portion of their compensation coming in the form of stock, according to Feinberg.
GMAC CEO Michael Carpenter, for example, who was appointed to lead the firm last November, will only be paid in the form of company shares.
Feinberg also said Tuesday that executives from AIG’s notorious financial products unit, which brought the firm to its knees, had repaid the entire $45 million in bonuses they originally pledged to return.
No Wall Street brain drain
There have been some questions about whether attempts to cap compensation at bailed-out firms would prompt top employees to seek work elsewhere.
But according to Feinberg’s latest ruling, more than 80% of the executives that submitted to Feinberg’s review in 2009 were still with the same firm earlier this year.
Feinberg’s forthcoming review of all firms that accepted TARP funds is expected to be made public by late spring or early summer.
The pay czar said Tuesday he will attempt to negotiate with those companies and employees that were awarded payments that were "contrary to the public interest."
One likely target could be bonuses paid to bank employees for fiscal year 2008.
An analysis of the original nine banks that received money under TARP published last July by New York Attorney General Andrew Cuomo revealed that those banks still paid out billions of dollars in bonuses in 2008, even as the firms suffered severe losses.
Citigroup, for example, paid an estimated $5.33 billion in bonuses in early 2009, despite suffering more than $27 billion in losses in 2008.
Goldman Sachs, which continues to face criticism over its pay practices, paid out some $4.8 billion in bonuses despite earning just $2.3 billion, according to the report.
It is unclear though, whether those firms may put up a fight. Others have questioned whether Feinberg will have the legal authority to renegotiate some of these employee payments.
–CNN’s Lisa Sylvester contributed to this report
It remains unclear exactly what Google Inc. will do about its operations in China but a decision will reportedly come this week.
The Wall Street Journal said an announcement could come as early as Monday, citing information from an unnamed person briefed on the matter.
The Mountain View search giant's decision to stop censoring the results of its search engine in China met with new criticism there over the weekend.
The state-owned Xinhua news agency accused Google of "playing an active role in exporting culture, value and ideas" and said the company's "ambition to change China's Internet rules and legal system will only prove to be ridiculous."
It remains uncertain whether Google will close only its Chinese search engine at www payday loans.google.cn or will shut down all of its business operations in the country. Talks with Chinese officials about keeping the search engine running with less censorship have reportedly been fruitless.
Google (NASDAQ:GOOG) said in January that it would no longer censor search results in China after a cyberattack originating from there targeted human rights activists and broke into more than 20 companies' systems.
The announcement triggered an international debate over Internet censorship and espionage. China has strongly denied any involvement.
For complete coverage by the Business Journal of the Google cyber attacks, click here.
When radio was invented in the late nineteenth century by the likes of Marconi, Edison, and Tesla, government and industry faced a conundrum. Who would own the limited band of electromagnetic frequencies that made this new invention possible?
By the 1920s the decision was made that the public would own the airwaves, with the government leasing frequencies to companies that were required to follow certain rules. A century later this system isn’t perfect, but it does bring us every day everything from text messages to Youtube, to the latest hits from Lady Gaga.
Society now faces a similar ownership predicament with who owns human genes — another kind of spectrum that always existed, but was unsuspected until we discovered it. This time, however, the story is different. Instead of a public ownership model granting licenses, the U.S. Patent Office has spent the last twenty years awarding patents to companies, universities and others who discover genes — with over 20% of human genes already claimed.
Controversial for decades, the validity of issuing these patents has erupted again in a case brought last year by the American Civil Liberties Union against Myriad Genetics (MYGN), which holds patents on two genes that in a mutated form can cause a person to be high risk for breast cancer. According to the ACLU and a long list of plaintiffs that includes research and patient advocacy groups, the U.S. Patent Office (also listed as a defendant) was wrong to issue these patents — and by extension all genetic patents.
"Genes are naturally occurring entities, like air or gravity," says ACLU attorney Chris Hansen, "and therefore under the law they are ineligible for patenting."
The ACLU also claims that Myriad’s patents block access to the genes by researchers and patients who want a second opinion on breast cancer results, but are barred by the exclusivity of the Myriad patent. They criticize Myriad’s access prices, which can range as high as $3,000.
Myriad General Counsel Richard Marsh counters that Myriad and researchers working at the University of Utah — which co-own the patents, and are co-defendants in the suit — did discover something that exists outside of nature. By extracting the genes from the human body, the company claimed, and the U.S. Patent Office agreed, that it had created an isolated sequence that is patentable, whereas the sequence as it occurs inside a person is not — a contention being directly challenged by ACLU.
Marsh also insists that researchers and patients have benefited from Myriad patenting the BRCA I and BRCA II genes and certain mutations within these genes that are linked to breast and ovarian cancer. He also defended the company’s pricing, saying that it is the essence of patent protection — that Myriad can charge what it likes on something it has created, until the patent lapses and the gene enters the public domain.
More critically, Myriad and others in the pharmaceutical industry claim that without patent protections, no one would invest in developing products based on genetic markers for disease. "Without patents, who is going to do the work and spend the money to make this product accessible to people?" asks Marsh cheapest personal loan rates.
Both sides are now waiting for federal Judge Robert Sweet to rule on whether or not the case will go to trial in the U.S. District Court of the Southern District of New York. Last month Sweet refused to dismiss the case in a motion filed by Myriad, suggesting that he may want to hear the case, although no one knows for sure.
"If not now, it will have to be dealt with later, because there are core issues at stake that impact the entire pharmaceutical industry," says Robert Cook-Deegan, Director of the Center for Genome Ethics, Law & Policy at Duke University.
Which brings us back to the invention of the radio and the electromagnetic spectrum — and potential solutions that demand some imagination and creativity beyond the tried and true pharma track of slapping patents on everything in sight.
One idea would be to turn genetic discoveries — many of which are initially found using taxpayer funds — into publicly owned entities that could be licensed to companies like frequencies on the radio dial. Licensees would be required to follow certain rules such as allowing researchers and patients access to DNA sequences, and requiring that pricing be in line with costs.
A variation of this model has been used for decades to govern the extraction of natural resources such as oil and gold from public lands. Businesses bid on and receive licenses that allow them to extract these resources (and to earn back investments) for a period of time if they follow certain rules.
Yet another idea comes from a 2004 global agricultural pact — The International Treaty on Plant Genetic Resources for Food and Agriculture — ratified by the United States and other nations that allows patent holders to own a genetic discovery for modifying plants, but not to block others from licensing and using it. Last month, an advisory committee at the Department of Health and Human services issued recommendations that patents on genetic diagnostic tests also be modified to allow greater access by researchers and patients.
Ultimately, the tussle over who owns genes may be decided not by government agencies, lawyers, or judges, but by advancements in science. Already the notion that one gene marker can best determine a person’s risk for a common disease is becoming outmoded. The latest science suggests that risk factors for maladies such as diabetes are increased by the interaction of dozens — or even hundreds — of genes and other molecular structures in the body. A legal system that does not retain flexibility in incorporating this rapidly moving science will cause confusion down the line.
Finding clarity in the issue of who owns our DNA will take time, and will be far more complex than, say, a simple frequency on a radio carrying a song by Lady Gaga. Yet it’s crucial in this new age of genomics and molecular biology that we are as clever about how we implement new discoveries as the discoveries themselves.
NASDAQ OMX Group Inc. said Lincare Holdings Inc. would be one of eight new companies whose securities will join the NASDAQ Q-50 IndexSM.
The index is designed to track the performance of the 50 securities that are next in line to replace the securities currently included in the NASDAQ-100 Index(R), a release said. The NASDAQ Q-50 Index is re-ranked on a quarterly basis.
Lincare (NASDAQ: LNCR) provides respiratory therapy and other services to patients in their homes. Based in Clearwater, the company serves patients across the United States.
Other companies joining the NASDAQ Q-50 are Amylin Pharmaceuticals Inc. (NASDQ: AMLN), Gentex Corp. (NASDAQ: GNTX), Micron Technology inc. (NASDAQ: MU), Rambus Inc. (NASDAQ: RMBS), Sirius XM Radio Inc. (NASDAQ: SIRI), Vistaprint N.V. (NASDAQ: VPRT) and Windstream Corp. (WIN).
The changes will result in the removal of CTC Media Inc. (NASDAQ: CTCM), Endo Pharmaceuticals Holdings Inc (NASDAQ: ENDP), LM Ericsson Telephone Co. (NASDQ: ERIC), Allscripts-Misys Healthcare Solutions Inc. (NASDAQ: MDRX), Myriad Genetics Inc. (NASDAQ: MYGN), Patterson-UTI Energy Inc. (NASDAQ: PTEN), Strayer Education Inc. (NASDAQ: STRA) and Techne Corp. (NASDAQ: TECH).
The change is effective March 22.
NASDAQ OMX Group (NASDAQ: NDAQ) is the world’s largest exchange company.
BRUSSELS, BELGIUM — The EU on Tuesday warned the United States against protectionism after a European-led consortium pulled out of the bidding for an Air Force contract, saying the terms had been altered to favor a U.S. company.
EADS, the parent company of Airbus, had partnered with Northrop Grumman to vie for the 179 tanker order, but the consortium pulled out on Monday. It said the terms of the deal appeared designed to eliminate its design in favor of a smaller jet offered by rival Boeing Co.
The announcement left Chicago-based Boeing as the only bidder for the project. It is offering a version of the 767 commercial airplane to replace the Air Force’s 1960s-era fleet of KC-135 tankers.
"The European Commission would be extremely concerned if it were to emerge that the terms of tender were such as to inhibit open competition for the contract," the EU said in a statement.
In 2008, the EADS-led consortium was awarded a contract for the fleet, but Boeing protested and the deal was annulled later that year cheap credit report.
In December, Northrop Grumman/EADS expressed concerns to the Pentagon and the Air Force that the new criteria were slanted in favor the Boeing design.
"It is highly regrettable that a major potential supplier would feel unable to bid for a contract of this type," said EU Trade Commissioner Karel De Gucht. "Open procurement markets guarantee better competition and better value for money for the taxpayer."
The EU noted that the trade balance in defense equipment with the 27-nation EU has traditionally been heavily in favor of the American side, and that in 2008, the US exported $5 billion worth of defense materials while importing only $2.2 billion from the European side.
"The Commission will be following further developments in this case very closely," the statement said.
On the last day of 2009, the state of Missouri gave $19.6 million to developer Paul McKee.
It came in the form of tax credits, from a program never before used, to pay back some of the cost of the land McKee spent five years secretly buying in north St. Louis.
It was a good day for McKee, and for his hugely ambitious $8.1 billion NorthSide project.
It was also a good day for his bankers.
Because after McKee sold the tax credits for cash, he used the money not on NorthSide itself but to pay down his debt, mostly to the small Washington, Mo., bank that is his primary lender on the project.
Yet nearly half of the $19.6 million was reimbursement for interest and fees already paid to lenders. In a sense, the bank got some added protection and a quick payback.
This is exactly how the new tax credit program was intended to work, supporters say. The credits provided the backup a bank needed to see before accepting the risk of financing a long, complex process of assembling land in beleaguered north St. Louis neighborhoods.
"We’ve got to understand, these are high-risk loan areas," said Missouri Sen. John Griesheimer, who pushed the Distressed Areas Land Assemblage tax credit in the Capitol. "This is where bankers and developers don’t want to go."
But the way the program has worked so far speaks to the heart of a lawsuit against it to be heard this week in Cole County. The tax credits won’t create jobs, said attorney Irene Smith. They won’t build buildings or generate any other public good, at least not directly.
"You’re basically just incentivizing the collection of land," she said. "You’re not incentivizing any development."
When state lawmakers established the program in 2007, they designed it to encourage lending on a speculative project such as NorthSide, something risky that might take years to pan out. Indeed, many say it was written specifically for McKee.
Griesheimer, a Republican from Washington, Mo., chairs the Senate’s economic development committee and helped author the credit. Early on in that process, he said in a recent interview, the senator consulted with McKee and with L.B. Eckelkamp, a constituent of his and chief executive of McKee’s primary lender, the Bank of Washington.
They met, Griesheimer said, "to explain what they needed." And after talking with a few other experts, he inserted the tax credit program, worth $95 million, into a massive state economic development bill. It had the vocal support of Lt. Gov. Peter Kinder, St. Louis Mayor Francis Slay and St. Louis County Executive Charlie Dooley. And it passed.
The measure included a 100 percent reimbursement for money spent on interest and loan fees to buy at least 50 acres of land in low-income neighborhoods, and a 50 percent reimbursement for the cost of land itself. It was structured that way, Griesheimer said, to protect any banker willing to take a chance on a major project such as this. It was, he said, the only way NorthSide would happen.
"It was a very high-risk area," he said. "The banks and everybody wanted to make sure that they’re going to recoup at least some of their losses, some of their money."
Indeed, beyond a $27 million loan from the Bank of Washington, McKee has struggled to attract lenders, even with the support of the tax credits. He has pitched NorthSide to a number of local banks, but none has publicly committed to him.
The Bank of Washington’s money did not come cheap. Since 2005, McKee’s NorthSide Regeneration has paid at least $9.25 million in interest and fees on loans held by the bank, according to documents obtained from the Missouri Department of Economic Development under state open records laws. Another $529,000 in interest went to a small Illinois bank that’s now defunct. Now, every cent of that has been reimbursed by the state.
In a recent e-mail, McKee acknowledged that his interest costs were high. But so, he argued, was the risk.
"The loans were unique," McKee wrote. "They were the only loans made in decades for large-scale site development in north St. Louis that were not backed by government guarantees."
Once he sold the tax credits in January, McKee used the proceeds to pay a substantial portion of his debt. The bank "required a pay down," he wrote, and it makes sense for the project. Paying off debt will reduce interest payments — which were nearly $3.8 million last year — and free up cash for actual redevelopment.
But some say all this focus on protecting lenders reflects misplaced priorities.
"Half of the money is going to pay interest on loans," Smith said. "What public benefit do we gain from a tax credit being used to pay someone’s interest?"
That question will be up to a judge.
Smith said she planned to focus her case on the constitutionality of the tax credits, an issue, she says, that’s never been thoroughly vetted in court. It’s a fairly narrow legal question, Smith said, and she expects the trial, set for Wednesday, to be brief.
In the mean time, McKee continues to buy property in north St. Louis.
His tax credit application says he has spent $25.1 million on 98 acres across two square miles near downtown. It estimates another $66 million in land-buying costs to come. And there’s still about $75 million in the pot of money available through the Distressed Areas credit; McKee’s financial plans project his getting nearly all of it.
Even the program’s critics express little surprise in how it’s been used so far. In floor debate three years ago, Sen. Brad Lager, R-Savannah, raised questions about so much reimbursement for borrowing costs and whether the state should spend $95 million on this sort of project. But he lost that debate.
"And right, wrong, or indifferent, they’re using the credit exactly how it was written," Lager said recently. As for whether it will work, he said: "Only time will be the judge."
Tampa Bay Sports and Entertainment LLC is officially the new owner of the Tampa Bay Lightning.
Jeff Vinik, a Boston-based asset manager, avid hockey fan, and minority owner of the Boston Red Sox, controls the company.
Terms of the deal that closed Wednesday were not disclosed. The purchase also includes the lease to the St. Pete Times Forum and ownership of adjacent real estate, the club said in a release.
Vinik becomes the Chairman of the Lightning and the club’s Governor on the National Hockey League’s Board of Governors. Earlier Wednesday, the NHL Board of Governors approved the acquisition of the team unanimously. A purchase agreement to buy the team on Feb. 4, 2010
“The Lightning is a great franchise in a terrific community,” said Vinik in a prepared statement. “We thank [former owner] Oren Koules and his partners for beginning the turn-around of the Lightning hockey club. Our goal now is to build a world-class organization, on and off the ice.”
Vinik, 50, is the founder and chairman of Vinik Asset Management free credit score online. Prior to forming Vinik Asset Management, he managed Fidelity’s Magellan Fund, at that time the world’s largest equities mutual fund. A Phi Beta Kappa graduate of Duke University with a Bachelor of Science degree in Engineering and Economics, Vinik went on to earn his Masters of Business Administration degree from the Harvard Business School.
The team has scheduled a press conference March 5 to discuss the sale.
The Lightning was founded in 1990 by NHL Hall of Famer Phil Esposito and began play in 1992. The team won the Stanley Cup in 2004. Previous owners of the Lightning include Kokusai Green Ltd (1992-1998), Art Williams (1998-99), Palace Sports & Entertainment (1999-2008) and Lightning Enterprises LP (2008-2010).
The team currently has 20 games remaining in the 2009-10 regular season and it sits in 11th position in Eastern Conference, just two points removed from a playoff position.
Australian business profits rose for the first time in five quarters as earnings at wholesalers, hotels and restaurants gained.
Gross operating profits advanced 2.2 percent in the three months through December from the previous quarter, when they declined a revised 1.4 percent, the Bureau of Statistics said in Sydney today. The median estimate of 15 economists surveyed by Bloomberg News was for a 3 percent gain.
Today’s report adds to evidence of an economic rebound that may prompt the central bank to raise the benchmark interest rate tomorrow for the fourth time in five meetings. Australia’s economy probably grew the most in 1 1/2 years in the fourth quarter, a separate analysts’ survey ahead of a report on March 3 shows, boosted by A$22 billion ($20 billion) in spending by Prime Minister Kevin Rudd on roads, ports and schools.
Income from companies “looks OK, and they should improve further” in 2010, said Stephen Roberts, a senior economist at Normura Australia Ltd. in Sydney. “They’ve cut back a bit on costs and by this time next year we should have a big positive annual gain” in earnings.
Profits declined 11.2 percent in the fourth quarter from a year earlier, today’s report showed.
The Australian dollar fell to 89.84 U.S. cents at 12:03 p.m. in Sydney from 89.89 cents just before the report was released. The two-year government bond yield dropped 1 basis point to 4.58 percent. A basis point is 0.01 percentage point.
Supermarkets
Woolworths Ltd., Australia’s biggest retailer, said last week that first-half net income rose 11 percent to A$1.1 billion on increasing profitability at its supermarkets.
Goodman Fielder Ltd., the nation’s largest baker, said on Feb. 25 that first-half profit increased 25 percent after it cut manufacturing expenses and added new bread brands.
While some economists say concerns about sovereign debt in Europe and financial-markets turmoil may prompt central bank Governor Glenn Stevens to wait another month to increase borrowing costs tomorrow, 14 of 19 analysts surveyed by Bloomberg predict he will boost the benchmark rate by a quarter percentage point to 4 percent.
Boosting the benchmark rate tomorrow would make Stevens the first central banker from a Group of 20 economy to raise borrowing costs this year quick payday loans. He was also the first in the world to increase rates three times last quarter, when he raised the key rate in three quarter-point steps to 3.75 percent from a half- century low of 3 percent.
Business Investment
Profits at construction companies declined 2.7 percent in the fourth quarter and manufactures advanced 8.1 percent, today’s report said. Wholesale traders jumped 29 percent and hotels and restaurants gained 28.5 percent.
A report published last week showed business investment jumped in the fourth quarter at almost three times the pace predicted by analysts as companies raised their forecasts for investment plans to the highest level in five years.
BHP Billiton Ltd., the world’s largest mining company, said last month it will increase capital spending on iron-ore mines and oil fields by 63 percent next year to $20.8 billion from $12.8 billion this year.
Rising Chinese demand for Australian iron ore and coal is stoking a record boom in mining investment that may last more than a decade, central bank Deputy Governor Ric Battellino said on Feb. 23. Investment in new mines, ports and infrastructure may reach 6 percent of gross domestic product, more than double the amount spent during the last resources boom in the late 1970s, he said.
Faster Growth
GDP probably rose 0.9 percent in the fourth quarter from the previous three months, when it gained 0.2 percent, according to the median estimate of 18 economists surveyed by Bloomberg News. The economy probably expanded 2.4 percent from a year earlier, they said. The figures will be released at 11:30 a.m. on March 3.
Inventories held by companies gained 0.2 percent in the fourth quarter from the previous three months, today’s report showed. Economists forecast a 0.5 percent increase.
Retail sales rose 0.5 percent in January after falling in December for the first time in five months and building approvals gained for a third straight month, according to Bloomberg surveys of analysts ahead of reports to be released tomorrow.
Gross operating profit measures earnings before tax, interest, depreciation and amortization. It excludes asset sales and foreign-exchange gains or losses.
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