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Boeing apologizes for Dreamliner fiasco

Written By limadu on Kamis, 28 Februari 2013 | 04.32

LONDON (CNNMoney)

Raymond Conner, head of the commercial aircraft division at Boeing (BA, Fortune 500), said the incidents that led to the grounding of the entire fleet of Dreamliner 787 planes were "deeply regretful".

"On behalf of the Boeing Company and the 170,000 people which I represent today, I want first to apologize for the fact that we've had two incidents with our two very precious customers, ANA and JAL," he told reporters in Tokyo.

Between them, All Nippon Airways and Japan Airlines operate nearly half the 50 Dreamliners delivered to customers so far.

The Dreamliner has sold well in Asia and the Middle East, where airlines depend on long-range flights for much of their business and can benefit most from the improvements in fuel economy the lighter-weight plane promises.

Related: Boeing's latest problem: Strike threat

The grounding last month due to fires linked to the use of lithium-ion batteries has forced Japan's airlines to cancel hundreds of flights, costing millions in lost revenue. Boeing has warned customers of delays to deliveries, although it continues to make the plane.

The new plane is at the heart of ANA's strategy, and if it remains out of service for an extended period of time, the damage to the airline could be significant. ANA has already said it will seek compensation from Boeing.

Conner said Boeing had hundreds of engineers working with external experts on the battery technology to come up with a solution that addresses all the possible causes of the incidents that led to the grounding.

"What we did today was discuss the solutions that we are looking at that could be the final solution to get airplane back in air flying again," he said.

The problems with the new battery technology have already prompted Boeing's European rival Airbus to revert to standard nickel-cadmium batteries in its A350 plane, designed to compete with the Dreamliner and due to make its first test flight in the middle of this year.

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First Published: February 28, 2013: 5:59 AM ET


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Europe to cap bankers' bonuses

U.K. bankers' bonuses will be capped by new EU rules.

LONDON (CNNMoney)

The measure, which could take effect as early as January 2014, will limit bonuses to the level of annual salary, or twice salary given the approval of a majority of shareholders. The cap will apply globally to European Union banks, and to international banks operating within the EU.

"This is the objective of the cap, to stop short term risk taking," European Commissioner Michel Barnier said at a news conference.

The cap is part of a broader package of rules requiring banks to hold higher amounts of capital to protect them from future shocks, set aside more funds to ensure liquidity in times of crisis and to be more transparent about their businesses.

"This overhaul of EU banking rules will make sure that banks in the future have enough capital, both in terms of quality and quantity to withstand shocks," said Irish finance minister Michael Noonan, who helped broker the deal between representatives of EU states and the European Parliament. "This will ensure that taxpayers across Europe are protected into the future."

A majority of the 27 European Union states must back the provisional agreement for it to become law and further changes may yet be negotiated.

The U.K. has resisted the cap on bonuses, worried that it may drive bankers out of London, Europe's financial capital.

Banks have already been forced to change the way they structure bonuses, paying them out over a longer period of time and adding claw-back arrangements. Some responded by increasing base pay, saying they risked losing top performers.

But this is the first EU cap on bonus size and reflects political frustration that big banks continue to pay millions to some employees while many incomes are dropping as governments and firms are forced to tighten their belts.

A series of high-profile scandals -- including market rigging, money laundering and mis-selling of products -- has fueled public anger at the apparent lack of restraint in setting bonuses for top bankers.

Related: Barclays CEO: I don't deserve a bonus

Businesses argue that markets should be allowed to determine levels of pay, and that companies should be treated no differently than the movie industry or sports clubs that pay top dollar for top talent.

The Confederation of British Industry, a business lobby group, has warned that an EU bonus cap could translate into higher levels of base pay, weakening the link between performance and reward -- the opposite of the desired effect.

The CBI has also warned that capping the variable element of bankers' pay would limit banks' ability to reduce costs in response to weaker markets.

But the new rules may do little more than reflect the reality for many now working in financial services. Bonuses have fallen due to a sharp drop in activity and employment.

Related: Wall Street CEOs: Who's paid the most?

The Center for Economics and Business Research estimates that bonuses in London totaled about £1.6 billion in the latest round, down from £11.6 billion in 2008.

Wall Street bonuses have also fallen since the bumper years of 2008 and 2009, when New York bankers enjoyed a share of $22 billion each year, but they are rising again. Average cash bonuses rose by 9% last year to nearly $122,000, and the total pot was up 8% at $20 billion. To top of page

First Published: February 28, 2013: 4:02 AM ET


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Stocks: Economy, earnings back in focus

Click on chart for more premarket data

NEW YORK (CNNMoney)

The Labor Department will release its weekly report on initial jobless claims at 8:30 a.m. ET, while the Commerce Department will publish its second estimate of fourth-quarter GDP.

In its initial estimate last month, the Commerce Department said the economy contracted at an annual rate of 0.1% in the fourth quarter, the first contraction since the second quarter of 2009.

On the corporate front, the department store chain Sears Holdings (SHLD, Fortune 500) reported earnings, showing that sales at stores open a year or more notched up 0.8% in the fourth quarter but fell 1.4% for the year. The company said that it has closed 300 Sears and Kmart stores, or 13% of its total, since 2006.

Barnes & Noble (BKS, Fortune 500), the book retailer, is also set to report quarterly results in the morning, while Gap (GPS, Fortune 500) is up after the bell.

U.S. stock futures were steady.

Fear & Greed Index: Greed is good

U.S. stocks rose Wednesday to a five-year high as investors welcomed more upbeat housing data and a second day of dovish testimony from Federal Reserve chairman Ben Bernanke. The Dow rose 1.2% to finish at its highest level since October 2007.

J.C. Penney (JCP, Fortune 500) shares plunged in premarket trading as the retailer reported a dismal fourth-quarter loss and weak same-store sales.

Groupon (GRPN) shares plunged 26% in premarket trading after the daily deals site's results missed already low expectations.

Shares of Sturm, Ruger (RGR) rose in after-hours trading as the gun maker reported earnings that beat expectations. The company benefited from a surge in firearm sales on fears of new gun-control laws following the re-election of President Obama and the shooting in Newtown, Conn.

European markets rose in midday trading, drawing support from comments from European Central Bank President Mario Draghi that suggested the bank had room to relax policy further. Meanwhile, the European Union is planning to cap bankers' bonuses to rein in reckless risk taking.

Asian markets had a banner day. After the nomination of Haruhiko Kuroda to be Japan's next central banker, the Nikkei posted a 2.7% increase to its highest point since 2008. The Shanghai Composite rose 2.3% and the Hang Seng added 2%. To top of page

First Published: February 28, 2013: 4:41 AM ET


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Young adults are too broke to get loans

Written By limadu on Rabu, 27 Februari 2013 | 04.32

Young adults have reduced their debt levels throughout the Great Recession.

NEW YORK (CNNMoney)

It's not because legions of Americans under age 35 have suddenly become fiscally responsible. It's more likely that their shaky economic foundations either prevent them from qualifying for a loan or even thinking about applying for one, according to those studying the trend.

"It's a sign of economic struggle, not economic success," said Richard Fry, senior economist at the Pew Research Center. "They don't have the mortgage, but they don't have the house."

The center found that young adults' debt levels dropped nearly 14% between 2001 and 2010, while rising 63% for those age 35 and older, according to a recent Pew study.

The real-world ramifications are eye-popping. The share of younger households owning their primary residence fell to 34% in 2011, down from 40% in 2007. Only 66% owned or leased at least one vehicle in 2011, down from 73% four years earlier, as car loans plunged. Credit card balances have also fallen.

The only debt on the rise is student loans. In 2007, just over a third of young households had outstanding student debt. That jumped to 40% in 2010.

One reason for the decline is the weak job market, especially for the young. Their unemployment rate was more than 2 percentage points higher than their older peers in 2010 and 2011, according to federal labor statistics. Many of those lucky enough to have employment either make less than they expected or are concerned about getting laid off.

"Young people have less debt because they are less likely to live the American Dream -- own a home, buy a car, start a family," said Evan Feinberg, president of Generation Opportunity, an advocacy organization for young adults. "If they don't have a job, they can't even think about getting a car loan."

Take Vincent Nitopi of Alexandria, Va. Nitopi, 31, and his wife were hoping to buy a house last year, but the only mortgage they could secure carried too high an interest rate.

Though the couple want to own a home one day, they've postponed that goal for now. Nitopi is in the military, but he's concerned he could be the victim of a downsizing. So he now prefers to put any extra funds they have toward building a financial cushion.

"Picking up a couple of hundred thousand dollars in debt has put us off," he said about the idea of taking on a mortgage. "Renting is just fine."

Related: Americans still aren't saving enough

Brian Hackett, on the other hand, thought he'd be a homeowner by now. Instead, the 25-year-old is living with his parents and looking for full-time work after being let go recently from a part-time job.

Hackett graduated from The College of New Jersey magna cum laude in 2010. A thorough planner, he opted not to room at college in his last two years and to forgo graduate school to keep his student loan burden down. He hoped to launch a career in public policy or government as soon as he graduated so he could save for a down payment.

The lousy job market thwarted those plans. Now, he's not sure he'll be a homeowner by the time he turns 30.

"At this point, I don't think that will be possible," said Hackett, who applies for 10 jobs a week and was recently told he was overqualified. "I'm three years behind."

Young adults are pulling back on credit-card debt for similar reasons, said Amy Traub, a senior policy analyst at Demos, a public policy research organization. It found that Americans age 25 to 34 cut their credit card debt in half between 2008 and 2012.

All around them, young adults are seeing signs of financial distress -- job insecurity, foreclosures, high college costs. That's making them think twice about applying for loans, she said.

"Young people are being cautious in this difficult economic time," Traub said. "They are reluctant to take on debt." To top of page

Are you a young adult who can't get a mortgage or car loan? Have low wages prevented you from even applying for one? Email me at tami.luhby@turner.com. You could be profiled in an upcoming story.

First Published: February 27, 2013: 6:15 AM ET


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3 basic steps to creating a retirement plan

NEW YORK (Money Magazine)

You, sir, need a plan.

A recent survey shows that people who've prepared a personal financial plan are more likely to feel as if they're on track to meet financial goals, like saving for retirement. That makes perfect sense, since it's hard to know whether you're on course if you haven't mapped one out.

Similarly, stats from the Employee Benefit Research Institute's Retirement Confidence Survey demonstrate that people who've made an attempt to calculate how much they'll need for retirement not only are more likely to put money away, they also aspire to higher savings targets.

But the payoff you get from planning extends beyond having a greater chance of achieving a secure and comfortable retirement down the road. Research also confirms that people who take control of their finances tend to be happier about their lives than those who don't. In effect, you get to reap at least some of the reward of planning and saving for retirement before you actually retire.

So, how can you create a retirement plan that can help you simultaneously feel better about your life today and improve your retirement prospects down the road? Here's a three-step guide:

1. Take stock of where you stand now: Start by pulling together the current balances of any money you have tucked away for retirement in all types of accounts -- 401(k)s, IRAs, other company savings plans, even savings earmarked for retirement that are held in taxable accounts.

After you've added up all the balances, estimate the percentage of your total savings you have in each of these three broad asset categories: stocks (including stock mutual funds), bonds (and bond mutual funds) and cash equivalents (money-market funds, money-market accounts, CDs, etc.)

Related: Americans still aren't saving enough

Then calculate the percentage of your gross annual income that you save in a 401(k) or other workplace plans (including any company matching funds) and note the dollar amount that you stash in investments outside your workplace plan.

2. Plug this information into a good retirement calculator. By "good," I mean a calculator that employes Monte Carlo-type simulations to allow for the variability in investment returns.

Among the free online calculators that do this are our Retirement Planner tool, T. Rowe Price's Retirement Income Calculator and Fidelity's Retirement Quick Check.

In addition to the savings and investment information I mentioned above, you'll also want to include an estimate of the age you intend to retire, your projected Social Security benefit and the percentage of your pre-retirement salary you'll need to maintain an acceptable standard of living in retirement.

Clearly, the younger you are, the "squishier" these estimates are likely to be. Just do your best and be reasonable.

If you're 40 and just beginning to save, then it would probably be unrealistic to expect to retire anytime before your mid-to-late '60s, and even that may be ambitious.

As for the percentage of pre-retirement income you'll require, anywhere between 70% to 90% is a credible estimate. You can get your projected Social Security benefit by going to Social Security's Retirement Estimator.

Once you've loaded all this information into the calculator, you'll get an estimate of the probability you'll be able to retire at the age you indicated with the income you specified. If you haven't been saving and investing regularly for retirement, your chances are probably going to be uncomfortably low -- maybe even well below 50%.

But don't panic. Your goal at this point is to improve your prospects as much as possible in the time you have left. The way to do that is to rerun the analysis with different assumptions to see which changes, alone and in combination with others, improve your outlook the most.

Related: Make your money last all through retirement

What you'll likely find is that you'll get the biggest boost by saving more and postponing retirement a few years. Investing more aggressively isn't likely to help as much, and could backfire.

Even though investing better isn't likely to improve your outlook as much as saving more or working a few more years, you don't want to squander your savings on a haphazard investment strategy or foolish investments.

So I recommend you settle on an asset allocation, or stocks-bonds mix, that's appropriate for your age and, aside from occasional rebalancing, leave it alone, except to shift more toward bonds as you get closer to retirement. Creating as much of that portfolio as possible with index funds will hold costs down and increase your potential return. If you're not confident about your ability to build a portfolio on your own, you can invest in a target-date retirement fund or use one as a guide for creating your own portfolio.

3. Follow through -- and periodically reassess. All this effort will be for naught, however, if you don't actually put the plan into place and, most importantly, save as much as you can.

You'll get the biggest bang for your savings buck by contributing to tax-advantaged plans like a 401(k) or IRA. If the 401(k) offers matching funds, be sure to contribute at least enough to get the full match.

Once you've exhausted your tax-advantaged options, you can move on to tax-efficient investments, such as index funds, ETFs or tax-managed funds, in taxable accounts.

Related: Social Security's role in your retirement portfolio

Retirement planning isn't something you do once and then forget about it. You'll need to periodically assess your progress and make adjustments to stay on track. So go through the process I've outlined every couple of years, stepping up the frequency to annually as your career winds down.

When you're within ten or so years of your anticipated retirement date, you could very well find that, despite your best efforts, you haven't accumulated enough resources to allow you to retire on schedule and lead the lifestyle you'd like. At that point, you can weigh options such as working longer, taking a part-time gig in retirement, scaling back your post-career lifestyle or looking for ways to stretch your resources by, say, taking out a reverse mortgage or relocating to an area with lower living costs.

Ultimately, no plan can guarantee you'll be able to achieve the retirement you envision. But I can assure you that your chances of retiring in comfort will be much, much lower if you don't have a plan at all. To top of page

First Published: February 27, 2013: 6:20 AM ET


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Pimps hit social networks to recruit underage sex workers

NEW YORK (CNNMoney)

"I was just, 'oh, he's cute, I'll accept him,'" a 22-year-old called "Nina" recalls.

She was 18 at the time, and didn't imagine that clicking "accept" would start her on a path to four years of prostitution across the country. "Nina" is a pseudonym; CNNMoney agreed to change the names of the victims in this article to protect their privacy.

Upper middle-class and college-bound, Nina had her plans derailed in her senior year of high school after her mother was sentenced to two years in prison for financial crimes. Lonely and looking online for male attention, she started messaging back and forth with a man who said he was falling for her. They talked about trips they'd take together as a couple, and about marriage, maybe kids.

"He sold me the biggest dream in the world," she says. "I thought he really did like me and we were going to live this fairy-tale life together."

They exchanged online messages for about a month. That September, while Nina's friends went off to college, she traveled the two and half hours from home to meet her Facebook beau in person.

The fairy tale ended fast. Almost immediately after she arrived in Seattle, he dropped her off on a street where prostitutes troll for customers and told her she was going to "catch dates."

Many would have run, but Nina says her deteriorating family life left her with a sense of desperation. She was smitten, and willing to do anything for the man she thought loved her. So she stayed.

Keeping the attention of her "boyfriend" required selling herself for sex, Nina learned. He was a pimp -- and she was one of a growing number of women recruited on social networks for sex trafficking.

There are no hard statistics on the scope of the problem. Law enforcement officials don't track how sex workers are recruited into the field, and unless the victims are underage, prostitution is typically a low-priority crime.

But recent prosecutions in California, Virginia and Washington, along with interviews CNNMoney conducted with victims and those investigating these crimes, illustrate how social networks are helping traffickers lure in victims like Nina.

"Pimps are professional exploiters," says Andrea Powell, executive director of Fair Girls, an organization that helps victims of sex trafficking. "Often they're just spamming a whole bunch of girls with messages like, 'Hey, you look cute. I could be your boyfriend.'"

That's one way Justin Strom -- aka "J-Dirt" -- recruited the high-school girls he and his followers trafficked in Alexandria, Va., an affluent suburb on the outskirts of Washington, D.C. For six years, the members of Strom's "Underground Gangster Crips" gang operated a prostitution ring that ensnared at least eight 16- and 17-year olds, according to court documents.

See the court records: Justin Strom's Facebook messages

The girls were rented out to five to 10 customers each on a typical night. The going rate was around $30 for 15 minutes of sex.

Social networks were among Strom's preferred hunting grounds.

The group "searched Facebook for attractive young girls, and sent them messages telling them that they were pretty and asking if they would like to make some money," one witness told a Federal Bureau of Investigation agent investigating the case. The court records include a trail of those messages.

Strom had a collection of fake Facebook accounts. On one of them, for "Rain Smith" investigators found more than 800 messages sent out to potential targets.

If a girl expressed interest, a gang member would arrange to meet up. At that point, participation stopped being voluntary.

One 17-year-old solicited on Facebook allowed Strom to pick her up in his car at her home, but when he spelled out what he expected, she told Strom she wanted out. In response, he "slammed her head against the window of the vehicle," forced her to ingest cocaine, and slashed her arm with a knife, according to court documents.

That night, he took her to an apartment complex and rented her out to 14 men. The encounter netted Strom $1,000. It left the victim with a collection of physical scars.

"He's a con artist, a monster and a manipulator," another victim testified at his sentencing. "I was brainwashed into believing that having sex with men for money was normal, an everyday thing."

An FBI operation shut Strom's gang down last year, and in September he was sentenced to 40 years in prison. Four of his associates were also convicted.

But FBI cybercrimes supervisor Jack Bennett says Strom's tactics are becoming more common. Part of the problem, he says, is that minors will accept friend requests from strangers just to appear to be popular. Photos, personal information, and friend lists are then out in the open.

Pimps "start looking for the cracks where they can fill the holes, whether it be a father figure or a boyfriend," Bennett says.

Some are even more direct.

"Lisa," a 21-year-old who was a sex worker on and off for three years before escaping in mid-2012, gets daily messages on social networking sites from traffickers trying to reel her back in. Many don't even hide their intentions.

"If it's a 'P' beside their name, that stands for pimp," Lisa says. On any given day, she gets a steady stream of messages from unfamiliar men whose last names are just "P."

'Old tricks with new tools'

Powell, the advocate who runs Fair Girls, says she's seen girls recruited from almost every social network that exists. Facebook and Tagged are two of the most common, she says, but even more limited sites like Twitter and Instagram get used for solicitation. The FBI's case against Strom cites DateHookup and MySpace, in addition to Facebook, as sites his gang targeted.

In a recent Seattle case involving multiple juveniles, Facebook was used to recruit one of the victims. The two defendants were charged in Pierce County, Wash., in November.

"What you're really seeing here with Facebook, and other social networking sites, is old tricks with new tools," says Pierce County prosecutor Mark Lindquist.

The Polaris Project, which runs a sex-trafficking help hotline, works with tech companies to educate them on how their technology is being used to facilitate trafficking, and how they can help stop it.

"They're most interested in understanding exactly how the criminal networks are operating, and they want to know the modus operandi of the traffickers," says Bradley Myles, executive director of Polaris.

Facebook (FB) reacts swiftly to reports of illicit activity and quickly takes down questionable content when it's flagged, according to Myles and other advocates.

The company says it takes human trafficking very seriously.

"While this behavior is not common on Facebook, we have implemented robust protections to identify and counter this activity," a company representative told CNNMoney in a written statement. "We have zero tolerance for this material and are extremely aggressive in preventing and removing exploitative content. We've built complex technical systems that either block the creation of this content, or flag it for review by our team of investigations professionals."

But algorithms can't catch everything, and pimps are skillful social engineers.

During down time, Nina's pimp browsed through her Facebook friends, sending friendship requests using her profile and messaging women he thought "looked the part."

Strom used similar tactics, relying on women he controlled to reach out to new prospects. He also sent hundreds of messages himself to teenagers, with pitches like: "I work with girls that dance nude do partys dates one on ones and more does any of that interest you."

Calvin Winbush, who calls himself "Good Game," ran a prostitution business out of Ohio. He was sentenced in August to 14 years in prison for trafficking minors across state lines for prostitution. Winbush described himself as an "international player" on his Facebook page, and recruited heavily with messages like: "Call me soon as u get this love so we can chop it up and get better acquainted..."

That kind of approach works more often than parents would like to believe.

"There's no high school that's immune to this," Ken Cuccinelli, Virginia attorney general, said in a press conference unveiling the charges against Strom. "It demands increased vigilance by both parents and law enforcement into the activities that are occurring across those social media lines."

The FBI, which is often on the front lines of investigating these cases, has a tip sheet on its website to help parents protect their children on social networks.

The agency recommends that parents monitor their kids' online profiles and postings -- a controversial step in many households, but one the agency thinks is essential. It also recommends that parents educate their kids about how broadly the messages and photos they post online can spread. Teenagers don't always realize that they can't "take back" texts and images.

"I've talked to parents who say, 'Hey listen, my son has to set up my computer 'cause I just don't know,'" says the FBI's Bennett. "That's not an excuse anymore. You've got to know, because it's your child's life and their well-being depends on this."

Breaking free

Nina describes being raped, beaten with a pistol, and, once, locked in a closet for 24 hours. Beyond the physical threats, shame kept her from running away.

"I didn't want to tell my parents, 'Ya know, this is what I'm doing,'" she says. "How am I going to explain that to my father? That wasn't an option for me at all."

Nina bounced through a series of different pimps, eventually ending up "working" for a trafficker who took away her ID and forced her to dance -- and more -- at strip clubs and in hotel rooms.

A massive raid by local police and the FBI shut down his operation about a year ago. Without that, Nina says she could still be working for him today. Advocates at Fair Girls are helping her rebuild her life. She's planning to begin college in the fall.

Both Nina and Lisa still maintain accounts on the social networks on which they were recruited, mainly to keep in touch with friends and family. Both receive daily messages from pimps.

They no longer respond.

"I want to get my life together," says Lisa, who is working to earn her GED. "If I start school, I probably won't have a Facebook page." To top of page

First Published: February 27, 2013: 7:17 AM ET


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Business saves $270K. The trick? No employees

Written By limadu on Selasa, 26 Februari 2013 | 04.32

Xan Hood, founder of clothing startup Buffalo Jackson, relies entirely on freelancers. It's part of a small business boom in the use of temp workers.

NEW YORK (CNNMoney)

He's got two artists, two accountants, a photographer, a web consultant and a customer service representative -- and they are all freelancers.

If they were on Hood's payroll, their combined salary would probably have cost him $300,000 last year. Instead, he paid closer to $30,000.

His cash-strapped startup, Buffalo Jackson in Charlotte, N.C., doesn't need them working full-time. At this point, there just isn't enough work to do.

"We need to be efficient and resourceful with the little we have," Hood said.

Related: Pot dealers get slammed by taxes

Relying on freelancers saves him time and money in all sorts of ways. There's less government paperwork. He doesn't have to pay the federal payroll tax that funds Social Security and Medicare, 7.7% of workers' wages.

And there are no worries about North Carolina's unemployment insurance rate, which ranges between 1.2% and 6.8% of employee salaries. Even with just a few employees, these taxes can quickly add up to thousands of dollars a year.

"That's how we've kept our company lean and mean," Hood said. "I'm watching every dollar coming in or out of the company."

Buffalo Jackson, which designs clothes and contracts with manufacturers to produce them, is expanding quickly and might make $1 million in revenue this year. But Hood, who pays himself a small salary, still says his enterprise is in "survival mode."

Buffalo Jackson is part of the boom in temporary work. After all, why take on the cost and risk of hiring an employee if you can get one without strings attached?

Some business owners are heading to online platforms, like Buffalo Jackson did with Elance, where they find freelancers who bid on jobs. Others avoid hiring an employee directly by paying a staffing agency to do it for them.

Both options are growing in popularity. On Elance alone, more than 1.6 million U.S. jobs have been posted since mid-2011. Labor Department statistics show that the number of workers provided by temp agencies has more than doubled since 1990.

Employees end up with temporary or unstable jobs, a classification known as "contingent workers" that makes up about a third of the workforce, according to the Government Accountability Office.

But it's not necessarily a raw deal.

Related: India's luxury chocolate craving

Melissa Simpson turned to Elance after a car crash left her unable to lift heavy loads at her retail clothing job. The mother of five in Colorado Springs, Colo., searched for administrative office work she could do from home. Her first gig was with Buffalo Jackson, where she now takes customer orders and answers phone calls.

"I enjoy having time with my family and a flexible schedule," she said. "It's been a lifesaver."

Lately, though, Simpson has entered something of a gray area. She's been working 30-hour weeks, sometimes more during the holidays.

Hood said he's now faced with a decision: keep Simpson as a freelancer or move her onto his payroll. He's not sure he's ready for the additional duties of a manager -- or whether it's even necessary.

"The next stage in our company is taking ownership of responsibilities of a traditional workplace," he said. "But I'm not at the point where I want people to be depending on us as a source of hours every month."

Simpson, however, welcomes the idea.

"It would give me a sense of stability," Simpson said. "I would feel so much more a part of his company." To top of page

First Published: February 26, 2013: 6:12 AM ET


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Workers over 50 are the new 'unemployables'

Mary Clair Matthews, Tony Kash and Jill Cummings are struggling to find jobs. Click the photo to read their stories.

NEW YORK (CNNMoney)

On one hand, they're too young to retire. They may also be too old to get re-hired.

Call them the "new unemployables," say researchers at Boston College.

Older workers were less likely to lose their jobs during the recession, but those who were laid off are facing far tougher conditions than their younger colleagues. Workers in their fifties are about 20% less likely than workers ages 25 to 34 to become re-employed, according to an Urban Institute study published last year.

"Once you leave the job market, trying to get back in it is a monster," said Mary Clair Matthews, 58, who has teetered between bouts of unemployment and short temp jobs for the last five years. She applies for jobs every week, but most of the time, her applications hit a brick wall.

Employers rarely get back to her, and when they do she's often told she is "overqualified" for the position. Sometimes she wonders: Is that just a euphemism for too old?

Her resume shows she has more than 30 years of experience working as a teacher, librarian, academic administrator and fundraiser for non-profits.

"I've thought about taking 10 years off my resume," she said. "It's not like we're senile. The average age of Congress is something like 57. Joe Biden is 70. Ronald Reagan was in his 70s when he was president. So what's the problem?"

That's a question on the minds of many older workers.

Take Jill Cummings, 55, who has thought about dying her gray hair to improve her chances of landing a job. Then there's Tony Kash, 50, who wonders why his 30 years experience in manufacturing and management is no match for 25-year-olds fresh out of college with business degrees.

Nearly two-thirds of unemployed workers age 55 and older say they have been actively searching for a job for more than one year, compared to just one-third of younger workers, a recent survey by the Heldrich Center for Workforce Development at Rutgers University found.

Related story: Millions expect to outlive retirement savings

Older workers also have the longest bouts of unemployment. The average duration of unemployment for workers ages 55 to 64 was 11 months as recently as January, according to the Labor Department. That's three months longer than the average for 25- to 36-year-olds.

Given these circumstances, many workers can't help but think age discrimination is a factor. AARP's Public Policy Institute surveyed unemployed baby boomers in 2010 and 2011. While 71% blamed their unemployment on the bad economy, almost half also said they believed age discrimination was also at play.

About 23,000 age discrimination complaints were filed with the Equal Employment Opportunity Commission in fiscal 2012, 20% more than in 2007.

Proving discrimination is next to impossible, though, unless it's blatant.

"It's very difficult to prove hiring discrimination, because unless somebody says, 'you're too old for this job,' you don't know why you weren't hired," said Michael Harper, a law professor at Boston University.

Plus, employers may have rational qualifications that are inadvertently weeding out older candidates. Recent education and technological skills are two areas where older workers are more likely to come up short compared to the younger competition.

"When there's a large supply of unemployed workers, employers can afford to be choosier, and they're opting for workers they think are less expensive or more recently trained," said Sara Rix, senior strategic policy advisor for AARP's Public Policy Institute.

That's a hard reality for older job-seekers.

"When you're at 55 or 60, you've had a lifetime of work. You've played by the rules, and the rug has been pulled out from you," Rix added. To top of page

First Published: February 26, 2013: 6:18 AM ET


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Community college grads out-earn bachelor's degree holders

Nearly 30% of Americans with associate's degrees now make more than those with bachelor's degrees, according to Georgetown University's Center on Education and the Workforce

NEW YORK (CNNMoney)

That's 15% higher than the average starting salary for graduates -- not only from community colleges, but for bachelor's degree holders from four-year universities.

"I have a buddy who got a four-year bachelor's degree in accounting who's making $10 an hour," Omer says. "I'm making two and a-half times more than he is."

Omer, who is 24, is one of many newly minted graduates of community colleges defying history and stereotypes by proving that a bachelor's degree is not, as widely believed, the only ticket to a middle-class income.

Nearly 30% of Americans with associate's degrees now make more than those with bachelor's degrees, according to Georgetown University's Center on Education and the Workforce. In fact, other recent research in several states shows that, on average, community college graduates right out of school make more than graduates of four-year universities.

The average wage for graduates of community colleges in Tennessee, for instance, is $38,948 -- more than $1,300 higher than the average salaries for graduates of the state's four-year institutions.

Related: Colleges find a new way to get grads hired

In Virginia, recent graduates of occupational and technical degree programs at its community colleges make an average of $40,000. That's almost $2,500 more than recent bachelor's degree recipients.

"There is that perception that the bachelor's degree is the default, and, quite frankly, before we started this work showing the value of a technical associate's degree, I would have said that, too," says Mark Schneider, vice president of the American Institutes for Research, which helped collect the earning numbers for some states.

And while by mid-career, many bachelor's degree recipients have caught up in earnings to community college grads, "the other factor that has to be taken into account is that getting a four-year degree can be much more expensive than getting a two-year degree," Schneider says.

A two-year community college degree, at present full rates, costs about $6,262, according to the College Board. A bachelor's degree from a four-year, private residential university goes for $158,072.

The increase in wages for community college grads is being driven by a high demand for people with so-called "middle-skills" that often require no more than an associate's degree, such as lab technicians, teachers in early childhood programs, computer engineers, draftsmen, radiation therapists, paralegals, and machinists.

With a two-year community college degree, air traffic controllers can make $113,547, radiation therapists $76,627, dental hygienists $70,408, nuclear medicine technologists $69,638, nuclear technicians $68,037, registered nurses $65,853, and fashion designers $63,170, CareerBuilder.com reported in January.

Related: How does your community college stack up?

"You come out with skills that people want immediately and not just theory," Omer says.

The Georgetown center estimates that 29 million jobs paying middle class wages today require only an associate's, and not a bachelor's, degree.

"I would not suggest anyone look down their nose at the associate's degree," says Jeff Strohl, director of research at the Georgetown center.

"People see those programs as tracking into something that's dead end," Strohl says. "It's very clear that that perception does not hold up."

The bad news is that not enough associate's degree holders are being produced.

Only 10% of American workers have the sub-baccalaureate degrees needed for middle-skills jobs, compared with 24% of Canadians and 19% of Japanese, the Organization for Economic Cooperation and Development reports.

Over the last 20 years, the number of graduates with associate's degrees in the United States has increased by barely 3%. And while the Obama administration has pushed community colleges to increase their numbers, enrollment at these schools fell 3.1% this year, the National Student Clearinghouse Research Center reports. Graduation rates also remain abysmally low.

Related: Community colleges: How to avoid 'dropout factories'

Meanwhile, many people with bachelor's degrees are working in fields other than the ones in which they majored, according to a new report by the Center for College Affordability and Productivity.

"We have a lot of bartenders and taxi drivers with bachelor's degrees," says Christopher Denhart, one of the report's coauthors.

Still, the salary advantage for associate's degree holders narrows over time, as bachelor's degree recipients eventually catch up, says Schneider.

Although these figures vary widely by profession, associate's degree recipients, on average, end up making about $500,000 more over their careers than people with only high school diplomas, but $500,000 less than people with bachelor's degrees, the Georgetown center calculates.

As for Omer, he's already working toward a bachelor's degree.

"Down the road a little further, I may want to become a director or a manager," he says. "A bachelor's degree will get me to that point."

This story was produced by The Hechinger Report, a nonprofit, nonpartisan education-news outlet based at Teachers College, Columbia University. It's one of a series of reports about workforce development and higher education. To top of page

First Published: February 26, 2013: 6:23 AM ET


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Marijuana dealers get slammed by taxes

Written By limadu on Senin, 25 Februari 2013 | 04.32

Denver Relief, one of the largest marijuana dispensaries in Colorado, has an effective tax rate of around 50%, according to co-owner Kayvan Khalatbari.

NEW YORK (CNNMoney)

The hefty levy is the result of a 1982 provision to the tax code, known as 280E, that stemmed from a successful attempt by a convicted drug trafficker to claim his yacht, weapons and bribes as businesses expenses, according to 280E Reform, a group working to overturn the statute.

Enacted in the wake of that PR debacle, the rule bars those selling illegal substances from deducting related expenses on their federal income taxes.

It may have been effective against cocaine dealers and smugglers of other hard drugs, but the law now means purveyors of medical marijuana in the 18 states that have legalized the drug can't can't take typical things like rent or payroll as a business expense. That's taking a heavy toll on this new field.

"I'd personally love to give my employees a raise," said Kayvan Khalatbari, co-owner of Denver Relief, a medical marijuana center in its namesake city. "But because of the industry we're in, that's not always possible."

Related: Newest government job - expert pothead

Khalatbari said Denver Relief does just over $1 million a year in sales, and that not being able to take some standard business deductions costs him tens of thousands of dollars annually. He estimates his effective federal tax rate is about 50%.

For Denver Relief -- one of the largest marijuana dispensaries in Colorado, with a full-time staff of 15 -- the burden isn't killing the business. But for others, it's been lethal.

Jim Marty, an accountant in Colorado specializing in medicinal marijuana tax law, said he has one client that didn't turn a profit in 2009, 2010 or 2011. In 2012, though, she was handed a $300,000 tax bill from the IRS for those three proceeding years.

Entrepreneurs whose businesses are legal under state laws are getting hammered by outdated federal tax rules.

"If you have a license from the state hanging on your wall, that doesn't fit the definition of trafficking," Marty said. "Yet the IRS is aggressively auditing this industry."

He said he often sees clients facing effective tax bills of 65% to 75%. That compares to 15% to 30% for businesses in general.

The Internal Revenue Service did not respond to a request for comment. In a letter to a congressman in 2011, the agency said it was merely enforcing the law, and that Congress needs to change the law if it does not want medicinal marijuana dealers caught up in the provision.

Several groups are working on just that, though it's unclear if the law will be changed anytime soon. The Obama administration has so far not expressed much interest in weighing in on the matter.

Until then, those in the industry will keep looking for crafty ways to minimize their tax bill, and pay the tax man when they can't.

"An emerging industry that can provide hundreds of thousands of jobs is being held back by these crazy tax rates," said Betty Aldworth, deputy director of the National Cannabis Industry Association. "We're like any other small businesses, that just happens to be illegal in some states." To top of page

First Published: February 25, 2013: 6:09 AM ET


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Adoption tax credit for same-sex couples

Sharon McGowan, left, and her wife Emily expect to receive an adoption tax credit of more than $2,000 after Sharon legally adopted their daughter.

NEW YORK (CNNMoney)

The adoption tax credit grants qualifying taxpayers up to $12,650 per child for qualifying expenses. Opposite-sex married couples can claim it when they adopt a child together, but when one spouse adopts the child of his or her spouse, they don't qualify.

But under the Defense of Marriage Act, same-sex couples aren't recognized as married in the eyes of the federal government and therefore can qualify for the credit when adopting a partner's child, known as a second parent adoption.

Qualifying expenses include legal fees and court costs, which typically run from $1,500 to $2,500, along with a fee of around $1,200 for a home study -- a screening process that entails home checks and interviews. Altogether, second parent adoptions can cost up to $5,000, said Gideon Alper, a Florida adoption attorney who regularly counsels same-sex couples.

Related: Businesses band together to support gay marriage

And since same-sex couples are hurt by the tax code in many other ways -- they can't file jointly and owe estate and gift tax that opposite-sex couples don't, for example -- it's an important credit to know about.

"Same-sex couples face a big disadvantage tax-wise through the rest of the system by not being married [at a federal level], so this is like a saving grace that lets them save a little money," said Alper.

Sharon McGowan, from Takoma Park, Md., went through a second parent adoption late last year, after her wife, Emily, gave birth to their daughter, Sadie.

While Sharon and Emily are married at a state level, the federal government doesn't recognize their union and many other states don't either. So to guarantee Sharon has full parental rights wherever she goes, the couple spent over $2,000 in legal fees and other costs to adopt Sadie.

"I never wanted to have the risk of someone refusing to let me see Sadie in hospital or make medical decisions for Sadie," said Sharon. "I wanted to make sure my relationship with Sadie was airtight."

Related: 'What legalizing gay marriage means for our money'

The couple made sure to complete the adoption before the end of the year so they could qualify for the credit -- which was originally scheduled to expire on Dec. 31, but ended up being permanently extended under the fiscal cliff deal. They're hoping the tax credit this year will cover the adoption expenses they incurred.

The credit is nonrefundable, so it will offset some of their overall tax bill. And the extra money they don't have to put toward taxes this year will go toward Sadie's daycare.

The couple says they are lucky their state even allows second parent adoptions, since some don't. But they don't think the credit should be considered a "benefit," because they wouldn't have had to go through the second parent adoption process and incur those costs at all if their marriage had been federally recognized in the first place.

Along with second parent adoptions, the adoption credit is also available for joint adoptions where neither parent is the birth parent -- and both same-sex and opposite-sex couples can claim the credit in this case. Since same-sex couples can't file their taxes jointly, however, only one partner can claim the credit, or they must each claim a portion of it.

Related: Financial benefits at stake in gay marriage case

If DOMA is overturned, which is a possibility since the Supreme Court is expected to weigh in on the constitutionality of the law for the first time this year, same-sex couples who are married at the state level would also be considered married for federal tax purposes.

This means they would be able to file jointly, but they would no longer receive a credit for a second parent adoption.

It's up in the air whether couples in civil unions or domestic partnerships would still be allowed to take the credit, however. It will depend on whether the federal government's definition of marriage would encompass those relationships, said Patricia Cain, a law professor at Santa Clara University in California.

For Sharon and Emily, the inequities same-sex couples face under DOMA far outweigh the couple thousand dollars they will get that a married couple won't.

"We would be very, very happy to give up the adoption credit to have our marriage recognized," said Sharon. To top of page

First Published: February 25, 2013: 6:28 AM ET


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U.K. vows to stick with austerity

LONDON (CNNMoney)

Moody's cut its rating to Aa1 late Friday, saying growth would remain weak into the second half of the decade, making it harder for the government to deliver on its debt-cutting targets and undermining the ability of the U.K. to withstand future shocks.

"Britain has to stick to the course, and we will," finance minister George Osborne wrote in The Sun newspaper on Sunday.

"For we've had a stark reminder this weekend of the single most important truth about our economy -- Britain has a debt problem, built up over many years, and we have got to deal with it."

Moody's said it expected the U.K.'s debt to peak at 96% of gross domestic product in 2016, up from around 90% today.

A downgrade had been talked about for months, against the backdrop of a deepening recession in Europe and Osborne's acknowledgment late last year that borrowing would remain higher for longer than expected.

But it still served as a reminder of the poor growth prospects for the world's sixth biggest economy, and added fuel to speculation that the Bank of England will have to compensate for the lack of growth -- and the government's hawkish stance on fiscal policy -- by easing monetary policy still further.

Related: Eurozone economy to shrink again in 2013

Investors took the downgrade as another reason to sell sterling, extending a slide which began at the start of the year. The currency dropped 0.1% to its lowest level since July 2010 against the dollar, and 0.6% against the euro to levels last seen in October 2011.

Yields on 10-year government bonds have been rising for about six months and they ticked higher again Monday to 2.1%, still low by historical standards.

The Bank of England has signalled recently that it may be prepared to tolerate above-target inflation for longer, while growth remains weak. Three members of its monetary policy committee -- including outgoing Governor Mervyn King -- voted at its last meeting to expand its bond-buying program.

They were outvoted, but the previous time the committee split 6-3, the bank followed up at its next meeting with more monetary stimulus.

Related: Europe: No retreat from austerity

Osborne said Germany and Canada -- the only big economies still with AAA-ratings from all three major agencies -- had taken advantage of better times before the financial crisis to reduce deficits and make their economies more competitive, while Britain had built up the biggest structural deficit of all.

"Now we have no choice but to continue the hard work of putting our house in order," he wrote. To top of page

First Published: February 25, 2013: 7:23 AM ET


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Judge rules against Apple in Einhorn cash fight

Written By limadu on Minggu, 24 Februari 2013 | 04.32

NEW YORK (CNNMoney)

Einhorn's Greenlight Capital filed a lawsuit earlier this month seeking to "unbundle" a number of shareholder proposals that would have been voted on as a group, including one that would have made it difficult for the company to issue preferred stock. The vote on this, known as Proposal No. 2, was scheduled to be voted on at Apple's annual shareholder meeting on February 27.

Judge Richard Sullivan of the Southern District of New York ruled that bundling four different items in one proposal violates Securities and Exchange Commission regulations.

"Given the disparate, material nature of the items in Proposal No. 2, it is probable that Apple has improperly bundled four 'separate matters' for a single vote," the ruling states.

Apple (AAPL, Fortune 500)shares rose 1% on Friday. News of the ruling came just a few minutes before the market closed.

Einhorn has launched an activist campaign to get Apple to unlock some of its $137 billion in cash by issuing preferred stock, or iPrefs, as he calls them. He argues that allowing the cash to sit idle on Apple's balance sheet is bad for the company and its shareholders.

A spokesman for Greenlight said that the ruling "is a significant win for all Apple shareholders and for good corporate governance" and added that "we look forward to Apple's evaluation of our iPref idea and we encourage fellow shareholders to urge Apple to unlock the significant value residing on its balance sheet."

Related: Einhorn takes aim at Apple's cash hoard

But another big Apple shareholder was not pleased with the judge's ruling.

California's powerful pension fund, CalPERS, supported Apple's proposal, which it said would give shareholders more voting power over the issuance of Apple stock.

"We encourage Apple to reintroduce these measures as soon as is practical so that all investors can be heard," said Anne Simpson, a CalPERS senior portfolio manager and director of global governance. "We applaud the company's commitment to strengthening shareholder rights."

Apple has said it is reviewing Einhorn's proposal, but CEO Tim Cook has called the lawsuit a "silly sideshow."

Spokespeople for Apple could not immediately be reached for comment. To top of page

First Published: February 22, 2013: 5:01 PM ET


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Moody's downgrades United Kingdom from AAA

God save the AAA rating.

NEW YORK (CNNMoney)

The U.K. was knocked down one notch to Aa1, with its ratings outlook at stable. Moody's said the key drivers of the downgrade included the country's rising debt burden and tepid growth outlook over the next few years.

"[A]lthough the U.K.'s debt-servicing capacity remains very strong and very capable of withstanding further adverse economic and financial shocks, it does not at present possess the extraordinary resilience common to other AAA-rated issuers," Moody's said.

The U.K. had held AAA status since Moody's first began rating the country in 1978.

In December, the U.K.'s budget monitor projected that the country's economy would grow by just 1.3% this year. The government has been pushing a much-criticized austerity program, and finance minister George Osbourne said he remained committed to those efforts, even after the downgrade.

"This is a stark reminder of the debt problems that Britain faces and the clearest possible warning to anyone who thinks we can run away from dealing with those problems," he said. "Far from weakening our resolve to deal with our debts, this should redouble our resolve."

Related: U.K. risks new recession

The British government has said its belt-tightening will have to continue until 2018.

In announcing the downgrade, Moody's said it expects the U.K.'s debt to peak at 96% of GDP in 2016, up from around 90% today.

A year ago, Moody's switched the outlook on the U.K.'s AAA rating to negative, in a prelude to Friday's downgrade. At the same time, the firm cut the ratings of half a dozen European countries.

The other major rating agencies, Fitch and Standard & Poor's, still have the U.K. rated AAA, though with negative outlooks.

Elsewhere in Europe, France lost its AAA rating from Moody's in November, after a similar downgrade from S&P in January.

The United States maintains its AAA rating from Moody's and Fitch, though it was downgraded by S&P in August 2011 following the debt ceiling standoff in Washington.

Steven Englander, a foreign exchange strategist with Citigroup (C, Fortune 500), said in a research note following the downgrade that the move was unlikely to raise borrowing costs for the U.K., as bond yields in the United States, France and Japan had remained stable following similar downgrades. But it increases pressure on the country to pursue growth by weakening the pound, he added.

"[W]hile by itself the announcement merely accelerates what was expected to happen at some point, the need for weakness [in the British pound] will become more apparent to policymakers and investors," Englander said.

Among Europe's other major economies, Germany, Switzerland and the Netherlands maintain their AAA ratings from Moody's. France sits at Aa1, while Italy is down at Baa2 with Spain at Baa3. To top of page

First Published: February 22, 2013: 5:01 PM ET


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Samsung stuffs a phone in new Galaxy Note 8.0 tablet

NEW YORK (CNNMoney)

It runs Android 4.1, has a 1.6 GHz quad-core CPU, 2 gigabytes of RAM, and an 8-inch, 1280 x 800 display that you can control with Samsung's S-Pen stylus. But on the international version of the device, there's something quite strange lurking near the top.
Yes, it's an earpiece. Yes, it's meant for you to make calls. Yes, Samsung expects you to hold an 8-inch tablet up to your face.

Samsung expects you to hold an 8-inch tablet up to your face.

The decision to imbue an 8-inch tablet with a phone very much seems like a reaction to the success of Samsung's Galaxy Note phones, which checked in at 5.3 and 5.5-inches, opening up some of the functionality of tablets. (Ugh, phablets).

I joked before about the day when we'd see a 7-inch phone. Turns out we got an 8-inch one sooner than we thought. But it is worth mentioning that it's undecided if a phone-enabled version of the Galaxy Note 8.0 will see the light of day in the U.S.

The device itself is suitably thin and light (more or less comparable to the iPad mini, it's closest known competition), and is responsive enough for most tasks. The stylus works pretty well, introducing a new feature that lets you activate preview panes of apps such as email and Flipboard, without ever touching the the screen (instead, you hover above the area you want to preview).

Related: Samsung overtakes Apple in 'smart connected devices'

But aside from the stylus, it also has a couple of tricks the iPad Mini does not. For starters, It has an IR remote which lets you enter the codes for most television sets and control your TV with your tablet, much like you would with any other remote. But sweetening the deal is the use of the media guide software from Peel Technologies, allowing you to seek out and directly jump to specific shows and movies without resorting to the channel up/down buttons.

It also supports a dual-window mode, where you can run two apps side by side, and without the loss of functionality. For now it only works with a handful of optimized apps, but includes a calendar app, a note-taking app, Chrome, Gmail, YouTube and more (adding up to more than 20 in all).

And while it's expected to arrive sometime in the next few months, there was not so much as a whisper about price. Judging from the year-old guts inside the Galaxy Note 8.0, it's possible Samsung made the necessary moves to offer it at a mainstream price point. If it falls anywhere under the $330 price tag of Apple's iPad Mini, it might just have what it takes to steal some of Cupertino's thunder.

But why...why does it have to have a built-in phone? To top of page

First Published: February 23, 2013: 9:57 PM ET


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Fed officials: Don't worry if we lose money

Written By limadu on Sabtu, 23 Februari 2013 | 04.32

NEW YORK (CNNMoney)

But that's okay, Fed officials say.

After years of record profits, the Fed is likely to be saddled with losses starting in 2017 or 2018, economists predict in a paper that was presented Friday at the U.S. Monetary Policy Forum, a New York conference organized by the University of Chicago Booth School of Business.

Here's the scenario they think will play out: As the economy improves, the Fed will eventually tighten monetary policy. The central bank will stop buying mortgage-backed securities and Treasuries by the end of this year, they believe, and start raising interest rates in 2015.

Eventually, the Fed will have to start selling off the massive collection of bonds it acquired in its stimulus efforts.

And when that time comes, even the Fed admits that it will probably incur losses.

Inside the Fed's finances

Unlike most government agencies, the Federal Reserve funds itself. Its expenses are not paid for in by U.S. federal budget.

Each year after paying its own bills, the central bank hands over all its remaining profit to the Treasury Department. Most of the money comes from interest earned on holdings like Treasury bonds and other debt.

Those payments have ballooned in recent years. The Fed is earning huge profits from the large bond portfolio it amassed (and continues to amass) during its stimulus efforts.

In the decade preceding the Great Recession, the Fed paid out an average of $25 billion a year to the Treasury. In the last three years, its remittances have averaged $81 billion.

Based on those numbers, you could call the Fed the most profitable bank in the world. It's generating more income than America's top five banks -- JPMorgan Chase (JPM, Fortune 500), Wells Fargo (WFC, Fortune 500), Bank of America (BAC, Fortune 500), Citigroup (C, Fortune 500) and Goldman Sachs (GS, Fortune 500) -- combined.

Once the economy improves to its liking -- which could still be years away -- the Fed will have to start shrinking its portfolio, to ward off rapid inflation.

As the economy gets better, the Fed will raise interest rates. At the same time, bond prices will probably fall as the Fed sells off massive amounts of them.

That means the central bank is likely to lose money.

That's not necessarily a problem. A relatively new accounting rule would allow the Fed to pay for its operations and make interest payments basically on credit, deferring its losses and paying them off later in profitable years.

The situation could easily become a public relations nightmare, though -- especially in the current political environment.

"We're in a period where the attacks on the Federal Reserve system are the worst I've seen in 40 years," said Frederic Mishkin, a former Fed governor who is now a professor at Columbia University.

"In any year where the Fed is not giving remittances back to the Treasury, this is going to come up big time in Congress," he added.

St. Louis Fed President James Bullard also calls it a "recipe for political problems." During the same period that the Fed will incur losses, the government will be paying billions of dollars in interest to foreign governments.

The Fed seems to be trying to get ahead of the PR blow-up.

The central bank put out a research paper on the topic last month, and minutes released earlier this week show the issue was discussed at the Fed's January meeting.

Since then, several officials have spoken about it quite openly.

"There is a chance that we could go through a period of time in which our income falls, and we could even take losses," said Janet Yellen, vice-chair of the Federal Reserve Board, in a speech last week.

Her colleague Jerome Powell, a Fed governor, reiterated that point Friday.

Some Fed watchers expect Fed Chairman Ben Bernanke to discuss the topic when he speaks before Congress next week in his semi-annual testimony.

He's stuck in a "damned if you do, damned if you don't" position. If the economy improves, great -- but when it does, the Fed has big losses and a PR crisis to look forward to. To top of page

First Published: February 22, 2013: 2:27 PM ET


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Judge rules against Apple in Einhorn cash fight

NEW YORK (CNNMoney)

Einhorn's Greenlight Capital filed a lawsuit earlier this month seeking to "unbundle" a number of shareholder proposals that would have been voted on as a group, including one that would have made it difficult for the company to issue preferred stock. The vote on this, known as Proposal No. 2, was scheduled to be voted on at Apple's annual shareholder meeting on February 27.

Judge Richard Sullivan of the Southern District of New York ruled that bundling four different items in one proposal violates Securities and Exchange Commission regulations.

"Given the disparate, material nature of the items in Proposal No. 2, it is probable that Apple has improperly bundled four 'separate matters' for a single vote," the ruling states.

Apple (AAPL, Fortune 500)shares rose 1% on Friday. News of the ruling came just a few minutes before the market closed.

Einhorn has launched an activist campaign to get Apple to unlock some of its $137 billion in cash by issuing preferred stock, or iPrefs, as he calls them. He argues that allowing the cash to sit idle on Apple's balance sheet is bad for the company and its shareholders.

A spokesman for Greenlight said that the ruling "is a significant win for all Apple shareholders and for good corporate governance" and added that "we look forward to Apple's evaluation of our iPref idea and we encourage fellow shareholders to urge Apple to unlock the significant value residing on its balance sheet."

Related: Einhorn takes aim at Apple's cash hoard

But another big Apple shareholder was not pleased with the judge's ruling.

California's powerful pension fund, CalPERS, supported Apple's proposal, which it said would give shareholders more voting power over the issuance of Apple stock.

"We encourage Apple to reintroduce these measures as soon as is practical so that all investors can be heard," said Anne Simpson, a CalPERS senior portfolio manager and director of global governance. "We applaud the company's commitment to strengthening shareholder rights."

Apple has said it is reviewing Einhorn's proposal, but CEO Tim Cook has called the lawsuit a "silly sideshow."

Spokespeople for Apple could not immediately be reached for comment. To top of page

First Published: February 22, 2013: 5:01 PM ET


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Moody's downgrades United Kingdom from AAA

God save the AAA rating.

NEW YORK (CNNMoney)

The U.K. was knocked down one notch to Aa1, with its ratings outlook at stable. Moody's said the key drivers of the downgrade included the country's rising debt burden and tepid growth outlook over the next few years.

"[A]lthough the U.K.'s debt-servicing capacity remains very strong and very capable of withstanding further adverse economic and financial shocks, it does not at present possess the extraordinary resilience common to other AAA-rated issuers," Moody's said.

The U.K. had held AAA status since Moody's first began rating the country in 1978.

In December, the U.K.'s budget monitor projected that the country's economy would grow by just 1.3% this year. The government has been pushing a much-criticized austerity program, and finance minister George Osbourne said he remained committed to those efforts, even after the downgrade.

"This is a stark reminder of the debt problems that Britain faces and the clearest possible warning to anyone who thinks we can run away from dealing with those problems," he said. "Far from weakening our resolve to deal with our debts, this should redouble our resolve."

Related: U.K. risks new recession

The British government has said its belt-tightening will have to continue until 2018.

In announcing the downgrade, Moody's said it expects the U.K.'s debt to peak at 96% of GDP in 2016, up from around 90% today.

A year ago, Moody's switched the outlook on the U.K.'s AAA rating to negative, in a prelude to Friday's downgrade. At the same time, the firm cut the ratings of half a dozen European countries.

The other major rating agencies, Fitch and Standard & Poor's, still have the U.K. rated AAA, though with negative outlooks.

Elsewhere in Europe, France lost its AAA rating from Moody's in November, after a similar downgrade from S&P in January.

The United States maintains its AAA rating from Moody's and Fitch, though it was downgraded by S&P in August 2011 following the debt ceiling standoff in Washington.

Steven Englander, a foreign exchange strategist with Citigroup (C, Fortune 500), said in a research note following the downgrade that the move was unlikely to raise borrowing costs for the U.K., as bond yields in the United States, France and Japan had remained stable following similar downgrades. But it increases pressure on the country to pursue growth by weakening the pound, he added.

"[W]hile by itself the announcement merely accelerates what was expected to happen at some point, the need for weakness [in the British pound] will become more apparent to policymakers and investors," Englander said.

Among Europe's other major economies, Germany, Switzerland and the Netherlands maintain their AAA ratings from Moody's. France sits at Aa1, while Italy is down at Baa2 with Spain at Baa3. To top of page

First Published: February 22, 2013: 5:01 PM ET


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Transgender job seekers face uphill battle

Written By limadu on Jumat, 22 Februari 2013 | 04.32

NEW YORK (CNNMoney)

She has applied for almost 100 jobs and has gone on close to 20 interviews, but there have been no offers. No one says they aren't hiring her because she's transgender. But some employers tell her the job has been filled even though she continues to see postings for it online. Others have "laughed in my face."

"With as many non-trans people out of work as there are, it seems almost no one is going to hire a trans woman when there's another choice," said Juro, who lives at home with her mom as she job hunts.

Transgender is a term used for people who identify as a different gender from the one they were given at birth. Some undergo surgery or take hormones to change their bodies.

And as millions of Americans struggle with unemployment, this community is being hit especially hard.

Related: Transgender financial struggles: 'How we get by'

It's hard to pin down a precise jobless rate since there's so little transgender-specific data available. The most recent comprehensive study of more than 6,000 transgender individuals was released in 2011 by the National Center for Transgender Equality. This report found the transgender jobless rate to be 14% -- double the national rate -- and as high as 28% for black respondents. And a recent online Prudential survey of 49 transgender individuals had similar findings.

Keisha Allen, a black, 45-year-old transgender woman, has been working as a prostitute since her mother kicked her out of the house at age 16 for being transgender. She makes less than $12,000 a year and lives at a homeless shelter, where she is forced to stay in the men's section. She has applied for hundreds of entry-level jobs that don't require a college degree -- from dishwashers to cashiers -- without making it past the first interview.

"Once I get to the interview and my name doesn't match my ID and my body doesn't match what it says on my ID, I never hear back," said Allen. "My only way of survival is through sex."

Even those who find jobs often end up taking significant pay cuts, said Lisa Mottet, director of the National Gay and Lesbian Task Force's Transgender Civil Rights Project.

Jennifer Chavez, 55, has 40 years of experience in the auto industry but said she was terminated from her job as a mechanic just two months after telling her boss she planned to transition from male to female. Upon finding out about her transition, she said co-workers stopped talking to her and her boss even told her an applicant had turned down a job because of her. Soon, word about her transition spread.

Related: I'm unemployed and hopeless

"[P]rior to my transition, getting a job was nothing," said Chavez. "After my transition, a huge segment of Atlanta in the auto service world knew about me, so I was blackballed from all the auto dealerships."

More than 300 applications later, she landed a full-time, commission-based technician job at Pep Boys, where her potential annual earnings are around $35,000 -- half of what she previously made. As a result, she has barely been able to hold on to her home.

Many transgender individuals aren't able to afford a home at all. Homelessness among this group is estimated to be double the national rate, according to the NCTE study. Respondents were also nearly four times more likely to have annual household incomes of less than $10,000, and 16% said they resorted to sex work or drug dealing for income -- a percentage that nearly doubled for the unemployed and skyrocketed to 53% for black respondents.

Medical bills can also be a problem. Tim Chevalier, a 32-year-old transsexual man from California, has a high-paying job as a software engineer at Mozilla. But he's still struggling to make ends meet after racking up $50,000 in medical bills from his reconstructive surgery and related medical costs that insurance wouldn't cover.

Help for the unemployed

A growing number of programs are being launched to help the transgender community.

The LGBT Community Center in San Francisco assists transgender job seekers with decisions like which name to include on a resume -- the one from their previous sex or their new name -- whether to bring up their transition to a potential employer or to come out to past employers in case they are called as a reference.

It also started offering a computer coding class late last year -- a skill in high demand. The first class of 15 people is in its second semester, and the center will try to connect them with companies in the area like Twitter and Google upon graduation.

The Chicago House, a facility for people with HIV/AIDS in Chicago, is launching transgender-specific housing and a four-week employment program offering job search advice, career counseling and even help with makeup and clothing before job interviews.

Programs like this are especially important in the aftermath of the economic downturn, since transgender people were often the first to be laid off and last to be hired, said Mottet.

But a federal law protecting transgender workers remains crucial to getting to the root of the unemployment problem, advocacy groups say. And there's growing optimism it could happen, with state anti-discrimination laws that specifically protect transgender employees now covering 45% of the population -- up from 5% about 10 years ago.

Related: Heroes helping others find jobs

Even so, it's often hard to prove a discrimination case.

In one of the biggest recent victories, Vandy Beth Glenn sued the Georgia General Assembly for firing her immediately after she told her boss that she planned to transition from male to female. A federal appeals court based in Atlanta ruled that treating her differently due to her gender identity violated the Constitution's Equal Protection clause. Glenn was given back her job editing proposed state legislation, and the court even went on to rule that public and private employers can't fire transgender workers because of their gender identity, said Greg Nevins, an attorney at Lambda Legal who represented Glenn.

"Once [employers] are aware of what is prohibited, I think it will get rid of a lot of the barriers to transgender individuals having the right to earn a living and be part of the workforce," said Nevins. To top of page

Are you transgender and struggling to make ends meet? Or do you have a success story you want to share? E-mail blake.ellis@turner.com.

First Published: February 22, 2013: 7:06 AM ET


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Behind Facebook's tax bill

NEW YORK (CNNMoney)

Tax experts say that could possibly be true -- and if so, it's perfectly legal -- but it's only part of the story. At issue is a sizable tax deduction from stock options that Facebook issued to its employees.

Stock options, like regular cash salaries, are tax-deductible for companies. Companies can use those deductions to offset their profits, and apply those losses to previous years, too. That's how a company could even be eligible for a refund in a year when it made money.

Citizens for Tax Justice, the advocacy group, says Facebook (FB) will receive a tax refund of nearly $430 million as a result of those options.

Facebook said in an e-mail that the company believes "in paying our fair share, and we do pay our fair share."

Related: Do the math - Facebook stock is not a buy

Independent tax experts say CTJ isn't wrong, exactly, but that the group doesn't tell the whole story. They say CTJ is mixing together tax law and corporate accounting policies, which sometimes follow different sets of rules.

"[CTJ] is talking about apples and oranges ... by mixing up two sets of rules, it's easy to give misleading information," said Stan Pollock, a San Francisco CPA who specializes in stock-options planning.

A company could, for example, properly follow accounting rules that show the income impact of issuing stock options, but the IRS requires different rules for computing the tax bill.

In fact, companies can be profitable on an accounting basis and be unprofitable for tax purposes -- and both are correct under the different rules.

As far as the check Facebook or any company gives to or receives from the IRS, Pollock said that's another swampy issue. "Tax returns are private," Pollock said. "Companies give numbers in their financial statements that aren't necessarily the true tax numbers as far as the IRS is concerned."

Another expert pointed out that even if Facebook gets an income tax refund, it doesn't mean the tax revenue is simply lost. Employees who cash in their stock options pay taxes on them, often at higher rates than a corporation would pay.

"Some people have a hard time recognizing both sides of it," said Dan Morris, a senior partner at San Jose CPA firm Morris and D'Angelo. "Where Facebook is taking a deduction, a person is counting that as income. U.S. taxpayers absolutely did not get the shaft here."

Yet stock option tax deductions remain controversial -- particularly for newly public companies like Facebook.

When a company issues a stock option, it gives an employee the right to buy shares in the future at today's "fair value" price. The company accounts for that value on its books at the time the option is issued, but it can't take the tax deductions until the employee exercises his or her option -- sometimes years later.

Plus, it's no easy feat to determine the fair value of stock for a company that isn't yet public.

"You might as well have a crystal ball and someone with a shawl over their head taking a guess," Morris said.

CTJ's report claims that "because companies typically low-ball the estimated values, they usually end up with bigger tax deductions."

The advocacy group isn't the only group making a stink about this tax provision. Sen. Carl Levin (D-Mich.) has proposed legislation that would require companies to take the deduction when the options are given. To top of page

First Published: February 22, 2013: 7:12 AM ET


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$19.9M Atlanta mansion offers lush Hollywood life

NEW YORK (CNNMoney)

This 40,000 square-foot, Mediterranean-style mansion was custom built in 2008 and sits on one of the area's most prestigious roads in Tuxedo Park , according to Mark Bhaggan of Atlanta Fine Homes, Sotheby's International Realty. The nine-bedroom home is directly across the street from the Governor's Mansion, but it also has its own claim to fame.

It was Bill Murray's home in "Zombieland" and featured in the 2012 movie, "The Three Stooges." It has also played a prominent role in reality series like MTV's "Teen Cribs" and "Million Dollar Rooms" on HGTV and it will also be featured in the upcoming "Devious Maids."

The interior of the home features hand laid mosaics and 24-karat gilded ceilings throughout. The owner brought artisans in from Europe to hand lay more than $1 million worth of stonework around the Olympic-sized pool, said Bhaggan.

Related: First look at the world's largest yacht

The terrace level surrounding the one-acre courtyard also includes a steam room and a recording studio. On the main level, you'll find a home theater with seating for 16, and a cigar bar.

The home is currently listed for $19.9 million, down from its original $25 million price tag almost three years ago. Bhaggan said there has been considerable interest in the home, ranging from serious buyers to curious folks who simply want to see the most expensive home for sale in Atlanta.

Related videos:

$9.6M home has a runway for tiny airplanes

Tour Coach designer's luxe NYC townhouse

Russian tycoon buys his own 'Downton Abbey' To top of page

First Published: February 22, 2013: 7:21 AM ET


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France may prolong eurozone recession

Written By limadu on Kamis, 21 Februari 2013 | 04.32

LONDON (CNNMoney)

A survey of 5,000 companies in manufacturing and services showed eurozone output fell to a two-month low in February. The Purchasing Managers' Index flash estimate fell to 47.3, from 48.6 in January, as the decline in French output hit a near four-year low.

"A steepening rate of decline in February is a disappointment, and suggests that the eurozone is on course to contract for a fourth consecutive quarter," said Chris Williamson, chief economist at PMI compiler Markit.

The survey readings point to a contraction of 0.2% to 0.3% in eurozone gross domestic product for the first quarter of 2013, after a 0.6% drop in the final quarter of last year, Williamson said.

The French economy, second only in size to Germany in the 17-nation eurozone, stagnated through the course of 2012. Foreign Minister Laurent Fabius said in a radio interview this week that France was preparing to cut its growth forecast for 2013 to between 0.2% and 0.3%, down from 0.8%.

Related: Europe's recession deepens as exports suffer

Markit economist Jack Kennedy said France's performance in the first quarter of 2013 was shaping up to be the worst since the same period in 2009.

"The broad-based weakness across manufacturing and services leaves scant room for optimism, with a range of indicators from new orders, backlogs, employment and output prices all residing at depressed levels," he said.

Germany, by contrast, saw a further improvement in business activity in February for a third month running, although the pace of expansion slowed slightly.

Markit said the gap in performance between the eurozone's leading economies was at its widest since surveys began in 1998. France was beginning to look like it belonged to the group of economies on the eurozone periphery, rather than the core, it said.

Related: Europe's central banks stand firm

The European Central Bank has pointed to recent improvements in survey data as one sign that the eurozone economy should recover later this year but with inflation in Germany and France falling quickly and a strong euro making it harder for exporters, the bank may be forced to relax policy still further.

The euro fell nearly 1% Wednesday. to a six-week low against the dollar, in response to the fading prospects for recovery and signs that the Federal Reserve is considering pulling back monetary stimulus.

To top of page

First Published: February 21, 2013: 6:55 AM ET


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7 spending cuts you'll really feel

Americans will feel the impact of federal budget cuts through fewer federal food inspectors, meals for seniors, preschool teachers and hurricane repairs.

WASHINGTON (CNNMoney)

Some of the hardest hit would be 2.1 million federal workers who could be spending up to 22 business days at home without pay on a furlough.

The impact of federal food inspectors, park rangers, airport traffic controllers and security personnel staying away from work would be felt by many more Americans.

An important caveat: Congress still has time to avert the spending cuts, and if they do take affect they aren't expected to take effect right away. Experts expect agencies to do all they can to delay the start of furloughs, in some cases by several months.

But if they happen, these seven cuts will be really felt by many Americans.

1. Shrinking unemployment benefits. Some 3.8 million Americans estimated to collect unemployment checks between March and September will feel the pain the most. That's because unemployment benefit checks are being pared by 9.4%. On average, it would mean a cut of $400 over that period.

2. Beef and chicken to cost more and even face a shortage. A $51 million dollar cut to food safety programs means food inspectors will be furloughed and lead to closures of meat and poultry plants for up to 15 days. Americans will have to pay more and deal with shortages of chicken, eggs, pork and beef, according to U.S. Department of Agriculture Secretary Tom Vilsack. "Food safety could be compromised," he said in a letter. There will have less food available -- by as much as 2 billion pounds of meat, 3 billion pounds of chicken, 200 million pounds of eggs.

3. Granny won't get her lunch. More than 4 million home-bound and disabled seniors may have to go without supper this year because of cuts to Meals on Wheels programs. Just in Erie County, New York, it could mean 36,000 fewer meals will be delivered, according to the Meals On Wheels Association of America.

4. Your preschooler could be stuck at home. Some 70,000 children from lower income families will not be able to enroll for pre-schools and daycare centers run by Head Start programs this fall, thanks to at least $400 million in cuts.

5. National parks will close campgrounds or open late. The National Park Service will lose $110 million from its annual budget. The Great Smoky Mountains National Park in North Carolina and Tennessee plans to close five campgrounds and picnic areas affecting over 54,000 visitors. Two of the main thoroughfares into the Grand Canyon will remain closed until later this year, including the popular West Rim Drive, known for its breathtaking beauty. The delays will affect about 250,000 visitors.

6. Longer lines at the airport. Domestic travelers can add an extra hour to airport security lines, while international travelers may have to wait four hours to clear customs. That's because federal agencies that handle airport security and customs are warning that worker furloughs will increase the time it takes to check passengers.

7. Roofs blown off by Hurricane Sandy won't get repaired. About $3 billion has been cut from a supplemental bill for Hurricane Sandy victims. The cut includes "crucial funding" for repair and recovery of some 10,000 homes and small businesses, said HUD Secretary Shaun Donavan last week. To top of page

First Published: February 21, 2013: 6:18 AM ET


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Are you financially secure? 8 questions to ask

Keep your financial future above water. Save 15% of you income annually.

(Money Magazine)

You know you need a plan to handle the unknowable twists of fate -- and the impact they'll have on your bank balance.

Yet even if you think you've accounted for every possible contingency, says Karin Stifler, a financial planner in Hudson, Ohio, it's likely that you're relying on some outdated advice or overly general rules of thumb.

Have you charted the right path to financial security?

Test your knowledge with these questions. Chances are, you'll learn something that will help take your future from solid to impregnable.

1. I have at least six months of expenses in an emergency fund. How many of my fellow Americans can say the same?
.........................................................................................................................................................................................................

A. 15%
B. 45%
C. 85%
.........................................................................................................................................................................................................

ANSWER: B.

According to Bankrate.com, more than half of Americans haven't earmarked a six-month pot of money to tide them over if they lose their job or face another unexpected financial blow. That may sound risky, says Eleanor Blayney, a Washington, D.C., certified financial planner, but many people can use a different benchmark.

If you're in a high-demand profession (think programmer, pharmacist, or engineer), you're fine with a three-month cushion.

Related: Emergency funds: Risk versus returns

Same goes for retirees collecting a pension and Social Security. But if you work in an unstable industry -- or if you're 50 or older, which adds three months to the average time it takes to find a new job -- you need up to a year's expenses.

2. If I save 10% of my income every year and retire at 65, the likelihood my money will last until I hit 95 is:

...............................................................................................................................................................................................................
A. 40%
B. 75%
C. 95%, unless I develop a taste for Rolex watches and Fabergé eggs
................................................................................................................................................................................................................

ANSWER: A.

Saving at least 10% of your income (not including your company match) puts you ahead of the typical 401(k) participant, who contributes 8%, according to Fidelity Investments.

For your nest egg to reach the finish line, though, better than average isn't enough. Bump savings to 15% of income -- again, not counting any match -- and the likelihood that your funds will last until you turn 95 increases to 83%, says Stifler. Can you sock away 20%? If so, your chances hit 94%.

Related: Top stock picks from top pros

To get a better idea of whether your savings are on track, plug your assets and expected income (such as Social Security payouts) into the T. Rowe Price Retirement Income Calculator at troweprice.com.

3. Chances are, I'll keep working -- and pulling a paycheck - until I'm:

..................................................................................................................................................................................................................

A. 62
B. 65
C. 72
D. Six feet under
....................................................................................................................................................................................................................

ANSWER: A.

While 37% of workers think they'll call it quits after age 65, the fact is the median age of retirement is holding at 62, according to the Employee Benefit Research Institute.

What accounts for the gap between expectation and reality? Health problems are the biggest factor, says EBRI, but more than 30% of people say they had to retire because they were laid off or no longer had the skills to keep a job.

To increase job security, build a "career fund" into your plan, says Rapid City, S.D., financial planner Rick Kahler. Put away a couple hundred bucks a year to fund professional memberships, classes, certifications -- anything that will keep you on top of your job.

4. My debt payments shouldn't eat up more than this percentage of my income:

........................................................................................................................................................................................................................

A. Trick question. Any debt is too much.
B. 21%
C. 30%
D. 36%
.........................................................................................................................................................................................................................

ANSWER: C.

Banks will typically turn you down for a loan when those payments exceed 36% of your income. Financial planners, though, are generally more conservative, suggesting a debt-to-income ratio of about 30%.

Most of what you owe should be "good" debt that provides a return on investment.

What qualifies? A low-rate mortgage, for example, which allows you to purchase an asset that may appreciate, or a loan that enables you to go back to school and boost earnings.

Minimizing debt will get you better terms on mortgages, loans, and credit cards, says Stifler. If you're above the 30% mark, start to cut spending now. Use the extra funds to ramp up payments on your highest-interest debt.

5. I contribute just enough to my 401(k) to get a full match. I recently got a raise. What's the best thing to do with this new money?

...............................................................................................................................................................................................................................

A. Put it in my 401(k).
B. Open a Roth IRA.
C. Buy lottery tickets.
................................................................................................................................................................................................................................

ANSWER: A or B.

If it's still early in your career, check out a Roth. These accounts require you to pay taxes on contributions but allow tax-free withdrawals, making them a good fit for anyone who's paying a lower tax rate now than they will in retirement.

Related: Virtues of the 401(k)

Already in a high bracket? Stick with the 401(k). The same goes for everyone with a tendency to slack off on managing their account. After all, contributing to your 401(k) is practically automatic, while you must remember to fund your Roth.

6. If my life insurance would replace eight to 10 times my salary, I'm all set.

..................................................................................................................................................................................................................................

A. True
B. False
....................................................................................................................................................................................................................................

ANSWER: B.

Okay, it may be true for some, but you still need to tailor that number to your circumstances, says Kahler.

Do you have dependents -- particularly young children -- or are you the only wage earner in your household? You may need more (up to 20 times your salary in extreme cases).

If you're retired or part of a kid-free, two-earner family, you can make do with far less. To get a personalized estimate, see the calculator at lifehappens.org.

7. If my spouse and I are typical, how much should we plan to spend out of pocket on health care in retirement?

....................................................................................................................................................................................................................................

A. $0. That's what Medicare is for.
B. $177,000
C. $240,000
D. $433,000
.......................................................................................................................................................................................................................................

ANSWER: C.

According to Fidelity Investments, today's average 65-year-old couple will need $240,000 to pay out-of-pocket health care costs in retirement, not including long-term care.

Yet in a Wells Fargo survey of people with $250,000 or more in investable assets, 75% guessed that they would need only $60,000.

If you're already maxing out your 401(k) or IRA, Stifler suggests creating a designated account for health care costs. Separating health savings from other retirement funds will help you keep track of whether you're hitting your goal.

8. I need a will, of course, but I should also look into setting up a trust if I...

........................................................................................................................................................................................................................................

A. Am filthy rich.
B. Want to keep my money out of the tax man's hands.
C. Plan to remarry and want to make sure my new spouse doesn't shortchange my children.
D. Have a spendthrift son who's in debt, and I don't want his creditors to get a bite of my assets.
..............................................................................................................................................................................................................................................

ANSWER: All of the above.

You don't need to be loaded to benefit from a trust, says Ann-Margaret Carrozza, a New York City estate-planning and elder-law attorney.

Related: What's the best use of tax-deferred plans?

Irrevocable trusts, which may be changed only by the trustee and beneficiaries, can reduce estate taxes and help protect assets from creditors and lawsuits. They also allow you to specify how your assets will be distributed, should you, say, prefer to dish out the kids' inheritance slowly rather than in a lump.

Interested? Setting up a trust will cost you at least $1,200. To top of page

First Published: February 21, 2013: 7:09 AM ET


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