Daily Bullets……for September 8, 2014

·         New Harvard survey is troubling……Article in link below discusses results of a recent survey of corporate executives who are Harvard Business School alumni, pertaining to future hiring trends and  trends in worker pay and benefits. The picture is not a happy one as over 40% of the executives surveyed expect lower pay and benefits for workers and roughly half favor outsourcing over hiring. The survey found that many companies are reluctant to add jobs if other alternative exist.

What’s the point? The results of the survey are troubling for both younger workers and for the economy overall. The implications of this, if in fact they can be extrapolated to the greater economy, are negative for personal income, savings, and consumer discretionary spending, all of which implies continued below average economic growth, low inflation, continued low interest rates, and continuation of the substitution of capital for labor, which has contributed the slowness of the current economic recovery. This would also imply a continuation of the current environment for financial assets: bonds treading water with stocks continuing to slowly grind higher, remaining attractive because of their ability to “capture” growth (through higher sales) and translating that into growing cash flows and dividends. Mediocre economic growth does not portend a robust stock environment but one in which valuations will most likely continue to edge upward along with moderate (8-10%) earnings growth.

Link: http://money.msn.com/business-news/article.aspx?feed=AP&date=20140908&id=17911988

·         Cutting health costs…..The article in link below is a good summary of several strategies people in or nearing retirement can take to reduce health care costs.

What’s the point? As financial planners, the topic of health care costs comes up frequently in dealing with clients who are currently in or nearing retirement. For many of them, health and long-term care costs can be their highest single expense and, in certain cases, can make or break a retirement. Some or the recommendations we believe are worth considering are 1) starting and contributing to an HSA and funding it to the maximum extent possible each year ($7550 for a family in which owner is over 55). Funds in an HSA can also be used tax-free to pay for Medicare parts B and D during retirement. 2) If you cannot do an HSA (you need a high-deductible health plan policy), another (less attractive) option is flexible spending account (FSA) set up through your employer. Up to $2500 per year can be contributed on a pretax (i.e. tax-free) basis and can be used to pay out-of-pocket medical expenses throughout the year, in addition to other options that might be available through the FSA, such as reimbursment for mass transit commuting expenses.

Link: http://money.msn.com/health-and-life-insurance/11-tax-smart-ways-to-cut-health-costs