https://www.cnn.com/2019/09/09/business/ba-british-airways-strike-intl-hnk/index.html
2019-09-09 07:41:00Z
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Many younger workers put off saving for retirement so they can focus on goals like paying off their student debt or buying a home. But if you've reached your 50s and have no money at all in a dedicated retirement savings plan, consider it a wake-up call to start doing better. Here are three critical moves to make if that's the situation you're in.
If you're without retirement savings, chances are it's because you're in the habit of spending your entire paycheck. Getting on a serious budget and making lifestyle adjustments could therefore be your ticket to carving out some money for your nest egg and salvaging your retirement in the process.
Once you have your budget set up, comb through it to see where your money is going, and commit to making a few major changes that free up cash. That could mean downsizing to a smaller home, going car-less if there's low-cost public transportation where you live, or eating at home rather than dining out three or four times a week. Smaller changes, like downgrading your cable plan, will help, too, but if you're without retirement savings at all, you'll need to think big to make a difference.
The good thing about being in your 50s is that you're allowed to contribute more to a 401(k) or IRA than younger folks. Currently, workers 50 and older can put up to $25,000 a year into a 401(k) and up to $7,000 into an IRA. Those under 50, meanwhile, max out at $19,000 and $6,000, respectively.
Of course, if you're not in the habit of saving any money at all for retirement, it'll no doubt be a challenge to max out either account type. But let's assume you're housing your savings in an IRA. If you were to sock away $6,000 a year for the next 15 years and invest your savings at an average annual 7% return, you'd wind up with about $151,000. On the other hand, if you were to take advantage of that $1,000 catch-up and instead save $7,000 a year, you'd retire with around $176,000, assuming that same time frame and return on investment. That extra $25,000 could make a huge difference during your golden years, so it pays to push yourself to come up with that additional $1,000 annually.
There may come a point when you can only cut back on so many expenses or make so many sacrifices to free up cash for your nest egg. If you've exhausted those options, it may be time to consider a side hustle. Of the millions of Americans who have a second gig on top of a main job, 14% are taking on that extra work for the express purpose of saving for retirement.
Not only might a second job help you give your 401(k) or IRA a much-needed boost, but it might also be a gig you're able to continue doing during retirement to supplement your income down the line. And if you've reached your 50s without savings, chances are, you'll need all the money you can get once your full-time career comes to an end.
As of 2016, only 52% of workers 55 and older were saving for retirement in a 401(k) or IRA, according to the U.S. Government Accountability Office. Meanwhile, Social Security will replace only about 40% of the average worker's pre-retirement income, and most seniors need close to double that amount to live comfortably. If you're in your 50s without savings for your golden years, it's time to make some serious changes. Otherwise, you'll risk struggling financially when the time comes to finally leave the workforce.
SANYO-ONODA, Japan— Keijiro Nawata, a 38-year-old truck driver, had finished the day’s deliveries and was changing his truck’s oil in the shop one day in June last year when an uncle called saying something was wrong. Mr. Nawata’s mother had received a letter urging her to pay $3,600 in overdue life-insurance premiums, the uncle said.
Mr. Nawata immediately called the insurance office and set up a meeting for the next day, where the news got worse. He discovered that salesmen had persuaded his mother, who suffers from dementia, to take out a dozen policies costing her $2,400 a month—twice her income. She had even been induced to get a $7,000 bank loan to cover payments when she ran out of money.
The company selling all those policies was no fly-by-night operator. It was government-controlled Japan Post Holdings Co. 6178 0.42% , one of the world’s largest financial groups, with trillions of dollars in assets.
“I couldn’t believe it, because I had absolute trust in the post office,” said Mr. Nawata as he showed the pile of contracts with his mother’s shaky signature. “This is very much like the work of gangsters.”
What happened to 71-year-old Yaeko Nawata and tens of thousands of other Japan Post policyholders has now ballooned into the biggest scandal since the company’s partial privatization a decade ago and highlighted the pressure that rock-bottom interest rates may be putting on institutions around the globe.
When longer-term rates are negative—as in Japan and parts of Europe, including Germany—it is hard to profit from the difference between short-term and long-term rates, the bread and butter of banks and insurance companies. The U.S. is also experiencing near-record-low interest rates that some economists believe may last for years.
Japan Post said that over the past five years, it sold some 183,000 policies that may have gone against customers’ interests. The company is conducting an internal investigation of the matter.
Japan Post’s core life-insurance products are more like savings plans because they promise returns to policyholders even while they are living. When interest rates were 5% or 6%, Japan Post could offer attractive plans simply by investing in government bonds and letting the interest compound for decades. Today, savers might do as well stuffing their money under a mattress.
“Because of low interest rates, savings-style insurance is not very popular,” Japan Post Holdings President Masatsugu Nagato said at a news conference July 31.
“It’s now very hard” to sell policies, said Masahiko Suzuki, who has worked as a salesman for three decades at a central-Japan post office. Elderly people, he said, have good memories of the days when the products were more attractive, “so it’s easy to trick them.” Mr. Suzuki said he refused to do that and was a low performer.
One of the salesmen who sold policies to Ms. Nawata, Koichi Tokutomi, raised his voice when The Wall Street Journal called and asked about the case. “Why are you calling only me? I’m not the only person who does this!” Mr. Tokutomi said.
He is still employed at the post office in Sanyo-Onoda, an industrial seaside town with cement factories along the coast. Officials at the post office referred questions to Tokyo headquarters, where a spokeswoman declined to comment on the case.
Japan Post has apologized and said it would do its best to recover customers’ trust. At the July 31 news conference, Kunio Yokoyama, president of Japan Post Co., said, “I strongly regret” that unrealistic goals “put a lot of pressure on our employees.”
The 148-year-old financial behemoth has long been about more than just delivering the mail. With savings accounts and life-insurance policies, Japan Post brought modern finance to all corners of the nation with a network that now includes 24,000 post offices.
Japan Post Holdings Co. went public in 2015 along with its banking and insurance subsidiaries. The government now owns 57% of the holding company, which in turn owns 64.5% of the insurance unit.
As of last year, nearly 90% of Japanese households had insurance policies, with about four per household on average, according to the Japan Institute of Life Insurance.
But the industry has been through a rough period. Several insurance companies went bankrupt around the turn of the century, when the Bank of Japan ’s benchmark rate was headed to zero for the first time. Overall, industry revenue has fallen nearly 40% since 2011, and the number of policies held at Japan Post has fallen by nearly half over the past decade to 29 million.
The insurance institute’s surveys released last year found that while Japan Post’s policies are seen as less attractive, it still received top ratings for trustworthiness.
Many customers are hanging on to lucrative older policies sometimes known as treasure insurance.
Kyoko Okamoto, a 66-year-old who works part time at a parcel-delivery company, said she signed up for insurance when she was 20 and took out a loan from the post office to pay premiums when she was going through a rough patch. She said the terms were favorable by today’s standards and she has been collecting about $9,500 every five years, with the first payout coming at age 60 and the last to come at age 75. “I’m glad that I could manage to cling to it,” she said.
Some sales representatives try to persuade people to exchange their treasures for the insurance equivalent of trinkets: new policies with lower returns. Japan Post says its improper sales methods included charging policyholders twice for overlapping coverage.
Commissions account for 25% of annual income for the median postal salesperson, according to Japan Post, which cut salespeople’s base salaries in 2015 to emphasize incentive pay. Low performers have been sent to training where they were berated and humiliated with comments such as, “You’re useless!” said Kazuhiro Kamon, vice chairman of the labor union for the postal industry. Japan Post spokesman Hideo Murata said such training may have happened in the past but the company now offers proper training.
What lessons about consumer protection can be learned from Japan Post’s sales practices? Join the conversation below.
At her spacious traditional home, Ms. Nawata, still wipes the wooden hallway floors every day and feeds stray cats that come to her Japanese garden, despite advancing dementia. When her 38-year-old younger son visited on a recent Sunday with a reporter, she said happily to him, “Oh, my goodness, you have become taller!”
According to Mr. Nawata, two salesmen visited his mother in May 2017, a month after Japan Post Insurance 7181 0.26% raised some premiums to reflect lower expected interest rates. Among the policies she was induced to buy were two from Aflac Inc. AFL 0.86% The U.S. company declined to comment about Ms. Nawata and said it was looking into sales practices.
It took months for Mr. Nawata and his uncles to sort stacks of papers. They wrote down by hand each policy and each payment.
After half a year, the family managed to cancel all Ms. Nawata’s policies and get back the money she paid.
“I should have paid more attention to my mother. But the bonds with my family are now stronger,” Mr. Nawata said. He used to visit his mother only on weekends, but now stops by after work almost every day.
Write to Miho Inada at miho.inada@wsj.com and Megumi Fujikawa at megumi.fujikawa@wsj.com
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Hours after Federal Reserve Chairman Jerome Powell said he did not see the U.S. sliding into a recession despite uncertainty surrounding the U.S.-China trade war with China, President Trump had a few words for Twitter followers about China’s economic strategy.
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In a late-night tweet, Trump claimed that Beijing needed to stimulate its economy because of the U.S. tariffs on more than $350 billion worth of Chinese goods, but once again slammed the U.S. central bank saying it “does NOTHING!”
“China just enacted a major stimulus plan. With all the Tariffs THEY are paying to the USA, Billions and Billions of Dollars, they need it! In the meantime, our Federal Reserve sits back and does NOTHING!” he wrote in the tweet.
The People’s Bank of China Friday, in a statement on its website, said it would cut the amount of cash that banks are required to hold in reserve. The shift pivots the country to the lowest level of capital reserves since 2007.
China’s stimulus package is estimated to bring an added $126 billion in available loans to kick-start growth.
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Powell on Friday, while speaking in Zurich, Switzerland, said he “wouldn’t see the recession as the most likely outcome in the U.S.”
“The most likely outlook is still moderate growth, a strong labor market and inflation continuing to move back up," he said.
When asked if he felt whether politics influenced decisions by the U.S. central bank, he was emphatic.
“Political factors play absolutely no role in our process, and my colleagues and I would not tolerate any attempt to include them in our decision-making or our discussions," he said.
Trump has often criticized Powell for stifling economic growth by raising interest rates in 2018.
In July, Fed policymakers cut interest rates for the first time since the financial crisis. They are expected to lower rates by another 25 basis points during their upcoming meeting on Sept. 18.
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Kelly Tyko USA TODAY
Published 11:22 PM EDT Sep 6, 2019
The Big Apple is suing T-Mobile and alleges the third-largest U.S. mobile phone company scammed consumers with tactics like selling used phones as new and using deceptive return policies.
The lawsuit filed in state Supreme Court in Manhattan Wednesday follows a yearlong investigation alleging the company and more than 50 of its Metro by T-Mobile stores around New York City violated the city's consumer protection law thousands of times, according to a news release.
“Companies that blatantly scam New Yorkers must be held accountable,” Mayor Bill de Blasio said in statement. “We are doing everything in our power to make sure that T-Mobile ends these deceptive practices and that customers who were taken advantage of get the restitution they are owed.”
Metro by T-Mobile is the wireless carrier's prepaid phone brand and previously was known as MetroPCS.
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In an email, T-Mobile said it was taking the allegations "very seriously" but couldn't comment on the specific claims. The company said the accusations are "completely at odds with the integrity" of its team and the commitment they have to taking care of its customers.
The city said in its news release that it wants T-Mobile to "stop all illegal activity, to forfeit the revenue gained from the deceptive practices so that the court can create a restitution fund for victims," pay penalties and to notify credit bureaus that the financing contracts were fraudulent.
According to the city's lawsuit, T-Mobile’s deception practices include:
• Tricking customers into buying used phones. The city says it “received a stream of complaints from consumers who paid hundreds of dollars for new phones but were unknowingly sold used phones.”
• Deceiving customers about financing. The city alleges the terms of contracts “typically add hundreds of dollars to the advertised price.”
• Charging consumers illegal taxes, mystery fees, and fees for unwanted services.
• Deceptive return policy. The city said T-Mobile’s return policy is misrepresented on the Metro-branded website and claims phones have a “30 day guarantee,” while the fine print says phones bought in-store must be returned within seven days.
• Failing to provide legal receipts.
Contributing: Associated Press
Follow Kelly Tyko on Twitter: @KellyTyko