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PRESSURE FOR FEDERAL INSURANCE REGULATOR - Frustrated by the sluggishness and inconsistencies of state regulation, a broad coalition of 135 national and regional insurance companies, agencies, banks and financial services trade groups urged Congress to establish a federal regulator for insurance industry by enacting optional federal insurance charter legislation.  This new system would allow insurers and agents to choose between state and federal regulation.  The Big I, on the other hand, opposes an optional federal charter for insurance regulation, preferring instead legislation that would foster regulatory consistency among the individual states without resorting to federal regulation.

MASS MUTUAL AND FORMER CEO O'CONNELL - The Board of Directors of the Mass Mutual released its reasons for terminating Robert O'Connell's employment as the Company's Chairman, President, and CEO. The Board determined that Mr. O'Connell had engaged in a systematic and pervasive pattern of willful abuse of authority, violations of the Company's code of conduct, and other acts of willful gross misconduct. Among the specific reasons the Board cited for its action were: Actions resulting in over a $30 million credit to him and expense to the Company; buying a condominium from the Company without the knowledge of the Board and substantially below the market; interfering with the investigation and reprimand of two of his family members concerning the improper disclosure of confidential information of OppenheimerFunds, a MassMutual subsidiary; payment of unwarranted and excessive separation payments to Company personnel in connection with personally motivated and retaliatory terminations of employment; engaging in abusive and improper management of the Company, including retaliatory behavior against Company employees who tried to act in the Company's best interests; inhibiting or preventing communication between Company officers and employees and members of the Board; and attempting to restrict the Board's ability to obtain information from Company officers and employees. We hope, but doubt, this gets the attention of other greedy and arrogant CEOs.

IRS SECURITY BREACHES – The IRS is investigating a possible security breach where unauthorized people may have gained access to sensitive taxpayer and bank account information. A Government Accountability Office team was able to tap into the data without authorization but said, "There is no evidence that anyone who was not authorized accessed the data outside the GAO."

THIS ACCOUNTING THING – First it was Arthur Andersen and now it is KPMG. You really have to wonder what has happened to the industry that used to be considered as the paragon of integrity...the watchdog of American business.  The actions of a few at Andersen put the firm out of business (even though the Supreme Court later overturned its conviction) and cost several thousand people to lose their jobs. KPMG could be facing a similar fate because of charges that the firm knew the tax shelters it was devising would probably not pass muster with the IRS, but sold them anyway. KPMG, however, may escape Andersen's fate since the Justice Department probably will not indict the firm since KPMG apologized, admitted the shelters were unlawful and fired those most to blame.

RETIREMENT HEALTH COST, TIME BOMB? – Very few advisors plan for the effect of health care cost at retirement, but it may prove to be a time bomb, blowing all projections out of the water. Reason: Health care costs are rising much faster than inflation, and future retirees are likely to have a smaller percentage of those costs subsidized by former employers or Medicare.  Fidelity Investments ran some calculations...a 65-year-old couple retiring today without employer-provided health insurance needs a lump sum of $190,000 just to pay for health care, assuming he makes it to 85 and she lives to 90. Other studies have projected even greater needs. Oh yes, this doesn't count dental services, over-the-counter medications and long-term care. And the numbers assume the continuation of Medicare, which is headed for insolvency at a much faster clip than Social Security.

HAPPY INDEPENDENCE DAY!
The Founding Fathers

The cause of America is in a great measure the cause of all mankind.
Thomas Paine, Common Sense, 1776

Citizens by birth or choice of a common country, that country has a right to concentrate your affections. The name of American, which belongs to you, in your national capacity, must always exalt the just pride of Patriotism, more than any appellation derived from local discriminations.
George Washington, Farewell Address, September 19, 1796

Every government degenerates when trusted to the rulers of the people alone. The people themselves, therefore, are its only safe depositories.
Thomas Jefferson, Notes on the State of Virginia, Query 14, 1781

The fabric of American empire ought to rest on the solid basis of THE CONSENT OF THE PEOPLE. The streams of national power ought to flow from that pure, original fountain of all legitimate authority.
Alexander Hamilton, Federalist No. 22, December 14, 1787

They that can give up essential liberty to purchase a little temporary safety, deserve neither liberty nor safety.
Benjamin Franklin, Historical Review of Pennsylvania, 1759

America united with a handful of troops, or without a single soldier, exhibits a more forbidding posture to foreign ambition than America disunited, with a hundred thousand veterans ready for combat.
James Madison, Federalist No. 14, November 30, 1787

Government is instituted for the common good; for the protection, safety, prosperity, and happiness of the people; and not for profit, honor, or private interest of any one man, family, or class of men; therefore, the people alone have an incontestable, unalienable, and indefeasible right to institute government; and to reform, alter, or totally change the same, when their protection, safety, prosperity, and happiness require it.
John Adams, Thoughts on Government, 1776

HARDER LOOK AT PENSIONS - The Financial Accounting Standards Board, or FASB, is now preparing an overhaul of how companies calculate the financial impact of their pension plans. Expect corporations to oppose revisions because a new pension standard could lead to significant changes in how corporate earnings are reported, major changes in employee benefits and how pension funds invest their assets. Current accounting practices have come under criticism because they can mask the health of both the company and the pension plan. The new push to overhaul pension accounting follows a report by the SEC on the quality of corporate accounting after Enron. The report found that accounting had generally improved since Enron collapsed in 2001, but was still flawed in certain areas, including the pension-accounting standard.

PRIVATE PROPERTY? MAYBE NOT - In the case of Kelo v. City of New London, the Supreme Court ruled 5 to 4 that a city may take control of private homes and use underlying land for an economic revitalization project, provided, of course, that the city pays the homeowners "just compensation."

CONSUMER CONFIDENCE – We have some advice for you when reading about consumer confidence...don't believe anything. In the last two weeks, we have seen articles saying that "consumer confidence rose to a three-year high in June" and others claming consumer confidence "continues to fall." 

EX-HEALTHSOUTH CEO NOT GUILTY - A federal jury found former HealthSouth CEO Richard Scrushy not guilty of orchestrating a $2.7 billion accounting fraud at the medical rehabilitation chain he founded. Scrushy was among a group of high-profile U.S. corporate executives who have been tried for financial wrongdoing in a string of accounting scandals, and is the first so far to be found not guilty. Had he been found guilty, Scrushy could have spent the rest of his life in jail and been forced to forfeit millions of dollars and personal property, including multiple homes, luxury boats and airplanes.

FRAUD HOTLINE – The NAIC has unveiled its Online Fraud Reporting System for use by consumers, insurance producers and employees of insurance companies to report suspected fraud.  The secure site is located here.

TERMINATING PENSIONS - Watson Wyatt reports that big employers are accelerating freezes and terminations of pension plans and moving away from the increasing expense and uncertainty of paying for workers' retirement. About 11% of the big companies offering traditional pensions terminated their plans or froze accrual of new benefits to workers, according to a study by consulting firm Worldwide. That is up from 2003, when 7% of the nation's 1,000 largest companies capped pension plans. About half of the companies that froze pension accruals or terminated plans last year are financially troubled businesses, but even many healthy companies are rethinking pensions. (This should be a clue for government entities to start looking closely at the pension obligations being created for taxpayers.)

OBESITY COST – According to an Emory University study published by Health Affairs, spending on obesity-linked medical problems mushroomed from $3.6 billion (2% of all health spending) to $36.5 billion (11.6% of spending) in the last 15 years.

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VARIABLE ANNUITIES PLUS – This from a former critic of variable annuities who described them as "high-cost, unsuitable annuities some commission-hungry 'advisers' push on the elderly."  However, he was turned around by "a relatively new "living benefit" that can revolutionize the industry: a guarantee of lifetime income but without having to 'annuitize,' that is, give up access to your principal."  Mark Mackey, president and CEO of the National Association for Variable Annuities predicts, "We are going to be seeing more and more companies offering this benefit."   While details differ, the typical guarantee sets the minimum lifetime income at 5% of the amount invested, paid every year for life. You may increase the income amount by waiting to make withdrawals. You also may lock in actual account gains that occur at predetermined times to increase the amount used to calculate the lifetime income.

VOLUNTARY BENEFITS WISH LIST – A recent study reveals what employers and brokers want from voluntary benefit programs: (1) solutions to help benefit dollars go farther (particularly as relates to health care costs), (2) professional, reliable enrollment and benefits communications, and (3) hassle-free voluntary benefits (ease in enrollment, billing and claims processing).

MILESTONE – The first baby boomers will turn age 59-1/2 beginning on July 1, the age at which they can begin tapping into IRAs and 401(k) plans without penalty.  Predictably the experts are advising this first wave of boomers to leave their nest eggs alone and, instead, take the time for a retirement planning check-up.  Sounds to us like a good reason to get in touch with the oldest of your boomer clients.

LAST MINUTE PLANNING – If you or your clients are among the 44% of Americans age 55 and older who have saved less than $100,000 for retirement, it's probably time for serious action. Here are some options: Make catch-up contributions to your qualified retirement plans, postpone retirement and relocate to take advantage of a lower cost of living.

MEDICARE PRESCRIPTION DRUG PLAN – According to a Harris Interactive online survey, less than half of seniors feel confident that they'll be able to choose a Medicare prescription drug plan that's right for them when enrollment begins in November.  If you or clients need more information on the Medicare prescription drug plan, former Senator Bob Dole is promoting the new drug benefit through a nationwide speaking tour and a website: www.bobdoleonmedicare.com.  You can obtain a copy of the publication "Ten Things Seniors Need to Know about Medicare's New Prescription Drug Coverage" at the website.

MILITARY BASE SALES – On a vote of 405-2, the House has passed legislation that would impose tighter standards on the sale of insurance products on military bases.  The Senate is not expected to take action on the bill until this fall.

REVERSE MORTGAGES: HAS THEIR TIME COME? – Reverse mortgages are beginning to gain attention, possibly spurred by the rapid increase in housing prices in many parts of the country.  With increasing property taxes, insurance costs and health care costs, a reverse mortgage can make a lot of sense for seniors who find themselves living on a fixed income, but with a lot of equity locked up in their homes.  If you'd like to learn more about reverse mortgages, AARP is a great resource.  Check it out by clicking here.

CARE GIVING FACTS - The Family Caregiver Alliance defines the term caregiver as anyone who provides assistance to someone else who is in some degree incapacitated and needs help. Their statistics state that the duration of care giving can last from less than a year to over 40 years, but the average is 4.5 years providing care. Between 7 million and 10 million Americans are long-distance caregivers for older relatives. Care giving can be an emotional roller coaster. On the one hand, caring for our loved ones demonstrates our love and commitment.  On the other hand, exhaustion, inadequate resources, and continuous caring can lead to burn out, stress and depression. More than 50 million people provide care for a chronically ill, disabled or aged family member or friend during any given year.

ELDERCARE KNOWLEDGE - The number and variety of eldercare products, services and programs seem to be rising almost as quickly as the exploding worldwide baby boomer to senior population. To keep pace, you might want to consider one of several new courses and designations now offered, including Certified Senior Advisors, The American College and others.

REAL ESTATE TREND - A study released in March by the National Association of Realtors found that nearly one in four homes bought in 2004 was acquired not to live in, but for investment purposes. Include vacation homes, and the figure is more than one in three. Reason: It is a good investment. Since 2002 home prices in the Northeast have increased 60%...about six times the rate of the S&P 500.

BOOMERS TO GIVE BACK - According to a new MetLife survey, many boomers (now approaching the end of their traditional work lives) intend to continue working, but in jobs different from their careers. Unlike their parents, who took the gold watch and went home, these boomers aim to reinvent themselves with work that improves their communities and gives their lives more purpose. We just heard a speech given by a highly successful attorney who retired at age 65 and he and his business executive wife joined the Peace Corp. Interesting gender difference in the survey: More women than men (50% to 28%) want the opportunity to help people in need; 70% of women said it's very important that their job in retirement provide a sense of purpose compared to 48% of men. Read more about this survey, as well as "The Boomers' Guide to Good Work," an online pamphlet full of tips and resources to help boomers find public service jobs, at www.civicventures.org.

THE SILENT GENERATION – MetLife has conducted a study of the income and spending patterns in retirement of Americans between the ages of 59 and 71, often referred to as the "Silent" or the "Swing" Generation. Here are a couple of key findings: There is a correlation between guaranteed income from pensions/annuities and an increased feeling of comfort in retirement and leaving an inheritance is not a priority for the Silent Generation. Also, 83% of "Silent Generation" pre-retirees and 90% of retirees are confident that they have enough money to live comfortably until at least age 85. Question for Boomers: "With less replacement income from Social Security, a smaller likelihood of receiving a defined benefit pension plan and decreased chances of receiving an inheritance from their parents, how will the Baby Boomers and other cohorts, such as Generations X and Y, budget their money during retirement to ensure that it does not run out?"

SAFE PLACE FOR BIG MONEY – Some banks are offering a Certificate of Deposit Account Registry Service, known as CDARS and pronounced "cedars" as a safe haven for large sums of money. The FDIC provides government protection for up to only $100,000, but the service takes an over-the-limit deposit up to $20 million, chops it into insurable pieces and distributes the cash between member banks in CDs that range in maturity from four weeks to three years. The customer, however, only interacts with the bank where the initial deposit was made. That bank sends the customer one consolidated statement each month and one 1099 tax form each year.

HOW MUCH VACATION CAN YOU AFFORD? – We all need to take a break from our work, but just how much can you afford to spend on vacations? Here is a good rule of thumb from Suze Orman: If you will need to pay interest to finance the vacation — meaning if you can't pay off the whole credit card charge when it comes in — the hard truth is that you can't afford the vacation.

HOUSE TO BAR PUBLC FUNDS FOR VIAGRA – Just thought you might want to be aware that the use government funds to help pay for Viagra and other drugs that enhance sexual performance may be a thing of the past. The House voted to ban Medicare or Medicaid payments for Viagra, Levitra and Cialis. Another important article in this arena announced that "Viagra Doesn't Cause Blindness." That is a double dose of good news!