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Another aspect of retirement preparedness January 20, 2011

Posted by forwardfinancialplanning1 in Not classified.
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A frequent topic on this site is retirement preparedness–a critical element of being able to withdraw from the work-a-day world.  However, it’s also important to be cognizant of the non-financial elements associated with a fulfilling retirement.  And, there’s some indication that Americans may be struggling there as well.

According to the Substance Abuse and Mental Health Services Administration, the proportion of older people being treated for abuse of cocaine or alcohol tripled between 1992 and 2008.  For the group, cocaine abuse was the leading cause for admission due to drugs at 26.2% while abuse of prescription drugs was close behind at 25.8%.  It is expected that by 2020, the number of retirees with alcohol or other drug dependencies will increase 150% to 4.4 mllion from 1.7 million in 2001.

So, it’s obvious that social and mental health is just as important as financial health.  Staying connected to life-long social networks is an imperative and with the increase in leisure time in retirement, adding to those networks should become an objective for retirees.

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Growth Engines of the Future? November 11, 2009

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A recent article published in the T Rowe Price Report highlighted the growth potential of the Asian giants, India and China.  It noted that the GDP (Gross Domestic Product–the value of all goods and services produced in a nation) per capita  is currently $2,000 in China and $665 in India.  This contrasts with a figure of $39,000 per person in the United States, based on 2008 real GDP at constant currency exchange rates.  These statistics, coupled with their enormous populations,  suggest that India and China  will play an increasingly prominent role in the world economy.

A glimpse at the future? October 25, 2009

Posted by forwardfinancialplanning1 in Not classified.
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The Bureau of Economic Analysis released a report on Friday that the US personal savings rate in the second quarter increased from 3.7% in the first quarter to 4.9% in the second quarter.  In a nearly concurrent Associated Press article, it was reported that casual chain restaurants such as Chili’s and Applebee’s are seeing disappointing results from their strategy of slashing menu prices  (e.g. two meals for $20).  Apparently, diners are simply ringing up smaller checks or staying home, which Brinker International (parent of Chili’s) discovered when they temporarily suspended the promotions in September. It appears that the casual restaurant industry is learning the same lessons as the automakers who conditioned consumers not to shop unless large rebates were being offered.   These observations may also portend a trend for the future of consumer discretionary spending.  As our domestic savings rate went negative in 2004 and 2005, people were clearly living above their means.  Easy access to credit and home equity borrowing against escalating home prices facilitated this overconsumption and the restaurant industry responded.  Market research firm NPD Group reports that since 2001, the total number of casual restaurants increased by 14% and the number of “chain” restaurants in this category increased by more than 26%.  So, much like the auto industry which has painfully dealt with overcapacity via the bankruptcies of Chrysler and GM, it’s likely that we will see upcoming contraction in this restaurant segment.