Cypen & Cypen  
Home Attorney Profiles Clients Resource Links Newsletters navigation
777 Arthur Godfrey Road
Suite 320
Miami Beach, Florida 33140

Telephone 305.532.3200
Telecopier 305.535.0050

Click here for a
free subscription
to our newsletter


Cypen & Cypen
APRIL 30, 2009

Stephen H. Cypen, Esq., Editor


The Employee Benefit Research Institute has released results of its 2009 Retirement Confidence Survey, which reveals that the economy drove confidence to record lows and many are looking to work longer.  The following is part of the Executive Summary: 

RECORD LOW CONFIDENCE LEVELS:  Workers who say they are very confident about having enough money for a comfortable retirement this year hit the lowest level (13 percent) since the Retirement Confidence Survey began asking the question in 1993.  Retirees also posted a new low in confidence about having a financially secure retirement, with only 20 percent now saying they are very confident (down from 41 percent in 2007). 

THE ECONOMY, INFLATION, COST OF LIVING ARE THE BIG CONCERNS:   Not surprisingly, workers overall who have lost confidence over the past year about affording a comfortable retirement most often cite the recent economic uncertainty, inflation and cost of living as primary factors.  In addition, certain negative experiences, such as job loss or a pay cut, loss of retirement savings or an increase in debt, almost always contribute to loss of confidence among those who experience them. 

RETIREMENT EXPECTATIONS DELAYED:  Workers apparently expect to work longer because of the economic downturn -- 28 percent of workers  in the survey say the age at which they expect to retire has changed in the past year.  Of those, the vast majority (89 percent) say that they have postponed retirement with intention of increasing their financial security.  Nevertheless, the median worker expects to retire at age 65, with 21 percent planning to push into their 70s.  The median retiree actually retired at age 62, and 47 percent of retirees say they retired sooner than planned. 

WORKING IN RETIREMENT:  More workers are also planning to supplement their income in retirement by working for pay.  The percentage of workers planning to work after they retire has increased to 72 percent (from 66 percent in 2007).  This number compares with 34 percent of retirees who report they actually worked for pay at some time during their retirement. 

GREATER WORRY ABOUT BASIC AND HEALTH EXPENSES:  Workers who say they are very confident in having enough money to take care of basic expenses in retirement dropped to 25 percent (from 40 percent in 2007), while only 13 percent feel very confident about having enough to pay for medical expenses (from 20 percent in 2007).  Among retirees, only 25 percent (from 41 percent in 2007) feel very confident about covering their health expenses. 

HOW WORKERS ARE RESPONDING:  Among workers who have lost confidence in their ability to secure a comfortable retirement, most (81 percent) say they have reduced their expenses, while others are changing the way they invest their money (43 percent), working more hours or a second job (38 percent), saving more money (25 percent), and seeking advice from a financial professional (25 percent).  Among all workers, 75 percent say they and their spouse have saved money for retirement, one of the highest levels ever measured by the survey. 

IGNORANCE STILL A MAJOR FACTOR:  Many workers still do not have a good idea of how much they need to save for retirement.  Only 44 percent of workers report that they and their spouse have tried to calculate how much money that they will need to have saved by the time they retire -- and an equal proportion simply guess at how much they will need for a comfortable retirement. 

The full report, along with related fact sheets, is available at


In line with the foregoing item, the economic downturn has taken its toll on the American workforce and its psyche, according to the 10th Annual Transamerica Retirement Survey.  The survey found surprisingly positive signs in workers’ commitment to retirement savings.  The survey results also highlight the importance workers place on employer-sponsored retirement plans.  Despite experiencing declines in both account balances and confidence, workers are still committed to saving for retirement.  The vast majority of workers (91%) value a company-sponsored retirement plan, such as a 401(k), as an important employee benefit, and most continue to take advantage of their availability.  According to EarthTimes, plan participation (78%) and median annual salary contribution (7%) rates remain high for those workers who are offered such a plan.  By and large, workers are also resisting the urge to tap into their retirement savings.  In the last twelve months, only 6% reported having taken a loan and only 3% indicated that they had taken a hardship withdrawal from their accounts.  The promising news comes in spite of the fact that the majority of American workers have already been impacted by the weak economy.  More than half of workers surveyed indicated that their employers have already implemented layoffs or downsizing, frozen salaries, eliminated bonuses or reduced employee benefits.  More than three-quarters of workers shared that they expect the economy to get worse or stay the same over the next twelve months.  The survey also underscored erosion of retirement confidence as a result of the economy:  57% of workers are less confident in their ability to achieve a financially secure retirement than they were twelve months ago.  Only 10% are now “very confident” that they will be able fully to retire with a comfortable lifestyle. 


Although the financial markets are still volatile, many Americans remain committed to saving and investing for retirement according to results of a nationwide survey by AARP Financial Inc. reported by PR Newswire.  In a similar vein to the above two items, the study found evidence of cautious optimism among investors who believe the current market turmoil may slow their retirement progress, but not halt it.  Nevertheless, the survey found that when it comes to retirement an overwhelming majority (70%) believes no one is looking out for the average investor and, incredibly, the survey also revealed that almost half of those questioned feel that no matter what they do, it is unlikely that they will be able to have a financially secure retirement, and that one-third believe they will never be able to stop working!  Put that in your pipe and smoke it. 


For the first time this decade, a majority of non-retired Americans, 52%, doubt they will have enough money to live comfortably once they retire; only 41% say they will.  In 2002, by contrast, 59% of non-retirees were confident that they would have enough retirement income to live comfortably.  This year's update, included as part of Gallup's annual Economy and Personal Finance survey, also shows an 18-point drop in this measure among non-retirees compared to just five years ago.  For the first time since Gallup has been tracking the measure, a majority of those not retired say they will not have enough money to live comfortably in retirement.  It is probably not surprising that Americans have a more pessimistic attitude about funding their retirement now than they did a few years ago.  Americans have been told repeatedly in recent years that Social Security alone will not provide enough to live on, and even that the Social Security system will eventually run out of money.  Fewer Americans today enjoy the potential benefit of a traditional pension plan.  Thus, Americans have come to realize that more of their retirement income will need to come from their own resources.  And those resources, to the extent that they have been invested in stocks, are way down in value this year compared to years past.  Expected comfort in retirement could increase if the stock market continues to pull out of its current slump in the months ahead.  Still, given the maxim “once burned, twice shy,” many Americans may never again believe that their personal savings plans are going to grow inevitably and steadily in the years before they retire, leaving open the possibility that their worries will continue regardless of external circumstances. 


In less than two months, all 50 states have created websites that track use of their share of the federal economic stimulus package and that link to the federal site.  According to FederalComupterWeek, however, the state sites are individual efforts and offer a patchwork of data.  President Barack Obama signed the $787 Billion American Recovery and Reinvestment Act on February 17, 2009. 


Internal Revenue Service has reminded individual and business taxpayers that many energy-saving steps taken this year may result in bigger tax savings next year.  The recently-enacted American Recovery and Reinvestment Act of 2009 contained a number of either new or expanded tax benefits on expenditures to reduce energy use or create new energy sources.  IRS encouraged individuals and businesses to explore whether they are eligible for any of the new energy tax provisions.  More information on the wide range of energy items is available on the special recovery section of  Homeowners can get bigger tax credits for making energy efficiency improvements or installing alternative energy equipment.  Homeowners seeking these tax credits contemporarily rely on existing manufacturer certifications or appropriate Energy Star labels for purchasing qualifying products until updated certification guidelines are announced later this spring.  Business taxpayers who place in service facilities that produce electricity from wind and some other renewable resources can choose one of three options to fund the project:  a tax credit based on the amount invested, a tax credit based on the energy produced or a grant.  Flexibility to choose among these options was enacted as part of ARRA.  IR-2009-044 (April 22, 2009) 


In 2007 the U.S. Equal Employment Opportunity Commission issued guidance explaining circumstances under which discrimination against workers with caregiving responsibilities might constitute discrimination based on sex, disability or other characteristics protected by federal employment discrimination laws.  A new document supplements the 2007 guidance by providing suggestions for best practices that employers may adopt to reduce the chance of EEOC violations against caregivers, and to remove barriers to equal employment opportunity.  Best practices are proactive measures that go beyond federal non-discrimination requirements.  Currently, many workers juggle both work and caregiving responsibilities.  Those responsibilities extend not only to spouses and children, but also to parents and other older family members or relatives with disabilities.  While women, particularly women of color, remain disproportionately likely to exercise primary caregiving responsibilities, men have increasingly assumed caretaking duties for children, parents and relatives with disabilities.  Employers adopting flexible workplace policies that help employees achieve a satisfactory work-life balance may not only experience decreased complaints of unlawful discrimination, but may also benefit their workers, their customer base and their bottom line.  Numerous studies have found that flexible workplace policies enhance employee productivity, reduce absenteeism, reduce costs and appear positively to affect profits.  They also aid recruitment and retention efforts, allowing employers to retain a talented, knowledgeable workforce and save money and time that would otherwise have been spent recruiting, interviewing, selecting and training new employees.  The benefits of these programs remain constant regardless of the economic climate, and some employers have implemented workplace flexibility programs as an alternative to workforce reductions.  Such programs not only enable employers to “go lean without being mean,” but they also can position organizations to rebound quickly as soon as business improves. The following are examples of general best practices for employers that go beyond federal nondiscrimination requirements and that are designed to remove barriers to equal employment opportunity: 

  • Be aware of, and train managers about, legal obligations that may impact decisions about treatment of workers with caregiving responsibilities. 
  • Develop, disseminate and enforce a strong EEOC policy that clearly addresses types of conduct that might constitute unlawful discrimination against caregivers based on characteristics protected by federal anti-discrimination laws. 
  • Ensure that managers at all levels are aware of, and comply with, the organization’s work-life policies. 
  • Respond to complaints of caregiver discrimination efficiently and effectively.
  • Protect against retaliation.

There are also best practices with reference to recruitment, hiring and promotion and as to terms, conditions and privileges of employment.  The entire EEOC document can be accessed at  


The New York State Comptroller announced that he has banned involvement of placement agents, paid intermediaries and registered lobbyists in investments with the New York State Common Retirement Fund.  The ban includes entities compensated on a flat fee, a contingent fee or any other basis.  Placement agents, also known as finders, receive fees from investment managers for obtaining investments by pension funds and other investors.  If disclosed, placement fees are not illegal.  (Meanwhile, the New York Attorney General has launched an investigation of possible illegal conduct by placement agents that arrange for private firms to manage investment funds of New York City’s pension fund.)


Most state and local government employees are covered by traditional final-average-pay pension plans.  State and local government employers typically fund those pensions through a combination of employer and employee contributions, with help from investment returns on already-accumulated assets.  Unlike private pension plans, however, many public pension plans are not subject to strict minimum funding standards like those in the Employee Retirement Income Security Act of 1974.  Public pensions also face more relaxed accounting standards than private sector pensions.  To be sure, most public pensions are nevertheless fairly well funded.  Unfortunately, the recent meltdown of financial markets, decline in the stock market and the recession are putting inordinate pressure on both public pensions and the state and local governments that fund them; and public employers will need to respond.  A paper published in Social Science Research Network first reviews the operation and funding status of state and local government pension plans.  Next, the paper discusses the major financial, accounting and legal issues that relate to funding of state and local government pension plans.  Finally, the paper considers how to ensure that public employees will have adequate retirement benefits now and in the future. 


It is difficult to predict what your health care expenses will be in retirement.  Just ask the loyal, long-term employees of General Motors, which used to provide a pension and lifetime medical coverage.  Here, from, are some tips on how to cope with health care expenses in retirement:

A. Don't count on employer benefits.  Less than a third of firms with 200 or more workers offered retiree health benefits in 2008, down from the 66 percent that did so in 1988.  Among small companies, retiree coverage is much more rare: only 4 percent offer it.  And there is nothing that safeguards retiree health insurance benefits like the federal Pension Benefit Guaranty Corp., which, in private-sector pension plans, pays workers if a plan or a company fails. 

B. Try to make it to Medicare.  Workers who retire before they qualify for Medicare at age 65 often face the steepest health care costs.

C. Plan for Medicare costs.  Retirees with Medicare face significant out-of-pocket costs.  Major health care expenses include premiums for Medicare Part B (physician and outpatient hospital services) and Part D (prescription drug-related expenses), co-payments, coinsurance, deductibles and excluded benefits like dental care, eyeglasses and hearing aids.  A couple retiring in 2010 would need nearly $206,000 in 2007 dollars to buy an annuity sufficient enough to cover out-of-pocket health care costs in retirement.

D. Consider working longer.  Many economists think most people should plan to work well past the current average retirement age of 63, in part, to help finance health expenses. 

E. Factor in long-term care.  What is often the greatest retiree medical expense of all, long-term care, generally is not covered by Medicare.  Last year, a private nursing home room cost an average of $76,460 a year, or $209 per day. 

F. Consider long-term care insurance...carefully.  Long-term-care insurance can help protect you from some of these catastrophic costs -- at a hefty price.  Estimates are that a 65-year-old in good health can expect to pay between $2,000 and $3,000 a year for a policy that covers nursing home and home care.  Before you buy long-term care insurance, you should get answers to plenty of questions: how to cancel the policy; what happens if you stop paying premiums; how many times can you renew; how long coverage lasts; what is the maximum payout (and is it indexed for inflation); and what needs to happen before you can begin claiming your benefits. 

G. Go it alone.  Retirees who find they cannot afford their medical needs sometimes choose to delay or go without necessary care.   But failing to treat a chronic condition will inevitably lead to higher health care costs in the future. 

H. Invest in your health.  Another answer to limiting cost of health care is to take good care of yourself.  There are no guarantees, of course, but in general a healthful diet and plenty of exercise will not only help you enjoy life but make living more affordable, too. 

Yes, life is worth living.  (And, Baby, love is so forgiving -- at least to Jackie Wilson.) 


The Bank of New York Mellon has issued a report that reviews depositary receipts for last year.  In a year marked by unprecedented global equity market declines and volatility, depositary receipt liquidity reached record levels.  While depositary receipt capital raisings and depositary receipt initial public offerings declined, as would be expected, depositary receipts from all regions saw double-digit increases in trading volume due to market volatility.  The report expects fundamental depositary receipt investment again to pick up in late 2009, led by the emerging markets.  To demonstrate the power of emerging markets, in 2008, depositary receipt issuers from Brazil, Russia, India and China (the “BRIC” countries) continued to dominate the depositary receipt markets, accounting for 56% of depositary receipt capital raisings, 54% of depositary receipt trading value, 25% of depositary receipt outstanding value and 49% of new sponsored depositary receipt programs.  While equity declines have been global, the report predicts domestic activity in developing countries will drive growth and investment in emerging markets that will allow these markets to rebound faster than developed markets.  Sustained growth should result from an expanded supply of depositary receipt programs available to investors.  In October 2008, the Securities and Exchange Commission passed a groundbreaking rule change, permitting widespread establishment of unsponsored OTC-traded depositary receipt programs, which has opened the floodgates for creation of new U.S. traded equities and potential replication of global indices in the U.S.  In the last three months of 2008 alone, nearly 700 unsponsored depositary receipt programs from 47 countries were created.  Some of the world’s leading indices now have more than 80% of their constituents available via depositary receipts and can now be replicated without investing cross U.S. borders.  With more than 2,900 depositary receipt programs available to investors at year end, representing companies from 80 countries, investors have the world at their fingertips.  They can choose from companies in 40 industries available through depositary receipts, including Alternative Energy, Oil & Gas Producers, Banks, Travel & Leisure, Financial Services, Mobile Telecom, Pharmaceutical and Biotechnology.  Wow -- something else on which to lose money. 


United States Government Accountability Office has issued a report entitled “Recovery Act -- As Initial Implementation Unfolds in States and Localities, Continued Attention to Accountability Issues Is Essential” (GAO-09-580, April 2009).  The American Recovery and Reinvestment Act of 2009 is estimated to cost about $787 Billion over the next several years, of which about $280 Billion will be administered through states and localities.  The Recovery Act requires GAO to do bi-monthly reviews of use of funds by selected states and localities.  In this first report, GAO describes selected states’ and localities’ (1) uses of and planning of Recovery Act funds, (2) accountability approaches and (3) plans to evaluate impact of funds received.  GAO’s work is focused on 16 states and the District of Columbia -- representing about 65% of the U.S. population and two-thirds of the intergovernmental federal assistance available through the Recovery Act.  Office of Management and Budget has moved out quickly to guide implementation of the Recovery Act.  As OMB’s initiatives move forward, it has opportunities to build upon its efforts to date by addressing several important issues.  The Director of OMB should continue efforts to identify methodologies that can be used to determine jobs created and retained from projects funded by the Recovery Act; evaluate current requirements to determine whether sufficient, reliable and timely information is being collected before adding further data collection requirements; and clarify what Recovery Act funds can be used to support state efforts to ensure accountability and oversight.  Hmmmm.  We are getting the distinct impression that accountability, oversight and other administrative requirements may just eat up all available funds. 

13. “60 MINUTES” LOOKS AT 401(K)S:  

Have you checked your 401(k) lately?   The recent financial collapse has devastated this retirement resource.   Older workers are hardest hit, as their financial futures may now be at risk.   Check out “60 Minutes” reporter Steve Kroft’s report that aired April 19, 2009, at  One little factoid that everyone seems to have lost sight of:  the 401(k) was never designed to be one’s main retirement vehicle.  Retirement security comes from the “three-legged stool” -- Social Security, traditional pension plans and personal savings (as supplemented by 401(k) accounts).


CASH FLOW-- The movement your money makes as it disappears down the toilet. 

YAHOO -- What you yell after selling it to some poor sucker for $240 per share. 


"I love talking about nothing, it is the only thing I know anything about."  Oscar Wilde

Copyright, 1996-2009, all rights reserved.

Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.

Site Directory:
Home // Attorney Profiles // Clients // Resource Links // Newsletters