3M Co. said Monday that it is altering retiree medical plans and eliminating a defined-benefit pension plan for new hires, a benefit once regarded as one of the most generous in the nation.

Current employees and retirees will not see a change to their existing pension plan or to the current 6 percent match to their 401(k) plans, Berry said. But 3M will end its practice of quarterly and annual contributions to the 401(k) plan, which had varied depending upon 3M's performance each quarter, officials said. Instead, the company will contribute a fixed amount.

Courtesy of Minneapolis StarTribune.com 

PBS’s Retirement Revolution will be aired in separate, one-hour installments. The first episode, ‘Hazards and Vicissitudes,’ offers a look at the origins of retirement in the U.S. and the creation of Social Security and Medicare. In the second segment, ‘On Our Own,’ the focus shifts to how Americans are more personally involved today than previous generations in planning for their own retirement.

The program is scheduled for Monday, March 31.  Check your local PBS listings. 

Remember this guy?

"The Jack LaLanne Show" aired from 1951 to 1985 and was the longest-running television program devoted to exercise. 

Looks like Jack has a new passion- he recently co-authored a book to help baby-boomers focus on health care and finance.  Fiscal Fitness:  8 Steps to Wealth And Health, From America's Leaders of Fitness and Finance.  He's 93 and going strong- I'll pick up the book this weekend and give you some highlights.

What if you retire early and and don't have health care coverage with a spouse?  Or, any other medical insurance coverage?   You may need to get familiar with COBRA.

The Consolidated Omnibus Budget Reconciliation Act lets former employees and their dependents continue their employer's group coverage for up to 18 months. If you retired at age 63½, for instance, you could use COBRA to bridge the gap until you're eligible for Medicare at 65.

The biggest advantage to COBRA? It's guaranteed. Your former employer's insurer can't refuse to cover you, even if you have a chronic medical condition. That makes COBRA an attractive option for retirees who have serious health problems and want to continue their current coverage.

The biggest drawback: COBRA is expensive. Ordinarily, employers cover 70 percent or more of an employee's health insurance premium. With COBRA, you'll have to pay the entire premium -- plus administrative costs. Based on 2007 average premiums, that means a former worker would have to pay more than $373 a month for individual coverage and more than $1,008 a month for family coverage.

Answer Courtesy of USAToday 

We've received a lot of inquires on the "age 55" rule.  This only impacts your 401k or 403b plan.   An IRA account does not offer this early withdrawal feature.

You can take penalty-free withdrawals from a 401(k) if you are at least age 55 in the year you retire and if you leave your money in your former employer's plan. (If you roll the money into an IRA, however, the 59½ age rule kicks back in.) However, not all employers allow this option. You also can access 403(b) money penalty-free if you retire at 55.

Answer courtesy of Kiplingers. 

Costly March Madness

The NCAA Division I basketball tournament -- a k a March Madness -- could cost U.S. employers $1.7 billion in lost productivity, according to an annual estimate by consulting and research company Challenger, Gray & Christmas.

Between 28.6 million and 37.3 million workers will be in March Madness pools, according to the Challenger report. Using the higher estimate and assuming 10 minutes daily of wasted time per participating worker, the total productivity loss comes in at $1.7 billion, Challenger figures.

Faced with a weak economy, dimmer hopes of a merger with northwest Airlines and record fuel prices that are eating up profits, Delta Airlines said Tuesday that it would offer voluntary severance payouts to roughly 30,000 employees -- more than half of its workforce -- and cut U.S. capacity by an extra 5 percent.

Executives at Atlanta based Delta said in a memo to employees that the airline's goal is to cut 2,000 front-line, administrative and management jobs through the severance program, attrition and other initiatives.

Courtesy of WashingtonPost.com 

Hey wait a minute-who's left to buy these cars if everyone is encouraged to retire?

Newsweek.com looks at hiring and firing in Detroit..

GM, Ford and Chrysler are now offering virtually all of their 166,575 blue-collar workers buyouts of up to $140,000 or lucrative early retirement packages. Deadlines to decide are coming soon, and before it's all over, another 34,000 workers will head for the exits. At some factories more than half the staff is expected to take the buyout.

Why would the automakers hollow out their factories? Because last fall the Detroit Three cut a deal with the United Auto Workers union to allow them to pay some new hires half the wages of, and far fewer benefits than, current workers. These new hires will make as little as $14 an hour, compared with the $28 an hour earned by the workers the automakers are attempting to cashier. What's more, the outgoing workers have generous pensions and retiree health care benefits. The incoming workers will have 401K plans and no traditional pension or retiree medical benefits paid for by the company. Add it all up and the workers that are leaving cost the automakers $78.21 an hour, including benefits, while those who replace them will cost an average of $25.65 an hour. That downshift will save Detroit billions, which it desperately needs to get back in the black.

Looks like we should move to Wyoming for cheaper gas.  Check out gasoline prices in each state.

Frequent readers here know the big advantages of the Roth IRA.

The Roth is non-deductible IRA that allows tax-free withdrawals at retirement, the ability to take your own "contributions" out any any time without taxes or penalties (huge benefit), and you don't need to take distributions at age 70 1/2 like your traditional IRA or 401k.

Here's another plus;  A Roth IRA can substantially reduce a retiree's tax bill.

RegisteredRep.com explains the tax reduction of the Roth IRA.

Sure, you and most of your clients recognize and appreciate the fact that after age 59 ½ distributions from Roth IRA accounts are typically tax-free. But because of the progressive nature of the tax code, that lack of taxation can provide a “1 + 1 = 3” benefit.

Say your clients are a 65-year-old couple, with the $1,000,000 they hold in IRAs as their only source of income. All other factors being equal, if they decide to withdraw $100,000 a year from those accounts, their federal income tax bill will reach about $13,000, according to the “Tax Estimator” at www.hrblock.com.

But if their million-dollar nest egg is instead made up of $800,000 in IRAs, and $200,000 in Roth IRAs, and the clients pull $80,000 from the former and $20,000 from the latter, their federal income tax liability for that year will be less than $8,300.

Withdrawing from both an IRA and a Roth IRA, then, cuts their tax bill to just over 8 percent of their income from 13 percent. Basically, their ability to tap a Roth IRA saves them $5,000 in federal taxes in just one year — almost enough to pay the cable bill.