European markets are being thrashed as a result of great uncertainty related to Italy’s political situation. Last April we wrote about our concerns regarding Italy’s banking system and the massive debt that had been accumulated. The original post is below.

via Why Italy? 

The U.S. Retirement Crisis And The Impact On State Finances

We’ve been stating for a while that the unfolding U.S. retirement crisis would not only create a social and economic issue for individuals but that it would likely impact U.S. states, as well. We’ve just stumbled across an article in Employee Benefit Adviser written by Paula Aven Gladych, titled “Pennsylvania Focuses on Retirees Who Can not Afford to Retire”.

The article highlights the economic impact on Pennsylvania’s budget from increased expenditures to support the elderly population. According to Joe Torsella, PA State Treasurer, “when people don’t save enough for retirement, the states have to pick up the slack in long-term care and Medicaid and Medicare costs and state budgets get messed up trying to allocate enough funds to handle these extra charges”.

Pennsylvania decided to commission a study to look at its demographics and its ever-growing population of retirement age people. “As we suspected, there are significant impacts to state finances going forward from the state of our retirement preparedness,” Torsella says.

According to the article, “in 2015, Pennsylvania spent $4.25 billion in assistance costs for elderly residents. Fifty-four percent of this cost was attributed to the 21% of the elderly population who have $20,000 or less in annual household income, according to the report.”

If the elderly had been better prepared for retirement, meaning that they could replace roughly 70% of pre-retirement income, the state would have likely saved about $700 million in state assistance costs. The net impact of state assistance costs due to insufficient retirement readiness is likely to exceed $1 billion in the next 12 years.

We know that many small employers do not offer their employees a retirement program. We also know that employees are not likely to save outside of an employer-sponsored plan.  Thus, it is imperative for states to begin to offer state-sponsored retirement programs that can offer payroll deduction to these small employers and their employees.

As the social safety net gets more expensive, tax hikes are likely to follow. There is a great chance that well-heeled residents will seek to live in less expensive states. We have already witnessed a significant exodus from Illinois to nearby states.  If not careful, we could easily see this happen to other “Blue” states that have been impacted by recent Federal tax changes impacting one’s ability to deduct “SALT” taxes.

Finally, without a decent retirement benefit to rely upon residents won’t have the financial wherewithal to remain active participants in their economy. This will also negatively impact tax collections, businesses, and ultimately that state’s labor force.  It is truly a vicious cycle.

Bitcoin – What Is It? It Sure Isn’t An Asset Or Currency!

In July we dedicated the KCS Fireside Chat to Bitcoin.  I wrote it as much for my education as that of our clients, prospects, and friends. In our a July article we wrote,”If you thought that bitcoins could become a store of value, then the sharp price volatility seen in this currency may just change your opinion.” Furthermore, “The main reason for this volatility is that there is no underlying object/support to which the value of the bitcoin can be pegged.”

Well, if we thought that we were witnessing volatility in July, Just take a look at what occurred during the last several days.  Bitcoins experienced a 29% decline in price which resulted in a loss of “value” of roughly $35 billion. At the same time, Bitcoin cash saw its price quadruple. How ridiculous!

Since neither Bitcoin nor Bitcoin Cash is a store of value, we are witnessing a very public game of Russian Roulette. Wolf Richter, Wolf Street, recently penned, “instead of being usable currencies, cryptos – CoinMarketCap lists nearly 1,300 of them, with many of them already worthless – are a form of online betting based on a new technology, and they’re subject to different dynamics than classic online betting, but not regulated or forbidden by governments, unlike classic online betting.”

If you feel that you need to participate in some of this action, we’d suggest that you tread very, very lightly!

Midland Park Council Campaign Update

I am pleased to announce that Jack Considine and I will begin our campaign for the Midland Park Council on Sunday, October 8th. In order for us to be successful in November, we will need support throughout the community.  Please let us know if you’d like to get involved by reaching out to us through or through this blog. In addition, our campaign website will be launched next week, which can be accessed at

We will be looking for members of the community to become block coordinators for the purpose of placing lawn signs, distributing flyers, and generally talking up the campaign and candidates. We sincerely appreciate your interest and support and look forward to working closely with you before and after the campaign. Midland Park has been a fabulous place to raise our children, and we’d like to ensure that it remains a town of choice for all its citizens, both present, and future.  Thank you!

The Choice Isn’t Always Yours To Make

Older workers may think that a lack of retirement funding can be overcome by working longer, but that option isn’t always available to the employee.  Paula Aven Gladych recently reported in Employee Benefit Adviser on a recent study conducted by Transamerica’s Center for Retirement Studies that highlighted the fact that nearly three-quarters of employers think that they are “aging-friendly”, but unfortunately, most haven’t put in place procedures or policies to actually implement this objective.

According to the study, “only 39% of employers offer flexible schedules to pre-retirees, and even fewer allow pre-retirees to change from full-time to part-time positions or take on less stressful or demanding jobs with the company.”  Amazingly, only 27% of employers encourage pre-retirees to participate in succession planning, training and mentoring before they leave the company. What a waste of experience.

Why should an employee find this study disconcerting? With the demise of the traditional DB pension plan for the private sector, most employees will have to contribute earlier in the process, while also contributing more in order to actually generate a commensurate retirement benefit through a defined contribution offering.

Not surprisingly, this isn’t happening, and it isn’t likely to happen anytime soon, as higher paying jobs are hard to find in this economic environment, and our younger generation is often burdened with greater demands on their salaries from items such as student loan debt, higher medical insurance premiums, and greater housing expenses to name just a few.

So, if you find yourself a participant in a DC plan, please “pay” yourself first so that you can create a retirement account that might actually allow you to retire at a more normal age without having to count on the support of your employer to “permit” you to work longer.