Ukiah Daily Journal from Ukiah, California on March 18, 1998 · Page 3
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Ukiah Daily Journal from Ukiah, California · Page 3

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Ukiah, California
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Wednesday, March 18, 1998
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THE UKIAH DAILY JOURNAL Commerce Lois O'Rourke. commerce page editor, 468-3522 WEDNESDAY, MARCH 18, 1998 MONEY MATTERS Boom and bust By BARBARA REID I f you're about to retire or change jobs, you have some critical decisions to make. Because if you're counting on a .comfortable retirement, that money has to keep working. Naturally, your decision will be shaped by your personal circumstances. Changing jobs? You can, and probably should, keep your distribution invested for retirement. According to the Social Security Administration, these savings will ultimately provide one-third of your income during retirement. Does retirement seem a long 'way off? Think about the potential for tax-deferred growth that an IRA rollover could provide over all those years. Retiring? This may be your last, and largest, paycheck ever. You'll need to carefully consider your immediate and future income needs when deciding whether to pursue one or a combination of alternatives for handling your retirement plan distribution. Straightforward strategies for deferring taxes. The direct rollover. The surest way to continue to benefit from the same 100 percent tax- deferred growth of earnings provided by your current retirement plan is to request A direct rollover of your assets to an IRA. Simply instruct your employer to send your retirement plan balance directly to the IRA you have selected. It is important that you inform your employer of your intention to complete a direct rollover before your distribution is paid to you. If you don't, 20 percent of your assets will be withheld and forwarded to the Internal Revenue Service, and the check you receive will be for just 80 percent or your account balance. A direct rollover allows 100 percent of your retirement plan assets to continue to accumulate on a tax-deferred basis until you retire. At retirement, you probably won't need to withdraw your savings from your IRA all at once, so these assets can remain invested tax-deferred. Can I roll over my retirement plan savings into an existing IRA? If you mix the distribution from your retirement plan with money in your existing IRA, you'll lose "portability." Portability lets you transfer your qualified retirement plan money from a rollover IRA to another employer's retirement plan at a later date. If you won't have a need to transfer these dollars to a future employer's plan, there is no reason why you can't roll your plan savings into an existing IRA. Is my entire retirement plan distribution eligible for an IRA rollover? If you made after-tax contributions to your plan, these cannot be rolled over. YOU will receive a statement ffom your employer that explains what portion of your distribution represents after-tax- contributions. ;«• This amount should be taken in cash. Only the earnings from after-tax contributions may be foiled over into an IRA or other eligible retirement plan. ;• Weighing other options for yjour retirement plan distribu- 'tjon, Why not take some or all of 'my money in cash? Sounds tempting, but most financial jexperts would counsel against it. jf you take your distribution jiow: !; »Your employer will withhold •20 percent of the distribution. $his amount will be applied jagainst your income tax liability for the year of the distribution, lyou may owe federal income jtaxes in excess of the 20 percent jtfiat is withheld, •i 'Depending upon where you See MONEY, Page 6 THE COMMERCE FILE Los Angeles Times photo Jack Nietzsche, 37, at work on the set of "Cybill" Saving is a top priority for people whose incomes are unpredictable. Cyclical gigs can play havoc with finances By HELAINE OLEN Los Angeles Times Syndicate J ack Nietzsche, a veteran boom operator in the entertainment industry, says that angling a microphone just right so it doesn't spoil a shot is a piece of cake, compared with juggling his finances. Like many in his trade, Nietzsche, 37, goes from gig to gig. He can work for weeks without break on sitcoms like "Cybill" and features like "River's Edge," then be collecting unemployment and scrambling for a new assignment when the production wraps. His gross annual income can range from $25,000 to $100,000. "I'm a migrant film worker," he says. "I can go for months without work." In the past, Nietzsche didn't give much thought to building a nest egg, instead spending all his wages when times were good and living on borrowed money when jobs were scarce. In the early 1980s, he found himself almost $60,000 in debt. It took years to pay it all off-just in time to discover that he owed the IRS an unanticipated $25,000. "It cleaned me out. My hand shook as I wrote the check," he recalled. Today, Nietzsche is a new man - financially speaking. He has pared down his expenses, renting a small West Los Angeles apartment for $550 per month, and has traded in his European and Hawaiian vacations for weekend getaways to Northern California. He's maintained this more spartan lifestyle even as he's reaped the benefits of Hollywood's recent economic resurgence, working steadily and grossing $80,600 in 1995 and $72,000 last year, a figure that includes a $1,200 option on a screenplay he wrote. Nietzsche tries to invest $300 a month plus his annual tax refunds. His portfolio includes $10,340 in a credit union money market account that he considers fallback money; $10,965 in the Dodge & Cox Balanced fund (five-year average annual return: 14.4 percent); and $10;420 in;an American Express fixed annuity offering a guaranteed minimum return of 5 percent. He also owns about $1,350 in Mendocino Brewery stock. His only liability? A personal loan for $2,770. Nietzsche took it out last month to consolidate credit card debt from overspending at Christmas. He expects to have that paid off by July. Nietzsche said he had no idea if he had been saving enough for a "stress-free" retirement near his childhood home in Mendocino County. A union pension is still not a sure thing; to be eligible for even a minimal monthly stipend, he must put in 400 hours a year for 10 consecutive years on productions using union-represented workers. Nietzsche is currently working toward his ninth credited year. In addition, he worries that a prolonged bout of unemployment could wipe out his savings. Percy E. Bolton, a Los Angeles-based fee-only certified financial planner, reviewed Nietzsche's finances and pronounced his concerns valid. Nietzsche's emergency savings are inadequate for someone working in a boom-and-bust business like entertainment, Bolton says, and his retirement savings are neither sufficiently diversified nor invested aggressively enough. Three-quarters of Nietzsche's portfolio is in fixed-income investments, about 20 percent overall is in large-company stocks (about two-thirds of the balanced mutual fund), and 4 percent is in the small-company beer firm. Based on both conventional wisdom and Nietzche's goals, Bolton says, he should put a far greater percentage of his assets in stocks and far less in fixed-income investments, such as bonds and bank savings. (The rule of thumb when trying to decide on a proper mix of investment assets is to subtract your age from 100. The result is the percentage of your assets that should be in stocks. The rest can be in bonds.) Continuing to follow this conservative investment style and relatively low rate of saving could land Nietzche in a real bind in his late 70s, Bolton said, even taking Social Security benefits into account. The audio engineer will need to either reconfigure his investments or downscale his retirement plans. Bolton would like to see Nietzsche have 45 percent of his investments go into large- company stocks, 5 percent in small-company stocks, 10 percent in international stocks and no more than 40 percent in bonds. In addition, Bolton said, he should increase the dollar amount he saves for retirement until he is putting aside 10 percent to 20 percent of his annual income, or between $600 and $1,200 a month for that purpose. The amount should be automatically deducted from Nietzsche's money market/checking account each month and can be adjusted as jobs come and go. Why must he devote so much of his savings to retirement? Mainly because of the unpredictable nature of his work and the uncertainty over whether he'll get a pension, and if so, for how much. And also it's diffi- See BOOM, Page 7 ANALYSIS Criticizing technology By JOHN CUNNIFF AP Business Analyst NEW YORK - This is an age of technology, and marketing and social innovation, but few innovations achieve their goals without criticism and controversy. Lots of it. As in: •Voice mail. Poorly conceived, it can antagonize clients and cost customers. Many companies set up voice mail numbers to resolve problems and end up creating new ones. The ultimate is the long-distance information number that runs through a menu so long it runs up a big bill before arriving at something resembling what the caller wants. For this and other reasons the Fair Credit Reporting Act of 1997 requires the major credit bureaus to provide toll-free telephone lines answered by employees rather than recordings. •Health insurance. A delivery system in which insurers and ben- efits administrators assume powers once exercised mainly by medical personnel. It sometimes leaves all parties unhappy - doctors, patients and insurers. Increasingly, doctors are organizing and even unionizing, patients are suing and those in charge of payments are complaining about what they consider unfair demands being put upon the system. •Telemarketing. It's one of the reasons so many people don't answer the telephone but instead acquire equipment that discloses the calling number. And why some people install answering machines. This isn't likely to discourage telemarketers because, as they know, the statistical odds are with them. That is, if they dial enough numbers they'll get enough responses. •Credit card solicitations. See TECHNOLOGY, Page 8 New ad director named The Daily Journal Veteran account executive Janet Noe has been named the Daily Journal's new advertising director, Publisher Dennis Wilson announced this week. She replaces John Speck, who recently became publisher-general manager of Donrey Media Group's Jacksonville (Tex.) Daily Progress. Noe, 39, has worked at the Daily Journal since 1978. "I started working in the circulation department when I was 19," Noe recalls. "Then I worked for a while in the production department, then I became an advertising assistant." From there, Noe was promoted to account executive, before becoming classified advertising manager and now, advertising director. "Janet has certainly earned her stripes," Wilson says. "As an 18-year-plus employee, she has a good handle on the needs Janet Noe of the advertising department and knows the county's business community. Her qualifications are outstanding and I'm positive she will do a superb job." As advertising director Noe directs a staff of 10, deals with major accounts, and plans promotions. She also is responsible for her department's budget and pay roll. By K.C. MEADOWS T he preliminary unemployment figures for February for Mendocino County are in and unemployment dropped slightly. It's still in double digits, however, at 10.8 percent, compared to 11.3 percent in January. It's almost unchanged from a year ago. In 1997 we had a February unemployment rate of 10.9 percent. We gained about 250 jobs in the county in February, most of them in services other than hotel and health services (ie., doctors, lawyers and other professional offices). That sector gained 70 jobs from in February. In construction and mining with 40 jobs (construction, I think is the lion's share) and farm production with 40 jobs. There were an extra 20 logging jobs, and another 20 sawmill jobs, 30 more jobs in transportation and public utilities, and an extra 30 government jobs. Overall we had 4,440 unenv ployed people in February com- " pared to 4,960 unemployed people in January. Our county, with double- digit unemployment, is not enjoying the continued low unemployment rates of the state (6.3 percent) and nation (5 percent). The company jet of Crown Pacific Partners, L.P., a timber company out of Portland, Ore.; landed in Ukiah Tuesday and company officials -got off to look around Louisiana-Pacific properties. No one's talking about whether there's serious interest. A Crown Pacific spokesman in Oregon said he could "neither confirm nor deny" that company officials were in town:' I said I could confirm it for him since the jet was here and L-P. folks said they were touring CR; around. He loosened up a bit- then and said that's the compa*: ny line whenever they're askei about properties the company^ may be looking at. He said they« look at property all the time. 5 The company's Web page; says it "acquires and operates^ high quality timberlands" ir£ four states: Oregon, Wash ing v ton, Idaho and Montana. The» company owns no lands in Cali-- fornia. They now manage more* than 5 million board feet of tinK ber on about 800,000 acres irf those four states. » They also own five sawmillst and a chip converting plant.* Two new mills will be complet-* ed this year. *• In January, CP bought; Alliance Lumber of Phoenix,* Ariz., which has three contrac-I tor lumber yards. * The company says it has pro-I: vided investors with an average^. 22.5 percent return over the past* 24 months. *_ The man who owns the old-r est brewery in England': stepped off a helicopter in^ Ukiah Tuesday to have a look at* the Mendocino Brewing Com-? pany's new brewery here. Bobby Neame, chairman of. Shepherd-Neame Breweries,'! Ltd., will be named to MBC's'; board of directors at a board'j meeting today in Sausalitcv where the UB Group has its; U.S. headquarters. For those of] you who may have forgotten,! the UB Group (United Brew-', eries of America here) bought< about 47 percent of MBC last- fall and is funneling millions' into making Red Tail Ale a; national brand. UB's CEO Vijayt Mallya was also on hand TUBS-day. ;j The UB Group has a limited; partnership with Shepherd*! Neame in the United Kingdom;* and brews UB's "Kingfisher"! brand beer in England. King** fisher is the Budweiser of India;* Putting Neame on the MBG', board, according to Mallya, wil)t See COMMERCE, Page 6

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