Archive for December, 2010


Ready to retire on $190 a month?

Are you prepared to live on $190 a month when you retire?

For most Americans in their 50s, that’s all the personal savings they’ll have to look forward to during retirement, according to Wells Fargo’s annual retirement survey.

The survey, which polled nearly 2,000 middle-class Americans ranging from 20 to 60 years old, found that Americans aren’t saving enough, they are underestimating the amount of money they will need in retirement, and they are more likely to end up working through retirement.

While most Americans predict they will need a nest egg of $300,000 to live on for 19 years in retirement, the average savings of 50-somethings is only $29,000, which comes out to an income of $190 a month over 20 years assuming a 5% rate of return.

“$190 a month is not going to cut it,” said Laurie Nordquist, co-head of Wells Fargo Institutional Retirement and Trust. “This reinforces the huge gap in terms of what people are going to need and what people have. They have a little time to add to that nest egg, but it’s a huge shortfall to recover.”

Even with Social Security or other sources of income, most people are not going to be able to cover basic needs with such a small amount of money, she added.

While you would think the recession is to blame for the lack of savings — making it harder for people to tuck away money in retirement plans — Wells Fargo found that people saved roughly the same amount during the recession as they did before.

According to the survey, only 33% of Americans have a detailed written retirement plan and 37% don’t know how much the will need in retirement or how long they will be able to live on what they have saved.



1 in 4 Gitmo detainees said to return to terrorism

A declassified document made public Tuesday showed that up to 25% of all former detainees at Guantanamo Bay, Cuba, subsequently engaged in terrorism or insurgency, but the percentage is much lower for those transferred under the Obama administration.

The summary issued by Director of National Intelligence James Clapper said that of the 66 detainees transferred to other countries since President Barack Obama took office, two were confirmed and three were suspected of “re-engaging in terrorist or insurgent activities.”

Overall, the summary said, a total of 598 detainees had been transferred from the Guantanamo facility, with 150 confirmed or suspected of later taking part in terrorist or insurgent activities.

“Of the 150 former GTMO [Guantanamo] detainees assessed as confirmed or suspected of reengaging in terrorist or insurgent activities, the Intelligence Community assesses that 13 are dead, 54 are in custody, and 83 remain at large,” the summary said.

According to the figures, 532 detainees were transferred out under the Bush administration, with 145 of them confirmed or suspected of recidivism, or returning to terrorism. The figures put the rate of recidivism of Bush-era detainees at up to 27%, while the rate for Obama-era detainees is up to 7%.

The summary also said that the number of detainees returning to terrorism will likely increase, as data on the issue showed that, so far, about 2.5 years elapses between when detainees leave the Guantanamo facility and when they re-engage in terrorism.

John Brennan, Obama’s assistant on homeland security and counterterrorism, noted in a letter last February to House Speaker Nancy Pelosi that the administration had taken steps to strengthen oversight of Guantanamo detainees, including creation of a task force.

In the letter, Brennan said the task force included “60 career prosecutors, agents, analysts and attorneys from across the government, including civilian, military, and intelligence officials.”

“Every decision to transfer a detainee to a foreign country during this administration has been made unanimously by all agencies involved with the review process after a full assessment of intelligence and threat information,” Brennan wrote.

Obama pledged when running for president to shut down the Guantanamo Bay facility, but his administration is almost a year behind schedule in making that happen.

Retiring Sen. Christopher “Kit” Bond, R-Missouri, an opponent of the shutdown plan, said Tuesday that the declassified summary showed the need to keep terrorism suspects at Guantanamo Bay.

“It is unacceptable to continue transferring these dangerous detainees when we know that one in four are confirmed or suspected of returning to the fight,” Bond said in a statement.

More than 170 detainees are still being held at the Guantanamo Bay facility.



Little company behind big spam

You may have noticed certain spam comments repeatedly showing up on – they’re hard to miss, appearing mere seconds after the editors here publish an article. The comments are almost identical each time:

“It’s a Little off Topic but Anyone looking for a Job should check out this Website that is currently Hiring People to Work from Home for $73/hr Online: This opening has already paid me very well and is supporting my entire family and my children’s school. God Bless.”

That’s what “Audrey Sanders” wrote on a recent story, just the latest in thousands, if not tens thousands, of near identical posts. On a separate story, a Michelle Roberts wrote the same, except that she added, “And I Can Work from Home with my Kids!” before wishing readers “God Bless.”

The Facebook users making the comments have normal-seeming names and real profile pictures. But most readers probably aren’t fooled. Clicking on the person’s name reveals in nearly each case that the user has no friends, no interests or personal information listed, and does not respond to messages. If the accounts aren’t fakes, they’re built for the sole purpose of generating spam on the commenting system, which for most sections of and partner site CNNMoney, are currently powered by Facebook.

Fortune decided to jump down the rabbit hole and follow the trail of some of our most dedicated commenters, even if their comments are always more than a little off topic: The trail eventually ends at a company calling itself the Direct Commerce Academy.

The link to the “CNN jobs” web site (the site is not affiliated with CNN, CNNMoney or Fortune in any way) goes to a site called News 7 Daily. Hint: it’s not a real news outlet. The page presents a news story about Kelly Richards, a stay-at-home mom who tells News 7 Daily she has been making over $7,000 per month by working from home online.

The site design looks like a real news site. Tabs along the top tout sections like Home, U.S., World, Entertainment, and Leisure. Under “Other Related News,” there are even ads for Fortune-like lists, such as “50 best places to launch a business.” Photos along the bottom of the current news story preview stories about other people who have made the same outrageous money as our friend Kelly.

But clicking the section headings or anything else on the page (except for the weather report, which is legitimate, embedded from leads to one site: (Note: We’re not linking the URLs for the spam sites we’re mentioning, to avoid helping them boost their search engine rankings.)

Users who get this far are faced with an image of a large laptop screen explaining the Home Income Wealth System. Sticky notes announce that you’ve seen this service featured on CNN, MSNBC, Fox News, People, and Time (they must mean you’ve seen it in the spam comments). At last, users enter their names and addresses in order to “check the availability” of the start-up kit. Spoiler alert: it’s available.

We entered some information and learned we could have the home income kit for only $2.97. At this point, the site finally asks for a credit card, and we went no further. But wait—$2.97 isn’t the whole deal. Click “Terms and Conditions” and you get the big reveal: In five days, after the $2.97 trial period ends, you’ll be charged an activation fee of $68.71 and another monthly fee of $68.71.

Also in the Terms and Conditions was an 800 number. Call and a real human being answers: “You’ve reached customer care.” We asked what company the operator represented, and were transferred to the “corporate offices” where a woman named Debbie shirked our questions until finally saying, “um, we’re called Focus. You can go online, to or whatever.”

We tried that. But is the web site of the very real company Focus, a business expertise network that provides expert advice to Web entrepreneurs, and knew nothing about Underground Cash Machine or these links.

How to work from home and lose money online!

Another call to the original 800 number gave us a new person, Joe, who opened up a bit more. Joe said the company is not called Focus, but the Direct Commerce Academy. He said that they are based at a call center in San Diego, and that the whole company is in the same building there, though with different departments for incoming calls.

He was happy to explain the DCA for us, though he wouldn’t provide a last name and could not be reached on subsequent calls. “What you’re doing, basically, is you choose the category of links you want to advertise for, so you can do clothes, jewelry, sporting goods, whatever you’re good at is what we recommend you selling,” he said. “So you find companies that are doing advertising over the Internet, and you advertise for the store. And when someone clicks your link and buys the shoes, say, you make commission off of it.”

What Joe’s trying to say is that his company charges users a monthly fee to give them access to links that the users are then supposed to go promote online, in order to earn small amounts of money on click-throughs of those links. In other words, DCA is creating human-powered spam.

Joe happily acknowledged the hefty monthly fee, saying: “A lot of people don’t make any money at first, just lose it, so they see the monthly fee as a big hit to their income. But if they do stick with it, and actually go through and post links; that charge will start to seem like nothing.”

“On average our customers make an extra grand a month,” he said. Joe would not provide us with contact information for anyone that has had success with the service.

Joe also said that the DCA has been around since 2003, and that his specific job is solely to deal with the people that call to cancel their accounts. DCA also has a sales department that contacts users who enter contact information, but not a credit card, in an attempt to have them complete the sign up process.

Judging from hundreds of posts found on community message boards, the people that call DCA to cancel their accounts are not pleased with Joe’s response. “Watch out… I noticed the DCA charges and had my bank block those transactions since then, they are now trying repeatedly (7x in last 2 weeks) to get the money via two other names which show up as ExcelPro and MkOnlineFrmHm,” posted an anonymous user on on November 10. Another commenter, on November 15: “DCA are a group of criminals and need and will be stopped in their tracks. I fell for this crap.”

Yet the comments continue to appear. And they’re always made via Facebook accounts. Simon Axten, a Facebook spokesperson, said of the matter: “We take security very seriously and devote tremendous effort to protecting people from spam and scams. We’ve build automated systems that operate behind the scenes to detect and block or remove suspicious activity, including fake accounts and spam posts or messages.”

Meanwhile, Facebook just announced a sophisticated new messaging system, one that strives to be the routing point for the myriad ways people communicates online these days. It seems that now might be the time for Facebook to address its complex spam problems, and not by accidentally deleting valid accounts, as it has done this week. Such an effort by the social networking company wouldn’t be off topic at all.


For women, a seat at the table

When Nancy Pelosi was given the gavel as speaker of the House for the first time, she broke with precedent by posing for pictures at the podium surrounded by her grandchildren and children and grandchildren of other House members.

But when she was told that the House rules might not allow such a scene, she asked, “Who’s in charge of the rules?” The answer — the speaker of the House.

Pelosi recounted the anecdote to an admiring audience Tuesday evening at the first TED Women conference in Washington. The crowd gave her two standing ovations, a sign of support at a time when she’s preparing to give up that gavel due to the Democrats’ steep losses in the midterm elections. (TED is a nonprofit organization that spreads ideas through its conferences and itswebsite; it has a partnership with to publish some of its talks.)

Pelosi, who is the first woman speaker and will become minority leader of the House in January, stressed the idea that women need to be leaders in their own way, not necessarily following in men’s footsteps. “We’re not there for the power,” she said. “We’re there to get a job done.”

She acknowledged that women are sometimes uncomfortable with the tactics required to get things accomplished. “That doesn’t bother me,” she said, to laughter, during an onstage interview with Pat Mitchell, president and CEO of the Paley Center for Media.

“Men have been in charge for a very long time,” Pelosi added. “I think there’s room for other ideas.” She recalled her first visit as a minority leader to the White House during the George W. Bush administration. She said she felt she was sitting in a chair crowded by the spirits of women pioneers such as Susan B. Anthony, Sojourner Truth and Elizabeth Cady Stanton. “I could hear them say, at last we have a seat at the table,” Pelosi said.

A seat at the table also figured prominently in a talk at the TED Women conference by Sheryl Sandberg, chief operating officer of Facebook, who lamented the small minority of top corporate leadership and governmental posts held by women.

Sandberg said women have to share the blame for that situation. “Women systematically underestimate their own abilities,” she said. By and large, she said, women do not negotiate for themselves.

“The men are reaching for opportunities more than women. We’ve got to get women to sit at the table,” Sandberg said.



Obama aide defends tax deal

President Barack Obama’s top political aide Wednesday defended the tax plan the president hammered out with Republican leaders, even as Democrats threaten to rebel over it.

David Axelrod insisted the most important thing was that Obama had been able to secure a two-year extension in current income tax rates for “the middle class.”

Democrats are angry that the extension also applies to high earners, as Republicans had demanded, and that Obama agreed to a Republican proposal on the estate tax.

“Our guys got taken to the cleaners,” top Democratic Rep. Chris Van Hollen, D-Maryland, said Tuesday night.

Rep. Gary Ackerman, a New York Democrat, joked bitterly about the notion that Democrats hadn’t gotten anything out of the negotiations.

I disagree that we didn’t get anything — we got screwed,” he said.

Rep. Anthony Weiner, also a New York Democrat, accepted that politics involves compromise, but blasted Obama’s negotiating skills.

“I honor the president for wanting to try to solve these problems, and I’m not saying that you never compromise,” he said. “This is Washington. That’s how laws get passed. But he and his team just don’t seem to be any good at it, and that’s a real problem for a lot of Democrats.”

But Axelrod called the proposal “a good deal,” saying the president and his team “need to focus on what’s good for the country, what’s good for the American people.”

If no deal was passed, he said, “taxes would go up, people would lose their unemployment insurance and the economy would suffer.”

He also downplayed predictions that the tax deal — which does not include any revenue-raising measures — will increase the deficit by a huge amount.




Alternative minimum tax has peril for some payers

Maybe you’ve managed to ignore the recent spate of tax-reform stories, but that doesn’t mean you’ll dodge the Alternative Minimum Tax or its higher tax bite.

The AMT system comes with a completely different set of rates and deduction rules. People pay it only if their AMT tax amount is higher than their traditional taxes. Translation: if you’re paying the AMT, you are by definition paying higher taxes.

The system created to make sure the uber-rich didn’t dodge the tax bullet is under fire because it’s now affecting middle-class Americans. And reforming it could mean increased tax payments for everyone.

The problem? What defined uber-rich in 1969, when the AMT was first enacted, has never been adjusted for inflation. That means what made you affluent back then doesn’t now — but you’re still taxed like it does.

The Urban-Brookings Tax Policy Center says the AMT will hit 3.6 million out of the nation’s 131 million taxpayers filing for tax year 2005 (filed in early 2006), and could affect 31 million by 2010 if nothing is done.

To give you a sense of just who might get caught, this year only 1.8 percent of married couples with two kids and an adjusted gross income between $75,000 and $100,000 will be subject to AMT. Next year, that number jumps to 73.4 percent.

A tale of two systems

Under the regular IRS rules, you start with your gross income and subtract deductions like state taxes you paid, and exemptions like child credits. Eventually, you arrive at your taxable income.

Under AMT rules, you still start with your gross income, but many of the usual deductions and exemptions are disallowed. Suddenly, your taxable income is a lot higher.

Even though some deductions still stand, including those for mortgage-interest and charitable donations, some key breaks are lost. They include:


  • state and local income taxes and property taxes

  • unreimbursed business expenses

  • child-tax credits

  • tax-preparation fees

  • legal fees

  • home-equity loan interest

Even though the highest tax rate under the AMT — 28 percent — is lower than that in the regular tax system — 35 percent — AMT victims are paying more because they’re paying on a greater amount of taxable income.

Short of moving to a low-tax state like, say, Texas, said Len Burman, co-director of the Tax Policy Center, there’s not a lot you can do to avoid AMT’s clutches.

Exemptions and phase-outs

In trying to determine tax liability under AMT, you do get to exempt a certain amount of income from your calculations.

The problem is that the exemptions granted under the AMT have not kept pace with inflation — while the average paycheck has. For instance, in 1982, the exemption for married couples filing joint was $40,000. Adjusted for inflation, that would be $82,000 today.

Currently, the exemptions are only $58,000 for married couples filing jointly and $40,250 for singles. And they would be even lower if Congress every year did not vote through a “patch.”

Really high earners may not even get the full exemption since it is phased out above certain income levels.

The phase-out for married couples filing jointly begins at $150,000 (after the deductions that are allowable). The deduction shrinks by 25 cents for every dollar earned above that amount until finally, at $382,000, there is no exemption at all.

Who gets burned?

By law, everyone who files taxes is obligated to figure out whether they have to pay AMT, and they are prompted to do so on line 44 of Form 1040.

There, taxpayers are referred to the AMT worksheet. If the taxable income on the worksheet is higher than the taxable income on the 1040, you are subject to AMT and must fill out the special AMT Form 6251.

But the 12-line worksheet and Form 6251 can be daunting, and 75 percent of AMT payers hire a professional to do their returns, according to the President’s Advisory Panel on Federal Tax Reform.

“The first time most people hear about the Alternative Minimum Tax is when they get a letter from the IRS saying that they still owe money,” said the Tax Policy Center’s Burman.

So how do you know if you’ll be one of the unlucky?

If your total deductions and exemptions under the normal tax code come close to the AMT exemption, you want to be on the lookout for the AMT, said Tom Ochsenschlager, vice president of taxation with the American Institute of Certified Public Accountants.

Also be on the lookout if your adjusted gross income changes dramatically because of:


  • a lot of itemized deductions

  • high local and state tax deductions

  • child exemptions

  • a mortgage deduction

Then it may be time to get some professional help or some good tax software.


Wal-mart to lead discounting efforts

A quick look through Wal-Mart’s circular shows that the discounter is ready to take on its rivals, especially in the key electronics and toys categories.

“Customers can avoid standing in the cold waiting for stores to open and get an early jump on the season’s best savings,” he said. The early sales will focus in items like toys, pajamas, and small kitchen appliances, with the electronics and HDTV deals kicking in at 5 a.m., he said.

Among the doorbuster deals the circular advertises: the 32-inch Emerson 720p LCD HDTV for $198; 42-inch Emerson 1080p LCD HDTV for $398; 42-inch LG 1080p LCD HDTV for $478; Magnavox Wi-Fi Blu-ray player (with a $10 credit for on-demand movie service Vudu) for $68; 8GB iPod Touch for $225, plus a $50 Wal-Mart gift card; Kodak C183 14-megapixel 3-inch LCD digital camera for $59; and an HP 15.6-inch 250 GB harddrive laptop for $298.

Doorbusters also include $7 and $8 videogames, more than 90 DVD movie titles for $1.96, and Blu-ray disc movies for $5 and $10.