Data and Research March 7, 2016

Less Than Half of Pre-Retirees Consider Themselves in Good Health

Many fear that less-than-ideal health, particularly in one's older years, could derail retirement savings.
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Pre-retiree Americans fear that poor health could derail their retirement savings, particularly as they age and face higher health care costs. This is according to HSBC’s report, “The Future of Retirement: Healthy New Beginnings.”

More than three quarters, 76%, of Americans view poor health as potentially the largest barrier to savings, followed by illness in a partner, cited by 61%. The survey queried 18,000 pre-retirees and retirees in 17 countries, and found that 67% of pre-retirees are unsure what health care will cost them in retirement. For women, this rises to 73%, and for men, it declines to 60%.

Other findings show 42% of pre-retirees consider themselves to have good health for their age, 61% eat a healthy diet, 59% have regular medical check-ups, and 33% take preventative medications. However, among retirees, 71% believe they have good health for their age, 84% are eating a healthy diet, 66% have regular medical check-ups, and 66% take preventative medications.

Nearly two-thirds, 63%, of pre-retirees say they are prevented from living a healthy lifestyle due to being too busy (30%) and lacking leisure time (24%). Twenty-two percent of working age women say that living a healthy lifestyle is not affordable, while 12% of working age men believe this is so.

Before retiring, people need to adopt a healthy lifestyle and develop a financial plan to avoid stress, says Michael Schweitzer, global head of sales and distribution at HSBC.

HSBC suggests five actions people can take to improve their retirement and health care outlook: start saving for retirement as early as possible, take steps now to minimize health risks, plan for longevity and consider how your health care needs may change in retirement.

Recent research from Empower Institute urges people to use health care cost prediction tools to estimate what they will need in retirement. Another survey, from Nationwide Retirement Institute, finds that pre-retirees among all financial statuses have fears about health care costs in retirement but are not having the conversations needed to plan for them.

Investing March 7, 2016

CalSTRS Suing Volkswagen

The public fund giant says VW’s purposeful deception in defeating air quality controls on millions of diesel vehicles polluted the environment and threatens the company’s long-term shareholder value.
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The California State Teachers’ Retirement System (CalSTRS) announced plans to participate in a German securities litigation suit against Volkswagen AG, citing the automaker’s admission that it deliberately installed software that misrepresented air quality and emissions information on millions of so-called “clean diesel” vehicles.

Since the September 2015 revelation of Volkswagen’s fraudulent activities, illegal and intentional wrongdoing to manipulate emissions testing, VW’s share price has dropped significantly. The litigation is currently in the planning process, with additional plaintiffs to be announced in the near future.

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“Volkswagen’s actions are particularly heinous, since the company marketed itself as a forward thinking steward of the environment,” says CalSTRS Chief Executive Officer Jack Ehnes. “Its deceitful and hypocritical actions ultimately caused great harm to the atmosphere and the emissions cheating scandal has badly hurt the company’s value.”

Ehnes continued, “As an actively involved, long-term shareholder, CalSTRS places utmost importance on our fiduciary duty to our members to attempt to recover losses due to such wrongful conduct, while also communicating a clear message to VW, as well as the entire automotive industry, that we will not tolerate these illegal actions.”

According to a CalSTRS statement, German securities litigation is unlike United States securities class actions because shareholders in German companies are not entitled to a pro-rata share of recovery unless they affirmatively join a case, as CalSTRS is doing. A majority of CalSTRS shares in Volkswagen AG, valued at $52 million (353,988 shares as of December 31, 2015) in common and preferred stock, were purchased on foreign exchanges.

According to the Los Angeles Times, a spokesman for the California Public Employees’ Retirement System (CalPERS) confirmed that fund is separately pursuing a similar action.

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