Americans cut college and retirement savings amid bad economy

A sad old joke holds that people worried about their finances stuff their savings under their  mattresses.

Sadder still is that many Americans actually may be doing that.

More than one-quarter of Americans polled in a new survey said the best place to stash their limited savings is underneath their mattresses.

As with other recent studies of consumer attitudes in the troubled economy, the survey released Monday by Allianz Life Insurance Company of North America reflects the grim financial outlooks of many Americans, particularly toward their retirement and college-savings prospects.

Slightly more than half of working-age Americans question whether 401(k) and similar retirement plans will provide enough money for secure retirements.

Nearly half say the troubled economy has had an influence on their retirement saving. One in five people has cut spending to maintain their retirement savings levels, while 30% have either reduced their retirement contributions or stopped making them altogether.

“Given the gut-wrenching events and market volatility of late summer, consumers are questioning traditional retirement savings vehicles and changing their savings habits,” said Katie Libbe, a consumer expert at Allianz Life. “Recent events have only deepened the uncertainty many have felt about retirement since the market meltdown of 2008.”

The picture isn’t much better for college savings, with one in four people reducing or stopping their college contributions.

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In paying for college, better to be lucky than smart

-- Walter Hamilton

Photo: A game of shuffleboard. Credit: Mark Boster / Los Angeles Times

Kicking hybrids from carpool lanes slows everyone down

 
If you're like many California motorists, you probably looked on with envy or perhaps some stronger emotion when those single-occupant hybrids zipped by in the carpool lane. Others who had gone to the trouble of coordinating schedules and establishing real carpool relationships probably weren't too happy with their solitary HOV brethren either.

Surely, fairness was restored over the summer when the interlopers lost their HOV rights; the real carpoolers have seen their speeds increase, right? Wrong.

A new UC Berkeley study released Monday says that banishing those lone hybrid drivers from carpool lanes is making traffic slower for everyone. As an example, they cited a four-mile stretch of carpool lane on Interstate 880 in Hayward, which has seen a 15% reduction in speed since single-occupant hybrids were expelled since July 1.

What gives?

Researchers at UC Berkeley's Institute of Transportation Studies said they used traffic-flow theories and six months of data from roadway sensors measuring speed and congestion along all freeway carpool lanes in the San Francisco Bay Area to reach their conclusions.

Among other things, the report's authors found that the additional vehicles in the regular traffic lanes slowed speeds substantially. That slower traffic made it more difficult for the carpool drivers to move in and out of the HOV lanes, slowing them down as well. The report's authors were Michael Cassidy, UC Berkeley professor of civil and environmental engineering, and Kitae Jang, a doctoral student in civil and environmental engineering.

They were examing the end of a program that began in 2005 and ended July 1 that gave consumers an extra incentive to buy low-emission cars. By 2011, about 85,000 low-emission vehicles were carrying the coveted yellow stickers that gave them access to carpool lanes.

"Our results show that everybody is worse off with the program's ending," Cassidy said. "Drivers of low-emission vehicles are worse off, drivers in the regular lanes are worse off, and drivers in the carpool lanes are worse off. Nobody wins."

Related:

MTA plans to convert carpool lanes to toll roads

Electric cars to cost more in California

Gasoline prices at or near record highs for autumn

-- Ronald D. White

Photo: A single-occupant Toyota Prius southbound on the 405 Freeway carpool lane during rush hour, before the July 1 end to a program that allowed such access to solitary drivers of low emission vehicles. For good traffic flow, a new UC Berkeley study suggests, that's exactly where you wanted him to be. Credit: Lori Shepler / Los Angeles Times.

 

Optimism about European crisis sends stocks surging

Stock prices around the world rose on Monday after European leaders signaled a willingness to tackle the financial crisis brewing there.

In the first hour of trading, the Dow Jones industrial average rose 251.50 points, or 2.3%, to 11354.62. The broader Standard & Poor's 500 index and the technology-heavy Nasdaq composite index jumped even more sharply.

Over the weekend, French President Nicolas Sarkozy and German Prime Minister Angela Merkel announced in Berlin that they would come up with a plan to help stabilize and recapitalize struggling European banks. They gave few specifics but said a definite plan would be ready by a Nov. 3 meeting of the Group of 20.

In another sign of the willingness of European governments to act, the French and Belgian governments stepped in over the weekend to carry out an orderly breakup of Dexia, one of the banks that has encountered the most problems.

Leading indexes were recently up 3.1% in Germany and 2.0% in France.

Last week, the S&P 500 rose on three consecutive days after almost falling into bear-market territory, 20% down from highs reached in spring. The market's latest gains have been helped by a series of U.S. economic indicators that have suggested that the economy is in better shape than many analysts expected.

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-- Nathaniel Popper

Photo credit: Getty Images

About That 99 Percent ...

I received an e-mail over the weekend from a reader asking for some statistical context for the Occupy Wall Street protesters’ “99 Percent” rallying cry. Who exactly are the people in the top 1 percent of the economy? How much do they make, and how much are they worth?

CATHERINE RAMPELL

Dollars to doughnuts.

Here are some numbers:

Dollars to doughnuts.

American households right at the 99th percentile (that is, the cut-off for the top 1 percent) will earn about $506,553 in cash income this year, according to a Tax Policy Center analysis. The income curve is very steep at the high end, meaning that people just a few tenths of a percentile point above that make much, much more. A family at the 99.5th percentile, for example, makes $815,868; its neighbor at the 99.9th percentile makes more than double that, at $2,075,574 a year.

The top 1 percent of American earners receive about a fifth of the country’s income, according to Thomas Picketty and Emmanuel Saez, two economists who study inequality.

But as we’ve noted before, economic inequality isn’t just about what you make each year. It’s about how much wealth you have already accumulated, too. And inequality is far, far greater when you include wealth.

According to an analysis of Federal Reserve data by the Economic Policy Institute, a liberal research organization, the top 1 percent of Americans by net worth hold about a third of American wealth.

The cutoff for the 99th percentile in net worth was $19,167,600 as of 2007, based on this research.

That means, of course, that the bottom 99 percent of Americans includes an awful lot of millionaires.

Wall Street: Stocks and gold rising

Gold: Trading now at $1,668 an ounce, up 2.0% from Friday. Dow Jones industrial average: Trading now at 11,360.94, up 2.3% from Friday.

Big Monday. Stocks are having a big day as investors grow encouraged about the rescue effort in Europe and financial data in the U.S.

Recession averted? Bloomberg thinks the good economic data of the last week is enough to say that a recession has been averted. 

Earnings season. Bank earnings season begins again this week, and the results are not expected to be good.

Lehman averted? A struggling Belgian bank was broken up in a surprisingly peaceful fashion over the weekend, averting what some thought would be a calamitous collapse.

Nail in the coffin. One of the last vestiges of Bernie Madoff's empire -- a trading division that had been sold off after Madoff's Ponzi scheme was exposed -- has now bitten the dust.

Paulson's bad year. For John Paulson, the hedge fund magnate who made billions of dollars betting against the subprime mortgage market, the bad news keeps coming -- one of his funds has lost almost 50% since the beginning of the year.

-- Nathaniel Popper in New York
Twitter.com/nathanielpopper

Photo credit: Stan Honda / Getty Images

Venture capital fundraising drops to 8-year low

The U.S. venture capital industry raised its lowest amount of money in eight years, stymied by a recent panoply of economic bad news.

Firms raised $1.7 billion in the third quarter, said the National Venture Capital Assn. That's 53% less than the $3.5 billion raised in the same period a year earlier and the smallest pot since the third quarter of 2003.

The year started out with heavy fundraising, garnering $7.6 billion in the first quarter.

But then the economic recovery began to sag. Europe found itself mired in a debt crisis. U.S. credit was downgraded. Companies began delaying or calling off anticipated initial public offerings -– Zynga, Groupon and Facebook have all yet to go public, despite rampant speculation.

"Economic instability continues to impact the ability of venture-backed companies to go public which, in turn, has prevented many venture firms from delivering solid returns to their investors," Mark Heesen, president of the venture capital group, said in a statement.

The industry, he said in a blog post, has been investing more than it's been raising since 2008 -– an overhang that will reach $20 billion by the end of the quarter.

"Just like a bubble," he wrote in the post, "this imbalance is not sustainable."

The report was conducted with Thomson Reuters.

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Report: Facebook delays IPO until late 2012

Venture capital funding and deals rise in 2010

-- Tiffany Hsu

Photo credit: Brian van der Brug / Los Angeles Times

Consumer Confidential: Netflix says oops; iPhone orders

 
Here's your misfit-toys Monday roundup of consumer news from around the Web:

-- Give Netflix points for knowing it was wrong. The company says it will drop plans to split its mail-order DVD and Internet-streaming services. The change is an acknowledgment of the anger that Netflix triggered in subscribers, first with Chief Executive Reed Hastings’ plan to raise prices and the subsequent Sept. 18 announcement detailing the split of the services. Customers will be able to access the streaming and mail-order services from Netflix.com, with one account and password, the company says. Netflix on Sept. 18 said people who wanted DVDs would have to sign up for a new service called Qwikster, requiring a separate account and billing. Now if the company could just do something about getting more up-to-date movies.

-- Dr Pepper prefers hanging out with guys. That's apparently the idea behind Dr Pepper Ten, a 10-calorie soft drink Dr Pepper Snapple Group is rolling out with a macho ad campaign that proclaims, "It's not for women." The soft drink was developed after the company's research found that men shy away from diet drinks that aren't perceived as "manly" enough. To appeal to men, Dr Pepper made its Ten drink 180 degrees different from Diet Dr Pepper. It has calories and sugar, unlike its diet counterpart. Instead of the dainty tan bubbles on the diet can, Ten will be wrapped in gunmetal grey packaging with silver bullets. And while Diet Dr Pepper's marketing is women-friendly, the ad campaign for Ten goes out of its way to eschew women. So there.

-- Apple took some heat for not unveiling an iPhone 5 but, instead, debuting an upgraded iPhone 4S. But apparently the company knew what it was doing. Apple says first-day preorders of the iPhone 4S topped 1 million, breaking the record set by last year's model. Apple and various phone companies started taking orders for the phone last Friday. It hits stores this Friday. First-day orders for the iPhone 4 were 600,000 when it launched last year. It was then sold in the U.S. only by AT&T. The iPhone 4S is also sold by Verizon Wireless and Sprint Nextel. The base model of the iPhone 4S costs $200 with a two-year contract. It has a faster processor and an improved camera compared to last year's model.

-- David Lazarus

Photo: Netflix is dropping plans for a Qwikster service. Credit: Paul Sakuma / Associated Press