MBA 2004

Preparing for Your Final Career: Retirement
Checklist of Actions
August, 2009by Dr. Thomas E. Bell, CMG Member, Michelson Awardee (Retired)
About the Author
Dr. Thomas E. Bell
Tom received his Ph.D. in Management from UCLA many years ago, and was a consultant for about 25 years before he retired. He is a recipient of the A.A. Michelson award (in 1975), has served CMG as its Treasurer and its Secretary, and has repeatedly been on the CMG Board of Directors. He retired at the end of 2005.
Life is busy, and it's easy to put off things that don't have an immediate impact. However, delays on some activities can compromise your retirement. This article in the Retirement series lists specific actions for you to take at various stages of life. Most of the items on the checklist have been described in previous articles, but they haven't been organized to emphasize the actions to take at each stage of life. In case you want to review topics in previous articles, the topics and dates are listed in the appendix.
Joe Delano (who has contributed a number of articles on retirement to MeasureIT) has set up a web site with some very useful information, including two articles with immediate applicability to this article. That web site is: http://www.josephdelano.wfadv.com/ I encourage you to go there, read the articles referenced below, and take the financial IQ test (click on "More Calculators" in the left column, then click on "Financial IQ Test" under "Cash Management"). Lots of very useful stuff is on his web site, including assistance to make quick calculations about financial issues.
Some of the actions in this article may not apply to your specific case, and others might be done at a different stage of life. I suggest you look at the section for your current stage of life to see what might be appropriate actions for the near term. However, you might also examine the actions recommended for younger people to make sure you haven't overlooked an action in the past. Even if you're 10 or 20 years late, make sure you get all the items completed that are necessary for your retirement.
If you have an intransigent spouse who just doesn't like to think about a major change in life style - and certainly not death - you might use the check list to show that you're not just creating unnecessary work; this stuff is really important according to someone who learned the hard way. I've provided a little box (instead of the usual number) in front of each item so you can use the list to emphasize which unchecked items need to be accomplished.
From Graduation Through 30 Years Old
During this period, you're trying to build a career and start a family. Saving may be very low on your list of goals during this period, but you need to start wealth accumulation for two reasons: 1) to build a reserve in case of an emergency, and 2) for retirement so you can take advantage of compound interest over the longest possible time. A minimum set of associated actions are:
Open a tax-deferred or Roth retirement account and begin making contributions[i].
Sign up for your employer's 401(k), pension[ii], or other retirement provision. If you need to make contributions, contribute (at least) the maximum that your employer will match.
Make an initial Will to protect your heirs if you die even before you have a large estate[iii].
Make a Durable Power of Attorney, Health Care Power of Attorney, and Living Will to protect your family and your own desires. (These are standard documents that can be put together rapidly - and cheaply - by an attorney.) On Joe Delano's web site, he has provided an article titled "Five Important Estate Planning Documents"; it explains about these documents.
Sign up for health and life insurance offered by your employer, even if you need to make some payments to qualify (because they are far smaller than the costs for not doing so)
Begin building a financial reserve to protect you in case of an emergency; you and your family will certainly have one, two, or more.
In addition, a forward-thinking individual might take the following actions:
Get in the habit of reviewing your account statements every month or every quarter (as appropriate). Don't get depressed if you can't figure out the first few statements; their implications will likely become clearer with time.
Determine whether your employer provides financial advice to aid you in negotiating mortgages and investing for long-term gain. If so, take advantage of the help.
Ages 31 Years Through 45 Years
Now that you've (probably) purchased your first one or two homes, you've become quite sensitive to the need for carefully managing your finances. The temptation will likely grab you to quit saving, or even planning for retirement "until later". Don't do it!
Increase your retirement savings rate as much as you can afford. Including your employer's contribution, this should be at least 12% of your salary - 16% is better.
Save for your children's education, preferably in a tax-deferred account.
Start tracking your savings closely enough to detect if you're being charged excessive fees, or if your assets have been invested in things you didn't intend. (It would be better for you to track them more closely, but you may have inadequate time for that.)
Roll over your retirement accounts as necessary to keep the number of accounts below 4[iv] so you can keep track of your savings and manage them.
Consider your asset allocation (whether in funds or directly in instruments) to balance risk against yield. If anyone assures you that 15% (or more) per year can be reliably achieved, allocate your assets somewhere else - with someone more realistic (and honest). The article on Joe Delano's web site titled "Five Investment Mistakes You Don't Need To Make" warns about some of the things you should avoid.
At least once every 5 years, review your insurance to make sure it is adequate. This should include health insurance, life insurance, disability insurance, auto insurance, and home-owners' insurance. You may need to purchase insurance beyond the minimum that is provided by your employer.
Review and update your estate documents (especially your Will) because your family situation almost certainly has changed since your initial version.
Subscribe to at least one financial paper (e.g., The Wall Street Journal, Barron's, Money Magazine) and read it regularly to become sensitive to the financial issues you will probably face over the next 20, 30, or 40 years (or so)[v].
Ages 46 Years Through 55 Years
Your retirement isn't all that far off now. You may even be hoping for retirement at age 55 (but you probably won't make it). So it's time to get really serious about accumulating financial wealth and planning what your final career will be like.
If you're in this period of your life now, I suggest you read through the articles that Joe Delano, I, and other people have published in MeasureIT. Those articles were designed to be easy reading for any CMGer, so you might tackle one per night.
Track your retirement account(s) closely and rebalance them to match your chosen asset allocations. They now are certainly worth enough to justify your attention[vi].
Keep building your financial literacy. Taking a class or two at a local community college might be worthwhile in addition to reading financial periodicals.
Start being compulsive about your asset allocation. An allocation that is excessively risky could doom your retirement; you may not have time to correct the situation if things go bad[vii]. An allocation that is too conservative may produce inadequate gains. And an allocation that ignores issues like inflation[viii] is probably dangerous.
Check your annual Social Security summary to ensure it reflects the periods during which you've worked - as well as your income during each of those periods. We can't accurately predict what the Congress may do with Social Security and Medicare, but your receipt of benefits will probably be dependent on the records from the Social Security Administration. MAKE SURE THEY ARE CORRECT!
At age 50, you can begin making "catch-up contributions" to your IRA or 401(k), so do it. (That is, your contributions aren't as limited as they were during your younger days.)
Make an initial assessment of your financial requirements in retirement, and project whether you are on a path to meet those requirements[ix].
Based upon an assessment of your financial resources, decide when you'll likely retire, and how much risk you'll be taking by not continuing to work for a few more years.
If you haven't already done so, start planning for a Revocable Living Trust - and set it up. (Your assets have probably grown to a level that you need it now.) Even if the estate tax changes so you don't need a trust to conserve assets, you need to ensure that your spouse and heirs are protected from disputes about what will happen after your death.
Begin realistically considering what your final career will consist of. Each individual is different, based in his/her life experience. But retirement is looming, so now is the time to consider alternatives and volunteer opportunities[x].
Plan your mortgage so that (if possible) it can be paid off by the time you retire.
Begin a regular routine of providing your potential executor (e.g., your oldest heir) with regular updates of your financial status. (I didn't have that advantage prior to my parents' deaths, and I had a "really big ball of twine to unwind" after their deaths.)
Age 56 Through Retirement (And Beyond)
In final preparation for retirement, a number of critical issues should be addressed. The specifics of these issues may change with revisions in Federal and State laws, and certainly with your own preferences. However, this is the period when delaying considerations and decisions are unacceptable. You may be unable to recover from missed deadlines, or find that corrections are acutely painful (either figuratively or literally).
The implicit assumption is that you will retire somewhere between ages 55 and 70 (probably between 60 and 67). A number of specific dates are critical during this period - at least under existing laws and regulations. Therefore, most of the items in this section give detailed times for accomplishment.
By age 56 track your retirement investments and pensions closely. If you're really able to retire, your retirement assets and pensions are all you have to live on, so you need to manage them carefully and tenderly.
By age 56, make an initial prediction of where you'd like to live in retirement. If this location is not where you have lived previously, make plans to spend at least a couple of months there prior to retirement. (This location may be determined by where your kids live, where costs are lower, or somewhere that just seems exotic.) Be prepared to spend some time in that vicinity before making an irrevocable decision, perhaps by saving up vacation time over two or three years so you can spend enough time there to evaluate whether the location will meet your needs.
If you anticipate retiring in a location outside the US, determine how you'll receive medical treatment (in the absence of Medicare).
Do a financial analysis of your expenses in your current location or the alternative location so you can project your requirements in retirement. DO NOT JUST ASSUME THAT REQUIREMENT COSTS WILL DECREASE DRAMATICALLY.
If you have one or more employer retirement plans (e.g., pension, 401(k)), get the specifics (value, options for payments, administrative requirements, tax implications, etc.) by age 57 so you can make competent plans. If several employers are involved, this may take considerable time (perhaps years).
By age 59, ensure that your estate plan is in good order (including Trusts, Beneficiaries, Trustees, Executors, etc.)
By age 60, understand the major characteristics of Social Security (as it exists at that time). You could start by reading my article in the July 2008 issue of MeasureIT.
By age 60 (or retirement age minus 5 years, whichever is lower) develop a plan to move to your desired location at minimum cost (e.g., at your employer's expense).
By age 61¾ decide when to begin Social Security benefits. (Under current law, benefits can begin no earlier than age 62.)
Start learning about Medicare by age 62 so you can plan for your medical care both before age 65 (when Medicare is available) and after that time. One place to start is my article on Medicare published in MeasureIT in May 2008.
By age 62 make sure that your ultimate living location will involve a residence with characteristics appropriate for your physical limitations subsequent to retirement. This probably includes wide doorways, minimum stairs, using door handles instead of door knobs, etc.
By age 63, decide whether to roll over your 401(k)s into an IRA or other tax-deferred plan, and get things together to make your assets manageable in retirement.
By age 64 (or retirement minus 1 year, whichever is less), have an appropriate residence picked out and under consideration.
By age 64½, decide on what medical insurance plan you will use (e.g., Medicare or whatever wonderful alternative Congress creates).
By age 64¾, apply for Medicare (if that's your plan). (Employees of the Federal Government have the alternative of a more generous plan, so they probably won't want to apply for Medicare. Many employees of municipalities have been promised better medical care than provided by Medicare, so they probably won't either.)
Between the ages of 62 and 70, apply for Social Security benefits. You're not eligible before 62, and there is no real advantage to a delay past 70.
At age 70½ (approximately), take required distributions from retirement accounts.
Did Dr. Bell Accomplish All These Actions On Time?
Would you believe me if I told you I did all these things at the right times, and I didn't need to scramble to get things corrected - or at least improved?
I hope you would say "No way, turkey. You just ain't that bright!" because that would be the correct answer. However, I did study the topic pretty carefully because I'm basically, overwhelmingly scared. So I did many of them right, and now I'm still trying to recover from the rest of them. Oh well.
My suggestion is that you attempt to cover the actions that apply to you (probably most of them) no later than (at least) the schedule suggested above. If the problem is that your spouse refuses to discuss the topics (and you'd prefer to avoid a divorce), perhaps you could proceed with a reasonable resolution and then ask for acquiesce. That approach didn't work for me, but maybe it will for you.
If it's any help you can tell your spouse that Dr. Bell didn't really do all of it right, but he's still reasonably happy with his retirement. By gritting the teeth and trying to work toward an agreed solution, your spouse may be able to help protect people who are loved by both of you. (OK, that didn't work for me either, but maybe you're more convincing than I am.)
Do you remember when you applied for your first driver's license, when you filed applications for college, when you applied for your first permanent job, when you proposed, or accepted, an offer of marriage, when your first child desperately needed medical treatment? Maybe getting into retirement isn't as stressful as those things - or maybe it is. You need to find out yourself.
But don't delay, even though the whole thing is stressful. Delay will make things even more stressful.
If you'd like to reach Joe Delano or me, please put [CMG] at the beginning of your Subject Line. Our email addresses are:
joseph.delano@wachoviasec.com
TBell@RivendelConsultants.Com

Preparing for Your Final Career: Retirement
Checklist of Actions
August, 2009by Dr. Thomas E. Bell, CMG Member, Michelson Awardee (Retired)
About the Author
Dr. Thomas E. Bell
Tom received his Ph.D. in Management from UCLA many years ago, and was a consultant for about 25 years before he retired. He is a recipient of the A.A. Michelson award (in 1975), has served CMG as its Treasurer and its Secretary, and has repeatedly been on the CMG Board of Directors. He retired at the end of 2005.
Life is busy, and it's easy to put off things that don't have an immediate impact. However, delays on some activities can compromise your retirement. This article in the Retirement series lists specific actions for you to take at various stages of life. Most of the items on the checklist have been described in previous articles, but they haven't been organized to emphasize the actions to take at each stage of life. In case you want to review topics in previous articles, the topics and dates are listed in the appendix.
Joe Delano (who has contributed a number of articles on retirement to MeasureIT) has set up a web site with some very useful information, including two articles with immediate applicability to this article. That web site is: http://www.josephdelano.wfadv.com/ I encourage you to go there, read the articles referenced below, and take the financial IQ test (click on "More Calculators" in the left column, then click on "Financial IQ Test" under "Cash Management"). Lots of very useful stuff is on his web site, including assistance to make quick calculations about financial issues.
Some of the actions in this article may not apply to your specific case, and others might be done at a different stage of life. I suggest you look at the section for your current stage of life to see what might be appropriate actions for the near term. However, you might also examine the actions recommended for younger people to make sure you haven't overlooked an action in the past. Even if you're 10 or 20 years late, make sure you get all the items completed that are necessary for your retirement.
If you have an intransigent spouse who just doesn't like to think about a major change in life style - and certainly not death - you might use the check list to show that you're not just creating unnecessary work; this stuff is really important according to someone who learned the hard way. I've provided a little box (instead of the usual number) in front of each item so you can use the list to emphasize which unchecked items need to be accomplished.
From Graduation Through 30 Years Old
During this period, you're trying to build a career and start a family. Saving may be very low on your list of goals during this period, but you need to start wealth accumulation for two reasons: 1) to build a reserve in case of an emergency, and 2) for retirement so you can take advantage of compound interest over the longest possible time. A minimum set of associated actions are:
Open a tax-deferred or Roth retirement account and begin making contributions[i].
Sign up for your employer's 401(k), pension[ii], or other retirement provision. If you need to make contributions, contribute (at least) the maximum that your employer will match.
Make an initial Will to protect your heirs if you die even before you have a large estate[iii].
Make a Durable Power of Attorney, Health Care Power of Attorney, and Living Will to protect your family and your own desires. (These are standard documents that can be put together rapidly - and cheaply - by an attorney.) On Joe Delano's web site, he has provided an article titled "Five Important Estate Planning Documents"; it explains about these documents.
Sign up for health and life insurance offered by your employer, even if you need to make some payments to qualify (because they are far smaller than the costs for not doing so)
Begin building a financial reserve to protect you in case of an emergency; you and your family will certainly have one, two, or more.
In addition, a forward-thinking individual might take the following actions:
Get in the habit of reviewing your account statements every month or every quarter (as appropriate). Don't get depressed if you can't figure out the first few statements; their implications will likely become clearer with time.
Determine whether your employer provides financial advice to aid you in negotiating mortgages and investing for long-term gain. If so, take advantage of the help.
Ages 31 Years Through 45 Years
Now that you've (probably) purchased your first one or two homes, you've become quite sensitive to the need for carefully managing your finances. The temptation will likely grab you to quit saving, or even planning for retirement "until later". Don't do it!
Increase your retirement savings rate as much as you can afford. Including your employer's contribution, this should be at least 12% of your salary - 16% is better.
Save for your children's education, preferably in a tax-deferred account.
Start tracking your savings closely enough to detect if you're being charged excessive fees, or if your assets have been invested in things you didn't intend. (It would be better for you to track them more closely, but you may have inadequate time for that.)
Roll over your retirement accounts as necessary to keep the number of accounts below 4[iv] so you can keep track of your savings and manage them.
Consider your asset allocation (whether in funds or directly in instruments) to balance risk against yield. If anyone assures you that 15% (or more) per year can be reliably achieved, allocate your assets somewhere else - with someone more realistic (and honest). The article on Joe Delano's web site titled "Five Investment Mistakes You Don't Need To Make" warns about some of the things you should avoid.
At least once every 5 years, review your insurance to make sure it is adequate. This should include health insurance, life insurance, disability insurance, auto insurance, and home-owners' insurance. You may need to purchase insurance beyond the minimum that is provided by your employer.
Review and update your estate documents (especially your Will) because your family situation almost certainly has changed since your initial version.
Subscribe to at least one financial paper (e.g., The Wall Street Journal, Barron's, Money Magazine) and read it regularly to become sensitive to the financial issues you will probably face over the next 20, 30, or 40 years (or so)[v].
Ages 46 Years Through 55 Years
Your retirement isn't all that far off now. You may even be hoping for retirement at age 55 (but you probably won't make it). So it's time to get really serious about accumulating financial wealth and planning what your final career will be like.
If you're in this period of your life now, I suggest you read through the articles that Joe Delano, I, and other people have published in MeasureIT. Those articles were designed to be easy reading for any CMGer, so you might tackle one per night.
Track your retirement account(s) closely and rebalance them to match your chosen asset allocations. They now are certainly worth enough to justify your attention[vi].
Keep building your financial literacy. Taking a class or two at a local community college might be worthwhile in addition to reading financial periodicals.
Start being compulsive about your asset allocation. An allocation that is excessively risky could doom your retirement; you may not have time to correct the situation if things go bad[vii]. An allocation that is too conservative may produce inadequate gains. And an allocation that ignores issues like inflation[viii] is probably dangerous.
Check your annual Social Security summary to ensure it reflects the periods during which you've worked - as well as your income during each of those periods. We can't accurately predict what the Congress may do with Social Security and Medicare, but your receipt of benefits will probably be dependent on the records from the Social Security Administration. MAKE SURE THEY ARE CORRECT!
At age 50, you can begin making "catch-up contributions" to your IRA or 401(k), so do it. (That is, your contributions aren't as limited as they were during your younger days.)
Make an initial assessment of your financial requirements in retirement, and project whether you are on a path to meet those requirements[ix].
Based upon an assessment of your financial resources, decide when you'll likely retire, and how much risk you'll be taking by not continuing to work for a few more years.
If you haven't already done so, start planning for a Revocable Living Trust - and set it up. (Your assets have probably grown to a level that you need it now.) Even if the estate tax changes so you don't need a trust to conserve assets, you need to ensure that your spouse and heirs are protected from disputes about what will happen after your death.
Begin realistically considering what your final career will consist of. Each individual is different, based in his/her life experience. But retirement is looming, so now is the time to consider alternatives and volunteer opportunities[x].
Plan your mortgage so that (if possible) it can be paid off by the time you retire.
Begin a regular routine of providing your potential executor (e.g., your oldest heir) with regular updates of your financial status. (I didn't have that advantage prior to my parents' deaths, and I had a "really big ball of twine to unwind" after their deaths.)
Age 56 Through Retirement (And Beyond)
In final preparation for retirement, a number of critical issues should be addressed. The specifics of these issues may change with revisions in Federal and State laws, and certainly with your own preferences. However, this is the period when delaying considerations and decisions are unacceptable. You may be unable to recover from missed deadlines, or find that corrections are acutely painful (either figuratively or literally).
The implicit assumption is that you will retire somewhere between ages 55 and 70 (probably between 60 and 67). A number of specific dates are critical during this period - at least under existing laws and regulations. Therefore, most of the items in this section give detailed times for accomplishment.
By age 56 track your retirement investments and pensions closely. If you're really able to retire, your retirement assets and pensions are all you have to live on, so you need to manage them carefully and tenderly.
By age 56, make an initial prediction of where you'd like to live in retirement. If this location is not where you have lived previously, make plans to spend at least a couple of months there prior to retirement. (This location may be determined by where your kids live, where costs are lower, or somewhere that just seems exotic.) Be prepared to spend some time in that vicinity before making an irrevocable decision, perhaps by saving up vacation time over two or three years so you can spend enough time there to evaluate whether the location will meet your needs.
If you anticipate retiring in a location outside the US, determine how you'll receive medical treatment (in the absence of Medicare).
Do a financial analysis of your expenses in your current location or the alternative location so you can project your requirements in retirement. DO NOT JUST ASSUME THAT REQUIREMENT COSTS WILL DECREASE DRAMATICALLY.
If you have one or more employer retirement plans (e.g., pension, 401(k)), get the specifics (value, options for payments, administrative requirements, tax implications, etc.) by age 57 so you can make competent plans. If several employers are involved, this may take considerable time (perhaps years).
By age 59, ensure that your estate plan is in good order (including Trusts, Beneficiaries, Trustees, Executors, etc.)
By age 60, understand the major characteristics of Social Security (as it exists at that time). You could start by reading my article in the July 2008 issue of MeasureIT.
By age 60 (or retirement age minus 5 years, whichever is lower) develop a plan to move to your desired location at minimum cost (e.g., at your employer's expense).
By age 61¾ decide when to begin Social Security benefits. (Under current law, benefits can begin no earlier than age 62.)
Start learning about Medicare by age 62 so you can plan for your medical care both before age 65 (when Medicare is available) and after that time. One place to start is my article on Medicare published in MeasureIT in May 2008.
By age 62 make sure that your ultimate living location will involve a residence with characteristics appropriate for your physical limitations subsequent to retirement. This probably includes wide doorways, minimum stairs, using door handles instead of door knobs, etc.
By age 63, decide whether to roll over your 401(k)s into an IRA or other tax-deferred plan, and get things together to make your assets manageable in retirement.
By age 64 (or retirement minus 1 year, whichever is less), have an appropriate residence picked out and under consideration.
By age 64½, decide on what medical insurance plan you will use (e.g., Medicare or whatever wonderful alternative Congress creates).
By age 64¾, apply for Medicare (if that's your plan). (Employees of the Federal Government have the alternative of a more generous plan, so they probably won't want to apply for Medicare. Many employees of municipalities have been promised better medical care than provided by Medicare, so they probably won't either.)
Between the ages of 62 and 70, apply for Social Security benefits. You're not eligible before 62, and there is no real advantage to a delay past 70.
At age 70½ (approximately), take required distributions from retirement accounts.
Did Dr. Bell Accomplish All These Actions On Time?
Would you believe me if I told you I did all these things at the right times, and I didn't need to scramble to get things corrected - or at least improved?
I hope you would say "No way, turkey. You just ain't that bright!" because that would be the correct answer. However, I did study the topic pretty carefully because I'm basically, overwhelmingly scared. So I did many of them right, and now I'm still trying to recover from the rest of them. Oh well.
My suggestion is that you attempt to cover the actions that apply to you (probably most of them) no later than (at least) the schedule suggested above. If the problem is that your spouse refuses to discuss the topics (and you'd prefer to avoid a divorce), perhaps you could proceed with a reasonable resolution and then ask for acquiesce. That approach didn't work for me, but maybe it will for you.
If it's any help you can tell your spouse that Dr. Bell didn't really do all of it right, but he's still reasonably happy with his retirement. By gritting the teeth and trying to work toward an agreed solution, your spouse may be able to help protect people who are loved by both of you. (OK, that didn't work for me either, but maybe you're more convincing than I am.)
Do you remember when you applied for your first driver's license, when you filed applications for college, when you applied for your first permanent job, when you proposed, or accepted, an offer of marriage, when your first child desperately needed medical treatment? Maybe getting into retirement isn't as stressful as those things - or maybe it is. You need to find out yourself.
But don't delay, even though the whole thing is stressful. Delay will make things even more stressful.
If you'd like to reach Joe Delano or me, please put [CMG] at the beginning of your Subject Line. Our email addresses are:
joseph.delano@wachoviasec.com
TBell@RivendelConsultants.Com

Johannes von Maltke, a nineteenth century Prussian general influenced by the renowned military theorist, Karl von Clausewitz. von Multke argued that detailed plans usually fail, because circumstances inevitably change. A successful strategist, he wrote, always must be willing to adapt; even broad goals must be flexible enough to respond to new events.

Mary Quant Decade
Mary opened her famous London boutique Bazaar in 1955 and was swinging-60s London personified. The minishirts, hot-pants, shiny plastic raincoats, and paint-box makeup all added up to the Mary Quant decade. Mary was the first person to operationalized the concept "less is more."- "A woman is only as young as ker knees"
In her book, "Quant by Quant" she wrote "Woman wear clothes to make them feel good and to feel sexy. Women turn themselves on. Men like to look at women to be turned on - to feel sexy is to know you're alive."

The edge gives us a special attitude. Cutting edge, leading edge, bleeding edge, the edge of inspiration, on the edge of our seats. The edge is exciting and risky and extreme. Great ideas can come from anywhere, but most of them turn up on the edge.

Sir Josiah Stamp
"Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money ."
Another well known quote is:
"The government are very keen on amassing statistics. They collect them, add them, raise them to the nth power, take the cube root and prepare wonderful diagrams. But you must never forget that every one of these figures comes in the first instance from the village watchman, who just puts down what he damn pleases." (quoting an anonymous English judge.)

That's why Dell continues to hone the efficiency of its operations. The company has won 550 business-process patents, for everything from a method of using wireless networks in factories to a configuration of manufacturing stations that's four times as productive as a standard assembly line. "They're inventing business processes. It's an asset that Dell has that its competitors don't," says Erik Brynjolfsson, director of the Center for eBusiness at the Massachusetts Institute of Technology's Sloan School of Management.

Even in the midst of the recession, IBM spent $4.75 billion, or 5.9% of its revenues, on research and development in 2002, while HP ponied up $3.3 billion, or 5.8% of revenues. And Dell? Just a paltry $455 million, or 1.3%. Rivals say that handicaps Dell's ability to move much beyond PCs, particularly in such promising markets as digital imaging and utility computing. "Dell is a great company, but they are a one-trick pony," says HP CEO Carleton S. Fiorina.

Since 2000, the company has been adding market share at a faster pace than at any time in its history -- nearly three percentage points in 2002. A renewed effort to control costs sliced overhead expenses to just 9.6% of revenue in the most recent quarter and boosted productivity to nearly $1 million in revenue per employee. That's three times the revenue per employee at IBM and almost twice Hewlett-Packard Co.'s rate.

What's Dell's secret?
At its heart is his belief that the status quo is never good enough, even if it means painful changes for the man with his name on the door. When success is achieved, it's greeted with five seconds of praise followed by five hours of postmortem on what could have been done better. Says Michael Dell: "Celebrate for a nanosecond. Then move on." After the outfit opened its first Asian factory, in Malaysia, the CEO sent the manager heading the job one of his old running shoes to congratulate him. The message: This is only the first step in a marathon.

Sony must sell 30 games for every PS3 to make up for losses

The Financial Times (I don’t know what I was doing reading it either but stay with me) has a piece up detailing how a weaker yen could actually help save Sony from four years of losses with their Playstation 3 console. Some recent independent analysis has pegged the PS3 at costing Sony Y90,000 ($763) per console which results in a Y30,000 loss for each console sold. On the other hand, some analysts are expecting the console to retail for around €590 ($757) in Europe and Britain when it’s released there and for each console sold, and by the time the Euros made are translated back into Yen, Sony will be losing less than Y3,000 per unit.

Those figures all hinge on how the Yen will continue to hold up against the Euro in the coming months. Sony will be keeping a close eye on just how the forex market plays out because if the market plays out how Sony wants it to, the European PS3 release could save Sony from certain economic hardships.

The forex market will not be the only factor that weighs a heavy hand on Sony’s economic future. Their ability to cut costs with the manufacturer’s who make the many unique components the PS3 will ship with will also be key. Many analysts think that it may be 15-16 quarters before Sony will recoup their initial PS3 investment.

One analyst even goes as so far to state that Sony must sell 30 games per console to make up for the hardware losses they will sustain on each console sold. This assumes that Sony makes about $10 in revenue per game sold though.

Don’t expect the component makers to shed any tears for Sony though since they stand to make some decent profit in providing Sony with these parts…

Yoshiyuki Kinoshita, a Merrill Lynch analyst, believes that a new cycle may have developed. Where previously electronic component makers supplying to the game console makers could not make good margins, the latest generation of machines will deliver a sharp boost to profits.

The biggest components include Nvidia’s Reality Synthesiser costing $129, the IBM Cell processor costing $89, D-ram memory from Samsung at $48, and the Seagate hard drive at $54.

These are fragile times for Sony and the world will be watching to see how they progress.

A bad regime cramps moral space.
Under bad systems, morally good actions are penalized. Good people are pressured to act less than morally. thus do bad systems self-destruct.