Welcome to the holiday issue of the IRA.com Retirement Newsletter. This month, our article briefings provide two perspectives on the pension crisis, a look at possible legislative reform, a commentary on money management choices, and a discussion on how employees are covering the increasing cost of health benefits. IRA.com also brings you a special holiday message, with tips for finding balance in your celebrations and in the spending that comes along with them.

Happy Holidays from IRA.Com
Keeping the Holidays (and Your Finances) in Balance

Article Briefings
Healthy Choice
GOP Victory Clears Some Roadblocks to Pension Legislation
Ticking Bomb
The "Crisis" in Pension Plans May Not Be a Crisis After All
Itching to Rebuild the Tax Law
Companies Pass the Buck on Benefits

Resource Link
A Debt-Free Holiday in 2003

Keeping the Holidays (and Your Finances) in Balance

In most cultural traditions, the end of the year is a time to honor and celebrate the most meaningful things in our lives -- our spiritual connections with friends, family, and a power greater than ourselves. But everyone knows that the pace of the holidays can be overwhelming. We often seem to focus our activities on "things," rather than loved ones. We are tempted to overspend and often find ourselves facing financial stress for months to come.

Although most holiday spending is over for 2002, now (yes, now) is a great time to think about next year. Take an honest look at your holiday spending. Are you comfortable with the total? What about your debt load? What would you like to do differently next year? Here are some ideas to consider:

1. Use this year's expense list as a planning tool.
   Most of us underestimate what we actually spend at the holidays. With your actual bills and receipts in hand, add up your total holiday expenses for 2002. Then determine what you would like to spend in 2003. Make a budget and plan ways to spread it out. When you reach your spending limit, stick to it. Better yet, create a monthly savings plan to avoid holiday debt in 2003.

2. Make lists and more lists.
   Decide in advance who you are shopping for and what gifts you are seeking. Browse catalogs and look online for gift ideas. Do NOT browse in the stores! Once in the stores, it's easy for countless choices and attractive merchandising to lure us into spontaneous, unbudgeted purchases.

3. Shop early and use credit cards wisely, if at all.
   Shop early to compare prices and avoid hurried, unbudgeted purchases. Pay cash if possible. If you pay with credit, use one low- interest credit card, rather than many cards with varying rates. Here's food for thought: if you can pay for your expenses in one payment, it may be a good idea to use a credit card for ALL of your holiday spending. That way, you will have an accurate, permanently accessible record of your actual spending activities. (Remember, this only makes sense if you can pay off those expenses before interest accrues.)

4. Simplify the gift giving.
   Suggest drawing names for a gift exchange among extended family, co- workers, or a circle of friends. This reduces the spending demand for everyone, and the joint party for the gift exchange is often more fun than the presents themselves. Consider making gifts instead of buying them, or give homemade "coupons" to friends and family members for things you can help them with. For friends with small children, there's nothing more valuable than a free evening of babysitting.

Healthy Choice
One overlooked point in the debate over personal accounts for Social Security is that average workers can manage their money better than the federal government, according to this opinion piece.

Read the full abstract at: http://www.ira.com/news/plan/921b63778fcc300e7513bbd0aa0dfc3b.html

GOP's Victory Clears Some Roadblocks to Pension Legislation
The Republican-controlled Senate is expected to finalize higher contribution limits on retirement plans and individual retirement accounts early next year, as well as move forward with the pension law changes President Bush proposed after the Enron debacle.

Read the full abstract at: http://www.ira.com/news/tax/a51a1541dd059a4c8a4065fc30f1d261.html

Ticking Bomb
According to Fitch Ratings, the shortfall of America's pension funds will equal $30 billion in the car manufacturing industry sector, and Standard & Poor's estimates that pension funds across all industries will be underfunded by $300 billion in 2002.

Read the full abstract at: http://www.ira.com/news/prof/7eb3b001ca9dd4a40ca41c133db8c479.html

The "Crisis" in Pension Plans May Not Be a Crisis After All
In general, the most heavily affected industries--steel, automobile manufacturers, and airlines--offer defined benefit plans, which were hit hardest by the stock market and interest rate decline, which reduced the plans' assets and increased their liabilities, respectively. Those companies in Standard & Poor's 500 index, which saw pension assets fall from $235 billion in 2000 to just $4 billion in 2001, will not exhaust their pension fund assets for about 12 years, and that is even if they do not infuse them with further funds.

Read the full abstract at: http://www.ira.com/news/prof/a01f3ac664acd2997da153afe86162ad.html

Itching to Rebuild the Tax Law
As Treasury Secretary Paul H. O'Neill prepares to draft a model proposal for overhauling the U.S. tax code, most political and industry observers agree the task will be daunting. One key issue the plan will concentrate on is whether the tax liability for wealthy taxpayers should be more than for lower-income people.

Read the full abstract at: http://www.ira.com/news/tax/53ff1807a93da0e243be8dc26a131dac.html

Companies Pass the Buck on Benefits
According to the Kaiser Family Foundation, workers already pay for about 27 percent of their health insurance, and companies are being forced to decrease labor costs further through other benefit cuts. According to the U.S. Department of Labor's statistics, benefits are equal to 27 percent of labor costs for firms. The average deductible for a PPO health plan rose 37 percent, and many retirees are losing or being forced to pay more for health insurance benefits from their employers.

Read the full abstract at: http://www.ira.com/news/prof/b8191b87d789515bf085c8d53da3fdb2.html

Holiday Spending Worksheet
http://www.bankrate.com/brm/calc/holidaySpending.asp

This site from Bankrate.com offers an online holiday spending calculator, which breaks your expenses down into eye-opening categories (remember that new dress you bought for the cocktail party?). You can then access a savings calculator to help reach your holiday savings goal for 2003.

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