Current Events in June 2016

There is an assumption among parents that once the children leave home, they'll have a few years to sock money away for retirement. If they haven't saved enough early on, they can make up for it later.

A new report from the Boston College Center for Retirement suggests that isn't happening, at least not to the extent many retirement planners have assumed. The report finds parents haven't cut back that much on their spending and, as a result, aren't saving a lot more for retirement.

The authors begin with the assumption that when children leave the household, parents have more disposable income. What they do with this money is important for two reasons, they argue.

If parents save the extra money, they not only build up their retirement savings, they also keep their standard of living in check, meaning they will need less money to support it during retirement.

However, if they spend the money, they not only reduce the amount of money available at retirement, they have increased the standard of living they will need to support during retirement.

Just a slight increase in savings

“The results in this brief suggest that when the kids leave, households do increase their saving through their 401(k)s, but just slightly,” the authors write. The size of the increase is more consistent with research that suggests roughly half of households do not have enough savings for retirement than with the optimal savings research.”

The report does not speculate on how parents spend their money. It does note, however, that other research has shown that parents often provide financial assistance to their children, even after they leave home.

This was often the case in the years immediately following the financial crisis, when unemployment was high and wage increases were non-existent.

Last year the Pew Research Center issued a report that found 61% of seniors had provided financial support to an adult child in the previous 12 months.

Ameriprise, a financial services firm, issued research showing that 23% of Americans said their retirement planning had been disrupted by the financial help they were providing their offspring.

Applications for mortgages continue to yo-yo, falling this past week after rising the week before.

According to the Mortgage Bankers Association, applications dropped 4.1% during the week ending May 27.

The Refinance Index fell 4%, although the refinance share of mortgage activity increased to 54.3% of total applications from 53.7% the previous week.

The adjustable-rate mortgage (ARM) share of activity was down to 5.0% of total applications from 5.7% a week earlier, the FHA share slipped to 12.5% from 12.7%, the VA share rose to 12.0% from 11.5% a week earlier, and the USDA share was unchanged at 0.7% the week prior.

Contract interest rates

• The average contract interest rate for 30-year fixed-rate mortgages (FRMs) with conforming loan balances ($417,000 or less) was unchanged at 3.85%, with points decreasing to 0.36 from 0.37 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate was unchanged from last week.
• The average contract interest rate for 30-year FRMs with jumbo loan balances (greater than $417,000) slipped one basis point -- to 3.81% from 3.82% -- with points increasing to 0.35 from 0.27 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
• The average contract interest rate for 30-year FRMs backed by the FHA was down to 3.65% from 3.70%, with points decreasing to 0.26 from 0.27 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
• The average contract interest rate for 15-year FRMs jumped six basis points to 3.12%, with points unchanged at 0.40 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
• The average contract interest rate for 5/1 ARMs dropped to 3.00% from 3.09%, with points increasing to 0.44 from 0.31 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The survey covers over 75% of all U.S. retail residential mortgage applications.

First Source of Tonawanda, N.Y., is recalling the following items that may be contaminated with Listeria monocytogenes:

• 15 LBS Alpine Valley Fitness Mix with lot code BD 161021
• 15 LBS Alpine Valley Yogurt Fruit/Nut Mix with lot code BD 161261
• Alpine Tub “Roasted & Salted Sunflower Kernels” 10.25oz with Best By 03-24-17
• Alpine Tub “Roasted & Unsalted Sunflower Kernels” 10.25oz with Best By 3-23-17, 3-30-17, 5-3-17
• Wegmans square tub “Fitness Mix” 20oz with Best By 12-24-16
• Wegmans square tub “Sunshine Cranberry Delight” 20oz with Best By 12/15/16, 1-7-17, 2-9-17
• 15 LBS Alpine Valley Sunshine Cranberry Delight with Lot Code BD 161021 and BD 161261
• Flave Fitness Mix 8oz with Best By 4-20-17 and 05-02-17
• Flave Tropical Trail Mix 8oz with Best By 4-20-17
• Flave Oriental Mix 6oz with Best By 3-10-17 and 4-21-17
• Flave Sunflower Seeds 7.5oz with Best By 4-20-17
• Gonzo 2 Go “Sunshine Cranberry Delight” 4.5oz with Best By 2-10-17
• Gonzo 2 Go “Fitness Mix” 5oz with Best By 1-7-17
• Stewarts Sunshine Cranberry Delite 5oz with Best By 1-18-17
• Tops square tub “Roasted & Unsalted Sunflower Kernels” 10.25 with Best By 3-30-17, 5-3-17
• Tops square tub “Roasted & Salted Sunflower Kernels” 10.25 with Best By 1-28-17

No illnesses have been reported to date in connection with this problem.

The recalled items were distributed between March 11 and May 21, 206 in retail stores in Indiana, Louisiana, Massachusetts, Maryland, Minnesota, New Jersey, New York, Pennsylvania, Virginia, West Virginia and South Carolina.

What to do

Customers who purchased any of the recalled items should destroy them.

Consumers with questions may contact the company at 1 (716) 389–0264, Monday – Friday, 8am – 5pm (ET).

Ferrari North America is recalling 2,820 model year 2009-2011 Ferrari Californias manufactured February 16, 2009, to July 8, 2011, and model year 2010-2011 458 Italias manufactured March 5, 2010, to July 29, 2011.

These vehicles are equipped with airbag inflators assembled as part of the passenger front airbag modules, used as original equipment or replacement equipment. In the event of a crash necessitating airbag deployment, the inflators may rupture due to propellant degradation occurring after long-term exposure to absolute humidity and temperature cycling.

An inflator rupture may result in metal fragments striking the vehicle occupants resulting in serious injury or death.

What to do

Ferrari will notify owners, and dealers will replace the passenger frontal air bag assembly, free of charge. The manufacturer has not yet provided a notification schedule.

Owners may contact Ferrari customer service at 1-866-551-2828. Ferrari's number for this recall is 60.

E S Foods of Woodbury, N.Y., is recalling 3700 cases of Meal Breaks items containing individually packed Sunrich Natural Sunflower Kernels (Roasted & Salted).

The products have the potential to be contaminated with Listeria monocytogenes.

No illnesses have been reported to date.

The following products are being recalled:

The recalled products are packed in a master case containing the product code number, product description, “Best Used By” Date, and lot code. They were distributed in California, Kansas, Kentucky, Tennessee, Texas, Utah, Virginia and Wisconsin to foodservice distributors, food banks and school meal programs between April 21 and May 13, 2016.

What to do

Customers who purchased any of the recalled products should contact E S Foods to arrange for product retrieval.

Consumers with questions may contact E S Foods at 516-682-5484, Monday – Friday, 8am - 5pm (ET).

Box Components of Anaheim, Calif., is recalling about 4,100 bicycle forks.

The steer tube can become loose in the crown of the fork, posing a fall hazard.

The company has received 242 reports of loosened tubes. No falls or injuries have been reported.

This recall involves Box Components’ carbon fiber BMX bicycle forks. The forks are black with “BOX” printed in white on the side. The model numbers are printed in white letters on the front face of fork crown. The affected models have one of the following three serial numbers printed above the crown: 140508, 140606 or 140702.

The affected models include:

The bicycle forks, manufactured in China, were sold at independent bike shops and online at www.danscomp.com and www.jrbicycles.com from July 2013, through April 2015, for about $300.

What to do

Consumers should immediately stop using the recalled forks and contact Box Components for a free replacement bicycle fork.

Consumers may contact Box Components toll-free at (888) 279-9691 from 9 a.m. to 5 p.m. (PT) Monday through Friday, or online at www.boxcomponents.com for more information.