Business and Finance

new york — Stocks fell for a second day Thursday as concern that health care profits will be hurt by a White House overhaul of the medical system offset a rally in banks spurred by the administration’s request for more financial rescue funds.

UnitedHealth Group Inc. and Humana Inc. slid at least 12.8 percent, and Eli Lilly & Co. lost 4.7 percent on concern Obama will cut Medicare payments to insurers and raise rebates drug makers must provide to patients on Medicaid. SLM Corp., known as Sallie Mae, tumbled 31 percent as the president proposed ending its student loan subsidies. JPMorgan Chase & Co. and Wells Fargo & Co. gained more than 6 percent as Obama’s budget proposed as much as $750 billion in new bailout funds.

"You’ve got to be glued to your screen, not only to watch prices, but to see what’s coming out of Washington," said Michael Mullaney, a Boston-based money manager at Fiduciary Trust Co., which oversees $9.5 billion. "The rhetoric out of Washington is going to be the primary driver of the market."

The Standard & Poor’s 500 index decreased 1.6 percent to 752.83 after rising as much as 1.9 percent in early trading. The Dow Jones industrial average lost 88.81 points, or 1.2 percent, to 7,182.08.

Health care stocks in the S&P 500 slid 5.1 percent as a group, the biggest drop since Dec. 1. UnitedHealth tumbled 13 percent to $20.07. Humana sank 19 percent to $23.64. Aetna lost 11 percent to $24.03.

Eli Lilly and Co., whose shares have posted a daily gain only twice in the last three weeks, fell 4.7 percent to $31.04 after saying it would lose "several hundred million" dollars in annual sales if Obama’s health care plan is approved.

Merck & Co paperless payday loans., maker of asthma treatment Singulair, dropped 6.7 percent to $26.04 for the biggest slump in the Dow average.

S&P 500 profits fell 35 percent in the fourth quarter, the biggest decline since records started in 1998. Income is forecast to shrink 33 percent this quarter, Bloomberg data show.

General Motors Corp. had the Dow’s second-steepest loss, tumbling 6.7 percent to $2.38.

SLM, the largest U.S. student lender, tumbled $2.59 to $5.80 for the biggest loss since Oct. 1.

JPMorgan rallied 6.1 percent to $23.05. Wells Fargo added 7.1 percent to $14.40.

American International Group Inc. increased 13 percent to 52 cents. The insurer may get a backstop from the U.S. government to protect against further losses on credit-default swaps, according to a person familiar with the matter. As of Sept. 30, AIG provided protection on more than $300 billion of assets through credit derivatives.

Goldman Sachs Group Inc. and UBS AG strategists cut their year-end forecasts for the S&P 500 on expectations earnings will keep declining. David Kostin at Goldman Sachs lowered his estimate to 940 from 1,100 and said the index may fall as much as 15 percent in "the near term." UBS’ David Bianco cut his prediction to 1,100 from 1,300.

IBM Corp. rose the most in three weeks, adding 3.6 percent to $88.97.

Las Vegas Sands Corp. increased 32 percent to $2.85 for the biggest gain since October. Sanford C. Bernstein & Co. initiated coverage of the casino company with an "outperform" rating.

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The Occupational Safety and Health Administration announced Wednesday that it is seeking a $1.2 million fine against St. Louis-based G.S. Robins & Co. due to workplace safety violations.

An investigation was triggered by an incident in August when eight employees had to be hospitalized after being exposed to poisonous chemicals at the St. Louis company’s Ro-Corp facility in East St. Louis.

Specialty chemical supplier G.S. Robins & Co. has 15 business days to respond to the 21 citations issued by OSHA.

The company plans to seek an informal conference with OSHA’s area director to further review the citations, said Eric Kowalewski, vice president of operations for G payday loans for bad credit.S. Robins.
OSHA’s investigation found employees were exposed to the chemical para-nitroaniline, which is packaged at the plant. The chemical can attack the respiratory system and get into the bloodstream. OSHA found the company failed to provide employees with safety training and correct protective equipment.

Kowalewski said all employees involved in the incident returned to work and have had no related ongoing medical concerns.

— CHRISTOPHER BOYCE

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PHILADELPHIA — HBO on your PC? It could happen sooner than you think.

Wary of the growing number of consumers watching TV shows online for free — and yet reluctant to upset viewers by yanking shows from the Internet — the nation’s largest cable operators are in talks with media conglomerates to take back control. They would set up a platform to release cable TV shows online, but exclusively for paying subscribers.

It’s a delicate dance for the cable TV service providers and the owners of the cable networks.

Potentially at stake is the business model of cable television. The service providers pay networks a per-subscriber fee each month for the right to carry channels. But the cable companies have groused that they are paying for content that programmers are giving away for free on the Web.

Jeff Gaspin, president of NBC’s Universal Television Group, said that the idea of collaborating with cable operators on online video had been floated for a while but that talks began in earnest this year.

"There’s pressure on all of us," he said, referring to TV networks. "We get paid quite a bit of money from cable operators. … It’s important we find ways to do business that protects that business model."

At the same time, "consumers want content where they want it and when they want it," Gaspin added. If the networks don’t provide it, "they’ll get it any way they can."

Gaspin and others familiar with the project said the new service would probably be free to cable TV subscribers. But a small fee might be assessed.

Sam Schwartz, executive vice president of Comcast Interactive Media, said the company wasn’t looking at the effort as "some enormous new revenue opportunity" but wants to add value that will keep customers from leaving short term personal loan. Comcast calls its initiative "On Demand Online."

One model being discussed is for Philadelphia-based Comcast to expand its lineup of cable shows on Fancast.com, its website that aggregates TV shows and movies for free viewing, much like Hulu.com. But only subscribers could access the shows. It’s not yet clear how subscribers would be authenticated; it would be easier if the customer also buys high-speed Internet service from the cable company.

Other cable operators wouldn’t create a new website, but they would steer subscribers to the cable networks’ websites, such as HBO.com, where they would be able to see an expanded array of shows.

About 34 percent of adults who go online at home watch videos over the Internet at least every week, up from 25 percent two years ago, said a survey released Monday by Leichtman Research Group.

People aren’t yet cutting the cord en masse — the Leichtman survey found that people who watch recent TV shows online every week are not more likely to give up TV service than other people. But the industry is heading off what could end up as a troubling trend. After all, the availability of free content online has befuddled other media industries, from music to newspapers.

The cable companies and others involved in the talks for a TV service said their goal wasn’t to kill the online video goose, but to work out a plan that would keep everyone’s business intact.

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Bank of Japan board member Miyako Suda said last month she didn’t think purchasing corporate debt was necessary, meeting minutes show.

“Recent overall conditions for corporate financing were not so severe as to require the bank to conduct outright purchases of corporate bonds,” Suda said, according to minutes of the Jan. 21-22 meeting released today in Tokyo. Companies can borrow from banks or sell commercial paper as an alternative to issuing bonds, she added.

The central bank unveiled a plan to buy corporate bonds at the meeting, when it also cut its growth forecast and predicted a two-year bout of price declines. With the key interest rate at 0.1 percent, the bank will probably focus on expanding the range of assets it purchases to prevent the recession from deepening, economists said.

“The Bank of Japan is expected to buy a broader range of risky assets and it has just taken the first step in such attempts,” said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. “In any case, there is little room left for the bank to maneuver policy with interest rates.”

The central bank last week announced details for the corporate bond purchase plan, saying it will buy as much as 1 trillion yen ($10.7 billion) in such debt from lenders. The bank also decided to extend programs in place to buy commercial paper and provide unlimited collateral-backed loans to financial institutions until September.

Lowering Yields

Some members at the meeting said policy should focus on lowering yields on so-called term instruments given that the benchmark interest rate is at “extremely low levels guaranteed fast personal loans.” A few members said the bank should continue to examine ways to reduce yields on such instruments, which typically mature within a year.

Some members said last month that the bank should emphasize that buying corporate debt was an “exceptional measure for a central bank.” One person said that excessive purchases of debt could impair the functionality of the market, the minutes said.

Many members said a possible decline in inflationary expectations over the longer term requires “careful monitoring” as a risk for the economy. Governor Masaaki Shirakawa has said policy makers need to pay attention to such expectations for signs of a deflationary spiral.

Consumer Prices

Consumer prices excluding fresh food will drop 1.1 percent in the year starting April 1 and 0.4 percent in the year to March 2011, they predicted. Inflation by that measure probably fell for the first time in more than a year in January, economists say a report due this week will show.

Japan’s gross domestic product fell at an annual 12.7 percent pace last quarter, the steepest drop since the 1974 oil shock. Shirakawa said economic growth will remain “severe” in the first and the second quarters of this year.

Bank of Japan policy makers predicted last month that the economy will shrink 2 percent next fiscal year, the most since 1945. Economists surveyed by Bloomberg last week said they expect GDP to contract 4 percent.

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Prices are falling for just about everything these days.

The government will report its key inflation index Friday morning, the Consumer Price Index, and economists believe the report is likely to show the first year-over-year drop in prices since 1955.

But while shoppers might see that as good news, economists generally view this as a threat to an already struggling economy.

That’s because deflation, or a widespread drop in prices, is one of the most destructive forces that can hit an economy.

Lower prices are one way businesses respond to the lack of demand for their products in a slowdown. But if companies can’t make a profit selling their products at the lower price, they’ll respond by cutting production and laying off more people.

More job losses can cut even further into demand. But even if consumers have jobs and money, they’re likely to hold off on purchases if they come to believe that prices will head even lower. All of which adds up to even more weakness in the economy.

Deflation is most often associated with the Great Depression. In 1930, consumer prices fell 2.3% and plunged 9% a year later. Prices fell nearly 10% in 1932 before the rate of decline started to slow. Still, prices didn’t turn higher again until 1934.

The U.S. is nowhere close to that type of deflationary spiral just yet. Economists forecast that the year-over-year drop in January was just 0.1%

Much of that decline has been driven by lower gas prices. But there is clear evidence that falling prices are spreading beyond the pump. The core CPI, which strips out food and energy prices, fell at a compounded annual rate of 0.3% in the fourth quarter of 2008.

Worries grow about more salary cuts

The potential economic pain that can be caused by deflation is so great that St. Louis Federal Reserve President James Bullard identified it in a speech Tuesday as the greatest risk facing the economy this year.

"I think we face some risk — at this point only a risk — of sustained deflation," he said, adding that "ongoing deflation in the United States might be particularly pernicious."

Some economists agree that deflation should now be a major concern.

"I think we’re on the precipice of outright, full-blown deflation and that we’ll fall into that abyss by this summer," said Mark Zandi, chief economist for Moody’s Economy.com. "Given the pressures businesses are under to sell something, they’ll have to cut prices and I think they will empire payday loans."

Zandi said his biggest worry about deflation is that it may cause more employers to cut wages, which could lead to even lower prices down the road.

Some companies have already begun to reduce salaries. General Motors (GM, Fortune 500) is cutting the pay of all of its remaining U.S. salaried staff between 3% and 10% as of May 1.

"Right now millions of people are losing their jobs, and as painful as that is, it affects only a small fraction of 150 million workers," Zandi said. "If you’re cutting wages broadly across 150 million people, that’s a far bigger problem for the economy."

Deflation or disinflation?

But other economists argue that falling prices are not a significant threat to the economy.

They point out that consumer prices fell in the mid-1950’s, a relative period of prosperity. And they add that the current drop in prices may simply be a temporary decline due to an adjustment between supply and demand.

"To have deflation, you have to have the price structure collapsing," said Rich Yamarone, director of economic research at Argus Research.

"Disinflation is the D word we should be using," he added, meaning that he thinks prices won’t rise dramatically going forward as opposed to continuing to fall.

Yamarone says the steps taken by the Federal Reserve and Treasury to pump trillions into the nation’s banking system will keep deflation from taking hold the way it did during the Great Depression and in Japan’s "lost decade" that started in the 1990’s.

"Those policymakers did nothing for decades," he said. "We’re throwing everything imaginable and several things that are unimaginable at the problem."

But Yamarone concedes that prices for many products will be kept in check for awhile, partly because of weak demand in the near-term and demographic changes in the longer term.

"There is too much capacity for everything right now - too many malls, too many auto plants," he said "The Boomers are in the process of retiring and 60-year old Boomers don’t need 2.5 cars in the driveway." 

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Joe Epstein’s heart did a little flip-flop when he opened an e-mail from a staffing firm that promised a portal to a new job.

"When you’re in this situation, it really picks you up," said Epstein, 58. Nearly a year after being laid off from his job as an information technology sales rep, he finds himself in a job search for the first time in a quarter-century.

As Epstein learned in the resulting telephone conversation, an ailing economy can bring out the worst in people: Companies that prey on the unemployed in their struggle to find work.

Epstein said a "very nice, very positive" woman representing the staffing firm plucked his r

Toyota Motor Corp offered buyouts to some 18,000 U.S. workers and said it would cut pay for executives and blue-collar workers in North America, and an analyst warned it may soon cut working hours in Japan.

The world’s No.1 automaker, struggling as the global credit crunch sends auto sales sliding, said it would shut down production for more days in April at plants in the United States, Canada and Mexico and would cut executive pay and bonuses.

“The global economy is in a once-in-a-century situation … Nobody knows if these steps will be enough given the uncertain outlook,” said Shotaro Noguchi, an analyst at Mitsubishi UFJ Securities.

“Inventory levels are still high, and a recovery in demand is not in sight yet. Toyota may have to adopt work-sharing in Japan in line with production cuts, at the same time as reducing overtime work.”

The cost-cutting underscores how the world’s top automaker and a perennial blue chip in a notoriously volatile sector is struggling amid the worst auto slump in decades.

Toyota said the North American moves were intended to keep as many of its North American workers on the payroll as possible.

“We hope the new measures will help us adjust while protecting jobs,” Toyota Motor Engineering and Manufacturing Vice President Jim Wiseman said.

Toyota is on track to post an operating loss of some $4.95 billion for the year to March 31, the first group-wide operating loss in its 70-year history payday loan companies.

Shares of the world’s largest carmaker ended flat on Friday, underperforming a 0.5 percent rise in Tokyo’s transport equipment subindex.

Noguchi said Toyota’s North American announcement detailed previously disclosed plans to cut costs by 500 billion yen ($5.5 billion) in the year from April 1.

Toyota said on February 6 it would slash fixed costs, including labor and other costs, by 10 percent in the year to March 2010, partly by reviewing employment terms globally.

SLIDING SALES

The automaker has cut North American production of top-selling cars such as the Camry and Corolla after sales in the United States, its largest market, fell 15 percent in 2008.

It has also suspended work on a new plant in Mississippi that was due to produce its Prius hybrid car beginning in 2010. Rivals Honda Motor Co Ltd and Nissan Motor Co Ltd have also been forced to cut output.

Toyota said the buyout program would not be offered at two plants where its workers are unionized.

Those are the joint venture manufacturing operation it has in California with General Motors Corp and a truck assembly plant in Tijuana, Mexico. 

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Treasury Secretary Timothy Geithner is seeking to draw investors into the U.S. financial-rescue program, aiming to add private funding as a new component of proposals to address the toxic debt clogging banks’ balance sheets.

Aides worked through the weekend to complete the package that Geithner will announce tomorrow in Washington, which was delayed by a day. Aspects of the plan that have been settled include a new round of injections of taxpayer funds into banks, targeted at those identified by regulators as most in need of new capital, people briefed on the matter said.

The toughest issue has been the one Geithner’s predecessor failed to address: the illiquid assets that caused the credit crunch. A leading proposal is a so-called aggregator bank, featuring investors such as hedge funds and private equity, that may issue Federal Deposit Insurance Corp.-backed debt, the people said. It’s unclear how big a role there will be for guarantees of securities that stay on banks’ balance sheets.

“We have to reach a point where investors and consumers have greater confidence in our financial system,” Philadelphia Federal Reserve Bank President Charles Plosser said in an interview. “Without that, these institutions will not be able to attract new capital or be able to fully resume their important role in providing credit.”

Congressional Briefing

Treasury officials told congressional staff late today that the plan for an aggregator bank would have an initial capacity of as much as $500 billion, according to one Democratic and one Republican congressional aide. A second component will be $50 billion to help stem foreclosures, they said.

A Treasury spokeswoman wasn’t immediately available for comment on the numbers.

Officials said yesterday the one-day delay for Geithner’ speech was to allow the administration to focus on getting Senate approval of President Barack Obama’s fiscal stimulus. Geithner is scheduled to unveil the effort at 11 a.m. tomorrow.

A Federal Reserve program designed to spur consumer and small-business loans will be expanded as part of tomorrow’s package, possibly to include real-estate assets, the people said.

For now, the government doesn’t intend to ask for more money, while leaving open the option of requesting more later. Most of the second half of the $700 billion Troubled Asset Relief Program has yet to be allocated, an amount that economists have said is unequal to the task of shoring up the financial industry.

‘Not Working’

“Credit markets in this country are not working right” and “we’ll do what is necessary” to start a process of repair, Lawrence Summers, director of the White House National Economic Council, said on ABC television’s This Week program yesterday. Asked if the administration may come back to ask for more money down the road he said “we’ll see what happens.”

Regulators plan to subject banks deemed most important to the financial system’s stability to a new test to determine whether they have enough capital, according to a person familiar with the matter. The President’s Working Group on financial markets, which includes the Fed, FDIC, Securities and Exchange Commission and Commodity Futures Trading Commission, will develop the examination’s guidelines, the person said.

Firms that fail the test will receive more capital injections from the government, the person said. Banks that couldn’t repay the money over a period of time could be liquidated, placed into receivership or have their assets retired by officials over time.

Sales Effort

Geithner will try to sell the plan as a clean break from the Bush administration, while offering many of the same programs and policy tools bequeathed by former Secretary Henry Paulson.

The round of equity injections planned will contrast with Paulson’s initial push to make new capital available to all banks, and the firms that get additional money will be faced with tougher terms, people briefed on the matter said no telecheck payday loans.

“We’ve got to characterize this not as saving the banks, but saving the economy in terms of the credit that flows in this country,” Senator Claire McCaskill, a Missouri Democrat, said yesterday on NBC’s Meet the Press.

The FDIC is expected to play a role either running or financing some bad bank type of unit that takes on illiquid securities, which may sell its own government-backed debt, the people said.

FDIC Credit Line

Also this week, officials may seek to boost the FDIC’s credit line with the Treasury to $100 billion from $30 billion. The FDIC’S deposit-insurance fund is diminishing as it takes on more failed banks.

Geithner’s plan may include an asset-guarantee element similar to previous deals arranged for Citigroup Inc. and Bank of America Corp., while it’s not clear how big a role such insurance would play in tomorrow’s announcement, the people said.

The new approach comes four months after the start of the $700 billion TARP, which both Democrats and Republicans have criticized as ineffective. The task Geithner faces is reviving a U.S. banking system throttled by $752 billion in credit losses and an economy that lost almost 600,000 jobs last month.

Economic news this week is expected to show a further deterioration. Sales at U.S. retailers probably fell in January for a seventh straight month, capping the longest slide since comparable records began in 1992. The Commerce Department report will probably show purchases declined 0.8 percent, according to the median estimate in a Bloomberg News survey.

Economy Deteriorates

A Labor Department report last week showed the U.S. unemployment rate climbed to 7.6 percent, its highest level since 1992. White House Council of Economic Advisers Chairman Christina Romer warned last week that the rate may climb to 10 percent or higher without approval of Obama’s stimulus package, which exceeds $800 billion.

With the economic downturn deepening, attracting private money to the financial industry may be difficult. The Standard and Poor’s 500 Banks Index has fallen 33 percent since the start of last month, and 65 percent in the past year. It rose today, closing at 91.20.

Bank of America plunged 57 percent in the past month, closing at $6.58 last week even after the government agreed to backstop a portfolio of more than $100 billion of its assets. Citigroup, which got a joint federal guarantee for investments in excess of $300 billion, closed at $3.91.

The Obama administration will seek to “catalyze and spur private investment” to help solve the crisis, Summers said in an interview on Fox News Sunday.

‘Looking for Clarity’

Banks are “looking for clarity, we’re looking for this to be the complete package,” said Wayne Abernathy, an executive vice president at the American Bankers Association in Washington. “If they don’t have the details spelled out they will just freeze the market.”

Housing programs will be a key element of the administration’s plan, though may be announced separately from the bank-rescue rollout. House Financial Services Committee Chairman Barney Frank said yesterday that Obama will steer “substantial” funds to stem foreclosures as the administration prepares to unveil its plan for stabilizing the economy.

“A major part of what you’re going to see from the Obama administration is an effort to put substantial money into reducing foreclosures,” Frank, a Massachusetts Democrat, said on NBC’s “Meet the Press.”

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Norm Mackie, the head of operations for Mackie Moving Systems Inc., was holed up in his Oshawa office yesterday, helping put together a takeover of a smaller Brampton-based trucking firm as it teetered on the brink of bankruptcy.

"It’s not a good news story," said Mackie, whose family’s company operates about 500 trucks and a large warehousing centre in the Toronto area. "They have laid off approximately 150 people in the last couple of days."

A similar story of hardship is taking place across the Canadian trucking industry.

Statistics Canada said yesterday that the transportation and warehousing sector lost nearly 30,000 jobs last month – "largely in truck transportation in Ontario," where a weakening economy and the continued decline of the manufacturing sector has forced operators to cull large numbers of drivers.

The sector currently employs nearly 870,000 in total across Canada, the government agency said.

"It’s rough out there," said Mackie. "Everybody is trying to take a piece of the same pie and there’s not much of it left, to be honest with you."

A survey by the Canadian Trucking Alliance in January found that almost a quarter of the 86 trucking companies polled said they planned to reduce the number of company drivers.

Nearly 30 per cent said they were planning to reduce their business with independent owner-operators.

David Bradley, the chief executive of the CTA, said steep job losses in the transportation and warehousing sector should be a wake-up call for anyone who believes the current economic downturn has run its course.

"Trucking is probably the best leading indicator of economic activity there is. So the fact that we’re seeing this sort of deterioration is a harbinger of things to come in the overall economy cash advance to savings account."

He said the Canadian trucking industry was among the first to sound alarm bells about the economic downturn.

"Now, certainly, people couldn’t have foreseen the financial crash, which has exacerbated things. But for anyone that cared to listen, we said more than a year and a half ago that we were seeing weakness in the economy and demand declining."

While some trucking companies had been steering their business away from the ailing Ontario auto sector in recent years, the strategy has only been partially successful as the downturn takes its toll on everything from manufactured goods to paper products to building supplies.

Chuck Snow, the founder of Milton-based Traffix, said he’s concerned some of the business will never return.

"Our phones are ringing off the hook with good drivers that are looking for work," said Snow, a trucking industry veteran. "And I’ve got banks and finance companies calling me all the time offering me great deals on equipment."

It’s not just in Canada’s most populous province that truckers are hurting.

Declines in the forestry business have hurt drivers in B.C. while weak demand for paper products has affected companies in Quebec. Even Alberta, which until recently had been struggling to find enough drivers to keep pace with a booming economy, has seen a significant slowdown alongside the falling price of oil.

"We had record bankruptcies in the trucking industry in Ontario in 2007 and 2008," said the CTA’s Bradley. "And we foresee a tough period ahead in 2009."

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Question: My mother is 50 years old and has no 401(k), IRA or any type of retirement account that she can rely on when she is no longer able to work. What type of plan can I set up for her so she can start saving money?  L.K., Lancaster, Pennsylvania

Answer: The issue of what adult children can and should do to help assure that their parents are financially prepared for retirement is one that’s getting more attention as lifespans increase and we become increasingly reliant on our personal savings to fund our post-career lives.

Typically, though, this is the type of question I get from baby boomers who, already squeezed by simultaneously saving for retirement and paying school and other child-rearing costs, now face the prospect of also having to provide financial assistance to retired parents.

Indeed, a global study of intergenerational issues released early last year by The Hartford found that more than a quarter of Americans 45 and older say they are currently caring for both children and parents or older relatives. Given how badly the retirement savings of many retirees have been hit by the market meltdown, I wouldn’t be surprised if that number has already increased or will over the next few years.

The fact that your mom is just 50 likely puts you somewhere in your 20s, which means you’re grappling with this issue earlier than most people. Just as well, though, since it can give both you and your mom more time to try to work out a viable plan.

Basically, there are two separate, but related, matters you and your mother must address. The first is primarily financial, while the second deals more with personal and relationship issues.

Money matters

The financial side is relatively straightforward. You’ve got to find some way for your mom to start saving on a regular basis. You say she has no 401(k), but is she eligible for one? If so, you need to convince her to sign up for it ASAP and contribute at least enough to get the employer’s match, if there is one. This is her best shot at jumping on the savings bandwagon since contributions to her account are automatically deducted from her paycheck before can spend the money.

If your mom’s employer doesn’t offer a 401(k) or other savings plan, help her open an IRA. By going to Morningstar’s IRA calculator, you and she can quickly see which type of IRA, if any, she’s eligible for (traditional deductible, Roth IRA or nondeductible) and how much she can contribute. The maximum contribution for 2009 is $5,000, plus $1,000 for people 50 and older. By the way, assuming she’s eligible, your mom can also make an IRA contribution for the 2008 tax year if she acts by April 15th.

If your mom can sock away more than the maximum contribution for an IRA account, she can always invest in tax-efficient investments such as index funds like those on our Money 70 list of recommended funds or tax-managed funds within a taxable account cash advance loans.

To increase the odds that the money will actually make it into an IRA or taxable account, have your mom sign up for an automatic investing plan that transfers a certain amount — $100, $200, $500, whatever — from her checking account to her investment account each month. Like payroll deduction, this option makes saving more convenient — and more likely to happen.

Personal matters

The personal aspects of convincing someone to save — especially a parent or other relative — may be more difficult to deal with, however. You say your mom is 50 but has saved zip for retirement. So the obvious question is why?

Maybe she’s just never put her mind to it, in which case showing her columns that offer tips on how to start saving or suggest possible ways to free up the bucks to do so might help.

It’s also possible that she’s never made enough money to be able to put something away consistently. Or perhaps she just doesn’t want to. Maybe she’s perfectly happy the way things are.

All of which is to say that, far from simply introducing your mom to 401(k)s, IRAs, automatic investment plans and the like, the real challenge may be getting her on board with the need to save for retirement. You may also have to prepare yourself for the possibility that she’s just not willing to change.

Finally, you also need to consider that, even if your mom is willing to accept advice on saving for retirement, you may not be the best person to give it to her.

While you may see yourself as a concerned son or daughter just looking to help a parent in need, your mom might see a nosy or intrusive child. Or she might feel embarrassed about having to discuss the details of her personal finances with you. She could see this as an infringement of her independence. So after broaching the issue with her, you may find that you’re better off having her deal with a financial planner whom you or she hires.

Clearly, you’ll have to exercise some sensitivity when you approach your mom on this issue. But now is a good time to do it. If your mom is willing to save, then starting now will give her more time to improve her retirement prospects.

And if she demurs, at least you’ll have plenty of time to think about how much financial help you might be willing and able to extend her in the future should she need it — and allow you to adjust your own financial planning accordingly.

Have you found a way to pay for your child’s college education without taking on too much debt? Did you choose a university based on its lower cost or loan programs, research scholarships, or just save up and pay in full? We want to hear from you. Send your stories to pwang@moneymail.com and you could be featured in an upcoming story. 

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