Religious Retirement Office
Vol. 14, No. 3
In The Jaws of the Bear
Brother John T. Patzwall, FSC
I am fully aware that this is not an investment newsletter, and I am hopeful that most religious communities are using professional investment advisors to counsel them during these uncertain times. Nonetheless, the experiences of my fourth career and a recent presentation on investments given to the Carmelites under NATRI's sponsorship are prompting me to reflect and comment on the state of today's securities markets.
The third quarter of the year has just ended. The average stock fund fell 17.2 percent during that period and is off 26.6 percent for the year. Quarterly results revealed that sectors previously safe from the rampaging bear felt the bite of its teeth and the tearing of its claws.
In a few short weeks, we will be preparing the 2003 Basic Grant Eligibility Forms for distribution in late December or early January. As usual, we will be asking religious institutes to report on the value of their charitable trusts and other designated retirement assets. Acknowledging that we are in the jaws of a bear of an investment market, there is little doubt in these environs that the value of these funds has declined. Consequently, it is easy to predict that the total unfunded past service retirement liability [UPSL] will probably increase. This will reverse the trend which saw UPSL decline from $7.07 billion in 1996 to $6.06 billion in 2001. The markets which gave are in the process of taking away.
Hopefully, institutes have not accepted more risk than they can tolerate and have suffered only a fluctuation and not a loss. Fluctuation is not a loss of principal. If your portfolio has declined in value by twenty-six percent this year, you have had a significant and discouraging fluctuation. You have not had a capital loss, however, if you have been able to refrain from doing the worst possible thing and selling while the market is down.
Past history suggests that all you must do to recover and go on to acceptable profits [seven percent a year over time] is to hang tight. Those of us who did exactly that after the stock market collapse of October 1987 were well rewarded. In my first career I used to teach history, among other things, and I am unaware of any market that has gone down without recovering. It may not look like it at the moment, but we can expect the value of the world's economy to continue to grow in the future. Consequently, the value of the securities markets will reflect that growth; and equity investors, in particular, will profit and be rewarded for enduring the aggravation that risk entails. Eventually, the bear will return to hibernation. In fact, Don Cassidy, a senior analyst at the investment research firm Lipper, said in a recent interview that when the entire market heads in one direction, "it usually signals a top or a bottom."(USA Today, 10/04/02) And we all know it is not signaling a top!
A study by Ibbotson Associates, an organization specializing in financial analysis, indicates that for the entire period from 1926 to 1995 the annualized rate of return on common stocks was 10.5 percent (before taking into account the 3.1 percent annual inflation rate during that period). Jeremy Siegel in Stocks for the Long Run: The Definitive Guide to Financial Market Returns and Long-Term Investment Strategies (McGraw Hill, 2002) reports that these rates of return hold true over even longer periods of time. His research shows that the average annual stock returns after inflation for the period 1802 to 1997 were seven percent. His study included the periods of the Civil War, the Crash of 1929, the Great Depression, World Wars I & II, and the smaller "crash" of 1987. The latter does not appear on the graphic as bad as it felt at the time. Perhaps, and likely, in the future, we will have the same perspective of the bruin prowling about in the markets today.
NRRO consistently advises that while religious institutes should utilize the earnings from their retirement funds to pay for current retirement expenses, the capital should be allocated and invested for the long run. This is an advantage the institutional investor has over an individual retiree who must change investments and allocations as he or she gets older. Even during the Depression and in the 1970s (the worst of all bear markets), there has never been a loss while holding the S&P 500 for fifteen years or longer. So be honest about your risk tolerance, have diversified and socially responsible portfolios, and resist the temptation to second guess yourself.
Bad days are built right into investment strategies. There should be many more good days than bad. In the end our investments should be profitable. Where are you going to go anyhow? What are your alternatives as you try to be good fiduciaries? If you could find a CD yielding four percent, you would double your money in about 18 years. Even if you average only the seven percent historical rate of return, in stocks your money will double in just ten years. Until history proves differently, the business cycle and consequent market cycles will not be repealed. At some point, and I believe in asset allocation, not market timing, as the predominant determinant of performance, the bulls will assert themselves. Markets will begin to give again, and unfunded past service liability will reverse direction too! And we will be able to put the antacids back in the medicine cabinet.
Page 44 of the Retirement Fund for Religious 2001 Annual Report incorrectly cites the Oblates of Mary Immaculate of San Antonio, TX, as seeking their first Basic Grant. It was actually the Religious of Mary Immaculate, also of San Antonio, that were applying for this funding. We apologize for the error and extend our deepest thanks to the Oblates of Mary Immaculate who have chosen not to seek grants so that RFR funds may be reserved for religious institutes with greater needs.
Out of Ashes
It is hard to reflect on September 11th, 2001, and not be overwhelmed by the tragedy. But Sister Diane Couture, SSJ, of St. Augustine, Florida, hopes her ministry will also serve as a reminder of God's enduring presence, even on that terrible day. One of only six stained glass master painters in the world, Sister Diane was commissioned by St. Francis of Assisi Catholic Church in New York City to create a memorial to the victims of September 11th. Adjacent to St. Francis is the Franciscan friary where Father Mychal Judge, a victim and hero of the World Trade Center attacks, lived.
Sister Diane was contacted by Father Peter Brophy, OFM, pastor of St. Francis, after he learned of her work through an article in the Retirement Fund for Religious 2000 Annual Report. In response, Sister Diane created a design for the window that was approved by both Father Brophy and by Cardinal Edward M. Egan, Archbishop of the Archdiocese of New York.
The window, entitled "Even From a Dark Night," depicts firefighters sitting in front of the rubble at Ground Zero. In the background, among the devastation and debris, is a cross that was actually made from some of the charred beams of the World Trade Center. The cross is meant as a source of hope and a symbol that God is always with us.
The window was constructed at the Sisters of St. Joseph Architectural Stained Glass Studio in St. Augustine. Work began in November 2001, and the six by eight foot window was installed in August 2002. The window is the centerpiece of a shrine created at St. Francis in memory of all those who lost their lives in the attacks, especially Father Judge. The shrine was dedicated during a special performance of Faurι's Requiem on September 11th, 2002.
Sister Diane, who was present for the dedication, was grateful for the opportunity to work on the memorial. "I believe strongly in the ministerial value of the arts, and I hope this window will serve as an avenue for ongoing peace and healing."
Cards, bookmarks and matted prints of this inspiring memorial are available at: www.ssjstainedglass.com. Proceeds benefit the Sisters of St. Joseph retirement fund.
NRRO Workshops Available
Recently, NRRO's staff has presented workshops for various groups, including: families of religious institutes, several regions of the Conference of Religious Treasurers, and arch/diocesan gatherings of religious. We welcome opportunities to meet with groups such as these. Please contact our office if you are interested in having us address retirement planning issues at one of your upcoming meetings.
Some of the topics we have addressed are:
Emerging Trends in Elder Care
Levels of Care & Planning for Care Delivery
Investment Issues as Related to Retirement Funds
Building or Renovating for Retirement Care
Resources for Retirement Planning
Calculating the Cost of Care
Interpretation of the Retirement Needs Analysis
Spirituality of Aging
Retirement & Health Care Issues & Policies
Budgeting & Long-Range Planning for Retirement Costs
Message from the Director
As we move into colder weather, I think of the winter season of life of our elder religious. Often our senior religious feel a sense of uselessness as their physical ability to serve others diminishes. We each fear the possibility of becoming so totally dependent on others that we seem "useless." But with the light of faith, the reality is quite different.
Abbott Jerome Kodell, OSB, writes about this truth in The Meaning and Purpose of this Benedictine Moment (Benedictines, Winter 2000). "A prayerful person who has entered the zone of mental incompetence likewise remains in a habitual attitude of prayer, unbroken by the failure of health. By grace and suffering, they have been emptied of egoism, hollowed out to become channels of blessing." Prayerful persons, be they religious, lay or clergy, grow into a state of prayer that focuses their lives on God beyond thoughts and words.
These last years of life with all of their diminishment are perhaps the most fertile, pure form of holiness. It is the best gift that our elder religious can give. Our world is at the brink of war, and suffering abounds all over the globe. We trust the power of the prayerful lives of our seniors to intercede with God and to be channels of grace to the world.
Your generosity and kindness in helping to support our senior religious enable them to retire in dignity, surrounded by the religious practices that have nurtured their faith throughout their lives. Your assistance does more than provide basic necessities; it also supports lives of the deepest prayer that one can know. Surely, you are special recipients of those graces!
Sister Andrιe Fries, CPPS
More Than a Fairy Tale
Sister Janice Bader, CPPS
Once upon a time, not so very long ago, many religious institutes believed that a good math teacher had all the skills necessary to be a good treasurer. Most institutes have learned, often through the pleas of the math teacher/treasurer, that the ability to do arithmetic does not prepare one for the complexities of managing investments, insurance, employee benefits, taxes, etc., etc. Today, most institutes acknowledge that appropriate professional training in financial management and ongoing fiscal education are essential to good stewardship.
Once upon a time (maybe even today), some religious institutes believed that a kind and gentle personality qualified one to be a director of retirement. Since everyone ages, the need for professional preparation to minister to aging religious was sometimes seen as superfluous.
This past spring and summer, I was privileged to attend two conferences on issues related to aging: the annual joint conference of the National Council on Aging (NCOA) and the American Society on Aging (ASA) and a workshop, entitled Aging Religious and Diocesan Priests, sponsored by College Misericordia.
The NCOA-ASA conference brought together experts on aging from all across America and addressed issues as broad as public policy and health care to issues as specific as driver safety and the spiritual needs of elders.
The workshop on aging religious and priests that I attended was one of three such workshops sponsored by College Misericordia during the summer of 2002. This year was the twenty-fifth year that College Misericordia has presented workshops specifically geared to the educational needs of those who minister to elder religious and priests. The College Misericordia workshops offer topics that are timely and informative, and they provide an invaluable opportunity for networking with others involved in this important ministry to elder religious.
Both of these gatherings broadened my perspectives and deepened my understanding of the challenges and blessings of aging. In addition, I came away with much practical information that I can use to assist religious institutes with their retirement planning efforts.
The National Religious Retirement Office strongly encourages religious institutes to provide continuing instruction for those who care for the senior members of the institute. Few institutes would consider appointing someone as formation director without providing appropriate training. Ongoing formation at the other end of religious life is equally critical. Religious institutes need to insure that these "formation directors" receive the training and development that are so essential to their ministry.
The need for adequate preparation seems to be borne out by the Best Practices study that currently is being conducted by NRRO on behalf of the Commission for Religious Life and Ministry. One of the preliminary results indicates that the quality of life for senior members is enhanced in those institutes whose elder-care staff are both professionally qualified and up-to-date on trends in elder care.
Because ongoing education is so important, NRRO wants to encourage it in every way possible. Religious institutes for whom such educational opportunities would present a financial hardship may apply to NRRO for grant funding for this purpose. Small Supplemental Identified Need Grants (SING) are available to those institutes with a significant unfunded retirement liability. Please contact me for further information.
Let's work together to make quality care for our elders more than a fairy tale!
Please send changes in congregational leadership, as well as in addresses, phone or e-mail, to NRRO c/o Jean Smith so that we can keep our records and mailing lists up-to-date.
2003 Retirement Workshops
Elder Religious & Diocesan Priests
Sponsored by College Misericordia
May 24-29, 2003 San Antonio, TX
June 7-12, 2003 Madison, WI
July 19-24, 2003 Dallas, PA
For more information call toll free 1-866-262-6363 (option 4) or visit misericordia.edu on the web and click on Conferences and Non-Credit.
Making Our World a Good Place to Grow Old
Joint Conference of the National Council on Aging and the American Society on Aging
March 13-16, 2003 Chicago, IL
For more information visit: www.agingconference.org
Grant funds are available to cover the cost of attendance for those institutes with a very significant unfunded retirement liability. Please contact Sister Janice Bader for further information.
3211 Fourth Street NE
Washington, DC 20017-1194
Project Director for Retirement Services
|USCCB November General Meeting, Washington, DC||November 11-14, 2002|
|NATRI Conference, Tampa, FL||November 20-23, 2002|
|RFR National Collection||December 7-8, 2002|
|Supplemental and SING Grants awarded||December 12, 2002|
|CMSM New Leader Workshop, Marriottsville, MD||December 12-15, 2002|
|Supplemental Grant Applications due||January 31, 2003|
|CRLM, Jacksonville, FL||February 13-15, 2003|
|Vicars' Conference||March 13, 2003|
|Basic and Special Assistance Grants awarded||March 31, 2003|
|LCWR New Leader Workshop, Rochester, MN||April 3-6, 2003|
|LRCR Legal Seminar, Milwaukee, WI||April 24-27, 2003|
|Basic and Special Assistance Grants awarded||June 2003|
|USCCB General Assembly, St. Louis, MO||June 19-21, 2003|
|CMSM Assembly, Louisville, KY||August 6-9, 2003|
|LCWR Assembly, Detroit, MI||August 21-25, 2003|
|CMSWR Assembly, Belleville, IL||October 9-12, 2003|
If you would like to make a bequest or restricted gift to the National religious Retirement Office, the following information should be used:
To the United States Conference of Catholic Bishops, for the exclusive purpose of assisting Roman Catholic religious orders in the United States to provide for the retirement needs of their elderly members.