Planning to Retire
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Target-Date Funds Have Hidden Risks
Continue reading… 3 CommentsTarget-date funds automatically provide age-appropriate investments that grow more conservative as you approach your designed retirement date. But asset allocation varies widely among funds with similar retirement years.
The Senate's Special Committee on Aging sent letters this week to the Department of Labor and Securities and Exchange Commission asking them to establish regulations governing the composition and advertising of target funds. “Despite their growing popularity, there are absolutely no regulations regarding the composition of target-date funds,” said Herb Kohl, a Wisconsin Democrat and chairman of the committee, at a senate hearing about retirement security. “With more and more Americans relying on 401(k)s and other defined contribution plans as their primary source for retirement savings, we need to make sure their savings are well-protected with strong oversight and regulation.”
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Social Security Administration Reaches Out to Young Workers
Continue reading… 4 CommentsThe Social Security Administration is reaching out to 20 and 30-somethings. Beginning this month, workers between the ages of 25 and 35 will receive a new insert with their Social Security statement. “This two-sided supplement provides younger workers with information about ways to save and invest, and also shows how saving even a little bit can make a big difference over time,” says Jason Fichtner, acting deputy commissioner of the Social Security Administration.
One aim of this mailing is to educate young people about the power of compounding interest. One example provided: $25 a week invested at 5 percent interest will grow to about $165,000 over 40 years. It also highlights Social Security’s disability benefits paid to injured workers and their families. A 20-year-old worker has a 3-in-10 chance of qualifying for disability benefits before reaching retirement age, the supplement points out.
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House 401(k) Hearing: 4 Ways to Fix the Retirement System
Continue reading… 12 CommentsThe House Education and Labor Committee held a hearing today to examine the shortcomings of the U.S. retirement system. The two-and-a-half hour discussion largely highlighted the weaknesses of the current 401(k) retirement savings system. “For too many Americans, 401(k) plans have become little more than a high stakes crap shoot. If you didn’t take your retirement savings out of the market before the crash, you are likely to take years to recoup your losses, if at all,” said Chairman George Miller, a California Democrat, in an opening statement. “As a result, we are realizing that Wall Street’s guarantees of predictable benefits and peace of mind throughout retirement was nothing more than a hallow promise.”
Four invited retirement experts also offered their ideas to fix the retirement system. Excerpts:
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Recession-Related Money Worries are Worse Than Reality
Continue reading… 7 CommentsThere are plenty of recession-related money worries to keep you awake at night. Just the thought of job loss, an unexpected medical bill not covered by insurance, or stock market losses could easily rob you of a peaceful slumber. But Stephen Brobeck, executive director of the Consumer Federation of America, says you may be worrying too much. “For most Americans, to date recession-related financial concerns have been greater than financial losses,” he said at a press conference yesterday promoting America Saves Week. “But tens of millions who still have their jobs and have suffered little or no loss of retirement savings worry that a deepening recession will eventually cost them income or even their jobs.”
A new survey indicates that the majority of Americans are engaging in behaviors that will help them weather the recession. Some 72 percent of Americans currently say they have an emergency fund to pay for unexpected expenses such as car repairs or a doctor’s visit, according to a telephone survey of 1,001 adults in February by the American Savings Education Council and Opinion Research Corporation. And 73 percent of those surveyed wisely don’t spend all of their income and save the difference. “Even in a severe recession the overwhelming majority of Americans remain employed, receiving income… the damage that families suffer is typically less than the damage that families think they are going to suffer,” says Brobeck. “The percentage of families who think or worry that they are going to be losing their jobs increases.”
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The Top 4 Money Worries
Continue reading… 2 CommentsThe recession has many people worrying about money. But saving for retirement is being trumped by other more immediate financial worries including unemployment, healthcare costs, and stock market performance, according to a recent survey. Here are the top 4 money worries and who is fretting most about each one.
Job insecurity. Some 38 percent of Americans rank unemployment as their biggest money concern, according to the telephone survey of 1,000 adults this month by financial services firm Edward Jones and Opinion Research Corporation. Younger Americans are considerably more nervous than their elders about job security (50 percent vs. 22 percent).
Stock market and health care. Older Americans are more stressed about stock market performance (37 percent) and the cost of healthcare (33 percent) than their younger counterparts (17 percent and 18 percent respectively). Women are also more concerned than men about health costs (23 percent vs. 18 percent).
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Coca-Cola Bottling Co. Suspends 401(k) Match
Continue reading… 4 CommentsNote to Coca-Cola Bottling Co. employees: Get your 401(k) match while you still can. The second largest bottling company in the U.S. will suspend matching contributions to its 401(k) plan on April 1, according to a Friday regulatory filing. The company currently contributes one dollar for each dollar saved by the employee, up to five percent of the worker’s pay.
Coca-Cola Bottling Co. joins over 90 other companies that have eliminated on changed their 401(k) match since October 2008, according to the Pension Rights Center, including UPS, Macy’s, and Motorola. Human resources consulting firm Hewitt Associates believes that upwards of 10 percent of companies could potentially suspend or reduce their match in the coming 12 to 18 months.
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Do You Trust Your Broker?
Continue reading… 4 CommentsReading the daily financial news about bailouts and scandals makes it difficult to know where to get accurate and unbiased financial advice. A recent survey found that investors are unlikely to trust financial information from any source.
Only about half (54 percent) of investors who own stock value the advice of financial experts and professionals when making investment decisions, according to a Zogby International survey of 1,077 U.S. stock owners. Investors also frequently tune in to the opinions of family, friends, and colleagues (35 percent), information found on financial news web sites (32 percent), and the financial print media (14 percent). Only 11 percent of investors said they found financial information obtained from company announcements worthwhile in helping to make profitable investment decisions, ranked only slightly above online financial communities (10 percent) and blogs (3 percent).
Online brokerages, which offer the valuable perk of not having to wait in long teller lines or spend time on hold in call center queues, didn’t fair much better. Customer satisfaction with the online brokerage industry fell more than 6 percent since last year and is at its lowest point since 2002, according to a separate e-commerce report released this week by the University of Michigan and ForeSee Results, an Ann Arbor, Mich. firm that measures customer satisfaction on the Web. “The convenience of managing your investments online doesn’t mean much when you see your portfolio take such huge hits,” says Larry Freed, president and CEO of ForeSee Results.
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The 10 Best National Parks for Retirees
Continue reading… 16 CommentsNational parks are beautiful and affordable places for active seniors to spend time in retirement. Yellowstone was the world's first national park, but the concept of preserving nature and culture for future generations to enjoy has now been expanded upon by many countries on almost every continent. All parks are not created equal, however. The Coalition of National Park Service Retirees recently released a list of their picks for the 10 best foreign national parks. The areas were selected based on a survey of their 700 members who are former career employees of the National Park Service, including park managers, rangers, and other employees. The retiree’s favorite international parks include:
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Annie Lennox: Enjoying Life Now that the Children are Older
Continue reading… 0 CommentsSome baby boomers say they are enjoying a period of intense creativity and inspiration now that their children are largely raised. There is more time to reflect on your life and reengage in activities you enjoy.
Singer and songwriter Annie Lennox appears to be throughally enjoying this period in life. “Of course now I'm in that middle-age place, age-wise, and youth is no longer really something that I'm a part of anymore. And that started happening for me when I was about 40, to be honest with you. I had my kids and my focus went elsewhere. And I think I've changed so much through having children ... inside myself. It's been a kind of evolution and a maturity,” Lennox told CNN.
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Industries With the Most Unemployed Older Workers
Continue reading… 82 CommentsAmericans laid off after age 55 often aren’t yet financially prepared to retire, but many are having difficulty finding new jobs. The unemployment rate for adults age 55 and older was 5.9 percent in January, the highest level since 1983, according to the Bureau of Labor Statistics. Although lower than the overall employment rate of 7.6 percent last month, 1.7 million adults age 55 and older were unemployed, twice as many as in November 2007, just before the recession began.
Older men are considerably more likely to lose their jobs than older women, with unemployment rates of 6.4 percent and 5.5 percent respectively in January. Experienced workers in male-dominated industries have been hit especially hard. Unemployment rates tripled in agriculture and doubled in construction and manufacturing between November 2007 and December 2008, according to an Urban Institute analysis. The finance industry also experienced a substantial increase in unemployment. The most modest job losses among older workers were in the health services, education, and public administration sectors – professions women are often more likely to choose.
Education provides some insulation from unemployment. Older men who did not complete high school have experienced a 6 percentage point spike in unemployment since the recession began compared to only a 1.4 percentage point increase for male college graduates. These industries have seen the most job loss among older workers since the recession began:
