Planning to Retire
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Long Lines for Social Security Recipients
Continue reading… 6 CommentsBaby boomer retirement and a “retirement wave” of experienced Social Security Administration (SSA) employees could create long lines and unanswered phone calls, according to a recent report. The Government Accountability Office (GAO) found that staffing in Social Security field offices dropped 4.4 percent from 2005 to 2008. To keep up, the staff deferred some lower priority work. But field office work produced still fell by 1.3 percent during the same period and customer satisfaction dropped from 84 percent to 81 percent.
More than 3 million customers who went to a field office to apply for Social Security cards, sign up for retirement and disability benefits, or establish direct deposit waited for over 1 hour to be served in fiscal year 2008, including approximately 405,000 people who waited more than 2 hours for service. Those with appointments waited significantly less time. Many customers also reported poor office phone service. SSA’s Field Office Caller Survey found that 51 percent of customers calling selected field offices had at least one earlier call that had gone unanswered. That number could be even higher because only customers who eventually got through to the field office were included in the survey.
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Finding Love Online in a Recession
Continue reading… 2 CommentsThe stock market slump may be contributing to a surge in online dating. “On days when the Dow went down by 100 points we found an increase in our site usage relative to when the Dow increased by 100 points,” says Gian Gonzaga, a senior research scientist for dating website eHarmony. That site also saw a 20 percent spike in users between September 2008 and January 2009 compared to the same time period a year prior. “People may not always immediately make the connection between an external stressor, such as the state of the economy, and their close relationships, but our survey shows that people who are stressed about the economy may be drawn to long-term relationships even if they are not aware of it,” Gonzaga says.
Long-term relationships where couples share living expenses often save both parties money, but Gonzaga says that is not what is fueling this trend. “Companionship, not financial stability, is what appeals to them most about being in a long-term relationship,” he says. “Close relationships help people cope with stress, so we gravitate toward finding and maintaining them when times are tough.”
Another popular dating website, Match.com, has also seen business boom as most other sectors of the economy slump. Membership grew 17 percent in December. Interestingly, Match.com’s fastest growing demographic is Americans age 50 and older, who currently make up 20 percent of all members. “People say they are using online dating because the economy is so bad,” says Whitney Casey, a relationship insider (yes, that is really her job title) for Match.com and author of The Man Plan: Drive Men Wild... Not Away. “You can e-mail rather than having to go spend money on a drink.”
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401(k) Fee Disclosure Bill Introduced to Senate
Continue reading… 8 CommentsIt is incredibly difficult to avoid 401(k) fees. Even if you’re a savvy enough investor to know you should be on the lookout for fees that eat away at your investment returns, tracking them down often means pouring over fine print and firing off questions to your plan administrator.
Choosing investments with lower expenses, however, is well worth the trouble. A 35-year-old who invested $20,000 in a 401(k) plan over 30 years, earned a 6.5 percent return, and paid 0.5 percent in fees would end up with $132,287 at retirement, according to a 2007 AARP study. If fees increased to 1.5 percent, only $99,679 would be left for retirement – 25 percent less.
“It is absurd that millions of Americans rely on 401(k) plans for their retirement security and yet they aren’t told what fees they are paying to maintain these accounts,” says Senator Tom Harkin (D-IA). Harkin and Senator Herb Kohl (D-WI), chairman of the U.S. Senate Special Committee on Aging, introduced a bill this week that would require 401(k) plan providers to disclose all fees. “In an economy with more and more defined benefit plans being slashed or frozen everyday, it is vital that employees have access to all the information they need to maximize their retirement savings,” says Harkin.
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What Makes Retirees Happy
Continue reading… 10 CommentsA large nest egg won’t guarantee a happy retirement. Yes, wealth does increase retirement contentment, but not as much as you might think.
While retirees with $1 million or more in household investable assets are the most likely to feel satisfied with their retirement, those with between $750,000 and $999,999 saved are among those most likely to be disappointed, even more so than respondents with $500,000 to $749,999, according to a recent survey of retirees by money management firm MFS Investment Management. “This may reflect the fact that this group in the middle, with three quarters to a million dollars in assets, has higher expectations but not quite the assets to realize them,” says William Finnegan, senior vice president and director of global retail marketing for MFS.
The survey of retirees between ages 55 and 75 with at least $500,000 in investable assets who retired in 2003 or earlier also found that those who said they were satisfied with their retirements citied that they:
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Retirement Regrets
Continue reading… 1 CommentIf you could go back to the beginning of your career and begin planning for retirement again, would you do anything differently? Would you start saving at age 20? Choose different investments?
A recent survey asked affluent seniors who retired in 2003 or earlier to describe what they wish they had done differently, both before and after the financial crisis began. Not surprisingly, the retirees between ages 55 and 75 with at least $500,000 in investable assets had more financial regrets after the market downturn. The retirees wish they had:
August October
Taken fewer risks with investing 9 percent 17 percent
Invested in principal protection or income guarantee products 9 percent 12 percent
Spent less in retirement 6 percent 11 percent
Invested less in company stock 6 percent 9 percent
Source: MFS Investment Management
Tell us, if you could go back and plan your retirement over again, what would you do differently?
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How Supreme Court Justices Decide When to Retire
Continue reading… 1 CommentThere is a possibility that one or more Supreme Court Justices could retire during President Obama’s administration. Six Justices are at least 70 years old. The Court’s oldest Justice is John Paul Stevens, 88. And Ruth Bader Ginsburg, 75, underwent surgery for pancreatic cancer last week to remove a one centimeter tumor. (She currently intends to return to the court in time for oral arguments beginning Feb. 23.) Will these two liberal justices or the two remaining Reagan appointees, Anthony Kennedy and Antonin Scalia, both 72, try to time their retirement to enable party allies to appoint like-minded replacements?
Supreme Court Justices are free to stay in office as long as they like. Some Justices have, indeed, timed their retirement to insure a compatible successor. But a new analysis by Terri Peretti and Alan Rozzi, two political scientists at Santa Clara University, found that a Supreme Court Justice’s retirement decision is motivated more by their sense of power and position within the Court, than by the current political climate. They write:
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Executives Plan to Delay Retirement
Continue reading… 4 CommentsTop executives who have been paid lavish bonuses, even as their companies flounder, have been making headlines this week. But some executives complain they will have to delay retirement plans and struggle to pay for their children's college expenses due to their diminished portfolios.
Approximately 86 percent of executives say they plan to work longer before retiring to compensate for the losses in their retirement accounts, according to an online survey of 1,162 executives who use TheLadders.com, a job search website for executive level positions with salaries of $100,000 or more. (A subscription costs $30 for one month of full access to the site, although some parts are free.) On average, the executives expect to work 7.5 years longer than they had initially planned.
It’s not difficult to see why these executives plan to delay retirement when you look at their savings habits. Many have stopped contributing to their 401k accounts in the last three months (58 percent) and dipped into their retirement savings to help weather the current economic crisis (40 percent).
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Jimmy Buffett, 62, is Cashing in on Margaritaville
Continue reading… 7 CommentsAt age 62, Jimmy Buffett is old enough to retire to his front porch swing and begin collecting Social Security. Instead he’s cashing in on his accessible fantasy of a retirement or extended vacation to a tropical paradise and drinking margaritas.
Buffett’s Summerzcool tour kicks off on February 24 in Maui, Hawaii and he will traverse the country and Canada until November. Even with ticket prices well over $100 in some areas, Parrot Heads flock to his concerts. But his revenue stream goes far beyond traditional tickets, T-shirts, and poster sales.
The title of Buffett’s 1977 hit song has shown up on items as diverse as restaurants, flip-flops, casinos, salsa, tequila, and Radio Margaritaville on Sirius. He is associated with two restaurant chains named after his two most popular songs, Margaritaville and Cheeseburger in Paradise. Anheuser-Busch’s Landshark Lager and Seagram’s Margaritaville Tequila sponsor his concerts. Buffett’s even written several best selling novels. The Chicago Tribune estimates that Buffet has an annual income of more than $40 million.
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How Much Does Long-Term-Care Cost?
Continue reading… 6 CommentsLong-term-care is the largest expense Americans could potentially face in retirement. Medicare only covers long-term-care expenses under specific and limited circumstances. I spoke with Nightly Business Report on Monday night about the various forms of long-term-care and how much each arrangement is likely to cost. You can watch the video here.
The average annual costs for different forms of long-term-care include:
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The Retirement Pogo Stick
Continue reading… 9 CommentsThe metaphor most often used to describe retirement security is a three-legged stool consisting of Social Security, pensions, and personal savings. In theory, all three legs are needed to provide stable income security in retirement. AARP has since amended the stool metaphor to include continued earnings from employment and health insurance coverage as equally necessary to making your retirement stool stand.
Peter Brady, a senior economist at the Investment Company Institute, said this week that most Americans don’t have and never had all three legs of the stool. “It primarily applies to the highest income,” says Brady. For most people, “Instead of a stool we have a pogo stick: Social Security.”
It seems to me that many retiree's income streams might more closely resemble a patchwork quilt, perhaps consisting of income from 401(k)s, IRAs, personal savings, a pension, Social Security, a part-time job, and rent or royalty income. Some retirees even start small businesses.
Tell us, which metaphor suits your retirement? And can you think of a better one?
