Headlines about "Ret plans - info for employees"
Gathered from the web by the editors at BenefitsLink.com.
Survey Finds Widespread Deficiency in Retirement Preparation
Excerpt: "Despite the economic downturn's effect on the retirement plans of 50-something investors, only 23% of respondents to a recent survey are salting away more for retirement and 57% never changed their deferral rate." (PLANSPONSOR)
Seniors Can Boost Their Social Security Benefits by 'Re-Retiring'
Excerpt: "People who began collecting Social Security at age 62 and restart their retirement benefits at 70 would get about 76% more a month. The catch is that they must repay what they had already received." (Los Angeles Times)
Why You Won't Be Able to Retire
Excerpt: "[T]he most recent reading shows that 51% of Americans will not be ready to retire at age 65, up from 44% in 2007. Frighteningly enough, that figure doesn't even take into account health-care or long-term care costs. When those costs are included, the percentage of Americans who aren't ready to retire jumps to 70%!" (Motley Fool)
Private Sector Jobs With the Best Retirement Benefits
Excerpt: "Here's a look which jobs provide the most retirement benefits and how their value has changed since 1998." (U.S. News & World Report)
5 Tips in Using Retirement Planning Tools
Excerpt: "Retirement planning software is available for free on several major investment and retirement websites. But according to a recent analysis sponsored by the Pension Research Council, these programs do an inconsistent and often poor job." (U.S. News & World Report)
Solo 401(k) Offers Big Tax Savings For Self-Employed
Excerpt: "The solo 401(k) plan allows you to make a contribution of $16,500 (or $22,000 if age 50 or older) of your self-employment income each year. Plus, you can also make what's called a profit sharing contribution to your plan, which could bring the maximum contribution up to $49,000 for the year." (CBS Money Watch)
Ways and Means Committee Holds Hearing on DB Plan Funding and Investment Advice
Excerpt: "On Oct. 1, 2009, two panels testified before the House Committee on Ways and Means on retirement-related matters. The first focused on, and lobbied for, defined benefit (DB) pension funding relief. The six panelists, including Watson Wyatts director of Retirement Research, Mark Warshawsky, Ph.D., provided a wide range of experience and expertise. While it was universally accepted that pension relief is necessary, panelists disagreed about its form and who should receive it. Some advocated temporary relief from certain provisions of the Pension Protection Act of 2006 (PPA), while others argued for permanent changes to the law. The second panel focused on investment advice provided to defined contribution (DC) participants, specifically who can give investment advice to employees and how it should be provided." (Watson Wyatt Worldwide)
The Role of Information for Retirement Behavior: Evidence Based on the Stepwise Introduction of the Social Security Statement
Excerpt: "In 1995, the Social Security Administration started sending out the annual Social Security Statement. It contains information about the worker's estimated benefits at the ages 62, 65, and 70. I use this unique natural experiment to analyze the retirement and claiming decision-making. First, I find that, despite the previous availability of information, the Statement has a significant impact on workers' knowledge about their benefits. These findings are consistent with a model where workers need to gather costly information in order to improve their retirement decision. Second, I use this exogenous variation in knowledge to analyze the optimality of workers' decisions." (Center for Retirement Research at Boston College)
Creditor Protection for Your 401(k)
Excerpt: "Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (a.k.a. the Bankruptcy Reform Act) tax-exempt retirement plan accounts (including qualified plans, traditional IRAs, Roth IRAs, 403(b) plans, 457(b) plans, SEPs, and SIMPLE plans), are protected from an employee's creditors in the event of bankruptcy. With the exception of the Traditional IRA and Roth IRA assets, all of these tax-exempt retirement assets are protected without a dollar limit." (The Boston Globe)
What the Stock Market Decline Means for Financial Security and Retirement Choices of Near-Retirement Population
Excerpt: "This paper investigates the effect of the current recession on the near-retirement age population. Data from the Health and Retirement Study suggest that those approaching retirement age (early boomers ages 53 to 58 in 2006) have only 15.2 percent of their wealth in stocks, held directly or in defined contribution plans or IRAs. Their vulnerability to a stock market decline is limited by the high value of their Social Security wealth, which represents over a quarter of the total household wealth of the early boomers. In addition, their defined contribution plans remain immature, so their defined benefit plans represent sixty five percent of their pension wealth. Simulations with a structural retirement model suggest the stock market decline will lead the early boomers to postpone their retirement by only 1.5 months on average." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve fulltext)
Working Longer, Reducing Withdrawals, Buying Annuities Improves Retiree Savings
Excerpt: "In its October 2009, issue of ThoughtCapital, Principal suggested a number of ways that someone approaching retirement can postpone the depletion of his or her retirement portfolio beyond the 14-year period caused by poor market performance in the early years of retirement. First, scaling down retirement spending from 4% to 2%, adjusted for inflation, would help sustain retirement income from 14 to 30 years. Second, delaying retirement by five years would help sustain retirement income from 14 to 23 years, assuming that the retirement spending rate stayed at 4%, adjusted for inflation. . . . For more information, including the assumptions used to arrive at these conclusions, visit http://www.principal.com/about/news/research.htm." (Wolters Kluwer)
Personality, Lifetime Earnings, and Retirement Wealth
Excerpt: "Lifetime earnings vary widely, even controlling for education. Households vary widely in their retirement wealth, even when controlling for lifetime income (Venti and Wise, 1998). The role of conscientiousness and other personality traits as independent factors in labor market outcomes early in the life cycle has recently been demonstrated (Borghans, Meijers, & Ter Weel, 2008 ). We propose to examine the association between personality measures assessed near or past the end of work life with lifetime labor market outcomes, and with retirement saving conditional on lifetime earnings, using data from the HRS and the linked Social Security administrative records." (University of Michigan Retirement Research Center)
[Official Guidance] PBGC Announces Maximum Insurance Benefit for 2010: Remains At $54,000 Per Year
Excerpt: "The Pension Benefit Guaranty Corporation (PBGC) today announced that the maximum insurance benefit for participants in underfunded pension plans terminating in 2010 will be $54,000 per year for those who retire at age 65. The amount is higher for those who retire later and lower for those who retire earlier or elect survivor benefits . . . . The PBGC maximum insurance benefit is indexed to a contribution and benefit base in Social Security law. Because that amount does not increase for 2010, the PBGC maximum insurance benefit is unchanged from 2009." (Pension Benefit Guaranty Corporation)
The National Retirement Risk Index: After the Crash
Excerpt: "The National Retirement Risk Index measures the share of American households who are 'at risk' of being unable to maintain their pre-retirement standard of living in retirement. The Index results from comparing households' projected replacement rates ? retirement income as a percent of pre-retirement income ? with target rates that would allow them to maintain their living standard. The results showed that even if households work to age 65 and annuitize all their financial assets, including the receipts from reverse mortgages on their homes, in 2004 43 percent would have been 'at risk' of being unable to maintain their standard of living in retirement." (Center for Retirement Research at Boston College)
Asset Allocation Guidance for Defined Contribution Plans, 1999 and 2009 (PDF)
2 pages. Excerpt: "Recommendation. The Government Finance Officers Association (GFOA) recommends that public employers as plan sponsors work actively with the plan administrators to provide investment options and education to help employees who participate in defined contribution plans attain their income replacement goals in retirement. . . . To accomplishthese objectives, the following practices are suggested: 1. To provide adequate diversification, plan administrators should ensure participants are offered a broad spectrum of investment choices that include all the major asset classes (e.g., equities, fixed income, and cash equivalents). The investment choices should include several passively managed investment options such as low-fee index funds. Another option is a family of asset allocation funds. In addition to mutual funds, plan administrators should consider lower-cost commingled funds and separate account funds asinvestment options." (Government Finance Officers Association of the United States and Canada)
Participant Education: Guidance for Defined Contribution Plans, 2009 (PDF)
2 pages. Excerpt: "The GFOA recommends that public plan sponsors make sure high-quality investment education is provided to defined contribution plan participants who are allowed to direct their investments. To accomplish this goal: 1. The plan should provide a consistent, ongoing educational program that uses a number of communication channels to address participants' different career stages and learning styles. Channelscould include one-on-one meetings, seminars, phone calls, the internet . . . ." (Government Finance Officers Association of the United States and Canada)
Back to Basics: A Companion Report to the Study of Employee Benefits: 2009 & Beyond (PDF)
5 pages. (Prudential Retirement)
Affluent Investors Do Better Over the Long Term When They Are Engaged with Advisers
Excerpt: "Households that regularly receive advice are better prepared financially for retirement than households that do not receive advice as often. That's the essence of the findings of a recent report, 'Financial Advisors and Boomers,' that I recently completed with Elvin Turner of Turner Consulting LLC for the Retirement Income Industry Association. We sought to explain this differential in preparedness, and found four equally important reasons . . . ." (Investment News; free registration required)
Converting Assets to Income in Retirement: What Near-Retirees are Thinking
Excerpt: "Savings is necessary but not sufficient to generate a secure and adequate lifetime income for retirees. In retirement, savings must be managed and used to generate a stream of income. Annuitization is the only means to convert savings into an income stream guaranteed to last the lifetime of a retiree. This report examined the concerns of savers approaching retirement age in the higher education sector regarding managing that savings in retirement and their plans for converting it into income." (TIAA-CREF Institute)
[Guidance Overview] Elective Deferral Limits for 2010 for Employees of Non-Profit and Governmental Employers (PDF)
2 pages. Excerpt: "The chart . . . describes and summarizes these limits based on the plan(s) available and the type of employer." (Prudential Retirement)
What Replacement Rates Should Households Use? (PDF)
37 pages. Excerpt: "Common financial planning advice calls for households to ensure that retirement income exceeds 70 percent of average pre-retirement income. We use an augmented life-cycle model of household behavior to examine optimal replacement rates for a representative set of retired American households. We relate optimal replacement rates to observable household characteristics and in doing so, make progress in developing a set of theory-based, but readily understandable financial guidelines. Our work should be a useful building block for efforts toassess the adequacy of retirement wealth preparation and efforts to promote financial literacy and well-being." (University of Michigan Retirement Research Center)
Behind the Rally in Retirement Accounts
Excerpt: "Despite the biggest and broadest decline in financial markets in a generation, the median 401(k) retirement account at Vanguard Group on Sept. 30, 2009, was up 7% from where it was two years earlier, when the market was near its all-time high." (The Wall Street Journal)
Financial Literacy and Financial Sophistication Among Older Americans
Excerpt: "This paper analyzes new data on financial literacy and financial sophistication from the 2008 Health and Retirement Study. We show that financial literacy is lacking among older individuals and for the first time explore additional questions on financial sophistication which proves even scarcer. For this sample of older respondents over the age of 55, we find that people lack even a rudimentary understanding of stock and bond prices, risk diversification, portfolio choice, and investment fees. In view of the fact that individuals are increasingly required to take on responsibility for their own retirement security, this lack of knowledge has serious implications." (Pension Research Council; registration required to download fulltext of paper)
Financial Literacy among the Young (PDF)
35 pages. Excerpt: "[The paper shows] that financial literacy is low among the young; fewer than one-third of young adults possess basic knowledge of interest rates, inflation, and risk diversification. Financial literacy is strongly related to sociodemographic characteristics and family financial sophistication. Specifically, a college-educated male whose parents had stocks and retirement savings is about 50 percentage points more likely to know about risk diversification than a female with less than a high school education whose parents were not wealthy. These findings have implications for consumer policy." (University of Michigan Retirement Research Center)
The Hearts and Minds of Retirement Investors: A Survey (PDF)
12 pages. Excerpt: "Even in today's volatile economy, DC investors overwhelmingly feel that saving for retirement is important. . . . Recognizing the need to -- and importance of -- retirement saving, mostindividuals prefer an 'automatic' method, with a very strong preference to have the investment directly deducted from a paycheck." (ING Institute for Retirement Research)
Advisers Can Now Officially Become Retirement Specialists
Excerpt: "The Retirement Income Industry Association has formally introduced a new educational course designed to help financial advisers be certified as 'retirement management analysts.' As InvestmentNews first noted in March, the association has been developing the course in response to demand from member advisers who said they needed more tools and support in helping clients handle the post-retirement 'decumulation' phase, according to Stephen Mitchell, acting chief operating officer of RIIA." (Investment News; free registration required)
Research Project: The Effect of Out-of-Pocket Spending for Health Care on Economic Preparation for Retirement
Excerpt: "In research previously funded by the Social Security Administration through MRRC, we estimated the fraction of households aged 65-69 who were adequately prepared for retirement by finding whether their economic resources could sustain an empirically estimated life-cycle consumption path. The only source of uncertainty in the model was longevity. The level of spending by each household was affected by average spending on health care but not by health spending shocks. In the proposed research, we will explicitly take into account the risk of out-of-pocket spending on health care to find, via simulation, the fraction of households financially prepared for retirement." (University of Michigan Retirement Research Center)
Research Project: Should You Borrow from Yourself? The Determinants and Effects of 401(k) Loans
Excerpt: "This project proposes to evaluate the economic rationale for 401(k) plan loans and the empirical determinants of loan patterns. We will show how plan design and participant characteristics contribute to borrowing from one's pension, as well as default and repayment behavior. This research will be useful to employers in developing plan design, and also to employees seeking to enhance their retirement preparedness." (University of Michigan Retirement Research Center)
Research Project: The Effects of the Economic Crisis on Retirement and Spending
Excerpt: "The United States is experiencing the greatest economic crisis since the Great Depression. Housing prices have declined, leaving many with negative equity; falling stock values have substantially reduced household net worth; high and increasing rates of job loss jeopardize the economic foundations of many families. Little is known about how these different effects are distributed in the population, and even less is known about how households and individuals adjust in the domains of actual and anticipated retirement and spending. We propose to assess, quantitatively, the effects of the economic crisis, both gross and net of household behavioral responses." (University of Michigan Retirement Research Center)
Retirement Planning and Risk: How Much Is Enough? (PDF)
20 pages. Excerpt: "While the global financial crisis that shook markets to their core last autumn may have finally begun to abate, the damage inflicted on investors' portfolios -- and their psyches -- has proven far more enduring. For all investors but especially those poised to retire, the fallout has resulted in an imbalance among the current value of retirementassets, the projected future retirement needs of investors and the ability to close the gap through additional funding. Investors face difficult choices related to what we've termed the 'trilemma,' where the three dimensions of retirement planning -- increasing savings, adjusting risk levels and resetting goals -- must be reevaluated as part of a comprehensive financial plan. But merely highlighting these dimensions -- and the difficult decisions they require an investor to make -- may still not be enough to bring portfolios back into balance. Thus, we propose a nontraditional approach toward managing retirement assets that allows investors to match specific segments of their portfolios to clearly defined objectives,which reflect stated needs, wants and wishes." (UBS Financial Services Inc.)
Deciding Whether a Roth Conversion Is Right
Excerpt: "Especially if you want to leave retirement assets to family or friends, a Roth conversion is one of the simplest, best planning tools available. You avoid the requirement to take yearly minimum distributions starting at age 70-1/2, and that can leave more for beneficiaries if you don't use the money yourself. And subject to certain restrictions, no tax is assessed when the money is withdrawn, so income can compound tax-free. But this technique has a hefty price tag." (New York Times; free registration required)
Social Security Literacy and Retirement Well-Being
Excerpt: "We build upon the growing literature on financial literacy, which studies the prevalence of lack of knowledge about various financial issues, and analyze how much people know about the Social Security rules using a small pilot survey conducted in 2007, and a follow-up and extended survey funded by MRRC conducted in December of 2008. We then assess the consequences of the apparent prevalence of lack of information by individuals about the rules governing the Social Security system using a realistic and empirically-based life-cycle model of retirement behavior under uncertainty." (University of Michigan Retirement Research Center)
Hispanics and Retirement: Challenges and Opportunities (PDF)
20 pages. Excerpt: "Hispanics in the United States face an especially difficult challenge in maintaining their standard of living throughout their retirement. This is due to several factors. On average, Hispanics in the U.S. today have lower levels of educational attainment, less earning power, and a lower level of savings than non-Hispanics. Hispanics in theUnited States are less likely than non-Hispanics to have an employer-sponsored retirement plan, which puts them at a disadvantage foraccumulating retirement income." (The Hispanic Institute / Americans for Secure Retirement)
Retirement Planning Beyond the Longevity Tables
Excerpt: "WHEN financial markets began to plummet two years ago, many retirees faced the very real prospect of outliving their money. As a solution, many academic researchers have long advocated 'fixed life annuities': investment vehicles that pay a set amount each year until the investor -- or, sometimes, a spouse -- dies. These annuities are not to be confused with a range of other products with 'annuity' in their names, including many known loosely as 'variable' annuities. Most of these other products don't directly address retirees' risk of outliving their money. These vehicles also generally exact higher fees. Only a tiny minority of the products sold as annuities in the United States are of the 'fixed life' variety, enjoying that academic seal of approval." (The New York Times; free registration required)
[Opinion] Book Review: 'The Smartest Retirement Book You'll Ever Read'
Excerpt: "The first problem is inflation. Even if it runs at a relatively tame 3 percent a year, the impact will be substantial. . . . Second, you'll need to figure out how to withdraw enough money during retirement to live the way you want, but without outliving your savings. [The author] sets out to deal with both topics, throwing in advice about other retirement issues like health care costs and estate planning." (The New York Times; free registration required)
Retirement Income: Fundamental Issues
Excerpt: "A number of issues are covered by the phrase 'retirement income' ? annuities vs. lump sums, defined benefit (DB) vs. defined contribution plans (DC), adequacy and 'leakage' all come to mind. Overarching all these issues is the question: will American workers have enough money for their retirement years? And in that regard, a central issue is ? what is the role of the individual, the employer and the government in making sure they do? . . . In this article, we review what we consider to be the retirement income 'basics' in the United States: (1) competing theories of adequacy (that is, what should the retirement income target be?); (2) key priorities from both the participant's and the sponsor's point of view; and (3) the role of the employer and the government (via Social Security and Medicare) in providing retirement income." (JPMorgan Chase & Co.)
What's a More Typical 401(k) Balance: $12K or $86K?
Excerpt: "Several readers asked how is it possible that the typical U.S. worker had an average balance of $86,513 in their 401(k) account at the end of 2008, based on data this week published by the Employee Benefits Research Institute and the Investment Company Institute. . . . [Response from Dallas Salisbury of the Employee Benefit Research Institute:] Great question. That is why the report provides all of the numbers for all participants by many factors including age, tenure, etc. And, for two continuous groups. In the report, those 2003 to 2008 and in the appendix, 1999 to 2008. And, as the comment above notes, the data for those over 60 with over 30 years of tenure provides a picture of what these programs can do for a full career worker. Any average is misleading, but using many averages for different groups, and also publishing medians, allows the user to get a complete picture. Just the facts is the role of EBRI. Not advocacy of what should or should not be. I encourage everyone to look at the detailed study to compare themselves to those fitting their income, age, tenure, to see how you are doing in relative terms." (BusinessWeek)
President's Advisory Council on Financial Literacy to Meet November 3
Excerpt: "The President's Advisory Council on Financial Literacy will convene a meeting which will be open to the public. The purpose of this meeting is to discuss the Council's priorities and how it can best advise the President and the Secretary of the Treasury. The Department of Treasury will also provide an update about the status of the recommendations made by the Council in January 2008. . . . The public is invited to submit written statements to the Council." (International Foundation of Employee Benefit Plans)
Hispanics at Disadvantage on Saving for Retirement, According to Report
Excerpt: "An Insured Retirement Institute (IRI)-sponsored report suggests that Hispanic Americans continue to disproportionately face financial hurdles in preparing for retirement. According to the report, Hispanic retirement savings rates are falling. Recent data shows that 41% of Hispanic workers say they have saved money for retirement (outside of their work or otherwise), compared to 60% in 2003." (PLANSPONSOR.com; free registration required)
An Interview with ASPPA CEO Brian Graff
Excerpt: "Brian H. Graff is the Executive Director/Chief Executive Officer of the American Society of Pension Professionals & Actuaries (ASPPA). . . . Today, ASPPA is a national organization of more than 6,500 retirement plan professionals who provide consulting and administrative services for qualified retirement plans covering millions of American workers." (BrightScope Inc.)
[Opinion] Financial Planners and Market Bulls Are Blowing Smoke
Excerpt: "These days, I see more and more reports about the market stabilizing, about the little guy dipping his toes back into the water. The old catch-phrases are returning: We are in the midst of one of the great bull markets in history; March was a once-in-a-lifetime buying opportunity. Balderdash. The current bull market is a classic sucker rally in the middle of a bear market. This happened all the time during the Depression. The recent 50% bounce still leaves the Dow about 4,000 points below its all-time high. March was not a once-in-a-lifetime buying opportunity; it was a once-in-a-lifetime salvage opportunity. It was a chance to buy back your lost shirt while conceding that your pants are gone for good. Even more infuriating are the 'experts' advising people how to invest the money they plan to retire on." (Los Angeles Times)
How to Rebuild a Retirement Investment Portfolio After Recession's Hit
Excerpt: "One year after the collapse of Lehman Bros., the average stock mutual fund is virtually unchanged. The question now: How to rebuild your retirement plan and recover from the bear market that began nearly two years ago. The average stock fund has fallen 28% since the stock market's peak on Oct. 9, 2007. What should you do now? Start with a list of things you shouldn't do . . . ." (USA TODAY)
Many Companies Going Beyond Basic Education Programs for Retirement Savings by Providing Variety of Financial Services and Tools
Excerpt: "Companies offering employees basic informational sessions on their retirement savings plans is nothing new. But with the recession, many employers realize that offering just retirement savings education and setting their 401(k) plans on autopilot might not be enough to get employees on track to retire on time, experts say. . . . Now more than ever before, employees appreciate it if employers help them with overall financial planning, from dealing with credit issues to paying for college . . . ." (Workforce Management; free registration required)
Retirement Savings: Better Information and Sponsor Guidance Could Improve Oversight and Reduce Fees for Participants
58 pages. Excerpt: "[GAO recommends that] Congress should consider (1) amending ERISA to require sponsors to disclose fee information to facilitate comparisons, and (2) giving the Department of Labor (Labor) specific authority over certain plans. Also, GAO recommends that the Internal Revenue Service (IRS) develop guidance on sponsor involvement, collect additional data on 457(b) plans, and share more information with financial regulators. Labor and IRS agreed with our recommendations, although IRS stated that it will continue sharing information with regulators using its current methods." (U.S. Government Accountability Office)
The Disappearing Defined Benefit Pension and Its Potential Impact on the Retirement Incomes of Baby Boomers (PDF)
27 pages. Excerpt: "A large share of traditional defined benefit pension plans have frozen within the past decade and evidence suggests that this trend will continue in the future. This article uses the Model of Income in the Near Term (MINT) microsimulation model to project the impact on boomers' retirement incomes of freezing traditional pension plans and replacing them with 401(k)-type plans. The projections suggest that the largest impact will be for the most recent boomers born between 1961 and 1965." (U.S. Social Security Administration)
DOL Recently Dropped Rule to Allow Brokers Affiliated with Financial-Services Firms to Provide Advice to 401(k) Participants
Excerpt: "'There is no doubt an agreement amongst lawmakers that a greater level of advice is needed for American workers as they save for retirement,' . . . . 'The fact that the DOL has dropped the investment advice rule demonstrates that although legislation is necessary, the proposed rules were too complex and cumbersome to be effective.' [T]he proposed legislation is in many ways much simpler and straightforward and that, while none of the legislation is currently law, there are clear-cut themes that plan sponsors and fiduciaries should be using as potential elements of their plans, so as to put them in a position to succeed when final regulations are approved . . . ." (Human Resource Executive Online)
The World's Greatest One-Page Estimator of Retirement Income and 401k Contributions (and Probably the Only One) (PDF)
Excerpt: "This estimator is intended to nudge employees to: Set an initial account target, Contribute toward their target, Learn more about using their 401k and Obtain a sophisticated projection and qualified advice." (Dennis Ackley)
Answers to the 401(k) Questions that Matter Most
Excerpt: "The information that HR provides to employees about their defined contribution savings plan typically focuses on basic plan facts. That leaves unanswered questions about how to use the plan. [On the target page] are some of the answers employees need to begin using their 401(k) to have the financial future they want (in Jeopardy style, followed by the questions)." (Society for Human Resource Management)
[Guidance Overview] How to Tap Retirement Assets Early with Minimal Tax Bite
Excerpt: "There are several ways to get at least a portion of your retirement money out without paying penalties. But there's just one method that works for all types of retirement plans -- the 'substantially equal periodic payments' or 'the 72(t)' method of retirement withdrawals. (Section 72[t] of the tax code spells out the rules for penalty-free early retirement plan distributions. Accountants, being clever wordsmiths, thus call these penalty-free early withdrawals '72[t] distributions.' To be fair, there's no snappy way to say it.) How does it work? In a nutshell, you spread out your retirement payments over your remaining life span, taking 'substantially equal' annual payments for the rest of your life." (Los Angeles Times)
Vanguard Principal Addresses ERISA Advisory Council on Retirement Readiness
Excerpt: "Steve Utkus, principal and head of the Vanguard Center for Retirement Research, addressed the Department of Labor ERISA Advisory Council on September 17, 2009. Utkus testified on the question of retirement readiness in America, providing a synopsis of his interpretation of several research studies examining how well-prepared Americans are for retirement. His testimony included opinions on questions such as 'Is retirement readiness getting worse?' and 'Who is not ready?'" (The Vanguard Group, Inc.)
Changes Needed in DC Retirement System
Excerpt: "In a recent survey, Mercer asked 180 DC plan sponsors if they believe the 401(k) system can ever provide adequate retirement benefits. Half of the respondents indicated that the existing system is adequate (16%) or would be adequate with additional regulations (34%), while the other half said the 401(k) system cannot provide such benefits (29%) or were unsure (21%)." (Employee Benefit Adviser; free registration required)
The Evolution of Retirement Risk Management: Proceedings Summary
Excerpt: "Leading academics, public pension sponsors, and their advisors met recently to examine ways to reformulate and restructure retirement risk management at the 2009 Wharton Impact Conference sponsored by the Pension Research Council and the Boettner Center for Pensions and Retirement Research. Here we summarize the proceedings from this event, co-organized by Olivia S. Mitchell and Robert Clark." (Pension Research Council; registration required to download fulltext of paper)
Retirement Saving Adequacy and Individual Investment Risk Management Using the Asset/Salary Ratio
Excerpt: "This chapter uses the Asset-Salary Ratio (ASR) to examine the factors that increase the likelihood that defined contribution plan participants will have sufficient assets to generate adequate retirement income, similar to the defined benefit plan full-funding ratio. We apply this measure to a sample of TIAA-CREF participants, and we show that participant assets are on average consistent with at least a 70 percent income replacement ratio. Key factors explaining success are an adequate contribution rate and long tenure in the system; having a portfolio weighted to equities is beneficial but to a lesser extent. Thus good funding and early participation is more important than 'chasing returns.' Measures such as the ASR can help participants make more informed choices." (Pension Research Council; registration required to download fulltext of paper)
Employer-Provided Retirement Planning Programs
Excerpt: "As older workers approach the end of their working career, they face a series of important decisions that will determine their economic wellbeing during their remaining lifetime. They must decide when to retire, when to start Social Security and company pensions, whether to annuitize 401(k) balances, and whether to take lump sums from defined benefit plans. Lack of knowledge or insufficient financial literacy may lead to regrettable decisions. This chapter assesses employer provided financial education as well as pre-retirement planning programs and examines their effectiveness in increasing knowledge and altering retirement behavior." (Pension Research Council; registration required to download fulltext of paper)
Chart: Retirement Benefits Access and Participation Rates, March 2009
Excerpt: "In March 2009, 71 percent of civilian workers had access to retirement benefits plans through their employers; 57 percent of civilian workers participated in such plans." (U.S. Bureau of Labor Statistics)
[Guidance Overview] Risk Management: Listen to Your Employees (PDF)
Pages 1, 6 of 7 pages. Excerpt: "While ERISA is a voluminous law, it says little, if anything, about listening to employee comments and complaints. However, by listening . . . and acting, when appropriate . . . employers can avoid the disruption of an unnecessary DOL investigation and even the potential of fiduciary litigation." (Reish & Reicher)
IRS's Retirement Plans Navigator Website for Small Businesses
Excerpt: "EBIA Comment: This new IRS website will be a useful tool to assist small businesses in selecting from the various retirement plan designs available and staying on top of compliance issues. Although some of the resources on the website are not new (e.g., various publications for small business retirement plans and the 401(k) plans checklist and fix-it guide), it is helpful to have this information housed in one easy-to-navigate website." (Employee Benefits Institute of America)
Call for Papers: Retirement Security in the New Economy: Paradigm Shifts, New Approaches and Holistic Strategies
Excerpt: "Given the confluence of [recent economic] events, a number of questions come to the forefront. How can individuals and families maintain a reliable income stream in retirement that can sustain adverse economic events? How can they protect against financial ruin from exorbitant expenses for health and long-term care? How can financial planners and their clients improve decision-making along with better ways to frame and communicate the challenges and potential solutions? What are potential new products that can address these challenges? How can individuals optimize their decisions focusing on products, services and strategies based on the latest research and disciplined thinking, rather than sales slogans and misperceptions? These questions and other related ones are the motivation for this Call for Papers." (Society of Actuaries)
Congress Eyes Compromise in 401(k) Independent Investment Advisor-Advice Rule
Excerpt: "Now that the Department of Labor is scrapping a rule proposal that would have allowed brokers affiliated with financial-services firms to provide advice to 401(k) participants, Congress will move forward with legislation that would require that such advice be given by independent advisers, according to a key congressman. The rule proposal was one of several Labor regulations put forth by the Bush administration during its final days. Labor Secretary Hilda Solis 'will work with Congress to find ways to further develop the existing market of qualified independent advice,' said Rep. Robert Andrews, (D-New Jersey), chairman of the House Education and Labor Committee's Health, Employment, Labor and Pensions Subcommittee. His recent comments came after Assistant Labor Secretary Phyllis Borzi, head of the Employee Benefits Security Administration, told a conference of 401(k) administrators that new regulations will be issued for investment advice to participants in the $2.3 trillion 401(k) market. She gave no timetable for issuing a new proposal." (Workforce Management; free registration required)
Life Events That Can Affect Retirement Savings
Excerpt: "Life Changes That you need to consider when you(r): Marry or have children; Become disabled; Divorce; Spouse dies; Are laid off, quit or terminate your employment; Rollovers; And when your employer: Terminates the plan; Switches to another type of plan; Declares bankruptcy; Merges with another company" (Internal Revenue Service)
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