You’ve heard it before: the best laid plans of mice and men often go astray. Through all stages of our personal and financial lives, we know there will inevitably be twists and turns. The market goes up, the market goes down. But there are safer routes than others for our money. While there’s no foolproof Waze app for retirement savings and investment, there are directions we can take—and avoid!
First, Let’s Look at Your Withdrawal Rate.
Two key players in the viability of your financial plan for retirement are the size of your retirement nest egg and the pace at which you plan to spend it. This is your withdrawal rate. After putting in the time and consideration to determine the magic number for your retirement and your intended rate to spend it down, you may have reservations about your actual investment portfolio and whether it will perform as expected to sustain you over time.
Since no one can say how long you will live, our lens of The Rule of 100 helps add perspective to this all-important strategy of making sure your retirement income will last. Read More
The “magic number” to retire comfortably – as worry-free as possible – has always been a hot topic between financial professionals and their clients. Do I have enough to do what I want? Did I save enough for retirement? Have I been living beyond my means? Do I have to keep working for another few years? Will I live to 100? These questions echo in almost everyone’s head, especially late at night. And, for some, they can get louder closer to retirement – when that “magic number” really matters. Luckily, there are many magic numbers. Read More
Note: This is the fourth part of a month-long series on financial awareness in the U.S., and how investors are planning – or not preparing – for retirement. Here are some important takeaways that are keeping Americans from financial security and peace of mind.
For the first time in a long while, Americans are feeling more stressed than ever. If surveys are any indicator, money concerns are a big part of it. In fact, more Americans are losing sleep over money issues than before the Great Recession.
According to CreditCards.com, 65% of Americans report having insomnia over money issues – a 9-point jump from 56% in 2007. And what accounts for these new, high levels of stress? Here’s a quick look at the sleep killers for Americans in 2017. Read More
As prior posts have mentioned, the 401(k) is the retirement savings plan most used by U.S. employers. Millions of Americans use it for their retirement saving goals. It’s no surprise as to why.
For one, the IRS permits pre-tax employee contributions of up to $22,500 (2023 contribution limit). Plan participants aged 50 and up are able to make pre-tax, “catch-up” contributions of an additional $7,500. Many 401(k)s also come with an employer match, providing a powerful savings incentive for U.S. workers.
Yet while the 401(k) is a valuable retirement savings vehicle, it has its downsides. One negative is the presence of high cumulative fees within some 401(k) plans and their in-plan investment menu. Over time, costly high fees can dwindle away earnings, which also siphons off money that would grow with compounding.
So there is also the opportunity cost of the money investors could have earned if those funds remained within their 401(k). It could be a difference of thousands, if not tens of thousands of lost dollars in potential retirement income. Read More
It’s no surprise as to why. A 401(k) plan offers a number of benefits, including tax-deferred accumulation, a high contribution limit for pre-tax savings, and in many cases an employer match.
As retirement nears for many Americans, it brings up an important question: How will their 401(k) plan prepare them to enjoy a comfortable, meaningful post-work lifestyle?
Even with these benefits, some Americans are dissatisfied with their 401(k) because they perceive shortfalls in other areas. Personal perceptions of there being limited investment options, “low” access to personal financial guidance with some plans, and a lack of money control are just a few investor frustrations.
There is also the issue of subpar financial knowledge. Surveys indicate many people don’t understand 401(k)s, even though these plans dominate the workplace savings landscape.
According to the Investment Company Institute, as of December 31, 2016 Americans held $7 trillion in all employer-based defined-contribution plans. Of this, $4 trillion was in 401(k) plans – or 57.1% of total defined-contribution plan assets. Read More
The stock market has been surging to new highs. For the first time ever, the Dow Jones exceeded 20,000 in January. Then on the heels of President Trump’s first address to Congress, it charged ahead yet again. The Dow posted a 300-point jump, closing at over 21,000 on Wednesday, March 1. These gains come at a time when market volatility has also been on the decline. In early February the CBOE Volatility Index – more commonly known as the “investor fear index” – showed investor concerns on the decline.
However, even as the market goes up many people still worry about their investments. What will the market do next? Do they own too many stocks? When the market goes down, will it be just be a spill, a correction, or a crash? For that matter, do they have too much money in other risky, market-based investments?
For people close to retirement, this brings up an important question. Should you stay with your current portfolio allocation mix, or is it time to move into a safer strategy? Read More
Good news: People are living longer. But it does come with downsides. For one, increasing lifespans bring greater financial risk, like outliving your retirement money or forking over income for costly health expenditures. Then there is the evolving question of what a longer retirement looks like.
Just some decades ago, many Americans shared a common vision. You worked for the same company for years, often in exchange for a defined-benefit pension. Then you left your job and shifted into a post-work lifestyle, drawing on your pension and living comfortably.
However, times have changed. As evolving trends and statistical projections indicate, retirement could last as long as 20-30 years, or perhaps even 40 years! Now it’s hard to define what retirement should be. That brings yet another challenge: How can we prepare financially for an extended post-work lifespan?
If you wonder about what you can do, here are some quick tips you can put into action. Before we go into those, let’s address an important topic affecting the near future: the pace at which longevity has changed over time. Read More
Retirement planning involves many decisions. For many retirement savers, an important question is what to do with their 401(k) retirement account. As they near retirement, investors must decide whether to leave the money within their account or choose another option, such as an IRA rollover.
The good news is Americans typically have six options for moving 401(k) assets around or leaving them alone. But not all of these possibilities may be appropriate, depending on the merits and downsides of a particular rollover option for your personal situation.
It’s also not unusual for an investor to have the lion’s share, or even a large bulk, of their retirement assets in a 401(k) plan account. So, whatever they do with these retirement assets, it’s a decision that will have tremendous implications for the future.
If you are mulling over 401(k) rollover options, be sure whoever you work with understands all the ins-and-outs of different rollover outcomes. Your financial professional should clearly explain the positives, negatives, and details of each rollover option to you. They should go over how it may help or hurt your personal situation. Read More
The holidays offer a great opportunity for us to reconnect with loved ones, relatives, and friends. From Thanksgiving dinners and seasonal gift shopping to holiday get-togethers and family gatherings, these times are truly special. But apart from the joy, merriment, good cheer, and great company, many Americans find this period financially stressful.
Discretionary spending, in the form of gift buying and other holiday shopping, ups the pressure on household budgets. And for a large proportion of retired and working Americans, the coming year-end may increase the brunt of existing financial pressures and obligations. Having sufficient income and healthy cash-flow is a concern for all households, especially people in their retirement years. The holidays are an ideal time-frame for financial review, but it can be intimidating to get our house in order, as personal finances are tedious, detailed, and, for many, overwhelming.
However, a secure financial life is well within reach, and it involves taking the right steps. If you are retired or approaching your golden years, read on for four quick tips to boost your financial wellness this holiday season. Read More
After years of hard work, all of us want a comfortable retirement. But it may be unclear as to what we need to achieve this. What steps are necessary for a worry-free financial life – the ability to spend with confidence?
Part of it means a transition in thinking. In real-world terms, it encompasses a shift in focus from asset values to monthly income. We want to be sure we have sufficient cash-flow for funding a retirement lifestyle. On the other hand, we should also be attentive to the matter of preserving wealth. With all those savings accumulated over many years, our money will now need to last for the rest of our lifetime.
However, this doesn’t mean that savings growth has to be put on the back-burner. For Americans looking for “safe money financial” vehicles, annuities may be attractive. In particular, fixed-type annuities can offer guaranteed lifelong income, tax-deferred accumulation, and growth via guaranteed interest rates or rising index values.
If you are investigating fixed annuities or fixed index annuities for personal growth or income goals, here’s a quick look at a few variables to consider. Read More
