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3 Ways Obama’s Budget Would Affect Retirement Savers
Tweet Share on Facebook March 3, 2009 Comment (18)President Obama released his 2010 government budget last week. A few of his proposals could change the way you save and plan for retirement. Here’s a look at some of the provisions likely to affect retirement savers the most.
Increased Social Security funding. The President’s Budget includes $11.6 billion for the Social Security Administration (SSA) in 2010, a 10 percent increase in funding from this year. The higher budget would be used to increase staffing next year and improve the number of initial retirement and disability claims and disability appeals processed. The resources would also be used to increase the frequency with which wages are reported to the SSA, verify hundreds of millions of Social Security numbers, issue about 18 million new Social Security cards, and step up efforts to ensure payments are made to the correct person and in the proper amount.
Automatic pensions. In addition to strengthening Social Security, Obama proposes that all employees be automatically enrolled in workplace pension plans. But nearly half of American workers – an estimated 78 million – currently have no employer-sponsored retirement savings plan, according to the Retirement Security Project. Employers who don’t offer a retirement plan will be required to enroll their workers in a direct-deposit IRA. Employees who don’t wish to participate may opt out.
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Older Americans Worry Least About Money
Tweet Share on Facebook March 2, 2009 Comment (9)One might think that retirees and baby boomers rapidly approaching retirement age might worry about money more than younger people. Retirees whose nest eggs lost value have no added income to help recoup their losses. And baby boomers who originally planned to retire soon will have little choice but to work during the traditional retirement years, if they can manage find or keep their job.
But a recent Gallup Poll analysis found that older Americans are actually the least worried about money. The portion of Americans with financial worries climbs from 39 percent of 18 to 29-year-olds currently fretting about money to a peak of 46 percent among those age 40 to 49. Apprehension about personal finances then begins to drop off at age 50 and continues to fall thereafter. Only 17 percent of those aged 70 to 89 report having money worries.
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Arkadi Kuhlmann: Most Retirement Savers Don’t Need Advice
Tweet Share on Facebook March 2, 2009 Comment (2)Some retirement savers want advice to help them choose the best investments or to actively manage accounts. Customer service call centers and websites at financial services companies have received record numbers of inqueries from consumers seeking reassurance about their investment strategy and even a little hand holding ever since retirement account balances faultered last year. But Arkadi Kuhlmann, CEO of the nation’s largest direct bank, ING Direct USA, says most people don’t need advice to meet their retirement goals. He says avoiding fees as much as possible and building an emergency fund to buffer market losses are two of the most important factors to help your nest egg grow. On Friday, I asked Kuhlmann about his retirement plans. Excerpts:
You’ve said that saving for retirement is actually a simple process. Why is that?
Everyone keeps worrying about weight. If you eat less and move more you will be OK with weight. If you are putting money aside to save for things – for that rainy day or retiement down the road – you will be OK for retirement. This actually is not complicated. The whole idea that everything goes up on a straight upward slope is not real. Your health goes up and down. The idea that you can perfectly plan for retirement is not true. If you had to retire this year, you just lost 40 percent of what you had last year. Thinking for the future and building in some big what ifs is probably the biggest lesson in retirement.
