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The End of Do-It-Yourself Retirement Accounts
Tweet Share on Facebook July 17, 2009 Comment (1)401(k)s have long been thought of as do-it-yourself retirement accounts. Yet, employers have been playing a growing role in how much workers save and where they invest their 401(k) dollars. Many 401(k) plan sponsors now automatically enroll workers in 401(k)s unless they specifically out. A portion of each employee’s paycheck is put into an investment of the company’s choosing, typically a target-date or balanced fund. Plus, even if you have already picked funds you like, your company can shift your existing nest egg into a new default investment through a process called re-enrollment. Employees who don’t want their nest egg moved into new investments must specifically elect not to have the change made. Here’s a look at some of the ways employers are becoming increasingly involved in your retirement accounts.
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Retirees Become More Conservative, Frugal
Tweet Share on Facebook July 16, 2009 Comment (4)Baby boomers still in the work force have some time left to boost their nest eggs. But people who retired before the recession began have less hope for recovering diminished retirement funds. Almost half of retirees (49 percent) are feeling less financially secure than when they first retired, according to a new survey. When these same 1,011 retirees ages 55 to 75 with $100,000 or more in household investable assets were interviewed in February 2008, 20 percent had less confidence in their financial prospects than they did when they first retired. Only one in four of these relatively affluent retirees are very confident they have saved enough for retirement, a 12 percentage point drop from last year.
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Giving Financial Gifts to Grandchildren
Tweet Share on Facebook July 15, 2009 Comment (3)Most grandparents say they don’t plan to leave their children and grandchildren an inheritance, but would prefer to give smaller monetary gifts throughout their lifetime. Some 78 percent of grandparents regularly give small sums of money to their grandchildren, while only 22 percent plan to leave heirs a significant legacy, a new survey found.
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A Quarter of Americans Still Work After Age 65
Tweet Share on Facebook July 14, 2009 Comment (2)Retirement is a thing of the past for a quarter of Americans over age 65. Just over 25 percent of those between ages 65 and 74 were still working in 2008, according to the latest Census Bureau numbers. And amazingly 9 percent of Americans still go to work between ages 75 and 84. After age 85, the number still working trickles down to 3 percent or about 122,000 people who continue to hammer away at their keyboard or punch in with their time clock.
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How Much Annual Income Do Retirees Have?
Tweet Share on Facebook July 13, 2009 Comment (14)Most retirees get income from several places. The biggest source of retirement money for most Americans is Social Security. The average Social Security recipient gets about $13,908 annually as of June 2009. But then there’s pension income, if you’re fortunate enough to get one, savings from retirement accounts such as 401(k)s and IRAs, and increasingly some form of part-time work. Less common sources of retirement income include rent, royalties, insurance products, home equity, and even an inheritance. Not everyone can or is disciplined enough to save regularly or lucky enough to inherit a nest egg. So, there is a wide diversity in retirement income. Here’s a look at the recently released Census Bureau numbers about how much money Americans age 65 and over earned annually in 2007.
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How Safe is Your Social Security Number?
Tweet Share on Facebook July 10, 2009 Comment (8)A new study says that identity thieves may be able to use easily accessible information like your birthday and hometown listed in commercial databases, public voter registration lists, and even on social networking websites and blogs to predict your Social Security number. Two Carnegie Mellon University researchers found that an individual’s date and place of birth were sometimes sufficient to guess his or her Social Security number.
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Older Worker Unemployment is Increasing Fast
Tweet Share on Facebook July 9, 2009 Comment (1)The unemployment rate for people age 55 and over rose from 6.7 percent in May to 7 percent in June. That’s still much lower than the 9.5 percent unemployment rate for the labor force as a whole. But unemployment among older workers grew faster in the past month than younger worker job loss. While unemployment among those under age 55 grew by just 1 percent between May and June, the number of age 55 and older unemployed grew by 4.4 percent, according to the Bureau of Labor Statistics.
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Racial Disparities in Retirement Savings
Tweet Share on Facebook July 8, 2009 Comment (1)African-American and Hispanic workers are less likely to participate in their employer’s 401(k) and, when they do participate, save less for retirement than white and Asian employees, according to a new study released today. This results in a smaller nest egg for African-American and Hispanic retirement savers—even after controlling for age and income.
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Suspending the 401(k) Match, Keeping a Pension
Tweet Share on Facebook July 7, 2009 Comment (5)When a company suspends its 401(k) match, it certainly hurts the retirement security of all employees. Approximately 4.4 million workers at 251 companies have lost company 401(k) contributions since the recession began. However, about half of the newly 401(k) matchless employees continue to receive another form of retirement benefits from their employer. Some 20 percent of the workers who no longer receive a 401(k) match continue to have access to a traditional pension plan and 30 percent are offered a cash-balance plan, according to a recent analysis by the Employee Benefit Research Institute. Another 16 percent of the employees without a 401(k) match work at firms with a frozen pension plan, but workers cannot accrue additional benefits and/or new employees are not allowed to join the plan. About 8 percent of the workers have an employer with both an open and a frozen traditional pension plan.
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Paying for Health Care in Retirement
Tweet Share on Facebook July 6, 2009 Comment (3)Baby boomers who have lost their health insurance often struggle to find affordable coverage until Medicare kicks in at age 65. But even qualifying for government health insurance won’t completely quell your money worries. While Medicare is far more affordable that buying an individual health insurance policy, the program still has significant premiums and out of pocket costs for retirees.
