-
Rising 401(k) Balances Helping Retirements Recover
Tweet Share on Facebook February 12, 2013 CommentBalances in 401(k) accounts are much, much larger among those who have been regular retirement-plan participants in recent years, continuing the recovery from the stock market plunge of 2007.
Jack VanDerhei, research director for the Employee Benefits Research Institute (EBRI), conducted a review for U.S. News of the savings behaviors of the 20 million account holders it tracks for research purposes. EBRI looked for account holders with active 401(k)s at the end of 2009 who have continued to contribute to their plans. It then measured the percentage changes in this group's average account balances during the two years ending in December 2012. The average gain during this period for all continuously active plan participants was 56 percent.
[Read: An Innovative Way to Face Retirement.]
-
6 Realities of the 'New Normal' for Seniors
Tweet Share on Facebook February 11, 2013 CommentWhen President Obama gives the State of the Union address Tuesday, it will doubtless be filled with aspirational calls to improve lives in the United States and throughout the world. It will call for action on many fronts. It will positively frame great opportunities for the country and its citizens.
What it won't do is change the increasingly clear picture of where the country and its people are headed. After a tough recession and an unsatisfying, long recovery that is still far from over, the nation seems set on a course whose direction has been set. In many ways, the future we will face will not be surprising. Here are six realities for seniors:
1. Working. Nearly a third of men and women between ages 65 and 69 are still in the U.S. workforce. The percentage will rise, as will the shares of even older people who are still drawing down or seeking regular paychecks. There is no way this can happen without changing the nature of some types of work. It will trigger new and not always welcome changes in how older employees are regarded. But along with the steadily rising share of seniors in the general population, the aging workplace will force society to adapt. Seniors will at once be more accepted and not so special.
-
401(k) Plan Trustee Conflicts Alleged
Tweet Share on Facebook February 8, 2013 CommentIf you have money in a 401(k) plan, it's unlikely you know the plan has trustees, let alone who they are and who they work for. You should, because their presence might well be costing you money. According to a new study, 401(k) plans favor mutual funds in some cases where plan trustees are affiliated with those mutual funds. Sometimes, the study says, the inclusion of these funds in the plan costs investors money. Other 401(k) plans with trustees who were not affiliated with mutual fund companies did not exhibit similar favoritism.
The study, by academics at Indiana University and the University of Texas, claims to be the first to look at the conflicting roles of 401(k) plan trustees who are affiliated with mutual fund companies. Trustees are appointed by the employers who sponsor the plan. Many of them are affiliated with the mutual fund companies whose funds are offered in the 401(k) plan they help oversee. Federal law says they are supposed to put the interests of employee investors first.
-
Time to Rethink Home as Retirement Nest Egg
Tweet Share on Facebook February 6, 2013 CommentA home may still be a man's castle, but it's likely to be a threadbare one in financial terms. An Ameriprise Financial survey released Tuesday found that people may have unrealistic expectations about how much they can rely on home equity in retirement. And the U.S. Department of Housing and Urban Development (HUD) has just formalized curbs that will reduce the amount of funds people will be able to get from reverse mortgages.
Ameriprise polled 1,000 people ages 50 to 70 who had at least $100,000 in investable assets (not counting their homes). It found people were upbeat about retirement but may have been basing their outlooks on misconceptions about the health of their finances and the expenses they would likely face in retirement.
"There seems to be a significant disconnect between the expectations that Americans have for their lifestyle in retirement, and the financial steps they're taking—or not taking —to make those expectations a reality," Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial, said in a statement.
-
Preventing Falls in Older Age Is Essential
Tweet Share on Facebook February 5, 2013 CommentWhen seniors visit the doctor, one of the mandatory questions they're asked is whether they've fallen recently. Tumbles which would be trivial at younger ages are anything but that as we get older. In addition to possible injuries from the fall itself, the fact that an older person has fallen could indicate any number of possibly more serious physical problems.
Guidelines from the American Geriatrics Society (AGS) provide solid, research-backed advice for how to treat falls and, perhaps of greater importance, how to avoid them in the first place. The preventive steps are relatively easy for seniors, their families, and their physicians to put into place. Let's repeat the key words here—preventive and easy, for seniors and their families.
One out of three people age 65 and older fall each year, and the odds rise to 70 percent and even higher for the oldest age groups, according to research findings distributed by the AGS. Roughly an eighth of all falls lead to serious injuries, with a total price tag of nearly $20 billion in medical bills and an average hospital bill of $17,500 for seniors who require hospitalization.
-
The Kind of Government We Want, At Least for a Day
Tweet Share on Facebook February 4, 2013 CommentWhen the students in Harvard's master level course API-304—Behavioral Economics and Public Policy—show up for class this afternoon, professor Brigitte Madrian plans to give them a new assignment: What would they advise Congress to do to improve America's retirement savings system?
The task is particularly relevant to behavioral economics students. The widespread shortcomings in Americans' retirement readiness include several key behavioral failures: not beginning to save early enough, not saving enough, cashing in retirement accounts when moving to new jobs, making poor investment decisions with retirement funds, and not having solid retirement plans or goals.
Finding ways to effectively change human behavior has become a big deal in economics. And it has already been applied to 401(k) retirement accounts with impressive results. With one simple but tortuously negotiated change in the law, Congress agreed several years ago that 401(k) plans could automatically enroll employees unless they opted out of participating. Prior law had said employees could not participate unless they opted into the plans. The change has led to big gains in plan participation rates.
-
The Big Money Communication Gap Between Adult Children and Parents
Tweet Share on Facebook January 31, 2013 CommentWhen it comes to money, older parents might be pleasantly surprised to know how much their adult children look up to them, at least in terms of their skills at managing money and investments. For the most part, however, parents don't return the love, at least when it comes to money.
A new survey of parents and adult children, sponsored by Fidelity Investments, surveyed parents who were at least 55 and had $100,000 average annual household incomes and nearly $530,000 in assets. It then polled the parents' adult children, who had to be at least 30 years old. These adults turned out to have average household incomes of more than $127,000 a year but only about $80,000 in assets.
Fidelity found that children looked up to their parents' money skills. Nearly half of the adult children actually said their parents had made no financial mistakes. Parents, for their part, were not so charitable about their kids. Specifically, they said their children:
-
Senior Employment Driven By Choice, Not Need
Tweet Share on Facebook January 29, 2013 CommentBy now, it has become accepted wisdom that the retirement dreams of older Americans, indeed their very ability to pay current living expenses, really took it on the chin during the recession and the collapses of investment values and the housing market. Certainly, in the case of household assets, the Federal Reserve's authoritative Consumer Finance Survey paints a story of big declines, driven largely by falling home values.
Against this backdrop, reports that more and more seniors are continuing to work seemed to also be a logical response to harder times. Retirement experts generally agree that extending a career is the best shot at an adequate retirement that many seniors have these days. This logic seems to be further confirmed by a recent U.S. Census Bureau report of a strong continuation in 2010 and 2011 of the trend toward extending careers.
Even as the recession's effect wears off and the economy slowly recovers, a rising percentage of seniors is continuing to report to work. More than 16 percent of people age 65 and older were still in the labor force in 2010, up from about 12 percent in 1990. And among those ages 65 to 69, more than 30 percent are still working or seeking work.
-
Surge in Older Workers Continues
Tweet Share on Facebook January 28, 2013 CommentThe impact of older workers continues to increase, according to new U.S. Census Bureau data. People over age 65 are becoming a larger share of the population, and more of them are choosing to keep working.
Nearly 1 in 8 Americans is now at least 65 years old, and the Census Bureau projects they will account for more than 1 in 5 people in the United States by 2040. The total could be even larger if a recession-induced reduction in new births continues.
[Read: Quick and Simple Tips for Baby Boomers on the Job Hunt.]
-
7 Key Issues for Seniors in 2013
Tweet Share on Facebook January 25, 2013 CommentThe Congressional Cold War is in recess. Republican willingness to avoid a debt-ceiling fight for a few months has cleared the way for other activities. And while it's doubtful today's governmental glasnost will last very long, even a brief period of detente is welcome. For starters, it's forced the Twitterati to focus on other monumental issues, such as whether or not Beyoncé lip-synced her Inaugural performance.
It has also provided breathing room to the main combatants squabbling over key retirement issues. However, they will be spending the next several weeks sharpening their arguments and their rhetorical axes. Here are seven issues where the trench warfare could be especially brutal:
1. Should Social Security be included in the broader deficit debate? Social Security is spending more than it takes in, but not if you include interest on a special series of government bonds that were issued in exchange for the nearly $3 trillion current surplus in the Social Security trust fund. Of course, Congress spent that $3 trillion, and forking over the interest does boost the federal deficit.
