Working Past 70 and a Half

November 16, 2011

If you have ever sat through a retirement planning workshop then you probably know that 401(k) plans and traditional IRAs are subject to required minimum distributions (RMDs) starting in the year you turn 70 ½, but what you might not realize is that RMDs from 401(k) plans are NOT required as long as you continue to work.  Recently I received an email from a webcast participant who wanted to know when he would be required to take a distribution from his 401(k) plan, and how the distribution would be calculated. Continue reading “Working Past 70 and a Half”

The Truth About Target Date Funds

November 11, 2011

I read this article on Bankrate.com about investors’ belief that target date funds come with a guarantee of a sufficient retirement income. The statistics are a little bit startling (51 percent — of people investing their retirement savings in target-date funds see them as a retirement planning panacea and think that putting their money in them guarantees their retirement income needs will be met), frightening even, from the perspective of a financial planner. The conclusion of the article is: Continue reading “The Truth About Target Date Funds”

The Biggest Myths About Social Security

November 10, 2011

In talking to people all over the country about their retirement, there are two big myths I’ve noticed when it comes to Social Security. The first one (which I hear less and less) is that there’s an account set up somewhere for you that you’ve been contributing to with your tax dollars. Unfortunately, Social Security doesn’t work that way. Instead, your tax dollars are immediately paid out to current beneficiaries with the expectation that future taxpayers will pay for your benefits when you retire. Continue reading “The Biggest Myths About Social Security”

Karaoke & My Grandparents’ Simple Success Formula

October 21, 2011

Last night, after going out to dinner with my girlfriend, I did something I thought I’d never, not in a million years, ever do.  I got up in front of an audience and sang at a Karaoke Night!  This may not be noteworthy for many people, but for me it is.  You see, when I sing most of the dogs in the neighborhood start to howl, glass starts to shatter, and anyone within earshot either starts to bleed from the eardrums or shouts, “Stop, PLEASE!!!!!”  I’ll never be confused with the next American Idol.  But, I got up and did my best to make everyone else look exceptionally talented.  But, that’s not the point. Continue reading “Karaoke & My Grandparents’ Simple Success Formula”

When in Doubt, Balance it Out

October 05, 2011

As more and more of the onus of saving for retirement falls on employees, more and more employers will look for ways to enhance their retirement savings plans.  One of the emerging plan features that many employers are adopting is the addition of a Roth option in their 401(k) plan.  If and when an employer adds this option, it seems inevitable that employees will immediately ask “which option should I use?”  To help shed some light on this basic question, here are some things to consider: Continue reading “When in Doubt, Balance it Out”

One of My Favorite “New” Features of 401(k) Plans

September 16, 2011

I would love to write about my favorite flavor of ice cream (Ben & Jerry’s Karmel Sutra) or other favorite foods (too many to list, which is why it would be fun to write about it), but I’m having trouble finding a way to make a connection into the financial world.  I just got done watching the Food Network’s “Best Thing I Ever Ate,” so forgive me for the food references.  While watching that, I happened to be reading an article in a financial journal at the same time (is that multi-tasking or A.D.D.?) about features that are available today in 401(k) plans that weren’t widely available 10 years ago.  They listed things like auto-enrollment and a cap on the percentage of company stock allowed in the plan, as well as a few others.  The one that really stood out to me as something that, if I could wave a magic wand and get everyone to enroll in I’d do it in a second, is the automatic rebalancing feature.  Why do I like this feature so much?  Well, I’ve seen it work as a means of managing your investment risk.  I’ll use an example to illustrate my point.  Continue reading “One of My Favorite “New” Features of 401(k) Plans”

Things to Consider if You Were Offered an Early Retirement Incentive Package

September 09, 2011

Last week I talked about some of the biggest factors that people face when considering an early retirement package.  Health insurance issues and determining when to take Social Security were by far the 2 most common topics of conversation.  But, they were by no means the only topics of conversation. Continue reading “Things to Consider if You Were Offered an Early Retirement Incentive Package”

Things to Consider if You Were Offered an Early Retirement Incentive Package

September 02, 2011

Over the last month, most of my working hours have been spent talking to people about the reality of deciding, in a short time window, if they are going to retire in the next several months.  Why?  These people have all been offered an early retirement incentive package with a deadline for accepting or rejecting the offer.  This meant that, for them, retirement was no longer something that was “out there in the future.”  It became a “right here, right now” opportunity.  There were things I learned during that process, and over the next 2 weeks I’ll talk about the “universal” factors.  Each person had their own story, their own situation, and their own set of circumstances that was remarkably different than anyone else’s.  But, there were some factors that were important to every single person I met.  They all asked about several factors that would impact the rest of their lives.  Here are the first few factors (more to come next week): Continue reading “Things to Consider if You Were Offered an Early Retirement Incentive Package”

Making the Decision: Which Pension Payout Option is Best?

August 30, 2011

I recently met with a multitude of pre-retirees for individual consultations who were contemplating an early retirement deal, so naturally part of the analysis revolved around their pension.  I was stunned at the amount of employees who, up until our in person meeting, had never gone online to run a pension estimate.  Of those who had already run their estimate, quite a few were still unclear about the various payout options and how to go about making the decision on which payout best fit their own situation.  The most common question I got was, “What do most employees pick?”  Although I was very tempted to bring up the old adage mom used to say that, “if everyone else jumped off a bridge, would you do that, too?”  I resisted, and instead, I stressed to them that it was a personal decision based on their own unique situation.  Here are the points I had the employees consider: Continue reading “Making the Decision: Which Pension Payout Option is Best?”

Real Life Cases of Money Isn’t Everything

August 26, 2011

Over the last month, I’ve had the opportunity to meet a lot of people who are contemplating retirement right now.  And I’ve noticed a common theme.  More people, than might be expected, really like their job and the people they work with, and they have a difficult time wrestling with the emotions of making the retirement decision.  A little background to this story might help. Continue reading “Real Life Cases of Money Isn’t Everything”

You Have HOW MUCH of Your 401(k) in Company Stock?

August 23, 2011

With the recent roller coaster ride of the stock market, many employees have taken a closer look at their asset allocation within their retirement plans, and to the surprise of many, they find their investment strategy is way off base. Continue reading “You Have HOW MUCH of Your 401(k) in Company Stock?”

Why I Love My Whole Life Policy

August 15, 2011

Whole life insurance has a bad reputation.  It isn’t perfect but then again it wasn’t ever meant to be.  When used for the right purpose, however, it can fit perfectly into a financial plan when there is a need for life insurance.  You hear a lot of talk about the negative aspects of whole life and what it doesn’t do such as: Continue reading “Why I Love My Whole Life Policy”

Do You Know Your Retirement Number?

August 10, 2011

There is a series of humorous commercials that show men and women holding a long, seven-figure number under their arm.  This number is supposed to represent “their” number; the amount they will need to save in order to enjoy the retirement they are looking forward to.  It seems silly, but the truth is, very few people actually know how much they will need to save in order to retire comfortably.  Even our own research suggests that only about one in three employees has used a retirement calculator.  With so few crunching the numbers, it’s any wonder retirement confidence is at record lows, but the good news is that this number doesn’t have to be a mystery.  Let’s look at six (relatively) easy steps to finding yours: Continue reading “Do You Know Your Retirement Number?”

Benefits Trends: Looking Back the Past 5 Years

August 09, 2011

Over the last 5 years, there has been great progress in the employee benefits arena for new employees entering the workforce.  Auto enrollment into a DC retirement plan has increased from 32% back in 2007 to 41% in 2011.  The number of companies offering the Roth 401(k) option has doubled since 2007, from 16% to 31%, and this feature usually is most beneficial to the younger workforce who most certainly may face higher tax brackets in the future.  And for those companies that offer high deductible health plans, 1 in 5 now offer an employer contribution, up from only 1 in 10 in 2007.  These are all positive movements highlighted in the 2011 SHRM Employee Benefits Study when looking back at the trends from 2007 to today. Continue reading “Benefits Trends: Looking Back the Past 5 Years”

Why Didn’t I Sell?

August 08, 2011

“Why didn’t I sell before the market dropped?”  is a question I got from a caller to our helpline last week.  This is a common question, as you can imagine, after a big drop in the market or during an extended bear market.  This caller was extremely frustrated because he was stuck between a rock and a hard place.  He had already turned in his paperwork to retire within the month (too late to cancel) and was making a transfer from his 401(k) to a pension purchase to provide additional fixed income – essentially changing the goal of this money from long term growth to income.  The market drop would lower his monthly income for the rest of his life because his lump sum was being used to calculate his monthly income payment.  He was distraught. Continue reading “Why Didn’t I Sell?”

How to Be Financially Independent in 5 Years (No Matter What Age You Are)

August 04, 2011
Updated June 14, 2017

One of the things that makes the lives of financial planners so difficult is that we usually have to get people to do what they don’t want to do, so that they can get what they want. In other businesses and professions, you’re generally either providing a good or service that will provide some immediate pleasure or alleviate some immediate pain.

Financial planning is more like dieting and exercise. Almost all the pain (saving money, taking a little more investment risk, diversifying out of your favorite stock, or taking the time to draft boring estate planning documents) is upfront for a gain (being debt free, having enough money to retire, or making sure your family is taken care of in case something happens to you) that often seems distant and far away. Continue reading “How to Be Financially Independent in 5 Years (No Matter What Age You Are)”