Callout: How do your retirement plans stack up?

Compare Your Retirement to Peers

How are your retirement plans going? If you’re a conservative Generation Y investor, are you in the mainstream? Baby boomers, how many in your generation are planning to retire at the same age you do?

Compare yourself with your peers in this cool interactive quiz developed by the Boston mutual fund company, Fidelity Investments.

Click here to check it out.

As you answer each question, you can compare yourself with your peer group’s answer to that same question, based on a prior survey for Fidelity by the polling company, Gfk. Your peer group is determined by your income and your generation – baby boomer, Generation X and Generation Y. Fidelity also provides useful information and tips with each question. …Learn More

Photo: Crossroad signs of work and retirement

Laid-off Boomers: Retirement as Default

The natural reaction to losing a job is to get a new one.  But when older people become unemployed, some view it as a dilemma: look for work or just retire?

The presence of a financial safety net significantly increases the likelihood that an older, unemployed person will retire.  And that decision often comes quickly after they lose their job, concluded a new study by Matt Rutledge, an economist for the Center for Retirement Research, which supports this blog.

“The brevity of [their] jobless spells suggests that older individuals have little tolerance for a job search” and will “make a quick exit” if they have financial resources backing them up, Rutledge wrote in a recent summary of his research.

His findings get to the heart of the difficult choices facing older workers when they are laid off, no more so than amid the Great Recession when the jobless rate among people over age 55 hit a record 7.3 percent.  Rutledge tracked individuals between 55 and 70 who lost their jobs between 1990 and 2012. …Learn More

Photo: Red flower

Estate Planning 101: Who Knew?

Boston trust attorney Michael Puzo has seen it time and again: people procrastinate about writing a will or putting their estate in order.

“It forces them to face their mortality, and they don’t want to,” he said.

Even those with modest assets – a house, a 401k, and maybe a life insurance policy – should carefully make an estate plan.  But are the nuts and bolts of wills and estate planning widely understood?

This question loomed as Puzo translated these legal complexities in a way anyone could grasp during his presentation to employees of Boston College, where Squared Away is based.  For readers who may not know where to start, here are 10 fundamentals gleaned from his talk:

A good estate plan achieves four goals:

  • Distributes one’s assets to the desired person or people.
  • Ensures beneficiaries receive the money when you want them to.
  • Makes appropriate bequests either directly or indirectly through a trust, rather than a will.
  • Minimizes taxes.

When thinking about a will, get out a blank sheet of paper and write down everything of value that you own, whether it’s a checking account, the house, a wedding ring, or life insurance policy – and who you want to receive each of them.

Many people may be surprised to learn they “have more money than they think they have,” Puzo said.

The difference between probate and non-probate property is critical: …Learn More

Graphic: Thanksgiving turkey

Happy Thanksgiving

Thank you readers for continuing to support our blog, which was recognized this week by Jean Chatzky of AARP.

We’ll return next Tuesday with more coverage of financial behavior.Learn More

CFPB Guidance for Financial Consumers

The Consumer Financial Protection Bureau is kicking into gear to help consumers safely navigate the increasingly complex world of financial products.

The federal agency in recent weeks has released information for homebuyers and for seniors seeking financial advisers. It also accepts complaints about a growing list of financial products.

Homebuyers Seeking Help:

Individuals can search CFPB’s website for experienced home-buying counselors, by state. These counselors are approved by the U.S. Department of Housing and Urban Development.

To find a counselor, click here.

Seniors Seeking Financial Advisers: To help protect older Americans from poor financial advice, CFPB has created a handy guide to help them find a trustworthy adviser. The guidance includes the right questions to ask and the importance of proper certification. …Learn More

Photo: Money house made of bills

Housing Market Adds to Seniors’ Equity

The equity in older Americans’ homes has risen smartly over the past year, fueled by the housing market rebound. But whether retirees will tap these gains to pay their bills remains in doubt.

Equity values for homeowners who are 62 or older was $3.34 trillion in the second quarter of this year – nearly 10 percent above its $3.05 trillion value a year earlier – according to new data released by the National Reverse Mortgage Lenders Association (NRMLA), a trade organization.

Rising house prices are restoring equity even in places like Florida devastated by the housing market bust. Seniors’ home equity has surged 14 percent there over the past year, to $241 billion in the second quarter of 2013, though it remains far below the levels reached during the bubble.

The equity gains are not being propelled by homeowners paying off their home loans. U.S. seniors owed $1.07 trillion on their mortgages in the second quarter, compared with $1.09 trillion a year earlier, the trade organization said.

The housing market rebound is a reminder that equity is the largest single asset that older Americans hold – it’s worth more than their savings in their 401(k)s and IRAs. But the question remains: does this help them? …Learn More

Photo: Group of people

Will Millennials Be Ready to Retire?

As he logged on to his online 401(k) retirement account, Jordan Tirone, a 25-year-old insurance underwriter, explained the mental accounting behind his 5 percent contribution.

He pays $300 a month to live with his mother so he can pay off student loans. Nevertheless, a regular paycheck from his Hartford, Conn., employer is finally giving him some financial stability. “I’m feeling like I’m gaining some traction,” he said.

Spontaneously, he clicks his mouse and increases his contribution to 6 percent of his salary.

Although it can be difficult to focus on a retirement that is still 40 years away, many young adults like Tirone try very hard to save. But are they doing enough? A lot of evidence suggests they’re not, either because they can’t afford to, refuse to, or don’t know what to do.

Adults in their 20s and early 30s, in a recent survey of 401(k) participants by Brightwork Partners LLC, predicted they would have to rely on their personal savings for half of their income in retirement.

Their 401(k) contributions don’t square with their expectations. Data on retirement plans administered by Fidelity Investments show that adults in their late 20s contribute 5.9 percent to their 401(k)s; by their early 30s, that increases to 6.5 percent.

But a typical 25-year-old who wants to retire at age 67 should contribute anywhere from 10 percent to 12 percent of his pay, according to various estimates. … Learn More

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