July 15, 2014
Target Date Funds Keep Growing
The number of employers offering target date funds as an option in their 401(k) plans, and the number of workers using these funds, continue to increase.
In 2013, 86 percent of all employer plans offered target date funds (TDFs) – double the share of plans offering them in 2006 – according to Vanguard’s annual report on defined-contribution plans, “How America Saves 2014,” released in June.
Vanguard data also support TDFs’ growing popularity among employees: more than half of plan participants now have some or all of their retirement accounts in TDFs, compared with just one in 10 in 2006.
TDFs eliminate the need for employees to wade in and make complex investment decisions about choosing and updating their asset allocations. A TDF initially invests largely in stocks, but the portfolio becomes more conservative and the allocation to stocks declines as the individual approaches the targeted retirement date he selected. …Learn More
July 3, 2014
Financial Savvy Means More 401k Returns
Financial knowledge is critical to one’s retirement security, finds a new study showing that 401(k) plan participants who scored higher on a test of their financial knowledge earned an additional 1.3 percentage points of investment returns annually on their retirement accounts.
Over a 30-year working life, that higher rate of return would add 25 percent to total savings at retirement.
Readers can take the quiz by clicking here; answers appear at the end of this blog post. …Learn More
July 1, 2014
Best States for Growing Old
Minnesota, Washington, Oregon, Colorado, Alaska, Hawaii, Vermont, Wisconsin, California and Maine – these states may be the best places to grow old.
They came out on top in AARP’s new State Scorecard based on their access, cost and the quality of their care services for aging adults and on their supports for the most common form of caregiver – family members.
To see your state’s overall ranking, run your cursor over the map below. To see how your state ranks on other measures, click here.
Enid Kassner, an AARP vice president who helped developed the rankings, said the Scorecard is useful to the leading edge of the baby boom generation, who will start turning 80 in 12 years. For example, if having a say in selecting the individual professional who will provide care, such as bathing, dressing, or meals, is the top priority, California is the best place to be. …Learn More
June 26, 2014
Retiree Health Plans Considered
Retiree health benefits are a luxury item.
In 2013, just 28 percent of government and private-sector employers with more than 200 employees offered health benefits to their retiring workers, down from 66 percent in 1988, according to the Kaiser Family Foundation.
These plans are popular with workers, but their declining prevalence has a silver lining.
A long history of research shows that people who can retain their employer health benefits if they retire tend to retire earlier, confident they’ll be insulated from extraordinary medical expenses that could wipe out their savings.
Here’s the silver lining when retirees lose that coverage: by inducing them to remain in the labor force longer, perhaps until their Medicare starts, it improves their retirement security in other ways. …Learn More
June 24, 2014
Social Security: Vale La Pena Esperar
Waiting to claim Social Security is good for retirees’ financial health – none more so than the U.S. Latino population.
This message is delivered in Spanish in the above video, “El Seguro Social: Vale la Pena Esperar.” The video was produced by the National Academy of Social Insurance, a policy research non-profit, and Squared Away found it on the website of Latinos & Economic Security.
Latinos & Economic Security, which is part of UCLA’s Center for Policy Research on Aging, said Latinos make up 7 percent of the U.S. population age 65 and older. But due to their lower incomes during their working years, Latinos are more reliant on Social Security than are Asian-American, African-American and white, non-Latino retirees, the organization said.
Its research also shows that Social Security provides at least 90 percent of the income of well over 40 percent of elderly Latino couples. So it pays to delay and increase the size of that monthly pension check. …Learn More
June 19, 2014
Aging, but Oblivious
Older people often wonder why young adults get tattoos that they’ll later want to remove.
In this Ted video, psychologist Dan Gilbert says tattoos are a good example of a universal error in thinking. …
June 12, 2014
Government Workers See COLA Cuts
State and local government workers have long felt their pensions were more secure than the vanishing pension coverage in the private sector. But a spate of changes to cost-of-living protections should give them pause.
In the wake of the Great Recession, 17 states reduced, suspended, or eliminated cost-of-living increases (COLAs) in their defined benefit pensions for state and local workers, according to a recent summary of legislative actions around the country by the Center for Retirement Research, which sponsors this blog. And the courts are backing them up, deciding that the inflation protections – a fixture of the majority of public pensions – do not have the same constitutional or other legal protections that apply to core benefits.
The COLA changes, enacted to reduce government pension liabilities, generally affect both current retirees’ benefits and the future retirement benefits of active employees.
The above map shows where the cuts have occurred. The following is a summary of the specific change in each state: …