Our daily roundup of retirement news your clients may be thinking about.
Holding target-date funds in 401(k)s and other accounts can be the simplified route to retirement investing, as TDFs combine a mixed bag of investments into one, age-specific portfolio, writes an expert on MarketWatch. However, these funds can be expensive and may not be accurate in determining investors' risk tolerance, writes the expert. "And most important, they’re not right for many people because your retirement age could have little to do with your long-term need for growth from stocks."
The 70/80 replacement income may be enough to cover living and other expenses in retirement, but this does not apply to all retirees, writes an expert for The Wall Street Journal. "But many other retirees (new retirees, in particular) find that they need almost as much money, or just as much, as when they were working," writes the expert. "Any number of variables can push spending higher: travel and entertainment costs, medical bills, home improvements, debt (read: mortgages and credit cards)."
A survey has found that clients aged 55 to 64 only have a median of $120,000 in their retirement accounts, or only 12% of the amount recommended by experts, according to this article on CNBC. Experts at Fidelity encourage clients to contribute at least 15% of their annual income to their retirement plans beginning at age 25, with more than half of their savings invested in different options. "Saving consistently over time is going to be your best bet. Whether you have $100,000 in the bank or $0 in the bank, you need to save consistently," says an expert.
Although teachers may be receiving pension benefits in retirement, it pays to save for retirement outside their pension plan, according to this article on CNNMoney. When investing for retirement, they should determine the amount they should sock away and how much of their retirement income should come from their pension plan. They may put the money aside in a 403(b) plan but they are advised to check the investment menu and the fees involved. An IRA is also a good savings vehicle for teachers to build their nest egg.
