Holding substantial company stocks in a 401(k) plan is not a smart move for retirement investors, writes Christine Benz of Morningstar. "[E]mployees who invest heavily in company stock are commingling their financial capital with their human capital, and making their financial plans unnecessarily risky along the way," Benz writes. "[N]umerous studies suggest that the rewards don't offset the risks of heavy ownership stakes in company stock."
Lower fees, personalized portfolios for participants and the absence of conflict of interest are drawing employers to robo-advisers to manage their 401(k) retirement plans, according to this article on Bloomberg. Other attractions that robo-advisers offer are a modern, intuitive user interface and a new algorithmic service designed to enhance a portfolio's tax efficiency. "The opportunity is that innovation has to happen, and the 401(k) space is not blessed with innovation. It has been a shielded kind of space," says an expert.
Data from LIMRA Secure Retirement Institute shows that about 50% of American workers retire between ages 61 and 65, according to this article on Money. Eighteen percent of workers even leave the labor force at age 60 or earlier, says LIMRA, adding that 89% of people have retired by age 75. A majority of workers also start collecting Social Security benefits before reaching full retirement age.
Contrary to what some investors do, clients should avoid making investing decisions based on economic agenda of President-Elect Donald Trump, as the "Trump trade" would "not go on forever," says Vanguard Group founder Jack Bogle in an article on MarketWatch. "The market is very focused on the short term and the heck with the long term," says Bogle. '"We're in a balancing act between long and short. In the long run, it's the fundamentals that apply."
A 68-year-old retiree may want to suspend his Social Security retirement benefits until he reaches 70 to boost the value of his benefit payouts, according to this article on Forbes. If he opts to suspend, he should return to Social Security a few months before reaching the age of 70 and ask that his benefits restart in the month he reaches 70. This is to prevent Social Security from issuing six months of retroactive benefits, which could reduce the value of his monthly benefits by 4%.
