States aim to fill pension gaps with auto IRAs: Retirement Scan

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States aim to fill pension gaps with "auto IRAs"
More states are considering "automatic IRAs" to help small business workers with no access to workplace retirement plans save for their golden years, according to this article on CBS Moneywatch. An analyst claims that an employer-sponsored retirement plan is not accessible to about 50% of the workforce or some 55 million employees, and implementing automatic IRAs nationwide would benefit 37.5 million of these workers. "The state plans are pretty modest, but they're a recognition that we're facing a huge retirement income crisis in this country. Since Congress is paralyzed and not likely to do anything big or new to address this problem, the states have jumped in," says an expert with the Pension Rights Center. –CBS Moneywatch
Don't bet your retirement on history repeating itself
Clients will be better off making withdrawal rate decisions based on the current market conditions than on historical averages, writes an expert. While a classic safe withdrawal research shows that "the 4% rule has a 95% chance for success, that only means the 4% rule succeeded in 95% of the rolling historical thirty-year periods," he explains. "New retirees today should not count on the same 95% chance that the 4% rule will work for them." –Forbes

Do 401(k) providers favor their own funds?
Mutual fund companies that administer 401(k) plans are inclined to favor their own funds, even when these funds are performing poorly, according to a study. The inclusion of these underperforming funds in the plan's investment menu could cost 401(k) participants, says one of the researchers. "What we find is that for the worst decile of funds—those that performed among the worst 10% over the prior years—they will continue to underperform by about 4 percentage points for the next year if they are kept on the menu." –The Wall Street Journal

Should the Social Security eligibility age be increased to 64?
Social Security should raise the eligibility age from 62 to 64 as full retirement age has been increased to 67 for seniors born in and after 1960, according to this article on MarketWatch. More people will be more prepared for retirement with the increase in Social Security eligibility age. Raising the eligibility age to 64 could also result in bigger retirement and survivor benefits and give seniors more time to boost their retirement savings. –MarketWatch

Hate your job? Here's how it might derail your retirement
People who dislike their jobs are likely to retire early, a decision that could affect their retirement security, according to this article on Motley Fool. Clients who opt for an early retirement will have less opportunity to build their nest egg and collect smaller Social Security retirement paycheck. Workers who hate their jobs should not retire and consider reducing their working hours daily. They may also want to look for another job that will give the satisfaction they want and motivation to continue working until they are ready to retire. –Motley Fool

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IRAs Retirement planning 401(k) Social Security