Retirement planning

NEW YORK -- An investors' advocacy group is challenging the Obama Administration and Congress to do more for the needs of average investors.

Brokers who offer advice to investors may be held to the same fiduciary standards as investment advisers if legislation proposed by the Obama Administration is passed by Congress.

Sixty-four percent of the calls going to Financial Finesse, which provides financial counseling to employees, are about debt reduction and budgeting, whereas only 15% of the calls are about investing and retirement planning.

Automatic enrollment into 401(k) plans is having the greatest impact on younger, lower-income workers, Fidelity Investments reported Tuesday.

Despite the volatile markets of late 2008 and early 2009, investor participation remains fairly stable, according to a review of retirement markets by Dublin-based Research and Markets.

Whereas in previous recessions, companies that suspended 401(k) matches always brought them back, this time around, consultants to defined contribution plans tell the Associated Press, companies are thinking about doing away with the matches forever or reducing them drastically from the typical 50 cents match for the first 6% an employee puts in.

One of President Obama’s proposed financial reforms would require employers that do not offer a 401(k) to automatically enroll their employees into an IRA. If implemented, it would give the biggest boost to the retirement savings industry since the creation of the 401(k) in 1980, enrolling 40 million new investors, and attract more than $100 billion within five years, The Wall Street Journal reports.

Diminishing employment opportunities notwithstanding, 9.5 million retired Americans are considering returning to work at least part-time, according to a study by Charles Schwab. Also, 32% of currently employed Americans expect to hold onto their jobs and delay retirement.

Returns on target-date funds continue to disappoint, with the five largest 2010 funds trailing the S&P 500 by 11 percentage points since the market’s March 9 low. They are up an average of 25% since that date, well below the benchmark index’s 36% rise, The Wall Street Journal reports.

As the economic slump curbs retirement savings and the government considers imposing curbs on target-date funds, Great-West Retirement Services is trying out what its president is calling "the next generation" of target-date funds.

It won't be easy in the aftermath of a global recession, but with the right mixture of transparency and expertise, wealth managers will be able to regain their status as trusted advisers.

Noting that one-quarter of employers have either already cut or plan to cut their 401(k) match, financial advisers are reminding investors of the importance of saving for retirement.

Advisers to 401(k) plans recently have revisited the wisdom of offering annuities, in light of last year’s severe market downturn. But group annuities are being criticized for subjecting investors to lockup periods of five years or longer and a variety of additional fees.

Regulatory leaders are questioning whether changes need to be made to target-date funds after several 2010 funds reported huge losses last year, but mutual fund industry leaders say these concerns are overblown.

Banking companies will be hard-pressed to repeat a banner 2008 in terms of sales of fixed annuities. Fixed annuities were popular late last year and early this year, but with interest rates falling and the markets in a fingers-crossed recovery, executives and analysts expect demand for these products to start tapering off.

In today’s unpredictable market, even the “safest” investments such as stable-value funds carry considerable risks that plan sponsors and participants might not be aware of, cautions Watson Wyatt. Thus, the consultant urges plan sponsors and investors to review their holdings.

With births declining and medical advances extending life spans, the population of people age 65 and older in the U.S. will rise from 13% today to 20% by 2030 and 26% by 2050, the Census Bureau announced Tuesday.

Financial Engines has launched a Retirement Checkup service for near-retirees age 50 and older that finds the outlook is not as grim as people might think. Only modest increases in savings and a slight delay in retirement can put near-retirees back on track.

WASHINGTON - With 47% of 401(k) plans now using automatic enrollment, the programs have helped get millions of new workers enrolled to start saving early for retirement, but industry experts say the automatic nature of these plans needs to extend to helping "hands-off" investors when they change jobs.

At the hearing on target-date funds that the Department of Labor and the Securities and Exchange Commission held in Washington last Thursday, the focus was on better disclosure of holdings.