Retirement Planning and Savings for Baby Boomers

This living topic covers essential information on retirement planning and savings specifically for Baby Boomers. It includes guidance on required minimum distributions (RMDs), changes in retirement account rules due to legislative acts like the Secure 2.0 Act, and the implications of new fiduciary standards for financial advisors. The content also addresses myths around Social Security benefits, updates on contribution limits for various retirement accounts, and financial planning advice to navigate market volatility and inflation. Additionally, it discusses legal actions affecting retirement funds and new retirement income products designed to ensure financial security. The overarching theme is to provide Baby Boomers with the knowledge and tools needed to make informed decisions about their retirement savings and investments.

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Here's what happens if the U.S. government defaults in early June

Though optimism is increasing that Republicans and Democrats will be able to agree on legislation to raise the debt ceiling, there is still the possibility they won’t. In that case, the U.S. government will be in default, unable to pay all of its bills.

While we’ve pointed out the impact that could have on Social Security recipients, economists say the ramifications for consumers in general and the U.S. economy would extend into many other areas. Consumers would be negatively affected on a number of fronts.

For example, people who have investment portfolios could see the value of their holdings drop sharply. As the early June deadline approaches, yields on Treasury bonds are already rising. That negatively affects current bondholders.

If you have money in a 10-year Treasury bond paying 2.5% and a default increases the rate to 5%, those 2.5% bonds are worth less, at least until maturity. Market analysts say stock prices would almost certainly go down significantly. In fact, an analysis by Moody’s Analytics says stocks could lose 33% of their value.

Housing would take a hit

The housing market, which has avoided a steep correction so far in the face of higher mortgage rates, might also be a casualty. A new report from Zillow predicts a government default could send the typical cost of a mortgage soaring by 22%. Yes, home prices might go down but mortgage rates would likely surge to 8% or higher.

"Home buyers and sellers finally have been adjusting to mortgage rates over 6% this spring, but a debt default could potentially raise borrowing costs even higher and send the market into a deep freeze," said Zillow Senior Economist Jeff Tucker. "Home values might not see a notable drop, but higher mortgage rates would severely impair affordability, for first-time buyers especially. It is critically important to find a solution and not put more strain on Americans who are striving to achieve their homeownership dreams."

Current homeowners might suddenly find it difficult to sell their homes. The Zillow analysis projects mortgage interest rates could peak at 8.4% in September in a default scenario. As a result, the housing market could freeze.

More layoffs

With the economic chaos unleashed by a default, the U.S. economy would slide into a steep recession. The wave of layoffs that has already hit a number of industries would only get bigger. 

So why would Congress play this kind of brinksmanship with so much at stake? Good question.

Pointing to the $31 trillion national debt, Republicans in the House have passed a bill that would raise the debt ceiling but would return government spending to its level at the end of December.

Democrats have rejected that, saying the debt ceiling should be raised with no conditions and with spending decisions addressed in separate legislation.

Though optimism is increasing that Republicans and Democrats will be able to agree on legislation to raise the debt ceiling, there is still the possibility...

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The clock is ticking on a Social Security fix

If you are in your 40s or 50s and looking forward to retiring in a few years and drawing Social Security, there’s something you should know. Unless Congress acts to add to the Social Security trust fund, benefits will be slashed by 25% or more as early as 2035.

Estimates vary but at its current pace, the Social Security trust fund will run short of money at some point in the early 2030s. According to the Social Security Administration (SSA), the Social Security Board of Trustees projects program costs to rise by 2035 to the point that taxes will be enough to pay for only 75% of projected benefits.

If Congress doesn’t address the issue before then – which would almost certainly require some type of tax increase – benefits for everyone receiving Social Security would be cut, probably by at least 25%.

“This increase in cost results from population aging, not because we are living longer, but because birth rates dropped from three to two children per woman,” SSA explains on its website. “Importantly, this shortfall is basically stable after 2035; adjustments to taxes or benefits that offset the effects of the lower birth rate may restore solvency for the Social Security program on a sustainable basis for the foreseeable future.”

That’s reassuring for many people, but it depends on lawmakers in both parties coming to some kind of agreement. In this hyper-partisan atmosphere, how likely is that?

‘No choice’

“My political calculus tells me that Congress has no choice but to enact the necessary provisions to increase the trust,” Terrell Finner, director of fundraising at Sole Strategies, a political action group, told ConsumerAffairs. “A reduction in Social Security benefits would burden our most vulnerable citizens and send the economy into a downward tailspin.”

In fact, there is evidence that some key members of Congress have quietly begun work on finding a solution. President Biden has also backed proposals to raise revenue by making more of taxpayers’ income subject to the FICA tax, which supports Social Security and Medicare.

Currently, the government stops taking out the FICA tax after a wage-earner has earned $162,000 in one year. Biden has proposed expanding that to $400,000. Treasury Secretary Janet Yellen has said she supports increasing revenue for Social Security but believes cuts in entitlements will also be part of the formula.

According to The Hill, Sen. Bill Cassidy (R-La.) and Angus King (I-Maine) are trying to craft a compromise that could win votes from both sides of the aisle in a narrowly-divided Congress. One of the proposals reportedly includes establishing an investment fund to contribute to the trust fund.

It’s been done before

As recently as 1982 Republicans and Democrats successfully worked together on a compromise to shore up the retirement fund. In 1983 President Reagan signed legislation that increased the Social Security and Medicare tax rate while also delaying when annual cost of living adjustments (COLA) kicked in.

So it’s possible that over the next decade, Congress can find a way to maintain Social Security in its present form. As a hedge, Finner suggests people approaching retirement maximize their savings.

“It could take months or years to come to an agreement on Capitol Hill,” Dinner said. “I would highly advise folks in their 50s should start taking precautions to position themselves to holdover in the face of a potential fallout over a limited benefit.”

Finner says socking away as little as 3% of their current income each year could guarantee financial safety “in the unlikely event of a cliff.”

If you are in your 40s or 50s and looking forward to retiring in a few years and drawing Social Security, there’s something you should know. Unless Congres...

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Retirement savers who ignored this week’s market turbulence did just fine

If you have an IRA or 401 (k) retirement account and did nothing as the market went on a wild roller coaster ride, you probably did exactly the right thing. Despite wild swings in major market averages during the week, Wall Street is ending up about where it started.

But it took strong nerves for investors to hold the line. Stocks plunged during the week as major technology companies reported weaker-than-expected earnings. Amazon shares fell sharply on Thursday after the company reported lower earnings and tempered its outlook, dragging the market down with it.

Days earlier it was Meta, the parent company of Facebook, that tanked shares by reporting a second straight quarterly revenue decline and warned of another decline in the current quarter.

In particular, Meta’s Reality Labs division, which produces its VR headsets, lost over $9 billion in the first three quarters in its quest to build the metaverse.

The plunge prompted an emotional on-air mea culpa by CNBC’s stock-picking guru Jim Cramer, who told viewers in June to scoop up Meta shares saying it couldn’t go much lower. However, it did.

After all the carnage of the week stocks turned in a strong showing on Friday with the Dow Jones Industrial Average rallying over 800 points. It ended the week just about where it started.

Many market analysts say stocks have rallied lately because investors are becoming convinced that the Federal Reserve is preparing to “pivot” from its aggressive policy of raising interest rates, setting off a massive market rally.

Good news for retirement savers

For retirement savers, this week’s gut-wrenching market may have underscored the value of not making any sudden moves. Retirement savers with 401 (k) accounts actually got some good news during the week. Because of inflation, they can add more to their savings accounts.

The Internal Revenue Service is increasing contribution limits on 401(k)s and IRAs in 2023 to account for the rising cost of living. It coincides with the Social Security Administration’s previous announcement of an 8.7% cost-of-living adjustment for retirees next year.

In 2023, the annual contribution limit for 401(k)s, 403(b)s, most 457 plans, and Thrift Savings Plan is $22,500. That’s a $2,000 increase from the current year. If you are 50-years-old or older you’re eligible for “catch-up” contributions that exceed the $22,500 ceiling.

If you have an IRA or 401 (k) retirement account and did nothing as the market went on a wild roller coaster ride, you probably did exactly the right thing...

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Do you really need $1.2 million to retire?

The amount of money Americans would like to have in their pocket before retiring has constantly gone up over the last couple of decades. In this era of high inflation, it’s taken a huge leap forward.

The Northwestern Mutual 2022 Planning & Progress Study found that when asked, Americans 18 years old and older estimated that needed to accumulate savings of $1.2 million before retiring. That’s a 20% increase over the 2021 study.

Yet despite that lofty goal, the study found Americans are actually now saving less for retirement. Americans' average retirement savings has dropped 11% – from $98,800 last year to $86,869 now. The age at which they expect to end their working days is now up to age 64, an increase from 62.6 last year.

Sign of the times

Christian Mitchell, executive vice president and chief customer officer at Northwestern Mutual, says the rising retirement savings goal is probably a sign of the times.

"It's a period of uncertainty for many people, driven largely by rising inflation and volatility in the markets," he said.  "We've also seen upticks in spending year-over-year not only as a result of inflation, but also as people have resumed a sense of normalcy in their lives following the earlier days of the pandemic. These factors are leading many people to recalibrate their thinking about how much they'll need to retire and how long it will take them to get there."

But if you’ve only saved an average of $86,869 for retirement can you really get to $1 million by retirement? Experts say you can if you start early enough and maintain discipline.

Many financial advisers suggest saving and investing up to 15% of your salary. According to CNBC, you can retire with $1 million if you invest about 9% of a salary of $70,000 before age 30 and the money earns an average of 6%. 

The longer you wait the more you will need to invest. If you are in your 40s you may need to sock away as much as 25% of your salary each year.

Other potential income

But the goal of $1.2 million in a retirement fund assumes that the retiree will no longer have any other income once they stop working. Today, many people who retire continue to work part-time at jobs they enjoy. Some even start second careers, earning a paycheck long after they’re “retired.”

"It's one of those questions on so many people's minds – how long should I expect to work in order to save enough for retirement?" said Mitchell. "It's really difficult to answer because there are all kinds of considerations to factor in. But too many people grapple with it in a bubble. With greater clarity you can make a more confident call and getting professional advice can provide that clarity."

The amount of money Americans would like to have in their pocket before retiring has constantly gone up over the last couple of decades. In this era of hig...

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Social Security recipients will get an 8.7% benefit increase in 2023

Seniors will get some inflation relief in 2023 when monthly Social Security benefits will increase by 8.7%. The Social Security Administration estimates the average Social Security payment will increase by more than $140 per month starting in January.

The cost of living adjustment (COLA) will benefit more than 65 million Social Security retirement benefit recipients, as well as 7 million SSI beneficiaries. The increase was calculated based on inflation data for July, August, and September.

As an added benefit Social Security recipients won’t see an increase in the amount of money deducted from the monthly payment to cover Medicare premiums. Not only are premiums not going up in 2023, but they’re also falling by 3%.

“Medicare premiums are going down and Social Security benefits are going up in 2023, which will give seniors more peace of mind and breathing room,” said Kilolo Kijakazi, acting commissioner of the Social Security Administration. “This year’s substantial Social Security cost-of-living adjustment is the first time in over a decade that Medicare premiums are not rising and shows that we can provide more support to older Americans who count on the benefits they have earned.” 

How to calculate the new benefit

Kijakazi released the video below to explain how to sign up for a My Social Security account to calculate the amount of each individual’s new benefit.

Those who don’t register for an account will be informed of their new benefit in early December, with the first increased benefit payment occurring in January.

Another way to determine the new benefit amount is to multiply the current monthly benefit by 1.087%.

Seniors will get some inflation relief in 2023 when monthly Social Security benefits will increase by 8.7%. The Social Security Administration estimates th...

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Social Security’s 2023 increase will likely be less than expected

The August Consumer Price Index (CPI) may prove to be a double whammy for people on Social Security. Not only is inflation continuing to erode their buying power, but it might also produce a lower than expected Social Security cost of living adjustment (COLA) next year.

The Senior Citizens League (TSCL) has revised its estimate for the 2023 COLA and has reduced it from its earlier 9.6% to 8.7% – which would still be the largest increase in decades.

The problem, says Mary Johnson, TSCL’s Social Security and Medicare policy analyst, is that the Social Security COLA is not based on the CPI, but rather the CPI-W, which declined last month. CPI-W is a monthly measure of the average change over time in the prices paid by urban wage earners and clerical workers for a market basket of consumer goods and services.

“After evaluating the August consumer price data, what I’m finding clearly illustrates the weakness in our inflation adjustment system for Social Security,” Johnson said in an update to members.

CPI-W went down last month

She notes that while the Labor Department’s CPI went up 0.1% in August, the CPI-W decreased by 1.10 percentage point year over year to 8.7%. Johnson said that reduction will likely have a big impact on Social Security recipients. She offered a quote from a longtime reader of her newsletter.

“There’s a “progressive loss of buying power of 40%, despite the SS COLA, since 2000,” the retiree wrote. “(That’s) 10% from 2021-2022 alone. This means we have lost (almost) half our real income in face of COLAs.”

Another headwind for people who depend on Social Security is the rising cost of health care, which will rise even faster in an inflationary environment. Medicare premiums will undoubtedly increase in 2023 and are deducted from seniors’ Social Security payments.

Greater emphasis on gasoline prices

Johnson says one of the biggest issues in using the CPI-W to calculate the Social Security COLA is the fact that it does not track the spending of retired households aged 62 and up and gives greater weight to gasoline and transportation costs. 

“A significant drop in gasoline prices (in August) played an outsized role in why my COLA estimate has dropped,” Johnson said. “It’s important that the public understand that to fight inflation the administration temporarily lifted the 18.3 cents per gallon federal tax on gasoline for 90 days. That period started in July and ends in September, the same third quarter period that is used to calculate the COLA.”

Johnson said Social Security recipients don’t typically buy a lot of gasoline since they are no longer commuting the work. Rather, she says seniors are more likely to spend on healthcare, housing, and food – all of which went up a lot in August.

The August Consumer Price Index (CPI) may prove to be a double whammy for people on Social Security. Not only is inflation continuing to erode their buying...

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Labor Department has ‘grave concern’ about Fidelity allowing 401(k) Bitcoin investments

Fidelity’s announcement that it will allow investment in Bitcoin in its 401(k) retirement accounts has set off alarm bells at the U.S. Labor Department. Top officials there expressed their worries within hours of Fidelity’s announcement.

“We have grave concerns with what Fidelity has done,” Ali Khawar, acting assistant secretary of the Employee Benefits Security Administration, told the Wall Street Journal.

Khawar is the government official in charge of the Labor Department group that regulates 401(k) retirement plans provided through an employer. These plans, while conservative by nature, are designed to be stable and grow steadily over the employee’s career.

He told the Journal he’s concerned about Bitcoin’s speculative nature – the value can fluctuate by tens of thousands of dollars – but also about what he calls hype and the belief among some that you “have to get in now because you will be left behind otherwise.” 

In its announcement on Thursday, Fidelity said its digital asset accounts will limit Bitcoin investments to no more than 20% of a portfolio. Some Bitcoin enthusiasts hailed the move, saying it could persuade younger workers to invest for retirement.

Henry Yoshida, CEO of Rocket Dollar, a self-directed Roth IRA / Solo 401(k) platform, told ConsumerAffairs that he believes Fidelity's move “has essentially established Bitcoin and cryptocurrency as mainstream.” He says he is interested to see how many employers adopt the plan for their employees.

Looking out for workers

But in his interview with the Wall Street Journal, Khawar said the Labor Department has a responsibility to ensure employer-sponsored retirement plans are in the long-term best interests of participants.

“For the average American, the need for retirement savings in their old age is significant,” Khawar said. “We are not talking about millionaires and billionaires that have a ton of other assets to draw down.”

Fidelity, meanwhile, is defending its new offering. In a statement, the company said its new digital asset account “represents the firm’s continued commitment to evolving and broadening its digital assets offerings amidst steadily growing demand for digital assets across investor segments, and we believe that this technology and digital assets will represent a large part of the financial industry’s future.”

Fidelity’s announcement that it will allow investment in Bitcoin in its 401(k) retirement accounts has set off alarm bells at the U.S. Labor Department. To...

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Ohio accuses Meta of securities fraud and deceiving the public

Ohio Attorney General Dave Yost is suing Meta, the company formerly known as Facebook, and accusing it of misleading the public about how it controlled its proprietary algorithm. The suit takes a two-pronged approach, claiming the company’s actions were aimed at boosting its stock and deceiving shareholders.

The lawsuit was filed on behalf of the Ohio Public Employees Retirement System (OPERS) and other Facebook investors. The complaint alleges that Facebook and its senior executives violated federal securities laws from April 29, 2021, through Oct. 21, 2021.

“This suit is without merit and we will defend ourselves vigorously,” Joe Osborne, a Meta spokesperson, told the Wall Street Journal.

Leaked documents

The alleged violation centers on revelations made by a former Facebook employee who leaked internal company research in late September. Those documents contended that the company was aware that Instagram was having a harmful effect on some teenaged girls.

"Facebook said it was looking out for our children and weeding out online trolls, but in reality was creating misery and divisiveness for profit," Yost said. "We are not people to Mark Zuckerberg, we are the product and we are being used against each other out of greed."

Yost cites a series of articles published in the Wall Street Journal that he says demonstrate Facebook’s priorities. The revelations triggered a congressional investigation and renewed calls in some quarters to break up the social media giant.

Statements called into question

Yost’s suit claims that Meta CEO Mark Zuckerberg and other company officials made statements about safety, security, and privacy on the platform that they knew were not true. The suit stated that Facebook admitted in those internal documents that it was “not actually doing what we say we do publicly."

In addition to charges that Meta deceived the public, the suit also charges that the revelations by the former employee ended up costing investors, including OPERS. The suit claims that the company’s action caused the stock to fall by more than $54 a share, costing investors $100 billion.

Yost’s lawsuit asks the court to order Meta to make good on those losses and to make significant reforms to ensure it does not happen again.

Ohio Attorney General Dave Yost is suing Meta, the company formerly known as Facebook, and accusing it of misleading the public about how it controlled its...

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The pandemic reduced retirement savings in 2020

Amid the economic distress caused by the coronavirus (COVID-19) pandemic, Americans’ retirement savings accounts have been a casualty. A poll by personal finance publisher Kiplinger and wealth management firm Personal Capital reported Americans are now less confident they can retire comfortably.

In another sign of economic distress, about a third of poll respondents reported they were forced to take either a loan or a distribution from their retirement accounts last year to meet expenses. 

Nearly a third withdrew more than $75,000. Uses of the money ranged from meeting everyday expenses to helping other family members.

Even as the stock market was racing to daily new highs, many retirement savers failed to benefit. Kiplinger categorized participants’ investment mix as “conservative,” meaning they weren’t invested in stocks that were driving the market. Worse still, Kiplinger reported 24 percent of Americans’ portfolios were in cash.

Confidence level drops

Only 40 percent of participants said the pandemic and its effects had not altered their financial confidence. Twenty-seven percent said they are “somewhat” less confident while 16 percent admitted to being “far less confident.”

So how has that changed consumers’ financial planning for retirement? Just over a third were able to say it hasn’t changed it at all. But here are the other answers:

  • I plan to work longer: 35 percent

  • I plan to save more: 34 percent

  • I plan to curtail travel or other activities I expected to do in retirement to save money: 20 percent

  • I changed my retirement financial projections: 12 percent

  • I will claim Social Security benefits earlier than I originally planned: 8 percent

  • I decided to hire a professional adviser: 7 percent

A financial advisor can sometimes help you get back on track financially. They give advice and help you create strategies to achieve your short- and long-term money goals, such as planning for retirement.

ConsumerAffairs has collected thousands of verified reviews of financial advisors here.

Amid the economic distress caused by the coronavirus (COVID-19) pandemic, Americans’ retirement savings accounts have been a casualty. A poll by personal f...

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Study suggests retirees are woefully behind in accruing recommended retirement savings

A new study suggests that the financial security retirees had hoped would get them through their senior years isn’t enough to maintain their pre-retirement standard of living. 

There are more Baby Boomers retiring every day, and according to Clever Real Estate’s The State of Retirement Finances: 2021 Edition, retirees have $178,787 in retirement funds -- about 39 percent of the recommended $465,000 savings -- and, as a result, are having to tighten budgets and give up some of their self-indulgences. 

In fact, two-thirds of retirees have less than $50,000 in retirement funds which leads to more than 80 percent of households with adults retirement age or older experiencing financial struggles and buying less to try and stay flush.

At the top of the retirees’ crunch list of challenges are basic necessities, including medical bills (47 percent), groceries (43 percent), and credit card bills (37 percent). Because all of those must-pays are items that will continue to pile up, 1 in 4 retirees worry they will outlive their savings.

The financial impact of the pandemic

While the COVID-19 pandemic wore thin everything it could get close to, retirees saw their debt more than doubling in 2020.

“That decline in household wealth is particularly concerning during a pandemic that has disproportionately impacted the health of older adults,” said Dr. Francesca Ortegren, PhD, the Data Science & Research Product Manager at Clever Real Estate.

“Infection can lead to unexpected costs related to acute or long-term healthcare, loss of the ability to live independently, and the death of a partner. Many don’t have the means to cover a financial shock, and even fewer have a cushion to fall back on.”

Get a job

With financial life not quite as rosy as hoped, many seniors have had to take on part-time jobs to cover living expenses.

Yes, some of those part-time jobs may seem menial, but they’re plentiful and the average employer values older workers as much as — if not more than — younger workers because they’re viewed as more productive

According to an analysis of jobs posted on RetirementJobs.com done by researchers at Boston College, the large majority of listings for retirees in late 2019 were in the following job categories:

  • Office or administrative support (15 percent)

  • Healthcare support (14 percent)

  • Computer and mathematics, e.g., programming (10 percent)

  • Transportation and material moving (9 percent)

  • Healthcare practitioners, management, and food preparation or serving (7 percent)

Despite the availability of jobs for seniors, the full-time jobs analyzed paid less than the overall average -- $43,800 vs. $50,000 -- and were less likely to offer fringe benefits, putting post-retirement workers at a disadvantage when it comes to income.

“Retirees who are in need of additional income should be ready to negotiate higher salaries when reentering the workforce,” Ortegren told ConsumerAffairs. “Many employers find older workers really valuable, so take advantage of that and focus on your experience.”

Putting on a happy face

Still, despite financial regrets during their working years, retirees are putting as much of a positive spin on the situation as they can.

Forty-two percent of retirees believe their retirement is more comfortable than their parents’ retirement was and 60 percent think they’re better off than their children will be when they reach retirement age.

However, it appears that Millennials have picked up on this challenge and are leading the way in increasing retirement savings.

“Many Millennials are keenly aware of the impact of a bad economy after experiencing first hand the 2008 financial crisis in their early careers. As a result, they started saving earlier than previous generations,” Ortegren told ConsumerAffairs. 

“Unfortunately, stagnant wages, less overall wealth compared to earlier generations, and possibly losing out on Social Security income could still hinder millennials’ ability to save enough for a comfortable retirement.“

A new study suggests that the financial security retirees had hoped would get them through their senior years isn’t enough to maintain their pre-retirement...

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Baby boomer retirements have taken a big jump in the past year

The number of baby boomers who are deciding to retire is at a record pace, at 3.2 million more from 2019-2020 than in previous years. However, according to a Pew Research Center analysis of monthly labor force data, the makeup of those retirees is starting to change. 

The recent increase is more pronounced among Hispanic and Asian American boomers -- up four and three points, respectively. On the geographic side of the equation, the increase is coming from those living in the Northeast U.S. -- up from 35 percent in February to 38 in September.

Job loss may be a factor

Pew researchers say job losses may be a dominant factor in this wave of retirements, probably at the hands of the COVID-19 recession. Since February 2020, the number of retired boomers has increased by nearly 1.1 million. 

Pew couches that number by saying that some of this increase could reflect seasonal change in employment activity. But running the numbers from February to September period in 2019, the population of retired boomers increased by only about a fourth of what happened last year.

Another interesting metric is that the share of retiring boomers differs by education attainment. The number of boomers who finished their education when they graduated from high school are up two points since February, and those who completed a four-year degree are up one point. For those who had some college education, but didn’t walk away with a diploma, there’s been no change at all. 

Will boomers have enough money to retire?

Baby boomers and retirement savings go hand in hand, and many of those new retirees face mounting challenges regarding their savings nest. Navigating that can of worms comes with things like supplemental Medicare insurance.

Baby boomers have an average of $152,000 pegged for retirement, according to the 19th Annual Retirement Survey of Workers conducted by the TransAmerica Center for Retirement Studies. While that may seem like a decent number when it stands alone, it’s not nearly enough to last through most people’s retirement. Based on information from the Bureau of Labor Statistics, adults between ages 65 and 74 spend $48,885 per year on average, which means they would blow through that $152k in less than four years.

Does this mean that boomers should be sounding the alarm? Not exactly, but the situation does beg a reassessment of how long a boomer’s savings can last. It also begs the question of what adjustments can be made to soften a boomer’s cash outlay.

"Aside from solely relying on Social Security, looking to downsize your home, moving to a more affordable state, relying on public transportation, and having a robust budget that itemizes discretionary and non-discretionary items are all a good start,” Mark Hebner, president and founder of Index Fund Advisors, Inc., told Investopedia.

“The most important thing is that retirees have the right mindset about their lifestyle in retirement. This is why it is important to start making lifestyle adjustments before you retire."

The number of baby boomers who are deciding to retire is at a record pace, at 3.2 million more from 2019-2020 than in previous years. However, according to...

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Two firms team up to help baby boomers downsize

Every day, baby boomers across America begin the process of downsizing, moving from a large home where they raised a family into smaller quarters that require less maintenance. Along the way, they discard lots of household items they accumulated over the years.

The William C. Huff Companies, which operates moving and storage firms, is partnering with Renovation Angel to help boomers downsize while keeping millions of unwanted household items out of landfills.

The two companies collaborated on the approach. Renovation Angel distributes unwanted household items to people who need and want them. William C. Huff Companies moves or stores the rest.

Their solution, called Downsizing Help, assists couples when they downsize and helps families liquidate an estate when a parent or family member dies. The companies say there are three goals -- to make the process easy, reduce the waste that ends up in landfills, and secure tax breaks for people who are downsizing.

Tax breaks

The companies say that the responsible recycling of unwanted household items can benefit community organizations while producing a tax saving of $3700 per $10,000 of donated items per family. The value of the donated items can be deducted from federal income tax returns

"As large estates are bought, many new homeowners choose to discard everything in the home and renovate the home to meet new styles and designs, often sending 'like new' cabinets and appliances to landfills,” said Jim Henderson, owner of William C. Huff Companies. 

“Also, when homeowners downsize they often need to rid themselves of the contents of the entire home which are no longer needed or wanted because they are moving into retirement communities where their new homes come fully furnished," Henderson said.  

Henderson says the donated items now end up in thrift stores instead of landfills and find a ready market. Consumers can purchase those unwanted items for a fraction of their value. And the emphasis on the environment doesn’t stop there.

Emphasis on the environment

“Providing logistics with low emission vehicles and storing items to be repurposed in a sustainable, solar-powered warehouse, hundreds of thousands of pounds of CO2 are cut from our environmental footprint each year,” Henderson said. “It's a win for everyone!"

The two companies say the market for this service is potentially huge. The National Association of Realtors recently reported that an estimated 12 percent of people between the ages of 45 and 64 who purchased homes in 2017 were downsizing.

The companies say that works out to about 80 million households, with the potential to redistribute over $20 trillion in household items over the next 20 years.

Every day, baby boomers across America begin the process of downsizing, moving from a large home where they raised a family into smaller quarters that requ...

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Retirement account balances have surged during the pandemic

The coronavirus (COVID-19) pandemic has taken a heavy economic toll on many employees and industries, but it has also widened the wealth gap between the haves and the have nots.

And we’re not just talking about the 1 percent that has done well. 

Ordinary Americans with 401(k) or IRA retirement accounts have seen their wealth surge in the second quarter of 2020, with the number of retirement accounts worth at least $1 million jumping by 49 percent.

An analysis by Fidelity Investments suggests that retirement accounts benefitted from the stock market’s remarkable rebound from its late March lows, driven in large part by technology stocks. The market’s rally, in turn, was fueled by Federal Reserve action and pandemic relief legislation passed by Congress.

Employers helped

While some hard-hit Americans have been forced to tap into their retirement funds to make ends meet, the Fidelity analysis shows many more continued or even increased IRA contributions, resulting in record-breaking flows to retail retirement accounts. Contributions to workplace retirement accounts, from both employees and their employers, remained steady, the analysis found.

“While the stock market’s performance in Q2 helped drive workplace retirement account balances higher, employer contributions also played a key role,” said Kevin Barry, president of Workplace Investing at Fidelity Investments. “Nearly 90 percent of employers continued to offer matching contributions to their employees over the last quarter, despite the unsteady business landscape.” 

What may be more unusual given the uncertain economic circumstances is that employees actually stepped up their retirement savings during this time. The researchers found that year-to-date contributions to IRAs increased by more than 20 percent.

In the second quarter, the average IRA balance was $111,500, a 13 percent increase from the first quarter and slightly higher than the average balance of $110,400 a year ago. The average 401(k) balance rose to $104,400 in the second quarter, a 14 percent gain from the quarter before the pandemic hit.

Stabilizing effect of the CARES Act

The analysis also stresses the stabilizing role played by the CARES Act, the first comprehensive aid package passed by Congress in late March. It allowed retirement account holders to tap into their accounts to meet short-term needs without penalty. 

As of the end of the second quarter, 711,000 people had taken a CARES Act distribution from their retirement account, which represents 3 percent of eligible employees on Fidelity’s workplace savings platform.

In many cases, their accounts rose by more than their withdrawal as the major stock market indices hit record highs, despite significant damage to economic growth.

The coronavirus (COVID-19) pandemic has taken a heavy economic toll on many employees and industries, but it has also widened the wealth gap between the ha...

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New SECURE Act requires faster taxable withdrawals from inherited retirement accounts

The recently passed SECURE Act, which makes changes to rules governing retirement accounts, is getting a warm reception from retirement planners, who are generally supportive of the changes.

But some of the rules could negatively affect you if you inherit someone’s retirement account. Under the SECURE Act, you’ll have to pay taxes on the money sooner -- and generally faster -- than under the old rule.

Until now, if you inherited someone’s IRA or 401(k), the rules required you to withdraw the money and pay taxes on it over your life expectancy. If you were 30 years-old, that meant you might have 50 years or more to withdraw the money, with each withdrawal adding to that year’s taxable income.

Under the new rules, you will now have just 10 years to withdraw all the funds from the account and pay taxes on it. If there is $500,000 in the retirement account, that averages to increasing your taxable income by $50,000 a year. However, the law does not specify how much you should withdraw at a time -- only that the full amount must be withdrawn and taxed by the end of 10 years.

Exceptions

There are some exceptions to this new rule. A surviving spouse or someone chronically ill or disabled can still take the withdrawals over life expectancy. For a minor child who inherits an IRA, the 10-year clock doesn’t start until they reach age 18.

Beneficiaries who have already inherited an IRA and are taking taxable withdrawals based on life expectancy will continue to do so. Starting in 2020, inherited retirement accounts are subject to the SECURE Act.

The government is motivated to get the money out of tax-deferred retirement accounts at a faster pace because it isn’t taxed as long as it remains in these accounts. By some estimates, the new law will increase tax revenues by $16 billion.

Benefits

However, there are some tax benefits for people who have IRAs. The old rules required account owners to make taxable withdrawals at age 70 ½. The SECURE Act raises the age to 72.

The law’s main objective is to expand the number of people who can participate in a retirement plan at work. A study by the Pew Charitable Trusts found that 25 percent of people working for private companies don’t have access to a retirement plan like a 401(k). John Carter, president and COO of Nationwide Financial, says the new law should change that.

"The SECURE Act is a much-needed and highly anticipated step in creating new pathways to retirement security,” he said. “We have new opportunities today to protect people, businesses, and futures in proven and innovative ways." 

Nationwide’s recent survey of business owners found that 80 percent believe the new law will allow them to offer a retirement plan that rivals those offered by large companies.

The recently passed SECURE Act, which makes changes to rules governing retirement accounts, is getting a warm reception from retirement planners, who are g...

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New survey of baby boomers shows mounting retirement challenges

Millennials are normally the ones stressing out over their lack of retirement savings, but a new survey suggests baby boomers may have an even bigger reason to worry.

The 2018 Retirement Confidence Survey by Greenwald & Associates found that only six in ten American workers feel confident in their ability to live comfortably in retirement. Baby boomers, it seems, are feeling a lot of pressure.

A new independent survey by Clever.com found that most baby boomers think they’ll be able to retire by age 68, but they may not fully understand their financial needs. Personal finance experts generally suggest socking away about eight times your annual salary by age 60. Based on an annual income of $57,000 a year that would be about $456,000.

But when asked to reveal how much they had actually saved for retirement the average was around $136,779, well short of the recommended amount.

Other financial problems

Unfortunately, the survey found that boomers face other financial problems as well. A large portion of those responding to the survey admitted they are having trouble creating an emergency savings account and even paying off debt, making it even harder to save for retirement.

This isn’t the first survey to raise an alarm over the lack of retirement savings for a generation now entering retirement age. A 2015 report from the General Accountability Office showed a disturbing number of Americans were approaching their retirement years with no savings and few, if any, assets.

The report, requested by Sen. Bernie Sanders (I-VT), found that 52 percent of U.S. households age 55 and older have no retirement savings, such as in a 401(k) plan or an IRA. Worse still, the agency found many older households without retirement savings have few other resources, such as a defined benefit pension, non-retirement savings or other assets.

Too reliant on Social Security

A 2017 study by Bankers Life Center for a Secure Retirement (CSR) found boomers were overly reliant on Social Security to get them through retirement. Thirty-eight percent said their monthly check from the government would likely be their primary source of retirement income.

That's up more than 25 percent from before the financial crisis of 2008, a year which seems to have changed the financial landscape on a number of fronts.

Before 2008, Boomers were younger and a lot more optimistic about retirement. Then, about 43 percent said they expected personal savings or earnings from a job to be their primary source of income during their golden years.

The Clever.com survey paints an increasingly bleak picture for aging boomers, showing that 31 percent have no emergency savings and 40 percent are still paying off credit card debt.

Millennials are normally the ones stressing out over their lack of retirement savings, but a new survey suggests baby boomers may have an even bigger reaso...

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Here’s how to claim your portion of the Equifax data breach settlement

If your personal information was compromised by the 2017 data breach at Equifax, you may be compensated as a result of the credit bureau’s settlement with the government.

At last count, more than 147 million consumers were exposed when hackers invaded Equifax’s network, stealing important identifying information such as date of birth and Social Security number -- just the kind of data a crook would need to steal your identity.

If you are one of the consumers whose data was exposed, you can make your claim by accessing this special web page. You can check your eligibility here.

Under the terms of the settlement, which must still be approved by the court, Equifax has agreed to pay $380.5 million to consumers in the form of benefits. It’s also on the hook for another $125 million in potential spending to compensate consumers for actual losses from identity theft.

Those whose information was compromised in the breach have a couple of options. They can receive a free credit monitoring from all three credit bureaus or -- if they are already paying for credit monitoring -- they can receive a one-time payment of $125.

Consumers whose identity has been stolen as a direct result of the breach may qualify for up to $20,000 in reimbursement of expenses made to restore credit standing.

Credit monitoring option

Free credit monitoring is being provided by rival Experian for at least four years. It will include monitoring of activity for all three credit bureaus, providing notice of any changes. It also includes free copies of a class member's Experian credit report, updated on a monthly basis, and up to $1,000,000 in identity theft insurance.  

Consumers who choose this option can also get up to six more years of free one-bureau credit monitoring through Equifax. While the benefits won’t be provided until the settlement has been declared final, consumers can and should submit a claim now.

Consumers can find additional details at www.equifaxbreachsettlement.com, or they can call the settlement administrator at 1-833-759-2982.

If your personal information was compromised by the 2017 data breach at Equifax, you may be compensated as a result of the credit bureau’s settlement with...

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Investment broker pleads guilty to swindling elderly New Jersey couple

It’s hard enough to accumulate money for retirement. Seniors’ lack of savings has been well-documented.

But older people who have been able to save are often vulnerable to fraud, not only from family members but also financial professionals. A recent case in New Jersey underscores the threat.

New Jersey Attorney General Gurbir Grewal reports that an investment broker entered a guilty plea to stealing $270,000 from an elderly couple. He reportedly did it by persuading them to put money in a fictitious investment program.

The broker, Michael Siegel, of Livingston, N.J., pleaded guilty to second-degree theft by deception. Under a plea arrangement with the state, he’ll serve three years in prison and pay back the $270,000.

According to the attorney general, Siegel had become friends with the couple before becoming their investment broker. The couple stayed with him when he moved to other firms, accumulating an account that totaled well over $2 million -- certainly enough for a comfortable retirement.

Phony ‘options’ program

In 2014, the broker reportedly urged his clients to invest in what was presented as an “options” program, which he sold as a safe institutional trading program for preferred clients. But the clients were allegedly told to make their investment checks out to the broker personally. Grewal says the options account never existed and that the broker pocketed the money.

“Investors count on their brokers to act with honesty and integrity in managing their investments, but Siegel callously betrayed the trust of his victims by stealing over a quarter of a million dollars from them,” Grewal said.

And therein lies the risk for older investors. Using a friend as an investment broker can cloud judgment and prevent the client from holding the broker as accountable as they might with an advisor with whom there was no previous friendship.

When someone takes financial advantage of an older person it’s a form of elder abuse. According to the Nursing Home Abuse Center, there are signs that elder financial abuse is taking place.

Signs to be aware of are forging the elder person’s name on legal documents; forcing the person to sign legal documents such as wills or power of attorney; and charging purchases to an elderly person’s credit card without permission.

It’s hard enough to accumulate money for retirement. Seniors’ lack of savings has been well-documented.But older people who have been able to save are...

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Study shows average senior has saved $200,000 for retirement

Americans have been told they need to save for retirement for decades, but a new survey on the subject from Vanguard shows that not everyone has been listening.

The survey-takers talked with people nearing retirement age about their saving and spending habits and about how much they had socked away in retirement accounts. For those who had 401(k) accounts, the average balance was a little less than $200,000.

But the situation might be even worse. The median amount of savings for adults who are at least 65 is just $58,000. That means most people in the survey had saved considerably less than the average.

Concerns remain the same

The Vanguard researchers say retirement plans have improved since 2006, when Congress passed broader incentives to encourage retirement plan participation. They note that plan participation has, in fact, improved since then.

“However, as we look to the future, the main concerns affecting retirement savings plans largely remain the same -- improving plan participation and contribution rates even further and continuing to enhance portfolio diversification, enabling more individuals to retire with sufficient assets,” the researchers wrote.

The report traced the poor performance to three main factors -- income, age, and how long an individual had been at a particular job. It also found gender played a role.

“Sixty percent of Vanguard participants are male, and men have average and median balances that are about 50 percent higher than those of women,” the report said. “Gender is often a proxy for other factors, such as income and job tenure.”

Of participants taking part in the survey, men had an average of nearly $107,000 tucked away while women, on average, had $72,451. The researchers found women earned less than men and hadn’t been at their jobs as long as men.

But when all things were equal -- with women earning the same and having the same job tenure -- they tended to save more than their male counterparts.

Other studies

Other studies have shown people nearing retirement have less-than-adequate savings. A 2015 study by the General Accountability Office (GAO) found that half of older Americans had no money saved for retirement. When asked why, many said they had no money left over after paying expenses.

Perhaps because of that, a 2018 survey by Careerbuilder showed more than half of workers aged 60 years or older said they are postponing retirement plans. Worries about having enough money to last through retirement appeared to be the overriding reason.

The survey showed 53 percent of age 60-plus workers are putting off retirement, with significantly more men making that decision than women. Four out of 10 workers said they don't think they can retire until at least age 70.

Americans have been told they need to save for retirement for decades, but a new survey on the subject from Vanguard shows that not everyone has been liste...

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Social Security benefits buy 33 percent less since 2000

Over the last two decades, inflation -- at least the official inflation rate -- has remained tame, and it even went down during the Great Recession.

But it hasn’t been so tame for Americans living on Social Security. A new report by The Senior Citizens League found that Social Security benefits lost 33 percent of their purchasing power since 2000.

“One would think that a higher cost-of-living adjustment in 2019, combined with relatively low inflation, would lead to an improvement of buying power in Social Security benefits,” said Mary Johnson, a Social Security policy analyst for the League.  “But any improvement was offset by spiking costs of essentials, including out-of-pocket spending on prescription drugs.”

In other words, the cost of the things seniors buy most hasn’t remained low, even though the official inflation rate has been below 2 percent for most of the last two decades. In fact, the low official inflation rate likely hurt retirees since cost-of-living (COLA) increases are based on the inflation rate. Beneficiaries received a 2.8 percent annual COLA for 2019, the largest during the study period.

Essentials increased twice as fast

In its analysis of retirees’ benefits and expenses, the study found that the Social Security COLA increased by 50 percent over the 19-year period, but the cost of things the typical retiree pays for rose more than twice as fast. Prescription drugs are at the top of the list, followed by other medical costs and food.

The study found that the 2.8 percent COLA that beneficiaries started receiving in January raised the average Social Security benefit of $1,400 by about $39 per month. At the same time, more than 78 percent of survey participants told researchers that their monthly spending rose by more than that in 2018.  

“When costs climb more rapidly than benefits, retirees must spend down retirement savings more quickly than expected, and those without savings or other retirement income are either going into debt or going without,” Johnson said.

No savings

Independent research has shown that a growing number of seniors are living mostly on Social Security because they have no retirement savings or investments. Even if they carefully manage their money, the editors at Motley Fool report they could be one big medical bill away from financial disaster.

“Seniors account for 34 percent of all healthcare spending, and a 2012 analysis estimated senior spending on healthcare at nearly $19,000 per person,” the editors write. “The government pays for around 65 percent of medical expenses for the elderly, and seniors are left to pay for Medigap or Medicare Advantage policies to cover additional costs.”

Even retirees with money in the bank may not have enough. Earlier this year, Merrill Lynch reported that most Americans under-save for retirement by about 20 percent.

Over the last two decades, inflation -- at least the official inflation rate -- has remained tame, and it even went down during the Great Recession.But...

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Most Americans under-save for retirement by almost 20 percent

One in five Americans don’t know how much money they will need in retirement and, consequently, most under-save by nearly 20 percent, according to a new Merrill Lynch report.

The wealth management and financial services company says Americans need more funding for longer retirements, however many may be overlooking one key aspect of financially preparing for retirement.

“The ‘three-legged stool’ traditionally used for funding retirement—Social Security, employer pension, personal savings—is getting very wobbly for many people,” the company said. “They will need to rely more on personal sources of income, and so the responsibility for managing retirement funding resides more than ever with the individual.”

Not saving enough

On average, retirement comes with a price tag of over $700,000 -- about 2.5 times that of the average house.

“It’s truly the purchase of a lifetime,” the report authors said.

However, each younger generation is anticipating less reliance on government programs and employer pensions and more on personal sources, which could lead to an imbalanced retirement savings plan.

“Millennials expect 65% of their retirement income to come from personal sources. A few industries and government organizations generally continue to provide defined benefit pensions,” Merrill Lynch said.

“However, for the overwhelming majority of Millennials—and most of today’s other pre-retirees—the defined benefit pensions leg of the stool will contribute little or nothing.”

Intentions versus actions

Although most Americans are aware they should start saving early and live within their means in the run-up to old age, most aren’t saving enough.

“There’s a big difference between theory and practice,” the authors noted. “On average, Americans said they think they should be saving about 25 percent of their disposable (after tax) income each year. But the average annual savings rate in the U.S. is only 5.7 percent.”

“The savings rate has moved up from a low of about 3 percent during the recent recession, but it’s still less than half the peak rate of 13% in the early 1970s,” the company said.

The result of this discrepancy has led to most Americans saving less than one-fourth of the amount they think they should be saving for retirement, according to the report.

Funding longer retirements

To save for a financially comfortable retirement, Americans need to be aware that the “retirement funding formula” is changing and responsibility is increasingly falling more heavily on the individual, Merrill Lynch says.

“Resolving this situation requires a new approach. It requires new knowledge, new attitudes, and new behaviors, starting with more informed and disciplined management of finances,” the report said.

In addition to seeking financial help early and often, experts say it’s wise to set realistic expectations.

“I encourage people to put their expenditure requirements into two columns. One is the basic living costs that you want to secure with a fixed income source,” Peter Chadborn, director of Plan Money, a UK financial advisory firm, told the BBC.

“Only then can you approach column two, which is your lifestyle costs: how often you want to eat out, how many cars you want to own and how often you want to go on holiday. That can be made up with flexible income, because your costs in retirement are going to keep relatively constant except for inflation,” Chadborn said.

One in five Americans don’t know how much money they will need in retirement and, consequently, most under-save by nearly 20 percent, according to a new Me...

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Social security checks to increase slightly next year

Retired workers and other Social Security recipients will see a 2.8 percent increase in their benefits next year due to inflation. That will bring the monthly paycheck of the average beneficiary to $1,461, just $39 higher than the current average payment.

Though the difference may seem modest, it's the highest increase for social security checks in seven years.

Recipients and experts say that the increase is unlikely to amount to any real savings, as it is only meant to keep up with an expected higher cost of living in 2019.

Last year, social security checks went up by 2 percent. But in May, a survey by the Senior Citizens League found that more than 40 percent of retirees reported that the adjustments were completely eaten away by their Medicare Part B premiums.

The annual price increases are courtesy of the Cost of Living Adjustment, a long time Social Security program that determines inflation rates based on the Consumer Price Index for Urban Wage Earners and Clerical Workers.

Retired workers and other Social Security recipients will see a 2.8 percent increase in their benefits next year due to inflation. That will bring the mont...

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Survey shows older workers are postponing retirement

More than half of workers 60 years old or older say they are postponing retirement plans, according to a new study by employment site CareerBuilder.

Despite an improved economy and rising wages, a large percentage of seniors in the workplace appear to be worried they won't have enough money to stop working.

The survey shows 53 percent of age 60-plus workers are putting off retirement, with significantly more men making that decision than women. Four out of 10 workers said they don't think they can retire until at least age 70.

It's going to have an impact

"Postponing retirement will make an impact across all of our country's workforce, along with retirement policy and financial and health care planning," said Rosemary Haefner, chief human resources officer at CareerBuilder. "With workers staying in their jobs longer, employers are adjusting hiring needs, but also reaping the benefits of the extra skills and mentoring abilities of mature employees."

While employers appear to be benefiting from the trend, what about the workers themselves? Few appear to be putting off retirement because they enjoy their jobs. Rather, it's a matter of addressing the uncertainty retirement brings.

Nearly a quarter of the workers in the survey admitted they don't know how much money they need in savings in order to stop getting a regular paycheck.

When asked to make an estimate, 20 percent of workers said they think they can retire on $500,000 in savings. Thirty-one percent said they would need between $500,000 and $1 million.

Challenges

Getting to those amounts have proven to be problematic. Roughly one in four people in the survey who are at least 55 said they do not contribute to a 401(k) or IRA retirement plan. Younger workers have a better record on that score, according to CareerBuilder.

As most Americans have longer and healthier lives, the concept of retirement has undergone changes. The financial crisis of 2008 has also had an impact, disrupting retirement savings plans for many just as they were entering what should have been their peak earning years.

A decade of stagnant wages hasn't helped matters. A 2017 study from Country Financial found over half the workers it surveyed were not saving for retirement. The most common reason was the difficulty in paying current expenses, with nothing left over for savings.

More than half of workers 60 years old or older say they are postponing retirement plans, according to a new study by employment site CareerBuilder.Des...

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Two-thirds of millennials haven’t saved anything for retirement

Two-thirds of working millennials haven’t saved anything for retirement, according to a new report.

The National Institute on Retirement Security (NIRS) found that about 66 percent of people between the ages of 21 and 32 haven’t even put the first dollar toward their retirement fund. The report is based on Census data collected in 2014.

The numbers are even worse for millennial Latinos; 83 percent of working millennial Latinos have nothing saved for retirement.

Of the 66 percent of millennials who haven’t started saving, only slightly over one-third (34 percent) participate in their employer’s plan.

Harsh economic realities

Many millennials may be falling short of their retirement savings goals due to the “harsh economic landscape” they encountered when they first entered the workforce, said Jennifer Erin Brown, manager of research for NIRS.

“Given that most Millennials entered the workforce at a time of depressed wages, high levels of unemployment, and major structural changes in the American economy—the Great Recession exacted a heavy price from this generation,” Brown wrote.

While only 34 percent of millennials are able to participate in an employer-sponsored retirement plan, more than 94 percent of those who have the option take their employer up on it. Most of those who have started saving through an employer’s plan have less than $20,000, but some have much more. The average account balance is $67,891, according to the report.

However, about 25 percent of millennial workers aren’t eligible for an employer-sponsored retirement plan even if their company offers one because some only work part-time; others haven’t been with their company long enough.

Loosening these eligibility requirements would increase the number of Millennials saving for retirement, the report said.

“Allowing part-time workers and new employees to participate in an employer-sponsored retirement plan would greatly increase Millennials’ participation in an employer-sponsored retirement plans,” Brown said.

Two-thirds of working millennials haven’t saved anything for retirement, according to a new report.The National Institute on Retirement Security (NIRS)...

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Tax deadlines and strategies to maximize your retirement savings

The end of each year is a key time to revisit your retirement accounts, and this year’s tax policy changes make now a particularly important time for diligent attention.

Whether you’re retired and taking distributions or are still making contributions, there are important deadlines and requirements that can impact your taxes for the year.

Here are five things every retirement investor should know.

IRA contributions

IRAs are individual retirement accounts. If you don’t have a retirement account associated with your employment or are looking to set aside extra money, an IRA is a good option for those earning up to $119,000 for 2017. The IRS allows you to contribute up to $5,500 to an IRA for 2017.

Kessler McLaughlin, a financial advisor with Edward Jones, told ConsumerAffairs “you can contribute to an IRA for 2017 up to the tax filing deadline of April 17th, 2018. And while circumstances may vary, contributions to your a traditional IRA generally lower your taxable income as the money is taken out before taxes.”

The reason for this is that your IRA distributions will be taxed when you receive them as income during retirement.

401(k) and 403(b) contributions

401(k)s are retirement accounts usually administered by your employer and are typically matched up to a certain percentage by your employer. While McLaughlin notes that these have the same contribution deadline as an IRA, the contributions are usually taken directly from your paycheck.

Because of that, you may need to work with your 401(k) plan administrator if you’re trying to make a contribution after December 31st.

403(b)s are essentially 401(k)s for government employees and follow most of the same rules. Both accounts have a contribution limit of $18,000 for 2017. Like IRAs, these are tax advantaged accounts, so making a contribution will often lower your taxable income for the year.

Roth accounts

Roth 401(k)s and Roth IRAs are another option for those looking to invest for their retirement. The difference is that the money you put into a Roth account has already been taxed.

The idea is that if you know your taxable income during retirement will be higher than your pre-retirement income, you would be getting a tax break by paying the tax now instead of when you take the distributions.

McLaughlin recommends working with a financial advisor to formulate a plan based on your income and goals so that you know which type of account is best for you, or whether you should use a combination of account types.

Catch-up contributions

McLaughlin explains that catch-up contributions are a way for older consumers to invest if tey didn't have a chance to do so earlier in their life.

“If you’re over 50, you can contribute an extra $6,000 to your 401(k) and an extra $1,000 to your IRA if you are over the age of 55,” he said.

However, he points out that there can be a tax penalty if you contribute more to your account than the annual limit.

Distribution requirements

For retirees who are 70 ½ and over, there are minimum distributions you must take from your traditional IRA and 401(k) accounts by December 31st of 2017. This does not apply to Roth IRAs, which have no requirement for distribution during your lifetime.

But for a Roth 401(k) you are required to take a distribution, but may not have to pay income tax on it.

The end of each year is a key time to revisit your retirement accounts, and this year’s tax policy changes make now a particularly important time for dilig...

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Millennials urged to start saving for retirement now

Only 31 percent of millennials have a retirement savings plan in place, according to research from three firms engaged in financial research.

People in their 20s and 30s need to be saving for retirement, says Michelle Perry Higgins, author and financial planner. Precisely because they have so much time before retirement, Higgins says planning now will pay off handsomely in the future.

In her book, "College Poor No More," Higgins walks millennials through the process of beginning a career and setting up a budget. Establishing good financial habits early, she says, will make it easier to save for retirement.

"Visualize various buckets and plan to fill them each to overflowing," Higgins said. "Consider one bucket for retirement, one for emergency reserves, one to pay down debt, and one for day-to-day expenses."

Save 20 percent for retirement

Higgins says millennials should earmark 20 percent of their annual earnings toward retirement savings. She acknowledges that can be a tough sell when she's talking to people in their 20s and 30s.

"Retirement seems like an eternity away at this point in your life," Higgins said. “But please don’t wait."

There are two good reasons to begin saving for retirement now. The first is the faster you remove that money from your everyday budget, the less you'll miss it.

The second is the power of time. The longer you have to invest in appreciating assets, the more your wealth will grow.

$1 million by age 65

MoneyUnder30, a personal finance site for millennials, offers up the following example: suppose you put just $50 a month into your company 401(k) plan at age 22 and your company provides a 50 percent match.

After that, you increase your monthly contribution by the same amount as any pay raises. At age 65 you'll have a nice retirement nest egg of close to $1 million.

Higgins says young people should take advantage of their employer's retirement plans, especially if the employer also contributes to it.

Investment services

Other options include a growing number of investment services that provide online stock trading platforms as well as optional investment advice.

Automated investment services like Betterment and Wealthfront are known as "robo advisors," taking some of the time out of wealth management. They offer retirement planning, diversified funds and low fees, along with an investment strategy tailored to individual investors.

Higgins says the important thing is to take the first step -- start saving. She recommends working with a financial planner who can help guide your overall financial position as you get older.

Taking these steps now could mean that 30 years from now, there will be much less need for retirement catch-up advice for people in their 50s.

Only 31 percent of millennials have a retirement savings plan in place, according to research from three firms engaged in financial research, according to...

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Where $1 million in retirement savings goes farthest

Consumers nearing retirement most likely have been told over and over they need to be saving money for retirement, but exactly how much?

Well, the answer to that is, "it depends." It can depend on a lot of things, including what other assets you have, whether and how long you plan to work in a "retirement job," and what the cost of living is where you live.

The folks at GoBankingRates.com have addressed that last consideration, doing the math to determine the states where $1 million in retirement savings will last the longest and where you'll spend it in the shortest amount of time.

Mississippi millionaires

For example, if you have $1 million and retire in Mississippi, GoBankingRates estimates the money would last 26 years and four months. In Arkansas, it's estimated to last 25 years, six months, and 25 years, two months in Oklahoma.

It should last an even quarter century in both Michigan and Tennessee.

Taxes and housing costs are a factor in making the money go farther, and all five states are hospitable to retirees on those counts. But they work against you in the five states where $1 million goes fast.

In Hawaii, $1 million might only last 11 years, 11 months. In California, it might last 16 years, five months, and 17 years in Alaska. It will last only a little longer in New York and Massachusetts.

Big difference between Hawaii and Mississippi

The editors at GoBankingRates conclude that the cost of living in Hawaii runs just under $84,000 a year but just under $38,000 in Mississippi. Healthcare is a big cost in retirement and Alaska's healthcare is the costliest -- $8,479 a year.

Housing is expensive in California, but is nearly $16,000 a year less than housing costs in Hawaii.

The editors conclude that the average retirement age is 63 and the average life expectancy is 85. AARP suggests retirees save $1 million for retirement, though some planners recommend a higher number.

In reality, it appears that few retirees have joined the million dollar club. A 2016 BlackRock survey found that the average Baby Boomer between the ages of 55 and 65 had only saved $136,000.

Consumers nearing retirement most likely have been told over and over they need to be saving money for retirement, but exactly how much? Well, the answe...

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One simple thing separates retirement savers from non-savers

A survey by investment firm Charles Schwab concludes there is one simple thing that separates people who are saving for retirement from those who are not.

Money.

Yes, it might be something Captain Obvious might come up with, but that doesn't negate its importance. The bottom line is, consumers who are scraping by, trying to meet everyday expenses and not fall behind on bills, aren't putting money away for retirement.

On the other hand, consumers who are able to meet monthly financial obligations with little effort tend to have a retirement savings plan in place.

The numbers break down this way: about 45% of the people who don't save for retirement also say they have no money left over at the end of the month. Only 23% of retirement savers describe their situation that way.

Credit cards and medical bills

When you drill deeper into the Schwab data, you find that non-savers have a lot of credit card debt, unexpected household expenses, and medical bills.

Some savers also struggle with these problems, but the survey found there are fewer of them. So it seems to all come down to money. Some people have enough, some don't.

For someone to move from being a non-saver to a saver, there not only has to be a will to change, there also has to be money available to save. Either income has to rise or expenses have to fall -- or a combination of both.

The first step for someone who can't seem to save is to develop a monthly budget. Getting advice from a non-profit credit counselor may be a good first step.

Having an objective professional look at your income and expenses might help identify areas where you can increase monthly cash flow. It doesn't have to be a large amount, as long as you start to save.

Pay yourself first

Doing this regularly, and paying yourself first each month, can be the first step in moving from the non-saver category to becoming a retirement saver.

"Americans have many legitimate and immediate financial concerns preventing them from setting aside funds for retirement," said Steve Anderson, president of Schwab Retirement Plan Services. "The good news is that both 401(k)-savers and non-savers understand they are responsible for their own retirement, and some may just need a little guidance to help them take steps in the right direction.”

Employers may be able to help. More companies have begun offering financial wellness programs for their employees.

A survey by investment firm Charles Schwab concludes there is one simple thing that separates people who are saving for retirement from those who are not....

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The best -- and worst -- places to retire

Choosing a place to retire is a highly personal decision, and it involves a lot of factors.

For example, you might prefer a warmer climate, a certain size city, a low cost of living, and access to top quality healthcare. All might go into your decision, but individuals will give more weight to some factors than others based on what's most important to them.

That said, there are metrics that can be used to evaluate locations and see how they stack up against one another. Personal finance site WalletHub conducted such an analysis, using "affordability," "activities," "health care," and "quality of life" as ways to compare cities.

Orlando is number 1

Using those metrics, it picks Orlando as the best place in America to retire, with an overall score of 59.93. Orlando scores high on affordability, healthcare, and activities, but not so much in quality of life.

Tampa is second on the list, scoring in the top 10 for affordability and activities and in the top 80 for healthcare and quality of life.

Miami is third, but it might not be everyone's choice. That's because it scores very high -- number four in activities -- but is 117th in quality of life. It's also not that affordable. So, you might begin to see how this works -- a ranking might mean less to you if its top attributes are less important to you.

Newark at the bottom

At the bottom of the ranking is Newark, N.J., which in all fairness has probably never presented itself as a retirement Mecca. According to WalletHub, it's not that affordable, there's not that much to do, healthcare is lacking, and the quality of life is not that good.

Providence, R.I., comes out only slightly better. The city ranks 87th in activities, but in the other three categories it ranks anywhere from 133rd to 146th.

San Bernadino, Calif., is in a similar situation. It ranks 71st in affordability and 148th in activities. It also receives fairly low marks for quality of life and healthcare.

Make your own list

In choosing a place to retire, it's helpful to make a list of things that may or may not be important to you. Low taxes and low housing costs, for example, should be important for most retirees living on a fixed income.

Proximity to family may, or may not be that important, depending on how you get along with your family. If you plan to do a lot of traveling, access to a good but easy-to-use airport could be an important factor.

Of course, if you find your present home meets all your needs, maybe you just stay where you are. After all, just because you retire doesn't mean you have to relocate.

Choosing a place to retire is a highly personal decision, and it involves a lot of factors.For example, you might prefer a warmer climate, a certain si...

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How opening an HSA can help you stretch your retirement savings

Setting up an Individual Retirement Account (IRA) is a great way to start investing and earmarking funds for when your working life is over. However, there are additional steps you can take to add to your retirement reserves.

The experts at Bankrate.com say that opening a health savings account (HSA) can be one of them. This kind of account is designed to help qualifying consumers pay off medical costs not covered by their high-deductible health insurance plan, but it also allows account holders to carry over money put into the account as a tax deduction.

Since the savings are an above-the-line tax deduction, consumers do not have to itemize them, and the money is subtracted from their earnings before calculating for an adjusted gross income (AGI). There are no phase-outs involved with an HSA, so no matter how much money you put into the account, you can still deduct a sizable amount – the limit was $3,400 for individuals and $6,750 for families in 2017.

Maximizing your benefits

The folks at Bankrate.com say there are four ways you can manage your HSAs and IRAs to maximize the benefits and stretch your retirement savings.

Rolling money over

Account holders are allowed once in their lifetime to roll money from their IRA into their HSA. The amount is capped by what the IRS says is the maximum allowable contribution for any given year.   

This can be extremely helpful to consumers who have an unexpected health emergency and end up exhausting the amount they had in their HSA. There are no penalties for rolling money over from an IRA into an HSA, as long as that money is eventually used on healthcare and no money has been contributed during the current year.

The best part? You won’t have to pay any taxes on the money you roll over, so basically the process allows you to withdraw money from your IRA, even if you are younger than 55.

No RMDs

The IRS requires consumers to start taking out required minimum distributions (RMDs) from a traditional IRA when they reach age 70 ½. However, these requirements don’t extend to HSAs, so any money in this kind of account is allowed to grow tax-free until it’s needed.

Additionally, if you die you can designate your surviving spouse as the beneficiary of your HSA, so the money can continue to grow and there are still no RMDs. Beware though – if you do not have a spouse or designate someone else as your beneficiary, then the money in your HSA will become taxable for that person upon your death.

No time limits

When it comes to withdrawing money on qualified medical expenses, HSA account holders have a lot of flexibility. As long as you save your medical receipts, you can claim the money from your account whenever it’s needed – even if it’s years later. In the meantime, the money can stay in your account and continue to grow.

It’s important for those who try to pull off this strategy to be good at keeping records and receipts. The IRS requires consumers to have information that shows that the “distributions were exclusively to pay or reimburse qualified medical expenses, that the qualified medical expenses have not been previously paid or reimbursed from another source and that the medical expenses have not been taken as an itemized deduction in any prior taxable year.”

As long as you meet those standards, you’re golden.

HSAs and Medicare

The IRS and the Centers for Medicare and Medicaid Services have decreed that any person who has signed up for Medicare cannot continue to save in an HSA because Medicare is not a high-deductible plan. However, there are ways that consumers can make their HSA work with Medicare.

If a consumer already has an HSA when they turn 65, they can use the money in their account to pay deductibles, premiums, and copays for Medicare parts A, B, C, and D. Out-of-pocket expenses like dental and vision can also be paid for in this way, but Medigap plan premiums cannot.

This is a huge advantage over a traditional IRA since any money put into an HSA can be put into the account tax-free, grow tax-free, and taken out tax-free as long as it pays for healthcare costs.

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Editor’s note: As always, consumers are urged to discuss any potential financial decisions with a trusted financial advisor before implementing them.

Setting up an Individual Retirement Account (IRA) is a great way to start investing and earmarking funds for when your working life is over. However, there...

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Early retirement might not be as easy as it used to be

The concept of retirement has undergone some changes since the financial crisis of 2008.

Before then, anything seemed possible. People watched as the equity in their homes skyrocketed. Their 401(k) accounts were also doing well, so dreams of an early retirement were common.

The crisis not only destroyed a lot of wealth, it damaged confidence in the process. Today, some people are fearful they won't ever be able to retire.

As the economy has recovered and the Baby Boomers have moved into their retirement years, new views of retirement have emerged, along with ways to fund it.

"Retirement has transformed into a stage of life in which people aspire to stay socially connected, participate in their communities, and remain economically active," said Catherine Collinson, president of Transamerica Center for Retirement Studies and executive director of Aegon Center for Longevity and Retirement.

Retirement accounts are still the most common way people plan to pay for their retirement. In addition to Social Security, an income stream or capital gain from retirement account assets can help make up for that missing paycheck.

Many IRA options

While most retirement accounts are still largely made up of stocks or stock funds, increasingly retirement savers are embracing alternative assets, such as gold IRAs or even real estate. Personal finance website Bankrate says the best reason to own a gold IRA is diversification. It provides a hedge against inflation and is largely shielded from the volatility of stocks.

At the same time, it doesn't pay a dividend. The only way to benefit is if the price of gold goes up. Many financial advisors suggest that holding at least a small position in gold is not a bad way to diversify.

Real estate IRAs were a hot commodity after the housing crash when properties could be picked up at foreclosure and flipped, or converted to rentals. With values back to pre-crash levels, there may not be the bargains there once were.

Kiplinger points out that these investments also carry with them a lot of restrictions, so the flexibility you often expect with real estate might not be there.

Reverse mortgage

Retirees who have most of their assets tied up in their home might consider a reverse mortgage. That's a loan where the lender pays you a lump sum or monthly payment for the right to sell the house when you eventually move out of it.

The government has this pretty thorough explanation of how it works, but if you are considering one, it's best to seek advice from an objective financial advisor or your accountant. There can be a lot of variables.

Some people have an emotional investment to their home and want to stay until the end. In other cases, a particular home may not be conducive to an older person. In that event, it might be better to sell the home, invest the proceeds in something producing an income stream, and move into an apartment.

Annuities

To generate regular income, some people put their money into annuities, which are essentially insurance products. For a lump sum investment, the annuity pays a monthly return. How much will depend on how long the actuarial table says you will live.

Some advisors like annuities, some hate them. A drawback is that they are not liquid; you can't get your money out if you need it without paying a very large penalty. According to Forbes, whether an annuity is good or bad is all going to come down to your needs. Again, investment advice may be helpful here, just make sure you don't get it from someone selling annuities. A general rule is that putting some money into an annuity may be OK but putting all of your money into one is probably a bad idea.

Stay in shape

Another new wrinkle in retirement planning is health. Someone in good health is going to have a more successful and enjoyable retirement than someone who is sick or infirm. That's why it's important to focus on nutrition and exercise as you approach your later years.

Eighty-nine percent of U.S. workers in the Transamerica Center survey say their health in retirement is a concern, yet their answers to questions about their behaviors tell a different story. Only 58% say they eat a healthy diet while only 56% say they exercise regularly.

The authors say that's particularly troubling since the trend of early retirement before the financial crisis has given way to people's expectations of working long past the age people normally retire.

For that reason, Collison says it's imperative that people protect their health so they can continue working as long as they want, or enjoy the best possible retirement.

The concept of retirement has undergone some changes since the financial crisis of 2008.Before then, anything seemed possible. People watched as the eq...

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Social Security going up, but expenses rising faster

The good news for seniors is that mild inflation is likely to produce an increase in next year's Social Security payments. Of course, the bad news is that the anticipated 2.1% increase won't be enough to make up for the rising costs of the items typically purchased by older consumers.

The predictions come from the Senior Citizens League, which says the paltry cost-of-living adjustments (COLA) of recent years have put seniors way behind in terms of purchasing power, taking away about a third of their buying power since 2000.

“The findings represent a big loss of 7 percent in buying power, from 23% in 2016 to 30% over the past 12 months," said Mary Johnson, the study's author. "This occurred as inflation has begun to climb, but people receiving Social Security received an annual cost-of-living adjustment of just 0.3 percent for 2017.”

Johnson says that housing and medical costs — particularly for prescription drug expenses — were among the most rapidly-rising spending categories over the past year.

Top 10

Johnson's group tabulated the top ten fastest growing senior costs since 2000:

ItemCost in 2000
Average cost $ or numeric value
Cost in 2017
Average cost $ or numeric value*
Percent Increase
1. Medicare Part B monthly premium$45.50$134.00195%
2. Prescription drugs
Annual average out-of- pocket
$1,102.00$3,132.00184%
3. Homeowner’s insurance
national average annual premium
$508.00$1,292.00154%
4. Real estate tax annual$690.00$1,701.50147%
5. Propane gas per gallon$1.01$2.39137%
6. Heating oil$1.15$2.63130%
7. Medigap supplement average monthly premium all plans$119.00$264.45122%
8. Pet care services including veterinary109.300*232.317*113%
9. Total medical out-of-pocket expenses national average people age 65 and up$6,140.00$12,125.0097%
10. Oranges per pound0.61$1.1995%

Where no average prices are available, numeric values from the U.S. Bureau of Labor Statistics CPI-U are used

 “When costs climb more rapidly than benefits, retirees must spend down retirement savings more quickly than expected, and those without savings or other retirement income are either going into debt, or going without,” Johnson says.

The survey found that a person having the national average Social Security benefit in 2000 — $816 per month — would have $1,169.80 per month by 2016. However, because retiree costs are rising at a substantially faster pace than the COLA, that individual would require a Social Security benefit of $1,517.80 per month in 2017 just to maintain his or her 2000 level of buying power.

The good news for seniors is that mild inflation is likely to produce an increase in next year's Social Security payments. Of course, the bad news is that...

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TIAA rolls out new automated investing platform to simplify retirement planning

Saving for retirement is tough, especially if you don't know a lot about investing. It's often hard to find a financial advisor you can trust and who won't eat up all your earnings in fees.

A new "robo-advice" entrant that claims to solve those dilemmas comes from TIAA, the 100-year-old non-profit that manages nearly $1 trillion, mostly for academics and employees of non-profit organizations.

The automated platform offers clients access to active, passive, and "socially responsible" mutual funds and exchange traded funds. Each category includes five different risk levels, ranging from conserative to aggressive. 

“At TIAA, we recognize that there is no ‘one-size-fits-all’ when it comes to personal finances,” said Kathie Andrade, chief executive officer of TIAA’s Retail Financial Services business. “With the launch of TIAA Personal Portfolio, we are expanding the reach of our personalized financial support to more people, including younger generations, and those who value working with a mission-based organization. It is a great option for customers who would simply prefer to receive advice from us digitally.” 

Robo-clients will also be able to receive live financial advice from a call center that's manned by about 100 financial advisors, Andrade said.

While older investors often prefer having a "real" financial advisor they can visit in person, many younger people prefer digital advice that they can access anytime, according to surveys. Women investors are thought to prefer investment plans that match their environmental, social, and governance beliefs, so TIAA is trying to hit both groups with its new offering. 

Investors must have a minimum of $5,000 to open an account. Annual advisory fees are 0.3 percent.

Saving for retirement is tough, especially if you don't know a lot about investing. It's often hard to find a financial advisor you can trust and who won't...

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Is retirement an outdated concept?

Here's yet another study underlining the problems facing retirees, and as a result, how retirement itself may be fundamentally changing.

Changing as in, maybe we aren't going to retire anymore, or not until we are too weak and infirm to be productive.

The study comes from Country Financial, which reports consumers are worried about being able to afford retirement. But despite that concern, it also finds over half the people in the survey said they aren't saving money for retirement.

What that suggests is people really aren't that concerned, or they have so much trouble meeting day-to-day expenses they don't think they have any money to put away. Either way, the notion of 21st century retirement is probably changing.

Constant leisure

For some, retirement holds out the promise of constant leisure, or the freedom to do whatever they want, without having to earn a living. To do this, however, requires a pretty significant income stream. And other studies have clearly indicated that most people approaching retirement don't have the assets for that. So there is a wide swath of the population that isn't going to achieve this kind of retirement.

The Country Financial survey suggests that more and more people now plan to keep working and not retire until the very end of their lifespan. Over half of those in the study -- 51% -- do not include retirement in their long-term financial goals.

The Economic Policy Institute came up with similar findings; nearly half of families have no retirement savings.

Finding people in the workforce at age 70 or more is no longer uncommon, and may in fact become more common. The Pew Research Center reports only about 13% of Americans 65 and older were still working in 2000. Last year, more than 18% were.

Working retirement

Some people, in fact, enjoy what they do and don't want to quit. Others might want to leave their current job but try something else, even if it is part-time.

Financial advisors, of course, point out that someone transitioning to part-time employment in their later years had better have some financial resources to supplement their reduced income.

"Many Americans are outliving their assets because they did not include retirement in their long-term financial goals," said Doyle Williams, an executive vice president at Country Financial. "We strongly encourage people to develop a long-term plan so they can eliminate the fear of never being able to retire. By taking some simple steps almost everyone can have a plan in place to secure their financial future."

Because people are now routinely living well into their 80s and beyond, the notion of walking away from income-producing work at 65 may be a quaint notion. Still, even if you aren't saving for retirement, you should be saving for something. Chances are, you're going to need it.

Here's yet another study underlining the problems facing retirees, and as a result, how retirement itself may be fundamentally changing.Changing as in,...

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What you should know, but probably don't, about retirement

The American College of Financial Services (ACFS) has released a survey of older Americans that it says raises troubling questions about retirement in America.

The organization says when it quizzed a large group of retirement-age Americans on retirement issues, three out of four did not pass. Broken down, those between the ages of 60 and 75 with at least $100,000 in assets lacked knowledge about how to pay for long-term care, maximizing investments, and strategies for sustaining income throughout retirement and life expectancy.

Graded on an A to F scale, 74% of older consumers got an F on the quiz. Fewer than 1% got an A, which required a score of 91% to 100%. Only 5% got a B score and 8% scored a C, while 13% got a D.

Understanding basic facts

"Over the next 12 years, an estimated 10,000 Baby Boomers will reach the age 65 every day," said David Littell, Retirement Income Program Co-Director at ACFS. "More and more Americans are retiring but so few understand basic facts and strategies when it comes to ensuring that their retirement is a comfortable one."

Littell says he's alarmed by the survey because it's clear that most older Americans are not prepared for the decades they'll spend in retirement when they are not earning a steady stream of income.

Granted, the questions on the quiz were not all that simple. For example, which is better -- to work an extra two years and defer Social Security an extra two years, or increase retirement contributions by 3% for the five years prior to retirement?

The answer is working longer, and 33% of those taking the quiz got it right, 67% got it wrong.

Here's another question: what is the amount you can "safely" withdraw from your retirement savings each year? The answer is 4%, with only 38% knowing the answer.

Major knowledge gaps

ACFS says there are major gaps in knowledge when it comes to long-term care expenses. Only 30% knew that its mostly family members who pay the cost of nursing and assisted living expenses. The government only pays if the person is on Medicaid.

Littell says the take-away from the survey is that there is a premium on retirement literacy. He says retirees and pre-retirees need to ack now to gain the knowledge they need to make smart decisions in retirement.

To get started, you might check out these six books recommended by AARP. You might also want to read our reviews of investment advisors.

The American College of Financial Services (ACFS) has released a survey of older Americans that it says raises troubling questions about retirement in Amer...

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Baby Boomers relying too much on Social Security

If you talk to younger consumers about retirement, they more than likely will express doubts about Social Security being around when they stop working.

But if you talk to Baby Boomers, you are likely to hear they are counting on their benefits more and more.

A new study commissioned by the Bankers Life Center for a Secure Retirement (CSR) has found Boomers are just a little too reliant on Social Security, with 38% now saying the monthly check will likely be their primary source of retirement income.

That's up more than 25% from before the financial crisis of 2008, a year which seems to have changed the financial landscape on a number of fronts.

Before 2008, Boomers were younger and a lot more optimistic about retirement. Then, about 43% said they expected personal savings or earnings from a job to be their primary source of income during their Golden Years.

Post-crisis investment environment

Drilling deeper into the data, the researchers suggests the post-crisis investment environment could have something to do with the change. While it is true the stock market is at all-time highs, there is a pervasive feeling among some that it's not going to last.

Age might be another factor. The stock market goes up and down, and when you're 50 a big drop doesn't seem as frightening as when you're 65.

The study found Boomers with incomes between $30,000 and $100,000 and less than $1 million in investable assets are concerned about investing money and, perhaps as a result, are now over-reliant on Social Security.

Nearly 75% of Boomers say they have changed their investing behavior as a result of the financial crisis and are taking a more conservative approach with their money.

It's supposed to be a safety net

"Social Security was designed to be a safety net, not a primary replacement for savings or income," said Scott Goldberg, president of Bankers Life. "Those who are in or near retirement should consider the various ways they can create future income to help achieve a secure retirement. There are products readily available in the marketplace that can help."

And that goes for Boomers who have actually saved some money. Financial planners are even more worried about those who have not.

A 2015 report from the General Accountability Office (GAO) found that 52% of U.S. households age 55 and older have no retirement savings. What's worse, the agency found many older households without retirement savings have few other resources, such as a defined benefit pension, non-retirement savings, or other assets.

As for Boomers facing retirement, most told the CSR researchers that they have struggled to rebound since the 2008 financial crisis. While they still plan to retire, they say they have readjusted their expectations to meet the new reality.

If you talk to younger consumers about retirement, they more than likely will express doubts about Social Security being around when they stop working....

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Four common retirement mistakes

Retirement can be an intimidating prospect, especially if you aren't sure whether you're ready. There are emotional considerations as well as financial.

But the financial ones are really big, says Eileen Ambrose, senior editor and writer for the Money Team at AARP, who covered the issue recently in AARP Bulletin. Ambrose says the four mistakes many people make as they approach retirement are:

  • Being upside down on a mortgage
  • Not having enough money
  • Not having savings adequately invested
  • Still supporting adult children

Mortgages

Housing expenses can be a challenge in retirement, which is why many retired consumers try to have their homes paid for by then. But thanks to the housing crisis of 2008, Ambrose says some people approaching retirement still owe more than their homes are worth. The good news? You do have some options.

"As a result of the housing crisis, there is a federal Home Affordable Refinance Program, so if you have an underwater mortgage, you can apply for this program, which will help you negotiate better terms on your loan so you can pay it off," Ambrose told ConsumerAffairs.

She says you can also stick it out, staying in your home and making payments until the value recovers. If you are a few years away from retirement and have significant equity in your home, the last thing you want to do is refinance and take the equity out.

Savings

Recent studies have shown more people, especially younger people, are saving more for retirement and starting earlier. But still too many people approaching retirement haven't saved enough.

"A lot of people don't take the time to do an assessment of how much money they'll need to retire," Ambrose said. "It's important to know that because it can prompt you to increase your savings rate."

If you're at retirement age and you don't have enough money, Ambrose says there are really only two things you can do: cut your expenses and increase your income. Increasing income may mean taking on a part-time job in retirement.

Investments

If you have put some money away for retirement, it might not be growing as fast as it should. Ambrose says retirement money should be wisely invested.

"If your fund is temporarily losing money, you shouldn't panic, because the markets go up and down," she said. "If you have a diversified portfolio, some of your assets will do well while others may do really poorly, and that's just cyclical."

But if you have assets that have lost value and it's clear they aren't coming back, Ambrose says its smarter to sell them and reinvest in assets that will provide a return. This is where a trusted and objective financial advisor is helpful.

Adult children

Adult children are a tricky subject. Since the financial crisis, many have had a hard time launching, depending on aging parents for support.

"Merrill Lynch did a study and found six out of 10 people age 50 and older were still supporting an adult child," Ambrose said. "This is difficult because you want to help out a loved one, but as you near retirement or you are in retirement, you might not have the means."

Ambrose says many financial planners have told her this has become a major issue for their clients. In some cases, she says, the financial planners volunteer to talk to the adult children about it, to explain the hardship it is placing on their parents.

"In many cases, the kids simply don't know, and their parents don't bring it up," Ambrose said.

Retirement can be an intimidating prospect, especially if you aren't sure whether you're ready. There are emotional considerations as well as financial....

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The best and worst states for retirement

In previous generations, Florida and Arizona were the most popular retirement destinations. After 30 years or more in the same job in a northern climate, many Americans looked forward to sunny skies and warm weather.

But things may be a little different now. When personal finance site Bankrate.com measured all the states against a set of criteria that should be important to people in retirement, states you might not think of as retirement havens showed up at the top of the list and states you might think would be near the top weren't.

Researchers looked at eight factors that includes the cost of living, quality of healthcare, the crime rate, cultural amenities, weather, the tax rate, how seniors fared in the state, and the prevalence of other retired people.

Retiring to New Hampshire

Measured against that set of criteria, snowy New Hampshire came out on top. No, its weather is not exactly a strong selling point, but it scored very well in the other categories. It appears to be a state that is particularly hospitable to its residents over 60.

Colorado was the second best state for retirement, followed by Maine, Iowa, and Minnesota. The absence of any Sunbelt states in the top five suggests weather isn't the retirement factor it once was.

In fact, the Bankrate editors slotted Arizona at number 12. Florida was 17th, earning points for having the highest population of seniors in the nation, but for little else. Nevada, another mild weather retirement destination, placed near the bottom, at 44th.

Alaska came in last, but not for the reason you might think. Yes, it's very cold in the winter, but the state was dragged down by its high crime rate and high cost of living.

You can check out the complete rankings here.

The rankings

The study surveyed non-retired adults and found about half would consider relocating once they stop working. Interestingly, the farther you are from retirement, the more likely you are to say you'd pack up and move.

About 58% of Millennials are open to moving, but just 37% of Baby Boomers and 12% of the Silent Generation want to think about relocating. Bankrate.com analyst Claes Bell says the study just illustrates the changing concept of retirement.

"What people think they want in retirement may not end up being what serves them best over the long run," Bell said. "It's about a lot more than sunny skies, beaches and golf courses. As you get older, practical considerations like healthcare, taxes and proximity to family and friends become much more important."

And after spending decades in the same house in a community where they have roots, many retired people are opting to simply stay put.

In previous generations, Florida and Arizona were the most popular retirement destinations. After 30 years or more in the same job in a northern climate, m...

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Millennials saving more for their kid's college than for retirement, poll finds

Parents often hope for a better future for their children. For Millennial parents, a better future means one without the burden of student loan debt.

In an attempt to lay the groundwork for a debt-free future for their kids, many Millennials are putting their children’s college savings fund ahead of their own retirement fund.

Roughly one in five (19%) Millennial parents who responded to a survey by TD Ameritrade said saving for their child’s education is their top financial priority, equal to the number that identified emergency savings as their number one priority. Retirement savings came in third, at 15% of parents.

Findings from the new survey suggest Millennials would rather not see their children in the same boat in the future -- which is to say, still chipping away at their student loan debt when their own kids graduate.

Key findings

Millennial parents are saddled with an average of $9,100 in student debt, the survey found. One-third of these parents expect that they will still be paying off their loans when their kids head off to college.

Although it’ll be years before Millennial parents attend their child’s college graduation, the poll found that a majority (90%) already have a plan in place to pay at least some of their kid’s college fees.

Additional findings from the survey showed:

  • Latino/Hispanic and Asian millennial parents are twice as likely as Caucasian Millennial parents to expect to pay all education fees.

  • Although 57% Millennial parents do not expect their parents to help with college fees, one in five (19%) grandparents contributed to a grandchild’s college savings in the past year.

  • Millennial parents who are saving for their children’s education are saving an average of $310 per month, with grandparents contributing an additional $205.

Setting financial goals

Accruing the funds needed to foot the bill for a child's college education may be a worthy endeavor, but the experts at TD Ameritrade say college savings shouldn’t come at the expense of retirement (for which there are no loans, grants, or scholarships).

“If you’re able to swing it, parents can of course sock away money in a college fund, or ask grandparents to contribute to future education needs, rather than the toy box,” said Dara Luber, retirement and long-term investing expert at TD Ameritrade.

“Just be steadfast in your own goals. Parents are much closer to cracking open that nest egg, and you want it to be as full as possible," Luber concluded.

Parents often hope for a better future for their children. For Millennial parents, a better future means one without the burden of student loan debt. I...

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Planning for retirement still not high on workers' things-to-do lists

How much do you need to retire? Thirty-seven percent of Americans say they think they'll need $1 million or more. To say that this is at odds with reality is an understatement, since only 20 percent of workers have saved $250,000 or more; 24 percent have saved $1,000 or less.

The rather sobering figures come from the 27th annual Retirement Confidence Survey conducted by the Employee Benefit Research Institute (EBRI).

Not only are most of us woefully short of our goal, many of us don't even have a goal. The survey found that only 41 percent of American workers have even bothered to work up an estimate of what they'll need to survive retirement.

“I continue to be struck by the relatively small share of workers who do formal retirement planning. Use of a financial advisor increases with age and income, but just 23 percent of workers say that they have spoken with a professional advisor about retirement planning and only 1 in 10 report they have prepared a formal plan for retirement,” said Lisa Greenwald, assistant vice president of Greenwald & Associates, and co-author of the report. 

“Some of these critical retirement planning steps don’t cost workers anything, like estimating Social Security or thinking through what your expenses may be in retirement,” Greenwald notes.

Great unknowns

The lack of planning is perhaps understandable, though, given the big unknowns one faces in trying to arrive at an estimate. The most obvious shortcoming is that we don't know how long we'll live. Some people turn 65 and promptly drop dead, while others live into their 90s. Either way, this has a big impact on your savings.

The other great unknown, of course, is healthcare. No one knows from one day to the next when the nation's healthcare policy is going to be a year or a decade from now. For that matter, many people don't know what it is today, including elected officials who are in charge of it.

Despite this uncertainty, six out of 10 workers say they are very or somewhat confident about having enough money for a comfortable retirement, down from 64 percent last year. 

Three in 10 workers say that preparing for retirement is stressful and 30 percent also say that fretting about retirement while at work is making them less productive. More than half of these stressed-out workers believe they would be more productive at work if they didn’t spend time worrying. 

Retirees more confident

Interestingly, people who have already retired are more confident than those who are still toiling away. The survey found that 79 percent of retirees are very or somewhat confident about having enough money to live comfortably throughout their retirement. 

This is a finding that has cropped up in other studies. It is usually ascribed to the fact that, once they retire, workers find their cost of living is reduced more than they had expected. After all, retiring usually eliminates or reduces commuting, lunching out, clothing and dry cleaning, and other daily expenses that may seem small but add up quickly.

What would help workers become better prepared? Among all workers, about half say that retirement planning (53 percent), financial planning (49 percent), or healthcare planning (47 percent) programs would be helpful in increasing their productivity at work while making it more likely they would get their affairs in order.

Also, 73 percent of workers who are not now saving for retirement say they would be at least somewhat likely to save if contributions were matched by their employer. Approximately two-thirds of non-saving workers say they would be likely to save for retirement if automatic paycheck deductions, at either 3 percent or 6 percent of salary, were used by their employer.

How much do you need to retire? Thirty-seven percent of Americans say they think they'll need $1 million or more. To say that this is at odds with reality...

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Retirement planners increase focus on women's challenges

For women, retirement can come with special challenges. Women live longer than men, but during their working lives they tend to earn less.

The Social Security Administration estimates a 65-year-old woman can expect to live to age 86.6, compared to an average male lifespan of 84.3. Complicating things further, women can expect to have higher healthcare expenses than men.

As the huge Baby Boom generation enters its golden years, more financial planners have begun to focus on the special needs of women.

Protection and security

“The financial industry speaks the language of risk tolerance and investments," said Jeannette Bajalia, president of life planning firm Woman’s Worth. "I speak the language of protection and security, not being a burden to anyone. I want my money to last as long as I last."

Bajalia's firm offers financial advice tailored to women clients' special needs, including lifetime income planning and healthcare planning.

The personal finance publication Kiplinger addressed the issue last year, suggesting the gap between the money a man needs in retirement and what a woman will need is more than a quarter of a million dollars.

"This is off-the-charts severe," Manisha Thakor, director of wealth strategies for women at BAM Alliance, told Kiplinger. "There's a trainwreck happening, and society is saying, 'the train may have some problems.'"

What to do

The Kiplinger editors say women are already saving at about the same rate as men, though neither are doing a great job. They advise women to put off drawing Social Security as long as possible, to maximize the benefit.

That said, for women age 65 and older, the average Social Security benefit is not quite $14,000 per year, while men average $18,000. Kiplinger says men are also more likely to receive income from a pension.

AARP says that makes Social Security even more important for women. It notes that Social Security benefits are structured to replace a larger portion of income for a low earner than a high earner. Since women generally earn less over their careers, putting off retirement as long as possible maximizes that benefit.

A recent study by the Transamerica Center for Retirement Studies found more than half of women plan to keep working after they hit retirement age, with 40% saying they will look for a part-time job.

In fact, working part-time at a job you enjoy is not a bad part of retirement strategy. It helps stretch your retirement savings while keeping you active and engaged.

For women, retirement can come with special challenges. Women live longer than men, but during their working lives they tend to earn less.The Social Se...

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Women may face special challenges in retirement planning

All workers face increased challenges in facing retirement, but a new report from the Transamerica Center for Retirement Studies (TCRS) finds the difficulties are greater for women.

That conclusion is based on findings from TCRS' 17th annual retirement survey.

TCRS President Catherine Collinson says today's women have career opportunities that weren't available to their grandmothers. But that hasn't made retirement any easier.

"Women continue to encounter challenges including lower pay, time out of the workforce for parenting or caregiving, and longer life expectancies that all contribute to unique challenges in adequately saving for retirement," she said.

Lack of confidence

The survey found only 10% of working women are "very confident" they can retire comfortably. But part of that lack of confidence may be traced to a lack of information. More than half said they are "guessing" at the amount of retirement savings they will need.

Based on the data it gathered in the survey, TCRS estimates women's median household retirement savings is only $34,000. More than two-thirds said they have no back-up plan if forced into retirement sooner than expected.

As an added worry, four out of five have doubts that Social Security will be available when they stop working.

Plan to keep working

In many ways, the retirement challenges facing women are not all that different from those facing men. For example, the survey found that more than half of women plan to work past age 65, and 13% said they don't plan to retire at all. Half plan to work at some type of job, even if they do retire.

Yet the survey also shows women, by and large, are doing the right things. Seventy-two percent said they are saving for retirement through a workplace plan or an Individual Retirement Account (IRA). The median age at which women started socking money away for retirement was 28.

"The facts are startling and clear. Women must begin taking greater control and gain an understanding of their true retirement outlook," said Collinson.

She says women need to confront their challenges head-on and acquire essential knowledge about how to achieve financial security. Retirement plans, Collison says, should help mitigate risks and steer women on a course for financial security.

Retirement needs will depend on a lot of individual factors. To help you get a handle on what your needs will be, this retirement calculator from AARP might be useful.

All workers face increased challenges in facing retirement, but a new report from the Transamerica Center for Retirement Studies (TCRS) finds the difficult...

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Years after financial crisis, many Boomers still struggling

The financial crisis, which deepened an existing recession, was a major blow to the U.S. economy.

Since then, the nation has been on a slow path toward recovery. Today, many consumers are feeling a lot better than they did a few years ago. Baby Boomers, however, are among the least likely to feel that way.

A study commissioned by the Bankers Life Center for a Secure Retirement found only 2% of middle income Boomers think the economy has fully recovered. Sixty-five percent don't think they have benefited at all from the recovery.

And while nearly all the Boomers in the survey said they expect to retire one day, the study found a near universal adjustment to just what form retirement will take.

Savings and earnings have fallen

Here are a couple of reasons why: among the group saying it has not benefited from the recovery, more than half say their money in savings is less than before the crisis. Four out of ten say they are earning less money than they did a decade ago.

Back then, 45% of middle income Boomers said they expected to have no debt in retirement, living in a home with no mortgage. Today, only 34% have that expectation.

Boomers contemplating retirement are also planning to be more dependent on Social Security income. Ten years ago, 40% of Boomers said they expected their retirement savings would be their primary income source. Today, it's 34%.

It's no surprise, then, that many Boomers appear to be reconsidering plans to stop working. The study shows nearly half of Boomers -- 48% -- plan to expect to hold down a full or part-time job after they reach retirement age. Before the financial crisis, it was just 35%.

"Ten years ago, Baby Boomers had a clear vision of what a personally satisfying retirement looked like," said Scott Goldberg, president of Bankers Life. "But today, many are realizing they will not be as financially independent in retirement as they once expected."

What to do

If you are in your 50s or 60s, you don't have the luxury of a lot of time to build wealth for your golden years. But there are steps you can take now to become better prepared. They involve cutting expenses and increasing savings.

First, AARP suggests defining what you want retirement to be. And be specific. If you want to travel, for example, think about what kind of travel. And it should go without saying, you need to be practical.

Next, add up your assets, both financial and personal. If you have developed a skill over the years related to a favorite hobby, maybe that can be a source of income after you quit your day job.

Decide when you want to start collecting Social Security. The monthly payments will be a lot larger if you can put it off until age 70.

Analyze your budget, looking for ways to trim spending. Just a little each month can add up to growing savings.

The financial crisis, which deepened an existing recession, was a major blow to the U.S. economy.Since then, the nation has been on a slow path toward...

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Before planning retirement, decide what you want retirement to be

With the leading edge of the huge Baby Boom population entering their retirement years, retirement planning is a big deal. But this phase of life can take many forms.

Planning to tour the country pulling an Airstream trailer? Your needs will be different than if you plan to launch a new career in retirement.

When talking about retirement, the discussion almost always starts with money. Not going to work every day means you won't be bringing home the same sized paycheck. So the first question is how you will make up the difference.

Can't depend completely on Social Security

Social Security will provide a source of monthly income, but not a very big one. You'll likely need other sources of income, such as a pension – which is pretty rare these days – or a retirement savings account.

According to the Labor Department, fewer than half of Americans know how much they need to save for retirement, but in fairness that number is hard to pin down until you decide how you plan to spend retirement.

If you plan to downsize, moving into a home that you can purchase with no mortgage, in a low cost-of-living area, you'll need less money each month than if you plan to spend half the year traveling.

That said, it is easy to underestimate your needs. The government says you'll probably need 70% of your pre-retirement income to keep up.

Is a part-time job the answer?

That's why a growing number of early Baby Boomer retirees are still working in some form or another. After a successful career, they have a lot of knowledge and expertise. Often, their former employers are eager to tap into that on a part-time basis.

Of course, after 40 or more years working in a profession or at a job you really didn't like, the prospect of continuing it, even on a part-time basis, might not seem that attractive. But many retirees take the opportunity to try their hand at something new. The website NewRetirement.com has some advice for finding the right fit.

Growing optimism

The good news is people approaching retirement are a lot more optimistic today than they were just after the Great Recession. A new study by T. Rowe Price shows 47% of Baby Boomers and Gen Xers believe their ideal retirement is “very attainable,” suggesting they have either given it serious thought and have their ducks in a row or have no idea of what's involved.

The subjects in the study were mostly investors, suggesting they have been building wealth. When it comes to visualizing their retirement years, the majority see it as “a time to relax.” Only 38% plan on “reinventing themselves.”

With the leading edge of the huge Baby Boom population entering their retirement years, retirement planning is a big deal. But this phase of life can take...

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Housing costs weighing on Baby Boomers

A number of recent surveys have found anxiety among Baby Boomers about retirement, primarily concerns about not having enough money.

The NHP Foundation, a not-for-profit provider of affordable housing, has drilled a little deeper into those concerns. It says a poll of Americans aged 55 and older found the cost of putting a roof over their heads is a major issue.

The survey found 30% of Boomers worry at least once a month that they won't be able to afford their home. About 42% of retired people in the survey say they worry about it at least once a day.

While Millennials are known to have housing anxiety, caught between high rent and rising home prices, Boomers were thought to be more housing secure. But it turns out many Boomers who don't worry about their own housing costs do worry about those of their adult children.

Multi-generational anxiety

"The anxiety is now multi-generational," said NHPF CEO Richard Burns. "So we are working today to increase our stock of affordable housing to ensure that this and future generations are able to afford desirable places to live."

Previous NHP surveys have uncovered other concerns about housing affordability. One discovered that up to 75% of the U.S. population is worried at any given moment about losing their home. One that focused exclusively on Millennials found 76% of the younger generation had made compromises to secure affordable housing.

"These findings underscore the urgency to make housing affordability solutions a priority in America, especially for those most vulnerable," said Ali Solis, President and CEO of MakeRoom, a national renter's advocacy group.

As you might expect, there are geographical differences in the level of housing worries. There is less concern in the Midwest, where real estate prices are lower. There's more concern in the South, where incomes are lower, and in the Northeast, where real estate is more expensive.

A number of recent surveys have found anxiety among Baby Boomers about retirement, primarily concerns about not having enough money.The NHP Foundation,...

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Generation X increasingly worried about retirement

It's only natural that people approaching retirement worry a little about whether they'll be able to get by without a paycheck. Maybe people with a few million socked away don't think about it much, but the rest of us worry.

A survey by American Funds – part of Capital Group – finds members of Generation X are increasingly concerned. And maybe with good reason.

After all, Baby Boomers had years of savings behind them when the Great Recession hit. Many Millennials were still in school. Generation X was just approaching its prime earning years when the unemployment rate soared past 10%, almost overnight.

"After experiencing the dot-com bust, the global financial crisis and the housing collapse, as well as stagnant wage growth during their formative adult years, Gen Xers — or Generation AnXious — are wary about their financial future," said Heather Lord, senior vice president and head of strategy and innovation at Capital Group.

And of course, career disruptions have affected retirement saving. Millennials learned the Great Recession lesson pretty well, and many of its members started saving for retirement by age 25.

Even though time is beginning to run short for Generation X, financial advisers say it's never too late to start saving for retirement. A good target, says wealth management advisor Michelle Perry Higgins, is putting away 20% of your income.

Bad timing

But Generation X is a victim of bad timing. Not only did the Great Recession hit it in mid career, there were big changes taking place in employer-based retirement systems just as Generation X was entering the workforce.

A 2014 study by the TransAmerica Center for Retirement Studies calls Generation X the “401(k) generation.” It entered the workforce along with the introduction of 401(k) plans and the decline of defined benefit plans. Because the plans were new, early participants didn't get the same education and guidance that are standard practice today.

"Most [GenX members] are saving for retirement but many have not saved enough,” the report said. “Questions about the future of Social Security loom for them. The first Gen Xers will start becoming eligible for full benefits at age 67 in the year 2032, just one year before the Social Security Trust Fund’s forecast depletion.”

Working past 65

The report found that 54% of Generation X employees expect to still be working at age 65 and beyond, and increasingly that is becoming an idea embraced by Baby Boomers as well.

In an interview with Yahoo Finance, New Jersey financial adviser Ann Minnium said she has several clients who are enjoying a successful retirement because of their willingness to work – not full-time, but part-time.

"The part-time income was the missing piece that completed a seemingly unsolvable puzzle," she said.

And that doesn't mean you have to keep doing a job you hate. Instead, it allows you to do something you enjoy, which might not seem much like work at all.

It's only natural that people approaching retirement worry a little about whether they'll be able to get by without a paycheck. Maybe people with a few mil...

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The question you didn't hear asked at last night's debate

When Democrat Hillary Clinton and Republican Donald Trump squared off in Monday night's first presidential debate, there was no shortage of fireworks.

But while the 90 minutes was long on entertainment value, some commentators observed that it was short on substance. In particular, AARP Senior Vice President John Hishta said there was one issue, affecting just about everyone in the country, that was not raised.

"In this issueless campaign, the debate was the best chance for voters to get real answers on how the presidential candidates would keep Social Security strong for future generations,” Hishta said. “If our leaders don't commit to act, future retirees could lose up to $10,000 per year.”

Hishta says Social Security faces a big revenue shortfall in the future. Under current law, if nothing is done, there will be cuts across the board for Social Security in 2034.

If the political climate does not change, it's hard to see how anything gets done. Congress can simply let the cuts go into effect and individual members don't have to take any action that would be unpopular among one constituency or another.

Trying to raise the issue

For its part, AARP is trying to get the issue on the political radar screen. In spite of recent polling, which shows support for more focus on the issue, AARP complains that Social Security has been largely ignored in the election.

It points to an AARP survey of Baby Boomer women that found 71% want the government to address Social Security immediately and more than two-thirds say have heard nothing about the candidates' plans.

"Americans who are working hard and paying into Social Security were the real losers at tonight's debate," Hishta said.

Hishta said AARP will step up pressure to have moderators in the remaining two debates at least bring up the issue.

Both presidential candidates have, in fact, addressed Social Security on their campaigns. On her website, Clinton says the biggest threat to Social Security is from Republicans. She supports an expansion of benefits, to be paid for by increasing contributions from upper income recipients.

Trump has said in speeches that he does not support any cuts to Social Security or Medicare. In a statement to AARP, Trump said the best way to preserve those benefits is to grow the economy.

When Democrat Hillary Clinton and Republican Donald Trump squared off in Monday night's first presidential debate, there was no shortage of fireworks.B...

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Why the workforce is likely to get older

There are several take-aways from the latest Transamerica Center for Retirement Study (TCRS), including the fact that Baby Boomer workers aren't going anywhere.

If you're a Gen-Xer waiting for your Baby Boomer boss to retire so you can move up, you might have a long wait.

“Baby Boomers are the generation that has re-written societal rules at every stage of their life,” said Catherine Collinson, president of TCRS. “Now, Baby Boomer workers are redefining retirement by planning to work until an older age than [the] previous two generations.”

Collinson cites numbers which show that 66% of Boomers are either already working past age 65, or plan to. And it's not entirely because their work is their life. Most who plan to keep working indefinitely say they need the income or the health benefits.

Counting on Social Security

Many Boomers – 34% in fact – are counting on Social Security to be their primary source of income once they do retire – hence the large number who plan to keep working. Eighty-seven percent expect Social Security to at least be a part of their income once they stop working.

But at this point, Boomers may be better off financially than the two younger generations in the work force. One-third say they expect to get income from a traditional pension plan while 78% say they have retirement accounts they can draw on. Even so, there are still plenty of Boomers who haven't saved enough for a comfortable retirement.

Collinson says she is actually encouraged by Boomers' plans to keep working, calling it a common sense solution. That said, she encourages older workers to be proactive about staying employable and keeping current with industry standards and technology. They should also understand that the decision to work or not may not be up to them in all cases.

Better have a Plan B

“As part of their retirement planning, Baby Boomers should create a Plan B if retirement happens unexpectedly due to job loss, health issues, or other intervening circumstances,” she advises.

It could turn out that Gex X takes a similar approach to retirement when the future rolls around. The study has found that, while Gex X workers started saving for retirement around age 28, many have already taken loans or early withdrawals to pay debts or meet unexpected expenses.

The estimated median household retirement savings for Gen X employees is $69,000, a little over half the total for Boomers. Just 12% of Gen X workers said they are very confident they will be able to enjoy a comfortable retirement.

There are several take-aways from the latest Transamerica Center for Retirement Study (TCRS), including the fact that Baby Boomer workers aren't going anyw...

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Study shows U.S. consumers are saving more for retirement

About a year ago, a survey showed that U.S. consumers were becoming less inclined to save for retirement because they didn’t want to sacrifice their current quality of life. While they considered tools like a 401(k) plan to be integral towards future security, many just weren’t willing to commit to it.

Now, a new study conducted by Bankrate.com shows a reversing trend; it says that more American workers are saving for retirement. Experts say that this could be a positive sign for a growing economy.

“More working Americans are saving more for retirement and fewer aren’t saving at all,” said Greg McBride, Bankrate.com’s Chief Financial Analyst. “Both readings are indicative of an improving economy, where people are earning more and saving more.”

Gen Xers and Millennials lead the way

The results of the study show that 21% of working Americans are now saving more for retirement than they were a year ago, the strongest improvement in five years. Additionally, fewer people are completely forgoing the saving process; only 5% of survey respondents admitted that they hadn’t saved anything this year or last year, the lowest result in the history of the study.

So which generations are leading the way in this new financially-conscious movement? Experts say that consumers belonging to Generation X (age 34-54) are saving the most, followed by Millennials (age 18-25). Members of the Silent Generation (age 71+) are saving the least, followed by younger Baby Boomers (ae 52-61).

McBride says that members of the Silent Generation may be less inclined to save because they are reaching the phase of life where they will be entering retirement; however, not saving can still be very problematic for this group and Baby Boomers.

“Younger Baby Boomers saving less for retirement than last year is troubling because they’re more likely in their peak earning years and should be utilizing higher catch-up contribution limits to get on track for retirement. Those in the Silent Generation that are saving less may be a function of earning less as they phase into retirement,” he said. 

About a year ago, a survey showed that U.S. consumers were becoming less inclined to save for retirement because they didn’t want to sacrifice their curren...

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Best and worst cities for retirement

Increasingly, retirees are not moving out of their homes once their working days are behind them. But for those who do plan to relocate, what are the most retirement-friendly cities, and which should be avoided?

Personal finance site WalletHub looked at that question and came up with a list of the best and worst cities for retirement, based on a set of important criteria. The criteria included the cost of living, but also the percentage of the population over age 65.

Measured against 31 key metrics, the analysts picked Orlando as the top city for retirement. It was number seven in affordability, number six in activities for seniors, and eleventh in health care. Its biggest drawback was “quality of life,” where it comes in at 73 out of 150.

Not surprisingly, the top four retirement destinations are in the sunny south. Tampa is second, largely by virtue of its affordability. Scottsdale, Ariz., is third – not so much because of its affordability but for its quality of life. Miami is fourth by virtue of its ranking of second in the activities category.

Surprising Sioux Falls

The real surprise might be number five – Sioux Falls, S.D. --  where it can get pretty chilly during the winter. Sioux Falls earns its ranking by being rated number one when it comes to health care.

Las Vegas, Coral Gables, Fla., Atlanta, Minneapolis, and Los Angeles round out the top 10.

At the bottom of the list of places to retire is Providence, R.I. It's one of the least affordable spots on the list – 145 out of 150 – and third from the bottom when it comes to health care. Worcester, Mass., Newark, N.J., and Chula Vista, Calif., are also cities to avoid in retirement, according to the report.

What's important to you?

Of course, different criteria are more important to some people than others. For example, great health care might trump activities and affordability might be more important than quality of life.

If affordability is most important, you might take a look at Laredo, Tex., which has the lowest adjusted cost of living on the list. Brownsville, Tex., Jackson, Miss., and Memphis are also very affordable cities.

If you plan to get a part time job in retirement, Anchorage, Alaska has the highest percentage of people 65 and over in the workforce. Want someplace a little warmer? Plano, Tex., just outside Dallas, is second in that category.

If stretching your budget in retirement is a top priority, check out these destinations where your money will go farther.

Increasingly, retirees are not moving out of their homes once their working days are behind them. But for those who do plan to relocate, what are the most ...

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AARP: Unless Congress acts, Social Security cuts are coming

Millennials and Gen-Xers take note: your anticipated Social Security payments when you retire might be significantly less than you think.

AARP New York has released an analysis of the Social Security Trustees' annual report and concluded that millions of workers – 10.4 million in New York alone – will see their benefits cut by 25% unless Congress and the President take action to prevent it.

Fewer current retirees would be affected since the cuts would not take place until 2034. But AARP New York says younger workers need to understand the stakes. This is not a hypothetical situation – the cuts are mandated by law.

Out of money in 2034

Here's why: when the Social Security Trust Fund is exhausted – currently projected for 2034 – automatic, across the board cuts in benefits take effect. The only way to prevent that from happening is for Congress to extend the life of the Trust Fund. It could do that by slowly reducing benefits now or by increasing the amount of Social Security and Medicare taxes that are collected.

In its analysis, AARP New York estimates the average retiree household in New York would see its income go down by $4,200 a year. An additional 197,800 seniors would fall below the poverty line, an increase of 63%.

To put it in perspective, the report's authors note that New Yorkers spend an average of $6,900 a year on groceries and $4,700 a year on utility bills. Losing $4,200 a year in income, they say, will have a major impact.

Putting it on the front burner

Beth Finkel, State Director of AARP in New York, says the current election cycle is an ideal time to address this issue.

"Voters deserve to know how the candidates' plans will affect families, what those plans will cost and how they'll get it done,” Finkel said.

The situation is actually worse than it seems. The Social Security Trust Fund shows a surplus on its books, but there is no money – it's made up of IOUs Congress has written since 1983, when it raised the Social Security withholding tax to build up a surplus – but spent the money on other things.

Now, Social Security payments are being made out of the government's general operating budget with no “surplus” to offset them.

Finkel says Congress and the President need to figure out now what is going to happen in 2034.

"Doing nothing is not an option,” she said.” The question is how long will our leaders wait to act. The presidential candidates need to show they can lead on this issue and give voters real answers on how they will update Social Security for future generations."

Millennials and Gen-Xers take note: your anticipated Social Security payments when you retire might be significantly less than you think.AARP New York ...

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How to set up an individual retirement account

It's easy to put off saving for retirement since there are so many other day-to-day expenses competing for your money. But starting with just small regular savings will put you on the road to a more secure retirement.

While there is no rule saying you have to save in a designated retirement account, there are advantages to doing so. And setting up an individual retirement account (IRA) is just as easy as opening any other financial account.

Most banks offer IRAs and so do investment firms. So the first decision is where you want to keep your money and what kind of investments you want in your retirement portfolio.

The second decision is choosing what kind of IRA – traditional or Roth. Vanguard has a handy comparison guide that can help you decide. Here are the major points:

Tax deductions

Contributions to a traditional IRA are tax deductible, but contributions to a Roth IRA are not. However, the decision might not be as simple as it sounds.

When IRAs were authorized, it was assumed that consumers needed tax deductions while they were young and in their peak earning years. So contributions to a traditional IRA are deductible and there is no tax on the money's growth, as long as it stays in the account.

But at age 70 and one-half, you must begin withdrawing the money and paying taxes on it as ordinary income. If you are in a lower tax bracket during retirement, maybe you will come out ahead. But many Baby Boomers are finding they are quite wealthy in retirement, and those IRA distributions can be costly at tax time.

With a Roth IRA, you can't write off contributions but you don't pay taxes on the investments' appreciation. If you are in a higher tax bracket when you start withdrawing the money, it doesn't add to your tax bill. Many financial advisers favor the Roth for that reason.

Things that are the same

Some other things about traditional and Roth IRAs are the same. People under 50 can contribute up to $5,500 per year. People over 50 can contribute up to $6,500 per year.

With a Roth IRA, you can keep making contributions as long as you want. With a traditional IRA, you can't make additional contributions after age 70 and one-half.

Once you've decided whether to go traditional or Roth – and you should probably discuss it with a financial adviser before deciding – you need to determine where the account will reside. Just because you open it at one financial institution, it doesn't mean it has to stay there. You can “roll over” one account into another IRA without penalty, as long as you follow the rules.

To open an account, it's simply a matter of filing out the proper forms and making the initial deposit. After that, you need to decide what type of investments make the most sense for your future. You can invest in stocks and bonds, as well as real estate and gold. There are a wide range of options, so it makes sense to get good advice as you start your retirement savings plan.

It's easy to put off saving for retirement since there are so many other day-to-day expenses competing for your money. But starting with just small regular...

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Here are five retirement destinations that can stretch your savings

Much of the discussion of retirement revolves around how much money you need to save for a successful retirement.

That number, of course, is different for everyone for a variety of reasons. One of the overriding factors is the cost of living where you happen to live. In some areas, $50,000 a year would mean barely getting by. In others, it could be a comfortable income.

In recent years retirees have considered more than climate when thinking about relocating. To stretch dollars, they have also looked at housing costs, taxes, and the ease of getting around.

Bankrate.com reports smaller cities and suburbs rank highest among retirees as places where they retire. In its latest rankings, it picks Arlington, Va., a Washington, DC suburb as number one, followed by Franklin, Tenn., a Nashville suburb, and West Des Moines, Iowa.

But Arlington is one of the more costly housing markets in the country, suggesting  that unless you already live there, it would cost a lot to relocate there.

In fact, relative housing costs are a major consideration of whether retirees decide to move, and if so, where. Someone retiring from a major metropolitan area might sell a home and walk away with several hundred thousand dollars in cash. By moving to a low-cost housing market, he or she could purchase a comfortable home with half the cash and bank the rest.

The south and Midwest probably offer some of the most affordable housing for someone seeking to relocate in retirement. Here are five you might consider:

Fishers, Ind.

Fishers, Ind., is a suburb of Indianapolis. According to Zillow, the median home price in Fishers is $207,000.

Fishers' proximity to Indianapolis, the state capital, provides plenty of entertainment, education, and cultural amenities. The downside, of course, are those chilly Hoosier winters.

Tuscaloosa, Ala.

Tuscaloosa, Ala., is a college town, home to the University of Alabama. A charming, tranquil city, Tuscaloosa housing prices are very affordable.

According to Zillow, the median home value in Tuscaloosa is $142,900. Interestingly, Zillow reports the median price has declined 1.6% in the last year but is projected to rise nearly 4% in the coming year.

Cumberland, Md.

Cumberland, Md., is one of the cheapest housing markets in the country. According to Trulia, the median home value in Cumberland is just $65,000.

Located in the western part of Maryland, Cumberland is a small city in a picturesque spot and about three hours away from both Pittsburgh and Washington, DC.

Las Vegas, Nev.

Las Vegas was one of the hardest hit housing markets after the real estate meltdown. As a result, homes there lost much of their value.

According to Zillow, the median home price in Las Vegas is $196,000, making it affordable for someone retiring from an expensive housing market. Las Vegas, of course, offers a desert climate and doesn't lack for entertainment.

Pensacola, Fla.

Pensacola lies in the Florida Panhandle and is often overlooked by retirees who head farther south. It offers white sandy beaches on the Gulf of Mexico and has a metro population of less than half a million.

According to Zillow, the median home value in the Pensacola metro is $119,600. Because it's a tourist destination, there are always plenty of activities and amenities.

Much of the discussion of retirement revolves around how much money you need to save for a successful retirement.That number, of course, is different f...

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Some contrarian advice on retirement saving

There is a lot of worry among financial planners about Americans' lack of retirement saving.

The advice is usually straightforward: take advantage of tax-deferred savings accounts, especially if your employer will contribute to it.

No one is suggesting you shouldn't be socking money away for retirement, but writing in Kiplinger, Michael Reese, with Centennial Wealth Advisory, makes a case against deferring taxes on retirement savings.

With a traditional IRA or employer-sponsored 401(k) account, contributions to the account are tax deductible. So are any capital gains or income the account produces.

However, at age 70 and a half, the account holder must begin withdrawing the funds and paying taxes on the money as ordinary income. If the account holder dies before the funds are withdrawn, his or her heirs must withdraw all the money and pay taxes on it.

Pay now, not later

Reese argues savers would be better off socking the money away in a regular investment account, forgoing any tax deduction and then paying taxes on any gains or income at the end of each year.

“Think about it this way,” he writes. “Let’s say you are saving $18,000 per year in your 401(k) or 403(b). You are deferring income tax on $18,000 each year you deposit the money. But when you retire, you may have built up an account worth $1 or $2 million. That is $1 or $2 million that has never been taxed! And you, or your heirs, will pay tax on every penny of it.”

Reece says you might have avoided paying some tax on the seed, but you will owe quite a bit on the harvest.

Conventional wisdom

The conventional thinking about tax deferred retirement accounts stems from the idea that people will be in a higher tax bracket during their working years and in a lower bracket during retirement, so the tax bite won't be as big when they withdraw the funds.

Reece says that isn't usually the case. Retirees have not lowered their living standard after their working years, and if they've saved and invested wisely, they haven't lowered their income.

If your employer will contribute to your IRA, Reece says you should take advantage of it, but only contribute the minimum. Don't make it your primary source of retirement savings.

A Roth IRA might be an attractive option. Contributions are not tax deductible, so withdrawals aren't taxed.

The important thing is that you are putting money away for retirement. How you do it is something you should discuss with your accountant or financial adviser.

There is a lot of worry among financial planners about Americans' lack of retirement saving.The advice is usually straightforward: take advantage of ta...

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Survey: More employees working until age 70

If you hate your job, no doubt you're looking forward to retirement. But plenty of people like what they do.

That fact, a longer life expectancy, and a need to earn income longer is leading roughly one out of four of U.S. employees to say they don't expect to retire until they are 70 years old. The difference is, some are happy about it – others aren't.

The Global Benefits Attitudes Survey of nearly 5,100 U.S. employees, conducted by the firm Willis Towers Watson, found another 5% of employees don't ever expect to retire. Even a large number of those who expect to retire at 65 say there's a 50-50 chance they'll still be working by age 70.

“Although their financial situation has improved over the past few years, many workers remain worried about their long-term financial stability,” said Steven Nyce, a senior economist at Willis Towers Watson.

Not doing it because they want to

Nyce says he thinks most of those who plan to work longer aren't doing so voluntarily. He chalks it up to inadequate savings or higher-than-expected expenses later in life. He also says a surprising number of employees are counting on their employers helping by providing some early retirement incentives.

People generally are living longer and are in better health, so it might not be unusual that more people expect to work until 70. But the survey shows those who plan to keep working past 65 are less healthy, more stressed, and more likely to not like their jobs.

Incentives to work longer

It may be true that a growing number of employees feel they must keep working beyond 65, but there are also plenty who are doing it voluntarily. Social Security provides an incentive to do so, paying the largest benefit to those who wait until age 70 to begin drawing it.

In recent years, financial planners have made a point of advising people to wait as long as possible before tapping into benefits, pointing out that waiting until age 70 would increase benefits 32% than at age 66.

And they appear to be doing it. The survey found that, over the last two decades, the percentage of men in the U.S. who are working past age 65 has grown from 15% to 22%.

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Study: empty nesters should be saving more for retirement

There is an assumption among parents that once the children leave home, they'll have a few years to sock money away for retirement. If they haven't saved enough early on, they can make up for it later.

A new report from the Boston College Center for Retirement suggests that isn't happening, at least not to the extent many retirement planners have assumed. The report finds parents haven't cut back that much on their spending and, as a result, aren't saving a lot more for retirement.

The authors begin with the assumption that when children leave the household, parents have more disposable income. What they do with this money is important for two reasons, they argue.

If parents save the extra money, they not only build up their retirement savings, they also keep their standard of living in check, meaning they will need less money to support it during retirement.

However, if they spend the money, they not only reduce the amount of money available at retirement, they have increased the standard of living they will need to support during retirement.

Just a slight increase in savings

“The results in this brief suggest that when the kids leave, households do increase their saving through their 401(k)s, but just slightly,” the authors write. The size of the increase is more consistent with research that suggests roughly half of households do not have enough savings for retirement than with the optimal savings research.”

The report does not speculate on how parents spend their money. It does note, however, that other research has shown that parents often provide financial assistance to their children, even after they leave home.

This was often the case in the years immediately following the financial crisis, when unemployment was high and wage increases were non-existent.

Last year the Pew Research Center issued a report that found 61% of seniors had provided financial support to an adult child in the previous 12 months.

Ameriprise, a financial services firm, issued research showing that 23% of Americans said their retirement planning had been disrupted by the financial help they were providing their offspring.

There is an assumption among parents that once the children leave home, they'll have a few years to sock money away for retirement. If they haven't saved e...

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Americans increasingly pessimistic about retirement

Americans are living longer. That's the good news.

The bad news is, longer life could mean you live your last years in poverty, if you end up outliving your money.

As you might expect, this is a growing fear among the aging population. Northwestern Mutual has released its 2016 Planning & Progress Study, showing two thirds of Americans think there is some chance that they will outlive their savings.

Drilling down in the numbers, the survey found that just over one third believe there is a better than 50% chance of that happening. Notably, 14% are convinced that will be their fate.

Despite this prevailing belief, the survey found that Americans aren't doing much about it. Just 21% reported increasing their savings while more than four in 10 say they have taken no steps at all.

Social Security skepticism

Not only are Americans doubtful about their ability to save enough for retirement, they also express strong doubts about the government's minimal safety net – Social Security. Just 25% of those polled are very confident that Social Security will be there when they retire.

About 28%, in fact, mentioned uncertainty about Social Security as one of the main obstacles to having a financially secure retirement.

The survey found just 35% of Americans who have yet to retire expect that Social Security will be the major part of their retirement income compared to 49% of current retirees.

Rebekah Barsch, vice president of planning for Northwestern Mutual, says the survey should serve as an incentive for Americans to get serious about their non-working years.

"The prospect of an extended retirement in an environment of diminishing safety nets makes it even more essential that your financial plan is flexible enough to stretch as long as needed," she said.

What to do

While money for retirement doesn't have to be contained in an account designated for that purpose, there are tax advantages to using a retirement account, like a 401(k) offered through your employer or an Individual Retirement Account (IRA). The advantage is that money grows without being taxed, until it is withdrawn.

Many people don't have access to retirement plans through their employers. To address that need, the government last year introduce MYra, a basic IRA that has no fees. It carries no risk of loss but returns only a small amount of interest.

Surveys have shown the biggest impediment to retirement savings is most people think they have enough trouble just paying the bills each month. Talking to a non-profit credit counselor or financial advisor may help you establish a savings plan, even if it is a very small amount each month.

Personal finance experts say that once a savings plan is in place, it will be easier to build on it over time.

Americans are living longer. That's the good news.The bad news is, longer life could mean you live your last years in poverty, if you end up outliving ...

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Study: most retirees falling behind financially

Consumers approaching retirement are no doubt confused at all the conflicting advice they receive about how much income they will need for a “comfortable” retirement.

Financial advisors generally suggest that most retirees will need at least 70% of the annual income they earned before retirement. By that metric, a new study from personal finance site Bankrate shows seniors in all but three states – Alaska, Hawaii, and South Carolina – are coming up short.

"Americans are facing a shortfall of retirement income because their saved assets are not enough to fund their desired or even current lifestyle," James Carlson, chief investment officer at Questis, a financial services firm based in Charleston, South Carolina, told Bankrate.

The study authors looked at the incomes in each state, broken down by age. The median household income in South Carolina for people age 45 to 64 is $52,289. The median income for those 65 and up is $36,694, which is just over 70% of the younger group.

The biggest shortfall is found in Massachusetts, where those 65 and older earn just 48% of what those age 45 to 64 earn.

Reasons for discrepancies

What causes the discrepancies between states? For one thing, Alaska has very generous retirement benefits for state employees who remain in the state after they retire. Hawaii, another state with a high cost of living, is generous to seniors when it comes to tax breaks. Seniors in Hawaii also tend to spend less on health care.

South Carolina has become a major retirement destination, and many of the people moving to the state have significant investment and pension income, which boosts the average.

In today's low-interest environment, savings will yield almost no income. Retirees living off savings will need to consider investments that have potential to either grow the value through capital appreciation or generate income through dividends.

Those who have a defined benefit pension are fortunate, but since pensions have been phased out over the last couple of decades, fewer workers have access to that kind of steady income.

Social Security is another defined benefit, but in most cases doesn't go far enough to be a sole source of income.

What to do

One of the best ways to generate income in retirement is by working. Someone who has worked for nearly 50 years might not want to contemplate that, but a part-time job in retirement that coincides with the retiree's interest or passions might not seem like work at all.

If you love animals, for example, you can make pretty good money, with flexible hours, as a pet sitter.

Along with adding to income, look for ways to cut expenses. Relocating to a state with a low cost of living, for example, might allow you to live on less money.  

Consumers approaching retirement are no doubt confused at all the conflicting advice they receive about how much income they will need for a “comfortable” ...

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Consumers cautioned about 'living trust mills'

With so many Baby Boomers reaching retirement age, living trusts have become a hot topic. Do you need one? Minnesota Attorney General Lori Swanson has some advice: be careful.

“You should steer clear of 'living trust mills,' which hold themselves out as estate planning specialists but churn out boilerplate documents for a high fee, all to get their foot in the door to sell you annuities or insurance products later on that might not be suitable for your needs,” Swanson writes on her web site.

She says people pushing living trusts are often nothing more than insurance agents, or people working for insurance agents. They may charge you a lot of money for a boilerplate trust, but their real aim, Swanson says, is to make an even bigger sale later on.

A living trust is a legitimate estate planning tool. Like a will, it is created while you are still alive. It allows you to transfer assets to the trust and, if done properly, may transfer those assets to heirs without going through probate.

According to the American Bar Association, a living trust is revocable, which makes it very flexible. You, or someone you appoint, manages the assets in the trust. Assets may be bought or sold but always remain in the name of the trust.

Complex legal document

The problem, says Swanson, is that a living trust is a complex legal document and a one-size-fits-all approach won't work very well. To set up a living trust, she suggests working with an experienced attorney.

Unfortunately, that's not how many consumers get drawn into the process. Swanson says living trust mills work by usually making initial contact by phone or by mail.

The target may be invited to a “free dinner” to hear a presentation. At the event, the “expert” scares his audience with horror stories about what will happen if you die without a living trust.

Swanson says the expert will next try to book as many in-home appointments with audience members as possible. During those visits he will collect extensive financial information about his potential client, working to earn his or her trust.

Swanson says he may eventually try to sell an over-priced living trust, but she says that isn't the real objective. Once he has a complete financial picture of his potential client, then and only then does the real pitch emerge – an annuity or insurance policy.

A lot to consider

“Annuities are complex products,” Swanson says. “If you move your money from another product, you may have to pay fees or penalties. Some long-term annuities may lock up your money for more than ten years, subjecting you to penalties if you need to access your money for living expenses.”

She says annuities may also have complicated interest-crediting provisions. That, she says, could lead to confusion about benefits.

Swanson's advice? Avoid living trust mills and, if you are considering an annuity or insurance policy, take some time to think it over and discuss it with family, friends, or an experienced investment professional you trust.

With so many Baby Boomers reaching retirement age, living trusts have become a hot topic. Do you need one? Minnesota Attorney General Lori Swanson has some...

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What's behind Baby Boomers' avoidance of annuities?

With the huge Baby Boom generation beginning to retire, you might expect the annuity business to be booming. After all, with one lump sum investment, a retiree can look forward to a steady stream of monthly income until they die.

But the annuity business isn't booming, and researchers at Boston College were called upon to try to figure out why. The researchers conclude that consumers avoid annuities for some of the same reasons they generally put retirement savings on the back burner: they associate it with death.

Don't want to go there

"People need to think about how long they expect to live in order to calculate the potential payout for an annuity," Linda Salisbury, a Boston College marketing professor and co-author of the study, said in a release. "Our goal was to understand how we can help people overcome their avoidance of annuity products."

To arrive at their conclusion, the researchers divided subjects into two groups, telling both that they were 65 years old and starting retirement. One group was told to think about putting money into an IRA and the other was told to think about putting money into an annuity.

Following the exercise, the participants were quizzed about the thoughts going through their mind. The researchers found 40% of the annuity group was thinking about death, while only 1% of the IRA group had those thoughts.

Follow up test

To further test the theory, the researchers then asked one group to write an essay about their own death and the other to write about dental pain they had experienced. Then, both groups got a sales pitch for annuities and were asked if they wanted to purchase one.

The group that had written about death was 50% less likely to show interest in an annuity.

Could the prospect of confronting one's own mortality really be the reason consumers shy away from annuities? If so, might it also explain why many Baby Boomers haven't done such a great job of planning for retirement?

Language influence

In a 2013 study, Keith Chen, of Yale University, offered another explanation. He found that cultures where there is the most saving for retirement speak languages where there is no grammatical distinction between the present and future.

“Empirically, I find that speakers of such languages save more, retire with more wealth, smoke less, practice safer sex, and are less obese,” he wrote. “This holds both across countries and within countries when comparing demographically similar native households.”

In English, he points out, the language makes a difference between the present and future. That leads, he says, to less future-oriented behavior, such as saving for retirement.

With the huge Baby Boom generation beginning to retire, you might expect the annuity business to be booming. After all, with one lump sum investment, a ret...

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How do you manage retirement in the freelance economy?

The workplace has changed since the Great Recession. Full-time jobs with generous benefits are still available, but there are far fewer than there was a decade ago.

Instead, we have begun to move into what some call the on-demand economy and others call the freelance economy. Instead of one job, an individual might have three and get paid as an independent contractor instead of an employee.

Or they might be a part-time employee for a company and have a freelance job on the side.

This arrangement can have its advantages. A freelance worker is his or her own boss, choosing when to work and what jobs to take. That's the theory, anyway.

The downside, of course, is lack of job security and a lot of other unknowns – such as retirement. When you aren't sure how much money is coming in each month, how do you plan for retirement?

Give employees more control

The R Street Institute, a Washington think tank, has studied the problem, concluding that reforms are needed to create a retirement system less tied to employers and controlled more by the employee.

“Under the current system, assets in employees’ 401(k) accounts do not actually belong to the employees,” R Street Associate Fellow Oren Litwin said in a statement emailed to ConsumerAffairs. “Instead they belong to the sponsor company – the employer – and are held in trust for the employees’ eventual benefit.”

Litwin said reforms that give employees direct control of retirement accounts would be a step in the right direction.

New social contract

A gathering of government, academic, and private sector players at MIT earlier this month also tackled issues arising from the on-demand economy, concluding it's time for a new social contract, built on the assumption that Americans will often hold down more than one job.

“How do we allow the innovation of the on-demand economy, but also recognize that we’ve got to maintain consumer protections and we’ve got to make sure that workers are treated fairly?” Sen. Mark Warner (D-VA) asked at the event.

Warner noted that when you get to choose when to work, the whole notion of unemployment insurance and vacation time “is a foreign concept.”

Jonas Prising, CEO and chairman of staffing firm ManpowerGroup, said he has seen a distinct trend in the last decade. More older people are seeking work, he says, and are having a greater say in when and where they work.

Going forward, Litwin says a typical worker is likely to have two or three retirement accounts over his or her working life. The downside to that is these accounts may be neglected, or even forgotten.

Under current law, self-employed workers may set up a simplified employee pension IRA (SEP IRA), with full control of the account. If the employee moves back and forth from employment with benefits and freelancing, his or her 401(k) with the employer may be rolled over into the SEP IRA.

Learn more about SEP IRAs here.

The workplace has changed since the Great Recession. Full-time jobs with generous benefits are still available, but there are far fewer than there was a de...

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Honest Dollar provides low-cost retirement plans for small businesses

Investment bank Goldman Sachs is purchasingHonest Dollar, which operates retirement plans for employees of small companies that don't have an employer-sponsored retirement savings program.

The deal sheds some light on a small company that doesn't get much attention, but which may hold the potential to help solve a pressing need – encourage more workers to put money away for retirement. Currently, an estimated 45 million Americans don't have access to a retirement savings plan at work.

Honest Dollar is a web and mobile platform offering retirement plans for employees who work at small-and medium-sized businesses. There are also plans for people who are self-employed or who work as independent contractors. The system uses currently available individual retirement account (IRA)-based savings programs.

Simple solution

In a statement, Timothy J. O’Neill and Eric S. Lane, co-heads of the Investment Management Division at Goldman Sachs, said Honest Dollar has created a simple solution to a complex retirement savings problem.

“Together, we have the potential to help millions of people achieve their investing goals,” they said.

Goldman Sachs believes the Honest Dollar approach also has potential to change the retirement investment landscape. Signing up is easy. Both employers and employees can do it online in less than two minutes.

Two retirement plans

The company offers two savings plans. The Basic Plan allows employers to provide employees access to individual IRAs. Depending on qualifications, employees will be able to choose from either a traditional or Roth IRA.

Under The Basic Plan, employees make all the contributions to their own accounts. Employers do not contribute.

The Flexible Plan contains a few added benefits. It allows employers to define eligible employees for participation in an employer sponsored SEP IRA. Employer contributions are at the discretion of the employer, but all eligible employees must participate.

Portable

The accounts are fully portable. If an employee leaves a company, the account goes with him or her.

Independent contractors and self-employed can also set up retirement accounts using Honest Dollar. Depending on how you qualify, you may be able to use either a Roth IRA or SEP (self-employed pension) IRA. Naturally, you'll be responsible for making all your contributions.

Employers pay $10 per month per employee to provide access to a retirement account. Employees pay nothing, except when they withdraw funds or close their accounts.

Investment bank Goldman Sachs is purchasing  Honest Dollar, which operates retirement plans for employees of small companies that don't have an employer-sp...

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Report: income inequality a factor in retirement savings

Once upon a time the average American consumer worked at the same place for 30 or 40 years and retired with a modest pension and Social Security, enough to live out their days in relative comfort.

That was before escalating medical costs, longer lifespans, and the wholesale replacement of defined pensions with individual retirement savings plans.

A new report from the Economic Policy Institute (EPI) finds that an increasing number of Americans have saved little or nothing for retirement, and has focused on characteristics of savers.

The study found that retirement wealth more than kept pace with incomes over the past 25 years. It nearly doubled as a share of personal disposable income between 1989 and 2013, with retirement account savings exceeding pension fund assets after 2012. While that seems to be a positive, the study notes that there is a distinct disparity among those who are saving and those who are not.

Widening retirement gaps

It suggests the shift from traditional pensions to individual savings has widened retirement gaps. High-income, white, college-educated, and married workers participate in defined-benefit pensions at a higher rate than other workers, but participation gaps are much larger under defined-contribution plans.

For many groups—lower-income, black, Hispanic, non-college-educated, and unmarried Americans—the typical working-age family or individual has no savings at all in retirement accounts.

“And for those who do have savings, the median balances in retirement accounts are very low,” the authors write.

The report also finds that economic turmoil takes a toll on retirement savings. Much of the 401(k) era coincided with rising stock and housing prices that propped up family wealth measures even as the savings rate declined.

This house of cards collapsed in 2000–2001 and again in 2007–2009. By 2013 most families were still feeling the impact from the financial crisis and Great Recession, reducing, if not eliminating, their ability to save for retirement.

Younger consumers not saving

At this point, the authors believe younger generations should be stepping up their retirement savings in defined-contribution plans. But while the retirement account savings of families approaching retirement grew before the financial crisis and Great Recession, those of younger families stayed flat.

At this point, the report notes the much discussed income inequality extends to retirement savings. The rich have gotten better prepared while the poor continue to lose ground.

“Participation in retirement savings plans is highly unequal across income groups,” the authors write. “In 2013, nearly nine in 10 families in the top income fifth had retirement account savings, compared with fewer than one in 10 families in the bottom income fifth.”

The report says the disparity has grown in the last decade as the share of working-age families with retirement account savings declined for all except the top income group. It concludes that it may be normal for higher-income families to have more savings, but it is not normal for most families in the bottom half of the income distribution to have no retirement account savings at all. That, the authors say, is a serious policy failure.

Once upon a time the average American consumer worked at the same place for 30 or 40 years and retired with a modest pension and Social Security, enough to...

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Taxes an often-overlooked area of retirement planning

If you're retiring this year, congratulations. Life will get better if you've planned well, but remember that taxes can play a huge role in your financial future during retirement.

Once you are no longer working full time and depending mostly on Social Security and retirement savings accounts, your tax situation can change. Dara Luber, senior manager of retirement at TD Ameritrade, says retirees – and those soon to be retired – need to pay closer attention to aspects of the tax law that can help or hurt.

“You need to be aware of how Obamacare and tax penalties related to the Affordable Care Act might have tax implications,” Luber told ConsumerAffairs. “You need to know whether tax brackets are changing.”

You also need to be aware of advantages that are available to older consumers, like changes to catch-up contributions. Ignoring legal changes could mean missing out on tax-favorable, last minute catch-ups to a retirement fund.

Changes at 65

When you turn 65, the way you file your taxes may change. You may be eligible for certain credits and deductions, and will be able to take a higher standard deduction, which may be more advantageous than claiming itemized deductions. Tax planning may change, especially if you are withdrawing funds from a tax-deferred retirement account.

“You may want to take into consideration things like your required minimum distribution if you are 70 and a half, you may want to take into consideration some state tax benefits in terms of your Social Security, and how that's taxed,” Luber said.

At the same time, certain credits or deductions you've enjoyed in the past may no longer apply. You may need to consider paying estimated quarterly taxes once you hit retirement.

Luber says there is no cookie cutter retirement plan, but you can take into account some fairly general assumptions by asking yourself some questions.

“Do you think taxes are going up? What do you think will happen with Social Security and Medicare? The answers can affect your tax planning,” she said.

Resources

Fortunately, there are many resources to help retirees deal with tax issues. The Internal Revenue Service (IRS) provides an extensive resource for retirement issues. TD Ameritrade also maintains a 2016 Tax Resource Center that may prove helpful.

Finally, Luber says it is important to consult with a tax professional as you transition into retirement. If you have been doing your own taxes each year, it might be wise to obtain the services of an enrolled agent—a tax professional who is licensed by the IRS, at least for the first year.

If your retirement involves a move, you may want to check with your new state's CPA society, the Accreditation Council for Accountancy and Taxation, or the National Association of Enrolled Agents.

The important thing is to make sure you are aware of all the benefits and responsibilities that come to a retired taxpayer. Retirement will likely change many of the ways you live your life, including the way you manage your finances and taxes.

“It's really a balancing act, trying to figure out how you limit your taxes and keep more in savings and still have enough to live on in retirement,” Luber said.

If you're retiring this year, congratulations. Life will get better if you've planned well, but remember that taxes can play a huge role in your financial ...

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What can a young person do to start saving for retirement?

AARP, formerly known as the American Association of Retired Persons, and Young Invincibles recently hosted an event called "Cheers to Your Future: A Happy Hour on Millennials’ Economic Outlook" in support of “Secure Choice” -- a legislation that would give working New Yorkers of every age the option to save at work via payroll deduction.

The legislation could be a positive step towards helping Millennials save for retirement. Compared to earlier generations, Millennials haven’t had it so easy when it comes to saving for retirement; a nationwide survey showed that Millennials have less wealth overall than earlier generations, and over half of low-income Millennials lack access to workplace retirement savings programs.

Savings plans like Secure Choice can go a long way towards helping an individual become self-reliant in retirement. But what other steps might a young person take to help them prepare for retirement?

To answer this question, we spoke with Michelle Perry Higgins, Principle and financial planner at California Financial Advisors, San Ramon, Calif. She advises young people to learn to balance the funds coming in so they don’t go out too quickly.

Visualize buckets

“You might be in awe of your paycheck and ecstatic to have money coming in regularly,” says Higgins, “But be smart with your money.”

She recommends visualizing various buckets: one for retirement, one for emergency reserves, one to pay down debt, and one for day-to-day expenses (yes, including some fun!). Keeping these buckets full can help ensure funds stay balanced -- which may also help you resist the urge to splurge while out shopping.

“Remember,” says Higgins, “Budgets are sexy. Budgets are cool. Budgets breed confidence and self-respect.” Buying a new pair of shoes may produce momentary happiness, but your self-respect will be shot if you can’t make rent because you splurged on the shoes.

20% for retirement

Higgins also recommends saving 20% of your income for retirement. Even though retirement may feel like a million years away, it’s a mistake to think, “I just graduated. I’ve got plenty of time,” says Higgins.

“Be savvier than that,” she says. "Once you get in the habit of saving 20% of your income for retirement, you’ll never miss the money."

You can also check and see if your employer offers a retirement plan (some will even match a percentage of your contribution). It’s a painless way to save, says Higgins, because the money is deducted directly from your paycheck.

Once a year, Higgins recommends checking in with a fee-based financial planner. With clear goals in place, you’ll never question your financial position.

More money-saving tips for young people can be found in her book, "College Poor No More! 100 $avings Tips for College Students."

AARP, formerly known as the American Association of Retired Persons, and Young Invincibles recently hosted an event called "Cheers to Your Future: A Happy ...

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Retirement savers get conflicting advice on market turmoil

Stock market volatility since the beginning of the year has investors puzzled and people saving for retirement nervous.

The latter tend to put their money in stock mutual funds, which have seen sharp erosions so far in 2016. Many are asking what their next step should be.

The advice that's emerging from market watchers tends to break down into two camps – stay the course and take defensive measures now and be careful about adding to positions.

Vanguard founder Jack Bogle clearly represents the stay the course view. In an interview on CNBC this week, the mutual fund guru called the current market volatility “speculation,” and said consumers should continue investing because the underlying economy is fine.

"In the short run, listen to the economy; don't listen to the stock market," he told interviewers on Power Lunch. "These moves in the market are like a tale told by an idiot: full of sound and fury, signaling nothing."

Continued headwinds

Michelle Perry Higgins, Principal at California Financial Advisors in San Ramon, Calif., is also counseling clients to hold tight, even though she acknowledges the market is likely to face strong headwinds from oil and China throughout 2016.

“My clients’ portfolios have strong defensive barriers that include bonds and cash for short term needs,” she told ConsumerAffairs. “Therefore, there is no need to sell equities in a panic.”

As for people sitting on large amounts of cash, she suggests the current market swoon represents an opportunity to put that money to work.

Farther to fall?

But others are not so sure stocks don't have farther to fall. Ari Wald of Oppenheimer is a technician who bases market calls on a reading of the charts. He tells CNBC that he believes stocks are in what he calls a non-recessionary bear market and they have not quite reached a bottom. He predicts the S&P 500 still has another 130 points or so lower to go.

Brett Arends, a columnist for Marketwatch, also sees more potential downside, writing that the market is cheaper, but not yet cheap. He maintains the underlying value of companies in the S&P 500 still don't justify their prices, even after this month's declines.

“None of this means the current slump must get worse anytime soon,” he writes. “The only short-term cause of a market selloff is the same: more sellers than buyers. At some point more buyers appear, while some sellers pause for breath.”

He says Wednesday's partial recovery from a terrifying morning plunge is a “hopeful sign.” Still, he says it might be a little too early to go bargain hunting.

Stock market volatility since the beginning of the year has investors puzzled and people saving for retirement nervous.The latter tend to put their mon...

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Feds offer help through the pension payouts maze

You've finally made the decision to call it a career. But what will you do about that pension that's been building for the last umpteen years?

Fear not. The Consumer Financial Protection Bureau (CFPB) has put out a guide to help you decide which pension payout option is best for you and make the right decision about retirement income.

The guide gives folks on the cusp of retiring the information they need to understand the trade-offs of taking their pension in a monthly payment or in a lump sum. There are also tips and warnings about how to protect and best manage that money.

“Retirees are increasingly being faced with the difficult one-time choice to either take their pension payments in a lump sum or as a lifetime income stream,” said CFPB Director Richard Cordray. “Clear information about the trade-offs they face can help consumers make the right financial decision for their retirement security.”

Your pension plan

Many employees in the private sector are covered by defined benefit pension plans in which retirement benefits are typically based on years of service and earnings, and paid out in the form of lifetime monthly payments.

Increasingly, employers are giving consumers eligible for retirement benefits the option of a one-time payment for all or a portion of their pension, commonly known as a lump-sum payout. In a given year, thousands of retiring consumers face this decision.

According to a government report, many people considering retirement don't get enough information from their employers about the long-term financial impact of choosing between a lump sum or an annuity pension payout or where to find help.

Making the decision

The consumer guide highlights factors that would-be retirees should consider:

  • Length of time income is needed: The monthly payment option offers steady lifetime income, which substantially reduces a consumer’s risk of running out of money later in life. A lump-sum payout, however, might make sense if the consumer is terminally ill or in critically poor health, or the consumer already has sufficient income to cover basic living expenses.
  • Money management skills: When a consumer chooses a lump-sum pension payout instead of monthly payments, the responsibility for managing the money shifts from the employer to the employee. For a monthly payment option, consumers don’t need to worry about their investment skills or how their financial management skills may change as they age. In contrast, a lump-sum payout can give a consumer the flexibility of choosing to pay off large debts, where to invest or save the money, and when and how much to withdraw.
  • Another factor to consider is that a consumer’s pension is typically insured by the Pension Benefit Guaranty Corporation (PBGC). In the event the retiree’s company declares bankruptcy or cannot make its pension payments, the PBGC guarantees those payments up to a certain amount. Pension payments are also protected against certain creditor claims or debt collectors. With a lump-sum payout, you lose these protections.

Pension payout tips

To assist retirees who plan to make the one-time choice for a lump-sum pension payout, here are some key tips to consider:

  • Check for lump-sum calculation errors: Many factors determine a lump-sum payment amount, including age, years of work, earnings history, taxes withheld, and the terms of the plan. Consumers can detect errors by taking a look at their most recent pension statement or a consumer can contact a pension counselor for assistance or to resolve errors.
  • Plan for tax consequences: Consumers will pay taxes on a lump-sum payout. This money is generally treated as ordinary income for that year. For this reason, an employer is required to withhold 20% on the amount. In addition, a consumer could pay a 10% early withdrawal penalty tax if he/she has not reached age 59½. Consumers can defer income taxes on their lump sum by rolling over the funds into a qualified retirement account.
  • Consider future needs of surviving spouse: If married, consumers should consider the long-term financial well-being of their spouse. A family history of longevity and good health may mean the possibility of spending 20 or more years in retirement. Most pension plans provide monthly benefits to a surviving spouse or another beneficiary after the pension holder’s death through a joint and survivor payout option.
  • Protect the lump sum from fraudsters: Older people are often targets of scammers and fraudsters. Consumers should verify information, ask questions, and seek advice from trusted professionals if they are offered high returns and low risk to invest their lump sum.

More information for older Americans about making financial decisions, protecting assets, preventing financial exploitation, and planning for long-term financial security can be found at consumerfinance.gov/older-americans/.

You've finally made the decision to call it a career. But what will you do about that pension that's been building for the last umpteen years?Fear not....

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January is a good month to review your retirement plan

This is the time of year for New Years resolutions, which typically have to do with health and fitness. But financial advisors say consumers shouldn't overlook their financial fitness, especially when it comes to retirement planning.

Experts at Foresters Financialsay a recent survey shows 70% of American workers believe financial stress is the most common cause of stress and are interested in ways to avoid it. Forester says there are many simple things consumers can do to improve fiscal fitness, such as saving more and spending less.

Easier said than done, right. After all, the bills keep coming and pay raises haven't been all that plentiful.

Pay yourself first

But one strategy to get ahead is setting aside a specific amount of money each month to pay yourself first, before you start paying your bills.

"There are many excellent strategies to improve your overall financial wellness," said Paul Prete, Vice President, for Retirement Programs at Foresters Financial. "To ensure thoroughness, one of the best strategies is to work with a financial representative who can help you achieve your financial goals based on your specific situation, risk tolerance and time frame—whether it be for making investments, retirement planning, funding a college education or providing life insurance protection for you and your family."

Prete says the key is to get empowered. You do that by taking an involved approach. Don't just leave it up to your advisor. Read the research and learn about investments. The important thing, he says, is to get active – just like you would do if you were trying to improve your physical health.

This advice may be especially timely for older Americans. Last year the General Accountability Office (GAO) issued a report showing a disturbing number of Americans are approaching their retirement years with no savings and few, if any, assets.

Their future may then depend on whatever income they can derive from continued employment and the increasingly fragile lifeline provided by Social Security.

52% have no savings

In a report produced as the request of Sen. Bernie Sanders (I-VT), now a candidate for the Democratic Presidential nomination, the GAO found that 52% of U.S. households age 55 and older have no retirement savings, such as in a 401(k) plan or an IRA.

Worse still, the agency found many older households without retirement savings have few other resources, such as a defined benefit pension, non-retirement savings, or other assets.

In November, the U.S. Treasury Department introduced a simple savings vehicle called myRA, after testing it with a small group of people.

The idea is indeed simple. Consumers can put a small amount of money away on a regular basis – whether it's taken from their paycheck or it comes directly out of a bank account.

It was designed for the millions of people who don't have access to employer–sponsored retirement accounts and those who have found it difficult to save anything.

For more information about MyRA, click here.

This is the time of year for New Years resolutions, which typically have to do with health and fitness. But financial advisors say consumers shouldn't over...

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Government rolls out “starter” retirement savings plan

As we reported back in June, research shows half of older Americans have no retirement savings.

Other research documents the difficulty young consumers face in putting money away for their retirement years.

To help people get started on a path to saving for retirement, the U.S. Treasury Department has rolled out a simple savings vehicle called myRA, after testing it with a small group of people.

The idea is indeed simple. Consumers can put a small amount of money away on a regular basis – whether it's taken from their paycheck or it comes directly out of a bank account.

It was designed for the millions of people who don't have access to employer–sponsored retirement accounts and those who have found it difficult to save anything.

Removes barriers

“myRA is designed to remove common barriers to saving, and give people an easy way to get started,” said Treasury Secretary Jack Lew. “myRA has no fees, no risk of losing money and no minimum balance or contribution requirements. To make saving easier than ever, you can now put savings into my myRA directly from your bank account.”

Because myRA carries no risk, it also carries very little upside potential. Money is invested in very conservative vehicles that provide very little growth. But for people who are risk averse and new to saving, it might be a good first step.

“myRA can give people confidence that they’re taking steps in the right direction, and it can serve as a bridge to other savings options that will carry them the rest of the way,” said Lew. “myRA alone will not solve the nation’s retirement savings gap, but it will be an important stepping stone for encouraging and creating a nation of savers.”

$15,000 limit

In fact, myRA is meant to be a “starter” savings program. When the account reaches a total of $15,000, it must be rolled over into a traditional retirement savings plan.

The new myRA accounts work like a Roth IRA. The money that is invested can't be deducted from income taxes but neither is the money taxed when it is withdrawn. Earnings – meager though they may be – are not subject to tax.

To participate in myRA, savers or their spouses must have taxable income and follow established Roth IRA rules. Savers can put away as little as a few dollars, up to $5,500 per year – or $6,500 per year for individuals who will be 50 years of age or older at the end of the year.

Participants can also withdraw money they put into their myRA accounts tax-free and without penalty at any time, although Roth IRA requirements apply to the tax free withdrawal of any earnings.

Consumers can get information about myRA and sign up for an account at myRA.gov.

As we reported back in June, research shows half of older Americans have no retirement savings.Other research documents the difficulty young consumers ...

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AARP survey exposes Social Security knowledge gap

Social Security is the most popular government program in U.S. history. Enacted during the New Deal, it provides income in retirement for every U.S. citizen.

But despite its popularity, most consumers – especially those not yet receiving it – know very little about it. In fact, we don't even think we know much about it.

When AARP posed the question in a survey, only 9% of consumers said they believe they are very knowledgeable about how Social Security benefits are determined and just 1% of Certified Financial Planner professionals say their clients are very knowledgeable about the ins and outs of the program.

What emerges is a rather large knowledge gap consumers face as they determine how to claim Social Security benefits.

“For families and individuals looking to claim their Social Security benefits soon, this survey shows that far too many face a claiming knowledge gap potentially leaving thousands of dollars on the table,” said AARP President Jeannine English. “We hope that this survey encourages Americans to begin their long term financial planning as soon as possible.”

No surprise

Jonathan Becker, financial planning executive with California Financial Advisors, in San Ramon, Calif., says it would be surprising if most people were able to understand the highly complicated Social Security rules. He finds that knowledge is spotty.

“For example, quite a few people are aware of the rule that reduces Social Security benefits if they have earned income over a certain amount until they reach Full Retirement Age,” Becker told ConsumerAffairs. “However, they are likely not aware of how the reduction actually works, the fact that foregone benefits are credited for later use and thus not lost, or how the rules apply to the partial year before the date Full Retirement Age is reached.”

While statistics show that, for far too many consumers, Social Security makes up the bulk of their retirement income, consumers appear to believe they will rely less on it when they stop working.

Fewer than four in ten consumers believe Social Security will make up at least half of their income. However, AARP research shows that as Americans age, their reliance on Social Security tends to increase significantly. Nearly six in ten Americans rely on Social Security for at least half of their retirement income after they reach 80 years of age.

Important points

What do future retirees need to know?

“People need to consider the non-quantitative factors that impact the decision of when to take Social Security,” Becker said. “These include such variables as health, how long they can or are willing to work, the possibility that future benefits may be affected by U.S. fiscal considerations, and how they will make up income if they retire early but want to wait until later to take benefits.”

But the survey found that 83% of consumers overestimated or underestimated the amount of money they would receive if they waited to become beneficiaries at their full retirement age.

About 39% did not know that age 62 is the earliest you can claim benefits, though most advisors say you should wait, in order to maximize benefits. In fact, 18% of financial professionals interviewed in the survey recommended waiting until age 70 to claim benefits, yet only 13% of consumers planned to take that advice.

Social Security is the most popular government program in U.S. history. Enacted during the New Deal, it provides income in retirement for every U.S. citize...

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Nearly 30 million Americans are dipping into their retirement savings prematurely

Every working person occasionally (or maybe not so occasionally) dreams of the day when they can stop working and go into retirement. In order to be comfortable when you reach that point in your life, though, you should be continuously putting money into your retirement savings and not touching it. This last part, unfortunately, seems to be a problem for many Americans.

A recent report by Bankrate.com shows that nearly 30 million people took money out of their retirement savings this past year due to an emergency. Another 21 million people simply aren’t putting money towards retirement at all, which could prove costly when they reach an appropriate age.

Disparity between generations

In their report, Bankrate.com determined that millennials were the best at putting money towards retirement and not touching it; only 8% of people in this age bracket took money out of their savings prematurely in the past year. This may correlate to how they feel about their overall financial situation – 40% say they are better off financially than they were a year ago, while only 11% say they are worse off.

In contrast to millennials, people ranging in age from 50-64 are much more likely to think that their financial situation has worsened in the last year. The report shows that 26% of people in this age bracket admit to these feelings – the most of any other age group surveyed. Seventeen percent of people in this age group also admit that they have dipped into their retirement savings this past year to pay for an emergency.

“Using retirement savings to cover an emergency is a permanent setback to retirement planning, with the possibility of taxable distributions, early withdrawal penalties, loss of tax efficiency, and the inability to replace withdrawn funds in future years,” said Bankrate.com’s chief financial analyst, Greg McBride.

The site’s full survey can be viewed here

Every working person occasionally (or maybe not so occasionally) dreams of the day when they can stop working and go into retirement. In order to be comfor...

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Why you might not be saving what you should for retirement

Charles Schwab commissioned a survey of consumers to gauge how they were saving and, if their saving fell short, the reasons for it.

The survey found that most workers need no convincing that the 401(k) is a key tool to build retirement income. But it appears people do need convincing to put money into these tax-deferred retirement accounts. A “live for today” mentality appears to be the biggest obstacle.

More than one-third – 35% – say they aren’t saving more for tomorrow because they are unwilling to sacrifice their quality of life today. They say they don't want to cut back on expenditures like dinners out and vacations.

Dealing with everyday life can be another obstacle. Thirty-one percent say paying for unexpected expenses and covering basic monthly bills is an impediment to putting money away. Twenty-four percent say credit card debt takes their extra money each month.

Indispensable tool

Even so, the survey found that most workers think a 401(k) is an indispensable tool.

“When it comes to retirement, there’s been a significant shift of responsibility from employer to employee over the past 30 years, making the 401(k) plan a critical part of the retirement system,” said Steve Anderson, head of Schwab Retirement Plan Services. “Our survey found only one in five participants would be confident in their ability to save for retirement without a 401(k) plan. In fact, participants worry as much about having enough money to enjoy retirement as they do about being healthy enough to enjoy retirement.”

Since most 401(k) plans are self-directed accounts, some basic knowledge of finance is necessary. However, it could be lacking. While 90% of workers in the survey knew what an ideal credit score is, only 58% knew how much they needed to save for a comfortable retirement.

Health insurance material is more clear

Nearly half said materials explaining their 401(k) plan investments are more confusing than materials explaining their health & medical benefits. Nearly 30% said they have reduced or made no change in the money flow into their retirement account in the last two years.

Anderson says many employers recently tweaked their 401(k) plans to encourage more participation. They are using automatic enrollment, automatic savings rate increases, and automatic investment advice to help their employees prepare for retirement.

“The industry needs to focus more on plan design features like these if we are to further our goal of improving participant outcomes,” Anderson said.

Employer match is key

Stock picking guru Jim Cramer, host of CNBC's Mad Money, has famously criticized 401(k)s for their high management fees and limited investment choices that give savers little control. However, he says if an employer matches the employee's contribution, they can be good retirement vehicles.

Most employees appear to have embraced the 401(k). The Schwab survey found 60% said the 401(k) is their only or largest source of retirement savings.

Charles Schwab commissioned a survey of consumers approaching retirement to gauge how they were saving and, if their saving fell short, the reasons for it....

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New retirees may be better off renting

Most of the time the debate over whether to buy or rent a home takes place among Millennials.

The younger generation was slow to embrace homeownership in the wake of the housing bust, though recent evidence suggests they are now showing a lot more interest.

Rarely do you hear people approaching retirement debating whether or not they should buy a home when they downsize and relocate. But Jane Bryant Clark, senior editor at Kiplinger's Personal Finance, says it's a discussion that more retirees ought to be having.

She writes that she was planning to sell her home when she retires and buy a condo. She found what she thought was the perfect unit – it had everything she was looking for. There was just one problem – it wasn't a condo, it was an apartment.

Financial advisors weigh in

Should she rent instead of own? She posed the question to a number of financial advisors she consults on a regular basis.

“I was actually surprised at how many were receptive to the idea of renting,” Clark told ConsumerAffairs. “Most of them seem to think there are some very good arguments for it. Renting is more flexible, expenses are more predictable. They seemed to think it was a good option, actually.”

It's flexible because you normally sign a one-year lease. No matter how long you stay, when you leave it's a lot easier because you aren't listing a property for sale. You just move.

Clark says financial advisors worry about their clients who retire and embrace big changes, like moving from the suburbs to the city, or moving to an entirely different part of the country.

“That's a big lifestyle change and its possible you just wouldn't like it,” Clark said. “Many of the financial advisors I talked to about this think it's not a bad idea to rent for a while after retirement, just to see.”

The economic argument

Besides whether or not you're happy in your first move in retirement, there's the matter of dollars and cents. Clark says retirees can't automatically assume that buying a home makes the most economic sense – you have to crunch the numbers.

“The New York Times has a very good rent vs. own calculator,” she said. “Punch all the numbers in and see which option makes more sense, based on how much you expect to get out of your house, how much you expect to spend on rent.”

Clark said she went into this experiment thinking she should purchase a condo. But she found arguments for both sides.

“To me, the idea of paying this rent every single month and not building any equity seemed a little scary,” Clark said. “On the other hand, condo association fees can go up and you have no control over that.”

Variables

A lot of variables go into such a decision, including where you happen to live. Some markets are affordable but some aren't. As we have recently reported, rents are rapidly escalating, but in some markets more than others.

Also, you have to be prepared to move again in the short-term when you rent. If you're 68, it may not be such a big deal. If you're 78, it might be.

At any rate, Clark says the idea of renting in retirement may become more common as Baby Boomers retire. It's definitely a subject to bring up with your financial advisor, she says.

Most of the time the debate over whether to buy or rent a home takes place among Millennials.The younger generation was slow to embrace homeownership i...

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Baby Boomers cautioned on overexposure to stocks

With retirement looming, Baby Boomers are being warned that they may have too much money invested in the stock market.

In its second quarter analysis of its 401(k) accounts and Individual Retirement Accounts (IRA), Fidelity Investments reports Boomers approaching retirement have stock allocations higher than those recommended for their age group.

Fidelity said it compared average asset allocations to an age-based target date fund and found that 18% of people ages 50-54 had a stock allocation at least 10% points or higher than recommended. For investors ages 55-59, that figure increased to 27%.

Bonds have been losers

There is probably a good reason for that. With the Federal Reserve's 0% interest rate policy, stocks have been in a roaring bull market since they bottomed in March 2009. Bonds – the traditional choice for people entering retirement – pay almost nothing.

But the Fidelity analysis found that about 10% of its retirement account clients ages 55-59 had all their retirement assets in stocks. Whether or not the market corrects, as predicted, Fidelity says this is a risky strategy.

"One thing we learned from the last recession is that having too much stock, based on your target retirement age, in your retirement account can expose your savings to unnecessary risk – it's the hidden danger that many workers are unaware of,” said Jim MacDonald, president, Workplace Investing, Fidelity Investments. “This is especially true among workers nearing retirement, who should be taking steps to protect what they've worked so hard to save."

MacDonald says he isn't suggesting Boomers try to time the market. They should just make sure their assets are diversified as they approach retirement age.

“Checking your account on a regular basis and ensuring your portfolio is properly balanced can ensure your allocation stays on track," he said.

Opinions vary as to what constitutes a prudent retirement portfolio. According to Schwab, a “moderate risk” portfolio includes 60% in stocks. For retirees who want to play it conservative, Schwab suggests limiting stocks to 20% of the allocation.

Balances are down

The Fidelity analysis also found the average 401(k) balance went down slightly at the end of the quarter to $91,100 from $91,800 at the end of the first quarter. At the same time, IRA balances increased to $96,300 at the end of the period, up from $94,000 at the end of the first quarter.

The report also found an increase in clients taking out loans against their retirement accounts.

“While the percentage of people initiating a loan (10.1 percent) and the percentage of loans outstanding (21.9 percent) have remained steady over the last several quarters, the average 401(k) loan amount continues to increase,” the authors wrote.

The average loan amount reached $9,720 at the end of the second quarter, up from $9,630 at the end of previous quarter and $9,500 a year ago.

Internal Revenue Service (IRS) rules allow for loans from qualified 401(k) plans but not from IRAs. Loans are capped at 50% of the amount in the account. Repayment of the loan must occur within five years, and payments must be made in substantially equal payments that include principal and interest and that are paid at least quarterly.

With retirement looming, Baby Boomers are being warned that they may have too much money invested in the stock market.In its second quarter analysis of...

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Just how financially solvent is your state?

The Greek financial crisis has focused attention on sovereign debt and the fact that it's not just businesses that can go bankrupt – so can governments.

Bringing it closer to home, the U.S. territory of Puerto Rico is also struggling under an unsustainable debt load. It owes $73 billion in debt it says it can't pay.

Bringing it even closer is the state of Illinois, where lawmakers have been unable to pass a budget. The state's governor and legislature are at odds over how to address growing shortfalls.

It is against that backdrop that Eileen Norcross of the Mercatus Center at George Mason University has analyzed the finances of each U.S. state, ranking its financial health based on long-term or short term debt.

Why should you care?

Why should you care what kind of financial shape your state is in? For one thing, a state struggling financially will likely be looking for ways to reduce services and might be more open to raising taxes.

Beyond that, if you are a current or retired state employee, your pension could be on the table at debt-reduction time.

And at an extreme, if you have invested in a state's municipal bonds to get a tax advantage, you want to be confident it won't one day pull what Greece is doing – telling its bond-holders, “sorry, we're not paying you back.”

First, let's look at pensions. Notably, Norcross says nearly all states have unfunded pension liabilities – meaning the money coming in, and expected to come in, doesn't match up with the money it has promised to pay current and future retirees.

These imbalances are large when measured against state personal income, suggesting potential trouble down the road. Norcross says another financial crisis could mean serious trouble for many states that are otherwise fiscally stable.

Natural resources help

For the ranking, Norcross analyzed each state's audited financial reports, looking for revenues, expenditures, cash, assets, liabilities, and debt. Not surprisingly she found states rich in natural resources, such as oil and natural gas, are in the best shape financially. The 10 strongest states are:

  1. Alaska
  2. North Dakota
  3. South Dakota
  4. Nebraska
  5. Florida
  6. Wyoming
  7. Ohio
  8. Tennessee
  9. Oklahoma
  10. Montana

These states are fiscally healthy relative to other states because they have significant amounts of cash on hand and relatively low short-term debt obligations, but Norcross says each state faces substantial long-term challenges with its pension and health care benefits systems.

Weakest states

The 10 states in the worst financial shape include those with large populations and a large number of services, as well as traditionally poor states:

41. Pennsylvania

42. Maine

43. West Virginia

44. California

45. Kentucky

46. New York

47. Connecticut

48. Massachusetts

49. New Jersey

50. Illinois

The good news, Norcross says, is that most states have just about recovered from the Great Recession. The bad news? There are troubling signs that many states are still ignoring the risks on their books, mainly in underfunded pensions and health care benefits.

The Greek financial crisis has focused attention on sovereign debt and the fact that it's not just businesses that can go bankrupt – so can governments....

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How ready are you for retirement?

Ask different financial planners how much you need to retire and you are likely to get several different answers. That's because there are a lot of variables, depending on each individual's situation.

But all will tell you the same thing. You need to be saving money. Now.

Fidelity Investments suggests that by age 35, you should have saved 1 times your current salary, then 3 times by 45, and 5 times by 55.

“Setting up clear goals linked to your salary can help simplify your planning, and help you determine if you are on track throughout your working life,” said Fidelity Executive Vice President John Sweeney. “Having such guideposts is particularly important in today’s workplace, where layoffs, job switching, longer life expectancy, and escalating health care costs can complicate your efforts to save for retirement.”

How you save is important

The U.S. Department of Labor points out that how you save can be just as important as what you save. Inflation and the type of investments you make play important roles in how much you'll have accumulated at retirement.

For example, if you're putting your savings into low-yield bonds, or even worse, certificates of deposit, it may reduce risk of losing the investments but it will do well to keep up with inflation.

Know how your savings or pension plan is invested. Learn about your plan's investment options and ask questions.

Diversify

One way to reduce risk is to diversify, by putting your savings in different types of investments. Your investment mix may change over time depending on a number of factors such as your age, goals, and financial circumstances. Financial security and knowledge go hand in hand.

While young people have the advantage of a long time line before retirement, they face a very difficult savings environment. Wages have been slow to grow while many everyday expenses haven't. With young families, many Millennials face obstacles in setting aside money for the future.

However, they appear to be doing it. T. Rowe Price's latest Retirement Saving & Spending Study concludes this generation has relatively good financial habits, especially when compared with a national sample of their parents' generation.

Both samples in the study had 401(k) retirement accounts. While Millennials are not saving at least 15% of their annual salary for retirement as recommended, they acknowledge the importance of saving for retirement and are interested in saving more.

Better habits

The study identified several areas where Millennials have better money habits than Baby Boomers. They are more likely to carefully track monthly expenses and stick to a budget.

"It's encouraging to learn that millennials are so receptive to saving for retirement and are generally practicing good financial habits," said Anne Coveney, a senior executive at T. Rowe Price. "These Millennials are working for private sector corporations, with a median personal income of $57,000 and an average job tenure of five years. So their circumstances may be somewhat driving their behaviors. When they have the means to do the right thing, it appears that they often do.”

Yet Coveney worries about the difficulty young savers face. Median pay raises for this group were a paltry 3%. Still, she says she's impressed by Millennials' financial discipline in managing their spending and are defying stereotypes that this generation is “prone to spend-thrift, short-sighted thinking."  

Ask different financial planners how much you need to retire and you are likely to get several different answers. That's because there are a lot of variabl...

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Half of older Americans have no retirement savings

As data continues to pile up about the financial condition of older Americans, one conclusion is becoming pretty clear. For millions of Americans, there probably won't be any retirement.

At least, not a retirement that fits into the traditional meaning of the word. A new report (PDF) from the General Accountability Office (GAO) shows a disturbing number of Americans are approaching their retirement years with no savings and few, if any, assets.

Their future may then depend on whatever income they can derive from continued employment and the increasingly fragile lifeline provided by Social Security.

52% have no savings

In a report produced as the request of Sen. Bernie Sanders (I-VT), the GAO found that 52% of U.S. households age 55 and older have no retirement savings, such as in a 401(k) plan or an IRA. Worse still, the agency found many older households without retirement savings have few other resources, such as a defined benefit pension, non-retirement savings or other assets.

The older Americans who do have retirement savings are in much better shape because the GAO found they typically also have other financial resources, such as pensions, non-retirement savings and real assets like property.

Among those who have some retirement savings, the median amount of those savings is about $104,000 for households age 55-64 and $148,000 for households age 65-74. GAO estimates that is the equivalent to an inflation-protected annuity of $310 and $649 per month, respectively.

Relying on Social Security

Social Security provides most of the income for about half of households age 65 and older. GAO says these benefits offer 2 primary advantages; they are monthly payments that continue until death and adjust each year to provide cost-of-living increases.

But U.S. workers have been paying into Social Security at a much slower rate than retirees have been withdrawing it. As a result GAO says the Social Security trust fund is projected to run out of money in 2034.

What happens then is anyone's guess but one option is to reduce payments to cover just 75% of benefits. Another is to increase the withholding of the FICA tax, as was done in 1983.

The Social Security Administration reports that as of April 2015 the average Social Security benefit received by retirees was $1,333 a month.

Unable to maintain lifestyle

GAO said it reviewed a number of different surveys and studies about Americans' retirement savings pattern and found widely differing conclusions. But its analysis shows that at least one-third to two-thirds of workers will be unable to maintain their present lifestyle if and when they retire.

Perhaps because of that, younger Baby Boomers say they plan to work longer than they previously assumed. Workers age 55 and older say they expect to retire later and a higher percentage plan to work during their traditional retirement years.

For those who can keep working, that helps address the lack of savings. However, as the GAO report points out, about half of current retirees said they retired earlier than planned when health problems cropped up or when their employer downsized or went out of business.

The GAO report says that suggests that many workers may be overestimating their future retirement income and their ability to accumulate future savings.  

As data continues to pile up about the financial condition of older Americans, one conclusion is becoming pretty clear. For millions of Americans, there pr...

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America's seniors under growing financial pressure

Twenty years ago retirement in America was a bit easier. You might have worked at the same company for most of your career and looked forward to a nice pension to supplement Social Security and savings. The house in which you and your spouse had raised a family was just about paid for.

Since then America has experienced a housing boom that tempted many people to use their homes like an ATM, followed by a housing bust that led to the biggest wave of foreclosures since the Great Depression.

A 2012 report by AARP found that 5 million Americans age 50 or older had lost their homes to foreclosure during the housing collapse. The report's authors were also disturbed that a growing number of people were carrying mortgage debt into retirement.

“More older Americans are carrying mortgage debt than in the past, and the amount of that debt is also increasing, leading to their worsening situation,” said Debra Whitman, AARP executive vice president for policy. “It’s one thing if your housing value goes down in your 50s. It’s another thing if you’re 75. For some people, it’s not like you can go back to work.”

Scam targets

While housing is a big challenge, it isn't the only financial challenge seniors face. The Consumer Financial Protection Bureau operates an Office for Financial Protection for Older Americans. It notes that older adults are prime targets for financial exploitation both by persons they know and trust and by strangers.

“Financial exploitation has been called 'the crime of the 21st century,' with one study suggesting that older Americans lost at least $2.9 billion to financial exploitation by a broad spectrum of perpetrators in 2010,” CFPB writes in its resource guide, “Money Smart for Older Adults.”

A recent scam targeting seniors involved the pretense that the caller was affiliated with a government program providing benefits to senior. Last October a federal judge stopped a telemarketing scheme that tricked senior citizens by pretending to be part of Medicare, and took millions of dollars from consumers’ bank accounts without their consent.

Unfortunately, these types of prosecutions tend to be the exception rather than the rule. CFPB says senior exploitation is an “epidemic” that flies under the radar. In most cases, the agency says, seniors who lose money – sometimes their life savings – have no way to get it back. It's an economic setback with an exponential impact on their future.

Family matters

Since the financial crisis income growth has slowed to a crawl and labor force participation has sharply declined. That has hit many older adults doubly hard if they are still in the job market. Not only is their income not growing, they are often called upon to financially support their adult children.

A recent report from the Pew Research Center found 61% of U.S. seniors had provided financial support to an adult child in the last 12 months. This is a number that worries many financial planners who work with seniors preparing for retirement.

Financial services firm Ameriprise says 23% of Americans 50 to 79 report their retirement savings have gone off track because they are financially helping adult children. The firm offers this advice: take a step back to see if you are enabling a problem or supporting a new solution.

If the financial gift is a short-term fix and no major behavior change accompanies it, the problem is only being postponed and could lead to multiple cash requests over time.  

Twenty years ago retirement in America was a bit easier. You might have worked at the same company for most of your career and looked forward to a nice pen...

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5 investment banks for baby boomers ready to sell their businesses

You’ve lived the American dream, starting your own business from the ground up, building it into a thriving successful enterprise that has supported your family, provided a needed product or service and created jobs.

Now that it’s time to retire, what do you do with the business?

You have a number of options. Many business owners sell to current key employees. Others sell to a competing or complementary company.

Regardless of the type of sale, many owners of “middle market” companies hire the services of an investment bank to facilitate a sale for the best price and on the best terms. There is no precise definition of a middle market company but it’s generally considered to be a business generating between $5 million and $1 billion in revenue per year.

One of the most important things an investment bank will do is establish a value for the business. Setting the right price means selling it quickly without leaving money on the table.

When entering into an agreement with one of the investment banks serving this sector, it is important to understand how it goes about its job and how it will analyze and help you establish a fair value for your business.

Industry experts say personalities will be very important. A seller needs to be comfortable with the bank’s representatives and confident they will be able to deliver.

There are many investment banks but we’re going to review 5 that may be ideally suited to help Baby Boomer business owners transition to retirement. They are Houlihan Lokey, Harris Williams, Baird, William Blair and Lazard Middle Market.

Houlihan Lokey

Houlihan Lokey, Inc., based in Los Angeles and founded in 1972, is one of the largest privately owned investment banks in the world. Its wide-ranging business includes advising large public, as well as closely held companies. It also provides services to institutions and government entities.

It specializes in mergers and acquisitions (M&A), capital markets, restructuring, fairness opinions and valuations.

Houlihan Lokey is known for assembling smart, talented teams. Its rigorous hiring practice tries to identify and employ quantitative thinkers who can devise creative solutions to clients’ problems.

Global in its reach, Houlihan Lokey has more offices than you might expect for a middle market bank – throughout the U.S. as well as Europe and Asia. Its U.S. presence is evenly spread across the country.

Most banks have specialties and Houlihan Lokey is highly experienced dealing with aerospace and defense, financial services, business services, energy, consumer food and retail, health care, media and telecommunications, real estate, hospitality, technology and transportation.

Our experts say Houlihan Lokey is a good choice for owners of privately held or publicly traded companies, owners of family businesses, executives at any middle market business and representatives at private equity firms.

Harris Williams

Harris Williams was founded in 1991 by 2 Harvard Business School graduates and since 2005, has operated as a subsidiary of PNC Financial Services. Based in Richmond, Va., the firm has offices in San Francisco, Boston, Philadelphia, Cleveland, Minneapolis, London and Frankfurt.

From the beginning the company built its reputation on its expertise in leveraged buyout (LBO) services. Because of this it has extensive connections to private equity sponsors.

Harris Williams takes a team approach, setting up industry groups that focus on aerospace, defense and government, building products and materials, business services, consumer, energy and power, health care and life sciences, industrials, specialty distribution, technology, media and telecom and transportation and logistics.

In one of its recent transactions, Harris Williams advised Health & Safety Institute, Inc. (HIS) on its sale to The Riverside Company. The firm deployed 2 of its teams to guide the transaction – Todd Morris, Andy Dion and Andrew Hewlett of the Healthcare & Life Sciences Group and Mike Wilkins of Harris Williams’ Technology, Media & Telecom Group.

"We are thrilled to have represented HSI’s shareholders in this transaction,” Morris said. HSI’s history of innovation and outstanding product quality, customer service and dedication to helping save lives has positioned it for strong continued growth and success in partnership with Riverside."

“HSI is well positioned to capitalize on training industry trends driving demand for its online and mobile products and services,” Wilkins said. "We expect to see additional growth and consolidation in the broader education and training markets.”

Our experts suggest Harris Williams is a good fit for owners of both privately held and public companies, owners of family businesses, executives at any type of middle market business, representatives at private equity firms and family offices, and representatives of local governments and sovereigns.

Baird

Baird is a major global middle market investment bank with a wide array of talent and a broad focus. It provides advisory, financing and restructuring services to publicly traded corporations, privately held and entrepreneur-owned companies, and private equity firms through an interconnected and highly specialized international team.

Founded in 1919 as the securities department of First Wisconsin National Bank, the Milwaukee-based financial services firm today has offices on 3 continents, providing investment banking, capital markets, private equity, wealth management and asset management services to individuals, businesses, institutional investors and governments.

Baird’s primary middle market investment banking offerings and focus are in equity raises, M&A and public finance. One of its most recent M&A transactions was when it advised Bad Daddy’s International LLC on its acquisition by Good Times Restaurants Inc.

In 2007, Bad Daddy’s founders’ created an upscale burger concept with “simple foods prepared to high culinary standards.” Bad Daddy’s became known for its signature burgers, salads, appetizers and sandwiches paired with local craft microbrew beers and signature cocktails and has won many awards and accolades for its culinary creations.

Bad Daddy’s, based in Charlotte, N.C., consists of seven company-owned restaurants and six franchised / licensed restaurants in North Carolina, South Carolina, Tennessee and Colorado.

Good Times Restaurants Inc. operates Good Times Burgers & Frozen Custard, an upscale quick-service restaurant chain focused on fresh, high quality, all natural products, making it a good fit with Bad Daddy’s Burger Bar, a full service, “small box” better burger casual dining chain.

Baird also specializes in equity financing. It recently completed a $249 million refinancing of P&L Development’s existing debt. PLD is a company that manufactures, packages and distributes over-the-counter pharmaceutical products and health care goods.

Baird is often referred to a “one-stop  shop” investment bank because of the range of services it provides. Our experts say it is a good fit for many middle market business owners who can profit from Baird’s expertise.

William Blair

Founded in 1935, in the midst of the Great Depression, William Blair today is an employee-owned firm providing investment banking and other financial services from its Chicago base and offices in London, San Francisco, Tokyo, Liechtenstein and Zurich.

Much like Baird, William Blair is thought of as a one-stop shop, whether a company is trying to raise equity or launch an initial public offering (IPO). It benefits from a stellar reputation among its peers, a result of rigorously protecting its brand.

The company has deep ties into the private equity community which can benefit both it and sellers hoping to be acquired by a private equity firm. Its strategic investment in BDA, another international investment bank, gives Blair special access to Asia, a significant source of investment dollars.

The investment bank’s focus is on consumer and retail, energy, financial services, health care, industrials, services and technology. Its advisory services include comprehensive sell- and buy-side advice for publicly traded and privately held companies. Its strength, the company says, is being able to identify the best transaction partners anywhere in the world, structure and negotiate transactions, and deliver the best outcomes for clients.

It can facilitate financing through equity capital markets or by providing access to private equity, leveraged finance and debt capital markets.

In early 2015 William Blair acted as the exclusive financial advisor to PowerPlan, Inc., a portfolio company of JMI Equity and TPG Growth, in connection with its sale to Thoma Bravo. The transaction closed in February.

Blair said it positioned PowerPlan as the only enterprise software vendor capable of helping asset-centric businesses such as utilities and oil and gas pipelines optimize financial performance of fixed assets.

“As the undisputed leader in a market with high barriers to entry and a strong growth profile, PowerPlan commanded strong interest from both private equity investors and strategic acquirers,” the bank said in a statement.

Our experts say William Blair is an ideal fit for privately held corporations, owners of publicly traded companies,, owners of family held businesses, executives at any type of middle market business,, representatives at private equity firms and family offices.

Lazard Middle Market

Lazard Middle Market (Lazard MM) is the middle market arm of the elite boutique investment bank Lazard, founded in 1848. Lazard Middle Market focuses primarily on putting together deals in the U.S. It. has offices in Chicago, Charlotte, Houston, Minneapolis and New York.

Lazard Middle Market is highly active in the area of M&A, making it a good choice for middle market firms that would like to be acquired. Because the bank works closely with private equity groups it is ideally placed to put buyers together with sellers.

Like other banks, Lazard Middle Market has its areas of specialty: business services, education services and technology, financial services, food and consumer, healthcare and industrials. Senior bankers focus on specific industries, allowing them to use their insight into and understanding of the various business sector ds and key players.

The bank tailors its services to meet the unique needs of mid-sized companies. It is able to provide the sophisticated services, global perspective and broad resources of Lazard, its parent.

Our experts believe Lazard Middle Market is a good fit for owners of both privately held and publicly traded companies and executives at any type of middle market business. It could be especially advantageous for companies in the higher end of the middle market.  

You’ve lived the American dream, starting your own business from the ground up, building it into a thriving successful enterprise...

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Here’s a reason your retirement savings may be lagging

American aren’t saving enough for retirement. That’s one problem. But a second problem is that Americans who have the chance to boost their retirement savings by taking advantage of their employers’ match simply aren’t doing it.

In some companies, but not all, an employer will match a portion of the employee’s contribution to his or her retirement account, based on how much the employee saves. The bigger the employee’s contribution, the bigger the employer’s match.

Since it is essentially free tax-deferred money it is one of the best ways to boost your retirement savings. But a new report from Financial Engines has found a large number of Americans who have access to an employer match aren’t taking full advantage of it.

Two conclusions

The study reached two main conclusions. First, 25% of employees did not save enough in their 401(k) accounts to achieve a full match by their employer. In 2014 the average employee left $1,336 in matching contributions on the table because they did not put enough of their own money into the savings account.

Second, lower income and younger employees were the most likely to pass up the free money. That’s likely because lower income employees don’t believe they can afford to put money aside and younger employees have not yet focused on the reality of eventual retirement.

Of the employees not taking advantage of their employer’s match, the average worker will miss out on $42,855 of retirement savings over a 20 year period.

“We estimate that nationwide, American employees are passing up approximately $24 billion in employer matching contributions by not saving enough to receive their full employer 401(k) match,” the authors write.

The study found that 42% of plan participants who earned less than $40,000 a year do not take full advantage of the employer match. On the other hand, only 10% of those earning $100,000 or more are passing up the money.

When age was considered, 30% of younger workers left money on the table while only 16% of older workers did.

What to do

If you find yourself in the situation where you are not taking full advantage of your employer’s plan, there are things you can do to turn that around. First, find out more about the plan and how the employer match works. For example, how much do you have to contribute to trigger your employer’s full match.

Talk to an unbiased financial advisor about ways to take full advantage of your employer’s retirement plan. An advisor may also propose ways to increase your savings you haven’t thought of.

Resolve to increase your retirement savings at every opportunity. If you can’t afford to increase your savings enough today to achieve the full match, make that your goal and up your savings each year.

American aren’t saving enough for retirement. That’s one problem. But a second problem is that Americans who have the chance to boost their retirement savi...

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Sixty really is the new 40

There used to be an old saying, “you're as old as you feel.” It was normally said by old people trying to convince themselves they weren't.

But increasingly science has begun to back that up. Sometimes, you see examples of it in real life – ordinary people active and alert into their 90s. Athletes on the field long after peers from earlier generations would have retired.

In Superbowl 49 last February, New England Patriots quarterback Tom Brady had the game of his career at age 37, and no one is suggesting he is close to hanging up his cleats.

Sergei Scherbov, who led a research team studying how people age, says better health and longer life expectancy has turned ideas about what constitutes “old age” on its head.

Time lived or time left?

"Age can be measured as the time already lived or it can be adjusted taking into account the time left to live,” Scherboy said. “If you don't consider people old just because they reached age 65 but instead take into account how long they have left to live, then the faster the increase in life expectancy, the less aging is actually going on."

Scherboy notes that 200 years ago, a person who reached age 60 was old. Really old. In fact, they had outlived their life expectancy.

"Someone who is 60 years old today, I would argue is middle aged,” he says. "What we think of as old has changed over time, and it will need to continue changing in the future as people live longer, healthier lives."

People in their 60s and beyond may have a few advantages the generations that went before them didn't have. Health care services are better than in the past. There is better knowledge about destructive habits, like smoking and poor diet.

Money helps

Today's older generation is also wealthier. A 2011 British survey found a third of people in their 60s said they were in the best financial shape of their lives, compared to just 23% of their younger peers. They took more vacations and enjoyed life more.

Organizations like AARP have promoted the idea of active, healthy people in their 60s, 70s or older, encouraging “seniors” to stay engaged both physically and mentally. In many cases that means working longer, if desired. But that can sometimes present a whole different set of problems.

Bill Heacock, who runs his own business as a seminar trainer, is 61 and has no intention of quitting. But he tells AARP he's worried that his much younger clients have a hard time seeing past his gray hair. Yet he eats wisely, runs 20 to 25 miles per week and weighs less than he did in college.

What's old?

Stony Brook University researcher Warren Sanderson says someone like that should not be considered old.

"The onset of old age is important because it is often used as an indicator of increased disability and dependence, and decreased labor force participation,” he said.

A 2009 Pew Research Center study asked Americans to define when someone is “old.” As you might expect, the answers were wide ranging. Only 32% said when someone hits 65 years of age. Seventy-nine percent replied when someone celebrates their 85th birthday.

There used to be an old saying, “you're as old as you feel.” It was normally said by old people trying to convince themselves they weren...

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For millions, retirement savings reality fails to match plans

You know you should be putting money away for retirement but there are bills to pay. Incomes have been stagnant since the financial crisis but costs have continued to climb.

Gasoline prices may seem relatively low now but between 2011 and 2014 the average U.S. price at the pump fluctuated between $3.50 and $4.00 a gallon. Rents have been steadily climbing since 2009.

Significant disconnect

So it's little wonder that a new study by financial service firm Edward Jones uncovered a rather significant disconnect between what people say they plan to save for retirement and what they actually save.

Young consumers in the survey between ages 18 and 34 said they know they need to save. Ninety percent said they plan to start a retirement next egg before they turn 30.

But then the survey takers talked to the next age group, those 35 to 44, they discovered that only 64% had actually begun saving in the 30s or before.

"When it comes to retirement savings, there's a big difference between planning to save and actually doing so," said Scott Thoma, principal and investment Strategist for Edward Jones. "While intentions to save for retirement are legitimate, individuals tend to satisfy more immediate, short-term spending goals and push off their long-term saving goals.”

Scary data

For policymakers, this should be scary data. It suggests more Americans will be more dependent – not less – on Social Security in old age. For individual investors, Thoma says their 30s and 40s are the time when investing a little money has a good chance to grow into a lot by retirement time.

The youngest Americans are not alone in not living up to their savings intentions. Twenty-two percent of respondents said they planned to start socking money away between the ages of 40 and 50. However, when examining their plans versus reality amongst respondents ages 35 to 44, just 3% had actually started saving. The results were better for those 45 to 54 – 30% had actually started saving.

Kids make a difference

It shouldn't come as a surprise that the presence of children and larger household size in general has a dampening effect on actual retirement savings. The survey found that singles are much more likely – 61% – to have begun saving for retirement. In households with 3 or more people, that rate falls to 49%.

In families with children or aging parents, other financial needs often compete for a wage-earner's resources.

"Parents are recognizing the need to save earlier in order to account for additional costs, like education," said Thoma.

The U.S. Department of Labor estimates that fewer than half of Americans even know how much money they will need for retirement. It found that in 2012, 30% of private sector employees with access to a retirement savings plan did not participate.

You know you should be putting money away for retirement but there are bills to pay. Incomes have been stagnant since the financial crisis but costs have c...

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Regardless of age, consumers' financial planning found lacking

There should be no generational finger-pointing when it comes to how well or poorly we manage our money for the future. A new survey suggests we could all learn a thing or two.

The evidence is submitted by Financial Finesse, a company running financial wellness programs in the workplace. Each year it studies financial priorities and vulnerabilities of Millennials, Generation X, and Baby Boomers.

This year, the survey finds that different circumstances may be causing them pain, but members of all three generations have money problems.

Millennials

First, let's look at what the study found out about Millennials. This under-30 generation probably bears the deepest psychological scars from the Great Recession. It has influenced the way they spend and manage money and, perhaps most significantly, has influenced their housing decisions.

They seem to have a lot in common with their great-grandparents' generation that survived the Great Depression with a distrust of financial institutions. Their focus appears to be on not losing money rather than growing it for the future. As a result, they tend to shy away from the stock market and home purchases.

This group as a whole also isn't doing much to plan for retirement. It has the lowest 401(k) participation rate of all generations.

Gen X

The survey finds members of Generation X, between the ages of 30 and 51, are actually the most at-risk financially. Why? The authors think Gen Xers may be putting their children first, at the expense of their own financial security.

When questioned, just 17% of Gen Xers said they are confident they are on track to achieve their income-replacement goal by the time they retire. Instead of pumping up their retirement accounts, 23% said they are contributing to a 529 college savings plan.

Boomers

Boomers, people between 51 and 69, are by far the wealthiest generation but Financial Finesse warns they face an impending health care crisis because of longer life spans and inadequate insurance planning. Only 16% of Boomers said they have long-term care insurance. Meanwhile, the Department of Health and Human Services (HHS) projects that 70% will need some level of care in retirement.

Financial Finesse’s advisers say they are most concerned for Generation X employees who they urge to re-evaluate their retirement plans with the expectation of less money from Social Security, increasing health care costs, reduced employer benefits, and longer life expectancies than Baby Boomers.

Oh yes, there's also the rising national debt. While both Gen X and Millennials will be left to deal with that mess, probably through higher taxes, but the firm points out Gen X has less time to reconcile their finances than Millennials.

“Is this solvable? Absolutely, but it will require a herculean effort,” said Liz Davidson, CEO and founder of Financial Finesse.

There should be no generational finger-pointing when it comes to how well or poorly we manage our money for the future. A new survey suggests we could all ...

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Suicide rates rising for older adults

Suicide, especially involving suffocation, is rising at a rapid rate for adults between 40 and 64, with researchers pointing to the economic downturn as the likely culprit. 

"Relative to other age groups, a larger and increasing proportion of middle-aged suicides have circumstances associated with job, financial, or legal distress and are completed using suffocation," said Katherine A. Hempstead, one of the authors of a new study.

"The sharpest increase in external circumstances appears to be temporally related to the worst years of the Great Recession, consistent with other work showing a link between deteriorating economic conditions and suicide. ... Financial difficulties related to the loss of retirement savings in the stock market crash may explain some of this trend," she added.

Economic factors

In the study, published in the American Journal of Preventive Medicine, researchers found that external economic factors were present in 37.5% of all completed suicides in 2010, rising from 32.9% in 2005.

In addition, suffocation, a method more likely to be used in suicides related to job, economic, or legal factors, increased disproportionately among the middle-aged. The number of suicides using suffocation increased 59.5% among those aged 40-64 years between 2005 and 2010, compared with 18.0% for those aged 15-39 years and 27.2% for aged >65 years.

The data came from the National Violent Death Reporting System (NVDRS), which links information on violent deaths from multiple sources.

The suicide circumstances were grouped into three major categories: personal, interpersonal, and external.

Examples of personal circumstances are depressed mood, current treatment for a mental health problem, or alcohol dependence. Interpersonal circumstances include an intimate partner problem, the death of a friend, or being a victim of intimate partner violence. Examples of external circumstances are a job or financial problem, legal problem, or difficulty in school.

Increased awareness

The four planning and intent factors are crisis in the past two weeks, leaving a suicide note, disclosing an intent to commit suicide, or a history of prior attempts.

"Increased awareness is needed that job loss, bankruptcy, foreclosure, and other financial setbacks can be risk factors for suicide, the study authors noted. "Human resource departments, employee assistance programs, state and local employment agencies, credit counselors, and others who interact with those in financial distress should improve their ability to recognize people at risk and make referrals."

Suicide, especially involving suffocation, is rising at a rapid rate for adults between 40 and 64, with researchers pointing to the economic downturn as th...

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Retirement looking less scary to more workers

In the immediate aftermath of the financial crisis and Great Recession, people approaching retirement decided to keep working. The thought of living without a paycheck, even among those who had been saving for retirement, just seemed too scary.

It's apparently looking less scary if a survey by jobs site CareerBuilder.com is accurate. The annual retirement survey finds the number of people age 60 or older who plan to put off retirement for a few years is at a post-recession low.

It's still pretty high – about 53% – but it's down sharply from last year's 58% and 66% in 2010. There are some encouraging economic factors contributing to this new-found confidence.

Rebounding from the recession

“As household financial situations continue to rebound from the recession, economic confidence among senior workers is significantly improving,” said Rosemary Haefner, chief human resources officer for CareerBuilder. “Reaching retirement, however, is proving to be a challenge for millions.”

For those who plan to keep working – or find new jobs – past the traditional retirement age, there is good news. Companies seem to value employees who have a little gray hair. Haefner says employers are hiring seniors at a faster rate than in recent memory.

Deep scars

The survey shows the Great Recession has left deep scars on older workers. Of those saying they plan to delay retirement, 75% attribute their decision to the recession.

Twelve percent say they don’t think they will ever be able to retire. That's up slightly from 11% last year. Of those delaying retirement, nearly half think retirement is at least 5 years out.

Working after retirement

Retirement, of course, isn't what it used to be and many who are quitting their day jobs plan to find other work once they retire. More than half of 60-plus workers say they'll work after retiring from their current career, a sharp increase from the 45% who said that in last year's survey.

Of this group, 81% say they’ll most likely work part-time, while 19% plan to continue working full-time.

Why stop working, only to take another job? Most likely it can be explained by a desire to do something else. Some people stick with a job they don't particularly like because it pays well or has a nice benefits package.

The new job might not pay as well but might be a lot more personally gratifying. Bankrate.com lists 10 part-time jobs for retirees including consulting and customer service.

U.S. Newsnarrows the list down to 8, but includes working for a retailer where you like to shop. Uber is running an online pitch to retirees to become drivers, working when they want to pick up some extra cash.

Whatever kind of post-retirement work people look for, the Careerbuilder survey suggest they will find willing employers. Fifty-four percent of private sector employers hired people age 50 or older in 2014 – up 6 points from last year’s 48% – and 57 percent plan to do so in 2015.

In the immediate aftermath of the financial crisis and Great Recession, people approaching retirement decided to keep working. The thought of living withou...

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Breaking down health care costs in retirement

Americans approaching retirement age are worried about lots of things, including having enough money to live on after they stop working. With so many people struggling to save for retirement, that might not be an unreasonable fear.

In particular, retirees and the soon-to-be retired worry about the cost of health care. A new survey by Bankrate.com found upper income households in the U.S. are more concerned about covering medical expenses in retirement than the overall population.

But it is important to understand the real numbers behind those projected retirement health care costs. Depending on individual circumstances – like whether you have Medicare supplemental insurance, they may not be as high as you think.

Fidelity Investments estimates a couple retiring in 2014 is expected to need $220,000 in today’s dollars to cover health care costs in retirement, admittedly a hefty amount for most retirees. However, it's important to understand how that number is calculated.

Cost calculator

AARP has a retirement health care cost calculator that can help show how this formula works. We decided to check it out.

After assuming a male in good health is retiring this year at age 65 and will live another 20 years, we entered the data and ran the numbers. The calculator estimates he would need $134,134 worth of health care. Admittedly, that sounds like a lot.

But our fictitious retiree really isn't going to have to come up with that amount. When we examined AARP's explanation of the numbers, we see that $77,012 would be covered by Medicare. The remaining $57,122 would be paid out of pocket. Still sounds kinda scary.

Medicare covers 80% but most people purchase Medicare supplemental policies, to cover what Medicare doesn't. So the $134,134 total includes both what Medicare pays for and what a consumer would likely pay out for pocket for health services without having supplemental coverage.

Breaking it down monthly

But assuming our retiree would pay around $100 a month for Medicare coverage, deducted from his monthly Social Security payment, and $100 or more a month for a supplemental policy, he would cover his medical expenses for $200 to $300 a month.

What about the $57,122 he still needs to come up with? Well, that's what the $200 to $300 a month goes toward.

If you divide $57,122 by 20 years, you get $2,856 a year. Break that down into 12 monthly payments and it's $238 a month – a lot less scary than $134,134.

Still a significant bite

None of this is to minimize health care costs in retirement, which will continue to go higher. And retirees will need to be able to to afford the $238 monthly payments while still paying for everything else so there is every reason to put away as much money as you can.

It just means you don't necessarily have to have $134,134 set aside for medical expenses the day you stop working.

There will be plenty of other demands on your resources in retirement and unfortunately, the Bankrate survey found a third of Americans said they can't save more for their retirement because they are barely making ends meet now. Only 29% of those questioned in the survey said they were satisfied with what they are able to save.

Reality check

One bright spot in the survey is the fact that only 13% of Americans expect Social Security to account for all or most of their retirement income.

"The average Social Security payout is only around $15,000 per year, so people are realistic to think they'll need to supplement that income," said Sheyna Steiner, senior investing analyst at Bankrate.com. "But despite all the gloom and doom about the future of Social Security, most Americans are optimistic that they'll get at least something from the program. That even includes Millennials – 63% of them think Social Security will fund at least some of their retirement several decades from now."

Americans approaching retirement age are worried about lots of things, including having enough money to live on after they stop working. With so many peopl...

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Financial smarts don't disappear with age

There's a theory that as people age, their financial decision-making declines, along with physical and mental abilities. But is that really the case?

New research from the University of California, Riverside suggests it isn't.

First, the research team separated 2 types of intelligence; on one side of the ledger it placed “crystallized intelligence," which is gained through experience and accumulated knowledge.

On the other side, "fluid intelligence," the ability to think logically and process new information. Past research has clearly shown that fluid intelligence decreases with old age, a phenomenon known as "cognitive decline."

Both are important to financial decision-making, but the researchers give added weight to “crystallized intelligence.” The knowledge you have gained over a lifetime of money management, they say, more than makes up for cognitive decline, in most cases.

Staying golden

"The research shows that despite cognitive graying, older people's financial decision making may be more 'golden' than a slowing brain might otherwise suggest," said Ye Li, an assistant professor of management and marketing at the UC Riverside School of Business Administration, who is the lead author of the paper.

The study may get added attention because of the fast-growing population of older Americans. One in 5 Americans is expected to be over 65 years old by 2030. And it's not just an American phenomenon – the number of people 65 and older worldwide is expected to double by 2035.

Where the money is

This is important because older people control vast amounts of wealth. As they age they will have to make decisions about how to manage and spend it, ensuring that they don't outlive it.

Public policy changes in health care and retirement planning have transferred many complex decisions to individuals. While some worry that older consumers will be more likely to make costly mistakes with their money, the researchers looked at credit scores, which told a different story.

If an older person has made sound decisions throughout their lifetime, the researchers say that prospect tends to continue in their advancing years, and can be measured through their credit scores.

Help from pros

This may be reassuring to some aging consumers who manage their own retirement money but the fact is, a majority of seniors with significant assets seek professional guidance.

That's because for those who have managed to save a retirement nest egg, the challenge of managing it in retirement may be much greater than the challenge of saving. To produce income the funds need to be put to work. But investing – anything beyond bank CDs – involves risk. As people reach retirement they tend to be less tolerant of risk.

"Generating retirement income is comparable to that of a NASA engineer trying to land a spaceship on Pluto," Eleanor Blayney, consumer advocate at the Certified Financial Planner Board of Standards, told us back in January. "Everything may be optimized and perfectly calculated to give the highest probability of success, but without mid-course corrections along the way, the likelihood of achieving the goal – of landing the ship or generating enough income to live on during retirement – is very low."

That may be true, but the UC Riverside research suggests older consumers should not abdicate complete control over their finances to outside sources.

While a qualified wealth manager may offer up sound advice, seniors who have gained a lifetime of experience building a portfolio should still have the gray matter to judge that advice, even when their hair turns gray.

There's a theory that as people age, their financial decision-making declines, along with physical and mental abilities. But is that really the case?...

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Is your trust in mutual fund managers misplaced?

If you ask most people saving for retirement where their money is invested, chances are they'll say it is in mutual funds.

These funds, made up of a variety of different assets, are popular because the average saver doesn't have to think that much about them. The stocks within the individual funds are selected by professional money managers, who are paid to know which stocks to buy and which to sell.

Earlier this year stock-picking guru Jim Cramer, host of CNBC's "Mad Money," ruffled feathers among professional money managers when he told his audience that “most company 401 (k) plans stink.”

"They have high management fees and administrative costs that eat into your returns, and worst of all, they typically offer you lousy choices for your investments and not nearly enough control over them," Cramer told his audience. "The 401(k) business is a racket for the managers who get to charge you these fees.”

He went on to recommend that people instead consider investing in a carefully-selected portfolio of about 10 diversified stocks.

It perhaps should be noted that the whole premise of Cramer's show is to instruct viewers on how to select individual stocks, so his advice might be considered in that light. But the fact remains that millions of individual investors would rather trust their stock picks to the experts.

How good are the experts?

But how good are the experts at picking their own investments – not the stocks they pick for the funds they manage but those in their personal retirement savings? A couple of finance professors took up the question and say you may be surprised at what they found.

"We asked the question whether financial experts make better investment decisions than ordinary investors," said Andriy Bodnaruk, an assistant finance professor at the University of Notre Dame.

He and colleague Andrei Simonov from Michigan State University selected two groups of investors. One was made up of people who have been trained in finance and had day-to-day experience with financial markets as mutual fund managers.

The second group of investors shared a number of socioeconomic characteristics but lacked financial training. In other words, they were amateurs. The researchers compared how the two groups fared in the market.

No difference

"We found that financial experts are no different from peer investors: they do not have ability to pick outperforming stocks, they do not manage risk of their portfolios in better ways, and they trade as often as other investors," Bodmaruk said. "The only time experts do better than non-experts is when they have access to better information stemming from their workplace."

And of course, that information counts for something. One of the hallmarks of a well-managed fund is it is usually supported by extensive research. But even Bodnaruk and Simonov concede that picking stocks can be an inexact science.

"Outperforming the stock market is very difficult and the overwhelming majority of investors, including experts, do not have the skill to do it," Bodnaruk said. "Markets by and large are efficient to the degree that very few investors can consistently perform better than a fair reward for the risk assumed.”

Role of financial advisors

Bodnaruk says investors should not chase "expert talent," but he's really talking about fund managers, not financial advisors. Financial advisors who are not trying to sell a product but simply offer investment guidance, can be a valuable resource as you build a next egg.

If nothing else, a good financial advisor can be a sounding board to discuss investment ideas and their questions and advice can keep you from making costly mistakes. Should you invest in mutual funds or index funds and ETFs as the researchers suggest? Or individual stocks as Cramer recommends?

If you have a qualified and trusted financial advisor to talk to, you don't have to make that decision alone.

If you ask most people saving for retirement where their money is invested, chances are they'll say it is in mutual funds....

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For self-employed, retirement saving can be a challenge

Often overlooked in the numerous discussions about the urgency of retirement saving are the potential obstacles for the self-employed.

People who are self-employed, either as business owners or independent contractors, don't have access to employer pensions or employer matches to retirement accounts. They're on their own when it comes to saving for retirement.

Michelle Perry Higgins, a financial advisor and Principal of California Financial Advisors in San Ramon, Calif., says that for a number of reasons, the self-employed often find it hard to save for retirement.

Unpredictable income

“A key characteristic of self-employed people, both business owners and independent contractors, is that their income is likely to be more unpredictable than that of employees,” she told ConsumerAffairs. “Business owners may have seasonable income flows or be subject to other market forces. They also tend to invest all their time and spare income in their businesses. Independent contractors may have difficulty lining up jobs consistently. Both practically and psychologically, the situation of both groups makes it difficult for them to save consistently for retirement and this is a huge problem.”

Granted, cash-flow is a major challenge for people who don't get a paycheck every two weeks. But the consensus of financial experts surveyed by U.S. News recently was that people who work for themselves should be putting way 15% to 20% of their salary for retirement.

But many self-employed might ask, “what salary?” Thomas Goodson, founder and CEO of a financial planning and wealth management firm in Santa Barbara, Calif., told the magazine that most small business owners pay themselves last, especially in the formative years of the business.

Counting their chickens

Higgins says many self-employed put off saving because they expect a windfall before they retire.

“Business owners may believe that they will be bailed out by selling their business,” she said. “The risk is that they don’t get the price they think they should get and are left with little for retirement after years of hard work.”

For business owners and independent contractors who want to get started on a retirement savings plan, the Simplified Employee Pension IRA, or SEP IRA, is a good vehicle. In fact, it is a retirement plan specifically designed for anyone with self-employment income. Contributions are tax deductible so it helps you build up savings while reducing your taxable income.

While you don't have a boss to match your contributions, your contribution is, in fact, an employer contribution. It doesn't come directly from your paycheck but from the business' gross earnings. Since you are not only the owner but an employee, the company is allowed to contribute up to 25% of your salary – up to $52,000 per participant this tax year.

Flexible

As someone who is self-employed, you are not required to contribute the same percentage of compensation every year. You can vary the percentage or even skip a year. However, if you have employees, you must contribute the same percentage of compensation for each employee who is eligible.

A SEP IRA is a retirement saving option if you are a sole proprietor, in a business partnership, own a business or you are an independent contractor earning self-employment income.

IRS Publication 560 has more information.

Often overlooked in the numerous discussions about the urgency of retirement saving are the potential obstacles for the self-employed....

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Retirement and debt usually don't mix

Consumers nearing retirement age are often lectured by financial planners to be saving more for the years when they aren't working. That's sound advice, but it should be added that getting rid of debt before retirement is also a key step to financial security.

That's rarely as simple as it sounds. Older consumers usually have mortgages, car payments and credit card debt, just like everyone else. Sometimes they are helping their children financially.

One way to make retirement more affordable is to pay off the mortgage before you stop working. If you bought your home 30 years ago and never refinanced, that isn't a problem.

Unfortunately very few people fall into that category. More likely homeowners refinanced several times – in the early 2000s to take out equity for other things – and more recently to lower interest rates.

Mortgage debt

With the slow recovery of the housing market, not only do many aging consumers not have much equity in their home, they are also early in the mortgage term. A recent AARP study shows that in recent years an increasing number of retirees still have mortgage debt.

A study by TIAA Cref shows more seniors are going into debt – to themselves. Nearly one-third of Americans who take part in a retirement plan say they have borrowed money from their retirement account for non-retirement expenses.

But the reasons for borrowing the money is interesting. The top reason given for the loan was to pay off other debt, including mortgages.

For every retiree who is able to burn their mortgage papers there are hundreds more that will carry significant debt into their Golden Years.

Becoming the norm

According to researchers at the Michigan Retirement Research Center, older persons today may be much more likely to enter retirement age in debt compared to decades past.

The percentage of consumers near retirement age having mortgage debt has risen by over 7 percentage points, from 41% in 1992 to 48% by 2008. The level of mortgage debt has also risen. The researchers say mortgage debt for near-retirees tripled between 1992 and 2008.

TIAA Cref cites statistics from the Employee Benefit Research Institute showing that debt levels for families headed by people 75 or older more than doubled in the 3 years from 2007 to 2010, to over $27,000. But pre-retiree Boomers were carrying even more debt – more than $107,000 in 2010.

Conflicting advice

Should you pay your mortgage off early? Some financial advisors suggest it isn't always the best move, if the payments are manageable and you have a low, fixed-rate. After all, it provides a tax deduction.

But that has to be measured against the cash flow benefit of adding $1000 or more a month to your budget because you aren't making a mortgage payment. There may be additional value in paying off a mortgage if you have savings earning little to no interest, given the current low interest rates.

If debt appears to be a problem that will follow you into requirement, the TIAA Cref researchers say you might have to consider postponing retirement, especially if the income you expect to get from Social Security, pensions and savings won’t cover debt payments and other fixed expenses.

If you’re struggling with credit card debt, they suggest waiting until you have a cash management plan you can stick to before leaving work.

Consumers nearing retirement age are often lectured by financial planners to be saving more for the years when they aren't working. That's sound advice, bu...

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8 low-stress businesses to start in retirement

Retirees, and people nearing retirement age, often worry they won't have enough money to support themselves in retirement. Starting a sideline business might be a way to stay busy and make a little extra income.

But choosing the right business is important. If money is already a concern, the last thing you should do is start a business that requires an upfront investment and ongoing overhead.

For example, opening a restaurant in retirement is probably a terrible idea. First, it will require you to put in about 60 hours a week, so it doesn't sound much like retirement.

Second, restaurants fail all the time. If it goes down, it could put you in much worse financial shape than before.

But starting a small business from your home, with a limited, specific objective, can provide both lifestyle flexibility and a small amount of regular income. Some of the suggestions we're about to offer will work best for certain skill sets and in specific locations.

Pet care

Pets are huge business. Consumers love their animals. If you also like dogs, cats and parakeets, a pet care business might be for you.

Dogs left alone at home during the day sometimes need walking, especially if the owner will be working late. If a pet owner frequently travels on business, they most likely would love to have someone they could rely on to look after their pets.

This business requires little more than some business cards and good word-of-mouth and social media activity.

Babysitting

Pets aren't the only things that need constant attention. Young parents often find it difficult to find trusted, reliable care for their children.

If you don't enjoy being around children, this might not be a business for you. But if you're a grandparent and have some experience with children, babysitting – let's don't call it child care because that may conjure up licensing requirements – provides a way to make good money.

Tutoring

Doing well in school has never been more important. Academic standards are rising and parents who want their children to continue their education in a good college hire tutors to help their children with particular subjects.

This business is ideal for a former teacher, but even a laymen with particular expertise in a subject like math or science can probably be a very effective tutor. Getting familiar with Common Core curricula will make your job easier and help you get clients.

Property management

There are more unoccupied homes and buildings than ever before. Absentee owners spend a lot of time worrying about the condition of these properties and might hire you to check on them, inside and out, on a regular basis.

Services might include light housekeeping or maintenance. Be sure to position yourself as a caretaker, not a security firm. Again, that can bring up unnecessary licensing issues.

Marketing services

Small businesses often need help promoting their business but can't afford to hire a marketing company or designate an employee to handle the chore. But if you can write well and are somewhat market-savvy, you may be able to offer your services to local businesses in your community.

Services might include writing a press release and getting it to the local newspaper, or ghost-writing an article for one of the many free publications that cover local communities and are always looking for free content.

And of course, if you can set up and maintain a Facebook page, many small businesses may find that attractive.

Senior IT support

Many older people often struggle with, or are intimidated by, computers and the Internet, but want to participate. If you are somewhat tech-savvy – you don't have to be an expert by any means – seniors might pay to have you come to their homes to straighten out problems with their computers and show them how to do things.

With more seniors choosing to age in their homes rather than institutions, the whole field of senior care is opening up.

Online sales

If you like poking through yard sales and thrift stores, you may find you often come across things that you can purchase for next to nothing – but others would pay much more for if they only had access.

Using auction sites like eBay, you may be able to buy low and sell high, with a huge margin on each sale.

Temporary staffing

Since the Great Recession businesses have been moving away from employees and toward independent contractors. While you might be looking for a part-time job somewhere, you may find you have more flexibility if you set yourself up as an independent temporary staffing agency.

There are likely a number of small businesses in your community that would like to be able to call on you from time to time when an employee is sick or on vacation. Since you are an independent contractor, you are free to turn down assignments, giving you more flexibility than you would have as a part-time employee.

While starting a small business in retirement can be way to stay busy and earn extra income, be careful about selecting the business you start. In particular, stay away from pre-packaged work-at-home businesses. The business you start on your own is likely to be a lot more successful than something you pay for.

The Federal Trade Commission warns that consumers have lost thousands of dollars on schemes that sounded great but turned out to be scams.  

Retirees, and people nearing retirement age, often worry they won't have enough money to support themselves in retirement. Starting a sideline business mig...

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Retirement savings leave a lot to be desired

Here's some disturbing -- and depressing -- news about retirement saving.

A new report from Bankrate.com shows that more than a third of the people it surveyed (36%) have not saved any money for retirement. Additionally, 69% of 18-29 year-olds haven't saved anything, along with 33% of 30-49 year-olds, 26% of 50-64 year-old and 14% of people 65 and older.

The survey was conducted by Princeton Survey Research Associates International.

But hold on, the news isn't all bad.

Those who are saving are starting earlier. Twice as many 30-49 year-olds started saving in their 20s as opposed to their 30s. But 50-64 year-old