Our daily roundup of retirement news your clients may be thinking about.
Data from the Government Accountability Office show that only about 14% of small businesses offer employer-provided plans to their workers, according to this article on The New York Times. However, more small businesses are now looking at providing such a plan to their employees, as they get motivated by technological advances, an expense war among mutual fund companies, and innovative plan offerings from the industry. Companies also feel the need to offer attractive compensation benefits, including retirement plans, to lure and retain competent, long-term workers. “I know that investing can be daunting at first. This gave them an extremely easy method of investing into their future,” says a small business owner.
A survey has found that retirement saving is a "significant" cause of financial stress for many people, according to this article on USA Today. Saving for retirement seems hard for many clients because they have no fixed figures to achieve on a definite timeline, which "breeds uncertainty and stress," says a personal finance expert. People can improve their retirement prospects by treating savings as part of the budget, taking control of their expenses, saving as early as they can, taking advantage of their employer's matching contribution, and seeking help from a financial adviser.
"Retirement cash flow" is a more accurate term to refer to the money extracted from an in-retirement portfolio, writes Morningstar's Christine Benz. That is because retirement income does not account for the possibility that the cash that comes from the portfolio may already include the principal, she explains. Benz identifies the different strategies that retirees can use to generate cash flow from their portfolio, and discusses the pros and cons of each of these strategies.
A report from the Government Accountability Office says that only a third of 401(k) plans offer options that will enable the participants to generate an income and sustain them through retirement, according to this article on Money. To ensure that they won't outlive their nest egg, clients are advised to know how long their retirement funds can support them, create a detailed budget of their retirement spending, and determine whether their Social Security benefits and other guaranteed income will be enough to cover their retirement spending. Clients should also develop a withdrawal strategy for tapping into their retirement accounts without outliving the nest egg.
lients are cautioned not to buy an annuity unless they fully know how the product works and they need it as part of their strategy to secure their retirement, according to this article on CNNMoney. While annuities provide guaranteed income in retirement, people who buy these products give up their access to funds. Retirees who receive sufficient income from Social Security and pensions have no need for any annuity product.
