401(k) retirement balances exceed expectations
2018 won't be a fizzy year for COLAs after all
The 2% cost-of-living-adjustment to Social Security benefits would offset the increase in Medicare Part B premiums for retirees who are not subject to the "hold harmless" provision, writes an expert on Morningstar. Rich seniors who pay high Medicare premium surcharges are exempted from this provision, which prevents the dollar amount of Part B premium from exceeding the dollar amount of Social Security's COLA, writes the expert. "That contributed to keeping premiums flat for this year's non-protected enrollees, while the protected group will pay more."
Now in 401(k)s: Alternative investments
Many 401(k) participants are having the opportunity to diversify their portfolio with alternative investments as their plans include hedge funds, private equity and real estate options in their menu, according to this article on The Wall Street Journal. However, many plan sponsors are hesitant to recommend these investments, sticking to low-cost passive funds to their employees. “The necessary education required for alternative investments is a challenging headwind for plan sponsors,” says an expert.
Americans’ nest eggs have never been bigger
Data from Fidelity Investments shows that the average balance of their 401(k) accounts broke records after increasing to $99,900 in the third quarter, according to this article from Bloomberg. The average balance of IRAs also jumped to a record-high of $103,500 during the same period, says Fidelity. Both figures represent a 10% increase from year-ago levels, while the percentage of families with retirement accounts increased to 52.1% last year from 49.2% in 2013, the investment firm adds.
Planning for retirement: Do you have a winning hand?
Clients can increase the odds of securing their golden years by starting planning for retirement early, writes an expert from Kiplinger. They should not just rely solely on the 4% retirement rule and develop a sustainable withdrawal strategy based on their actual financial circumstances, writes the expert. "To maximize tax-planning flexibility, it is best to use a 'bucket' strategy when planning for retirement. Think about filling a short-term bucket with roughly 20% of your retirement assets, or three to five years of retirement needs, that can be tapped without creating a significant taxable event."
4 ways to create steady retirement income
Looking for a stable source of income in retirement? A Forbes contributor writes that buying an annuity product is "one simple solution." Clients who have stashed away $1 million for retirement may use the savings to build a Treasury bond ladder, invest in a low-cost index fund for dividends and appreciated shares, or purchase high dividend stocks. Investing $1 million in these options could turn in $40,000 annually in income, writes the expert.