How much do employees need to retire?

Retirement-041118
Greek pensioners play cards inside a 'Friendship Club' for the elderly of the Athens municipality in Athens, Greece, on Friday, April 7, 2017. In a proposed compromise discussed on Tuesday, Greece would reduce its pension outlays by 1 percent of gross domestic product in 2019 and lower its tax-free threshold in 2020 by a similar amount, according to three officials with knowledge of the talks. Photographer: Yorgos Karahalis/Bloomberg

Welcome to Retirement Scan, our daily roundup of retirement news.

Strategies for managing a changing risk tolerance
Investors need to know their tolerance for risk to determine the right allocation for their portfolio, writes an expert in Kiplinger. “To correctly identify your risk tolerance, you must not only understand how you react to risk, but also how the market environment and your investment experience have impacted you. Risk tolerance also must take into account your investment goals, your age and how much you have in savings,” he writes.

How much do employees need to retire?
Workers need to have saved a certain amount at a certain age to stay on track for securing their retirement, says an expert in this Motley Fool article. For example, employees in their 30s should have saved an amount that is equivalent to their yearly income based on a research from Fidelity. “If they make $50,000 a year, they should have $50,000 in their 401(k) or IRA, whatever they’re saving. Those factors jump to three times income by age 40, six times by 50, eight times by 60, and then 10 times by retirement, assuming a retirement age of 67,” he says.

Employees’ pension plan benefits may not be as ironclad as they think
The Pension Benefit Guaranty says that employers are allowed to end their pension plans, a columnist from The Washington Post writes. Companies who can prove that their plan has enough funds to pay all the benefits to pension participants can apply for standard termination. Employers also have the option of applying for distress termination if their plan is not fully funded and they are under financial distress. “If the application is granted, PBGC will take over the plan as trustee and pay plan benefits, up to the legal limits, using plan assets and PBGC guarantee funds,” she says.

Early retirement could be derailed by health insurance premiums
Data from the Centers for Medicare & Medicaid Services show a 40% decline in enrollment in Affordable Care Act health plans from 2016 to 2018, according to this article in Money. This can be attributed to the hefty health insurance premiums. This should prompt employees who intend to retire early to rethink their plans. “It’s definitely a factor. It’s something that people looking to retire early who are not Medicare eligible yet need to be aware of and consider,” says an expert.

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