What makes 401(k) loans risky?

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1.5 million retirees await congressional fix for a pension time bomb
Lawmakers agreed to form a congressional committee that would look into "multiemployer" plans and develop a measure to fix these plans' insolvency woes, according to this article in The New York Times. Some 1.5 million retirees stand to benefit from this initiative, which is included in a bilateral agreement to increase government spending. “It’s an urgent problem that needs to be fixed,” says Alicia H. Munnell of the Boston College Center for Retirement Research. “Unfortunately there’s an ideological divide — do you bail these people out or not?”

How to turn ‘found’ money into a retirement income stream
Clients who unexpectedly receive a windfall or incur savings from spending cuts are advised to use the money to maximum advantage and that is to develop the best retirement income plan, writes an expert on Kiplinger. For example, clients who have $1,000 in newly-found savings may want to lease a vehicle for $80 more monthly or boost payments for more comprehensive long-term care insurance plan or a life insurance policy, writes the expert. "These actions might also allow you to comfortably take larger monthly payments from your retirement account today. In addition, insurance offers powerful tax benefits because the proceeds are received tax-free."

4 ways your Social Security benefits are being reduced
Future Social Security retirement benefits are likely to decrease if full retirement age is raised, according to this article on Motley Fool. The government is also moving towards taxing more benefits, while the purchasing power of retirement benefits is dwindling steadily. Moreover, Social Security cannot sustain the current payout schedule beyond 2034.

How to save more for retirement and deal with volatility
Retirement investors are advised to revisit their portfolio, as the stock market is likely to be more volatile in the foreseeable future, writes a Forbes contributor. They should identify bond and stock investments that are volatile and shift to more stable options, such as municipal bonds and older, dividend-paying stocks. They should also assess their portfolio's asset allocation and make changes to achieve the desired stock-bond mix, writes the expert. The bottom line on volatility? "It's going to be a roller-coaster and won't go away. Focus on your long-term plan."

What makes 401(k) loans risky?
The new tax law has extended the grace period for outstanding 401(k) loans made by workers who switch jobs, according to this article on NerdWallet. This change will lure more 401(k) participants to borrow from their accounts, exposing them to greater risks, such as taxes and missed opportunities for compounded growth on the borrowed amount. Making a 401(k) loan a more viable option for the participants “is not the approach you want if your primary goal is retirement security,” says an expert.

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Retirement planning Retirement income Retirement withdrawals Retirement readiness Pension reform Pensions Social Security 401(k)