Whether you are an employer offering group retirement plans or an individual concerned with your own post-retirement financial stability, these headlines can help guide your decisions in 2012.
Excerpt: Certainly, few of us need to ask whether the plans matter: We’ve resigned ourselves to our dependency when it comes to retirement savings. Americans now hold $4.3 trillion in 401(k)s and similar defined-contribution plans, nearly three times as much as the $1.6 trillion parked in annuities. The plans weren’t originally designed to be the nation’s primary retirement lifeline — they started as a minor tax perk for senior executives — but they’ve grown inexorably, as ever more big companies have used them as a cheaper alternative to traditional pensions. Only about a third of the corporate work force can look forward to a monthly pension check today, down from 80 percent three decades ago; over the same period, assets in 401(k)-like plans have grown 16-fold.
Excerpt: In a subsequent study, Mr. Bengen added U.S. small-company stocks to the mix, which increased the portfolio’s volatility and potential return. To adjust for this, he revised the withdrawal rule to 4.5%.
In recent years, as stocks have become more volatile, many observers have wondered whether Mr. Bengen’s rule still holds. So far, he thinks it does.
Excerpt: Now is a great time to investigate how you can make improvements to your money management – and bumping up the contributions you make to your 401k plan is a great place to start.