Friday Top Five: Retirement Related News for 8/28/2015

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From Forbes: Social Security Q&A: How Can We Maximize Child and Spousal Benefits?

Social Security may be one of your largest assets. What and when you collect will make a huge difference to your lifetime benefits.

Today’s Social Security question is about navigating Social Security’s rules to ensure maximum spousal and child’s benefits.

From PlanSponsor: Retirement Planning Takes a Life Vision

There is more to retirement planning than making financial calculations - more to living in retirement than securing an income stream.

Experts assembled for a retirement-themed webcast hosted by the American Institute of CPAs (AICPA) and 360 Degrees of Financial Literacy covered a range of topics, but some of the most interesting points of the discussion actually had little to do with specific investment products or 401(k) account withdrawal strategies.

From BenefitsPro: Claiming Social Security early is hurting retirees

One new study shows the vast majority of recent retirees are claiming Social Security benefits earlier than full retirement age, and that it’s costing them significantly. 

Nationwide Retirement Institute, a platform of Nationwide, the Columbus, Ohio-based insurance and financial services company, found that 83 percent of recent retirees claimed Social Security early. 

From BenefitsPro: Retirement savings, physical health challenging for workers

They may be seeking more help for their investments than for their health, but that doesn’t mean that people are preparing adequately for retirement.

Those are some of the findings of a new survey of 1,000 401(k) plan participants, commissioned by Schwab Retirement Plan Services. Survey results indicate that, although they know they need to save, more than a third (35 percent) say they aren’t saving more for tomorrow because they are unwilling to sacrifice their quality of life today, citing such examples as spending for dinners out and vacations. 

From CNN Money: Same-sex couples will get full Social Security benefits

Same-sex couples across the U.S. will now be able to collect spousal Social Security benefits, a Department of Justice official said Thursday.

While many couples may have thought that June's landmark Supreme Court decision legalizing same-sex marriage nationwide would have also applied to Social Security benefits, that was unclear ... until now.

Friday Top Five: Retirement Related News for 8/21/2015

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From PlanSponsor: Many Workers Wish They Had Started Saving Earlier

Nine in 10 workers have at least some regret about when they started saving for retirement, American Century found in a survey of 2,031 defined contribution plan participants. Seventy-five percent said they could have saved a little more in the past. More than half point to the first five years of working as they time when they could have saved more than they did. A majority said not saving enough for retirement was one of the biggest mistakes of their lives.

Despite this regret, half of those aged 55 to 65 and 60% of those 25 to 54 admit they are still saving less than they should.

From Center for Retirement Research: The Future of Retirement Is Now

Gray, small, and distinctly female.

This is what the director of MIT’s AgeLab, Joseph Coughlin, sees when he peers into the future of retirement.

“The context and definition of retirement is changing,” Coughlin said earlier this month at the Retirement Research Consortium meeting, where nearly two dozen researchers also presented their Consortium-funded work on a range of retirement topics. [...]

Coughlin spooled out a list of stunning facts to impress on his audience the dramatic impact of rising longevity and graying populations in the developed world, and he urged them to think in fresh ways about retirement. In Japan, for example, adult diapers are outselling baby diapers. China already faces a looming worker shortage, and Germany’s population is in sharp decline. In 2047, there will be more Americans over age 60 than children under 15.

From CNBC: Do you know when to claim Social Security? And how?

Most of us don't think much about Social Security early in our working lives, apart from noting the weekly toll on our paychecks. But as retirement nears, it's important to know when—and how best—to finally claim benefits from that program we've been paying into all those years.

From PlanSponsor: More Participants Find Retirement Plan Provider Resources Helpful

Quarterly statements from retirement plan providers continue to be seen as the most helpful resource to assist participants with planning, saving and investing for retirement, according to Transamerica Center for Retirement Studies’ 16th Annual Retirement Survey. Eighty-five percent of survey respondents in 2015 said quarterly statements are “somewhat” or “very” helpful. This is up from 71% in 2014.

The perceived helpfulness of online tools and calculators to project retirement savings and income needs on the retirement plan provider's website climbed to 83% in 2015 from 65% in 2014, while mobile applications that provide the same tools were somewhat or very helpful to 59% of participants in 2015, compared to 32% in 2014.

From BenefitsPro: Top 5 dreams of workers planning retirement

Forget all that hooey about workers dreamingly longingly of second careers in retirement, pursuing the businesses they always wanted to run, and working for satisfaction other than a paycheck.

According to the 16th annual Transamerica Retirement Survey from Transamerica Center for Retirement Studies, the great majority of workers have other dreams for retirement than work, no matter how rewarding it might be.

Friday Top Five: Retirement Related News for 8/14/2015

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From CNN: Baby Boomers have too much retirement savings in stocks

CNN Money: Christine Romans video
It won't matter how hard you worked to save for retirement if you lose a big chunk of it in the stock market a few years before you quit the workforce.

That nightmare scenario can be avoided by moving your retirement savings into less risky investments as you get older. But a new report from Fidelity says that Baby Boomers are keeping too much of their assets in the stock market.

From Forbes: Retirement Coaching: What Are You Carrying Into Retirement?

I’m not sure what compels me to do it, but every time my wife comes home from the grocery store I have this inherent need, a deep rooted desire, to carry everything in with one trip to the car. Mind you, we have four kids, plus a dog, and guinea pig, so as you can imagine, when I reach the car I am greeted by a sea of grocery bags. [ ... ]

While many of the things you reach the door with are essential goods for retirement, trying to get everything through the door usually means something has suffered along the way. It could be a relationship, healthy lifestyle, desire to participate in or experience certain activities, or even the ability to find joy outside of work.

From Center for Retirement Research:Retirement: a Priority for Millennials?

Ages 25 - 34: 401(k) Participation Rates
Vanguard’s 2014 data from its large 401(k) client base shows that 67 percent of young adults between 25 and 34 who are covered by an employer plan are saving – this is well above a decade ago.

A survey recently by the Transamerica Center for Retirement Studies found evidence that this generation makes retirement a priority: a majority of working adults in their 20s and early 30s – now the largest single demographic group in the U.S. labor force – view retirement benefits as “a major factor in their decision on whether to accept a future job offer.”

From Forbes: How Four Millennial Sisters Joined Forces To Demolish $182K Debt Within Two Years

When four 20-something sisters in the small town of Plainview, Texas, realized they were all drowning in debt and scratching to get by, they decided to band together and tackle their problem as a family.

“We had accumulated $182,000 in student loans, credit cards and car loans collectively,” said Rufina Barrientos, a clinical laboratory scientist, now 30. “Our yearly income came out to about $106,000, so it sounded plausible that we could effectively pay down our debt in three years. Being the youngest, I thought I was getting the best deal out of the arrangement. I was two years out of college, when most student loans take 10 or more years to pay off. Score!”

From CNN: 9 things to know about Social Security as it turns 80

The program was signed into law by FDR 80 years ago Friday. At the time, most people had lost any savings they had during the Great Depression, leaving them with little for retirement. Some companies provided pensions, but they were a rare benefit.

The program was largely uncontroversial, said Eric Yellin, a history professor at the University of Richmond. It sailed through Congress and was hugely popular all the way into the 1970s, he said.

Things have changed. Now, Social Security is more of a political punching bag. As the presidential election heats up, reforming the program will undoubtedly be a hot topic.

Here's what you should know to keep up with the conversation.

Bonus Article - U.S. Census Bureau: Annual Survey of Public Pensions: State- and Locally-Administered Defined Benefit Data Summary Report: 2014

This report is part of a continuing series designed to provide information on the finances, including that of the pension funds, of the United States’ nearly 90,000 state and local governments. The 2014 Annual Survey of Public Pensions provides data on membership, assets, revenues, and expenditures of state- and locally-administered defined benefit pension plans.
Related: Key Facts Regarding Funding of the Missouri State Employees’ Retirement System

Continuing Life Insurance as a Retiree

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Is it true that the $35,000 life insurance is only provided while still employed, not after retirement?
Not entirely. You have options for continuing your MOSERS life insurance after retirement.

As a benefit-eligible state employee*, you automatically receive one times your annual salary in basic life insurance at no cost to you. (So, for you, that may be $35,000. It would be more or less for others, depending on their salary.) You may also purchase optional life insurance through MOSERS where you pay the premiums. This is also group, term life insurance.

At retirement, if you retire within 60 days of leaving state employment, the state will continue to pay for $5,000 of basic life insurance coverage for your lifetime. You have 60 days from the date of retirement to make an election to port or convert the remaining basic life insurance to an individual policy through Standard Insurance Company if you meet eligibility requirements.

Additionally, at retirement, you may elect to continue purchasing any amount of MOSERS optional life insurance coverage from $1,000 up to a maximum of $60,000 (in increments of $500). However, the amount of coverage you carry into retirement cannot exceed the amount you carried while actively employed. You have 60 days from the end of the month in which you leave state employment to make an election to convert the remaining optional life insurance to an individual policy through Standard Insurance Company if you meet eligibility requirements.

Also, if you retire under the “Rule of 80” (MSEP 2000), or “Rule of 90” (MSEP 2011), you may retain all of your optional life insurance coverage until age 62. At age 62, your coverage will automatically reduce to a maximum of $60,000.

If you terminated optional life insurance coverage through MOSERS at retirement (or did not have any), it cannot be reinstated or added after retirement. Please see the Life Insurance Handbook or contact Standard Insurance Company at (800) 378-4668 or COBSS@standard.com for more information.

*MOSERS' life insurance is not available to employees of the Department of Conservation or state regional colleges/universities except for Lincoln University and State Technical College of Missouri.

When the Temporary Benefit Stops

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I am currently retired. The State pays an additional benefit until a certain age. At what age will this supplemental payment drop off?
If you’re referring to the temporary benefit, it ends the month you turn 62, but the base benefit continues for your lifetime (unless you decide to return to work for the state in a MOSERS benefit-eligible position). We posted an article on our website earlier this year that explains the temporary benefit in more detail.

What Does Vesting Mean?

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I am just interested in getting a clear understanding of benefits as far as retirement and full investment if that is what it's called. I will be here at the courts for 5 years at the end of this month, and just wanted to know as far as benefits what does that mean?
To be “vested” means you have worked long enough for the state that you are eligible for a future retirement benefit through MOSERS. (The vesting requirement for MSEP and MSEP 2000 is five years of credited service; for MSEP 2011 it is ten years of credited service.) Once you meet the age and service requirements and retire under a MOSERS defined benefit (DB) plan, you are guaranteed a lifetime pension benefit. The longer you work for the state and the higher your pay; the higher your monthly retirement benefit will be.

The formula for calculating a retirement benefit for members of MSEP 2000 is: Final Average Pay x Credited Service x .017 = monthly retirement benefits. For example, we would calculate the monthly retirement benefits for an MSEP 2000 member who has a final average pay of $2,500 per month and has 25 years of service with the state like this: $2,500 x 25 x .017 = $1,062.

More detailed information and an example of how your benefit adds up over time is available on our website in our member handbooks and you might find this video about vesting helpful also. Most state employees also receive their life insurance and long-term disability insurance through MOSERS. Benefits are a significant part of your total compensation package.

We suggest you register for a password to access your secure Member Homepage on the MOSERS website, if you haven’t already done so. With a password, you can create your own benefit estimates, view your annual benefit statements, complete and submit many forms, register for a PreRetirement seminar, and, when it’s time, even retire online!


Friday Top Five: Retirement Related News for 8/7/2015

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From Governing: After a Few Years Afloat, Pension Plans Start Sinking Again

What's shaping up to be a bad year for pension plans could give ammunition to politicians who want to change how they work and cut employee benefits.

Public pension plans across the country are missing their annual investment targets by wide margins this year, a trend that could put continued pressure on their governance and benefits.

From Pension360: New Jersey Supreme Court Will Hear Frozen COLA Case

The state’s high court will soon decide — it was announced on Thursday that the state Supreme Court will hear the lawsuit, brought by retirees, that challenges the legality of the frozen COLAs.

The central question is whether cost-of-living adjustments are part of public workers’ contractual rights; a lower court in 2012 said no, but an appeals court later said yes.

From Forbes: How A Couple Of 'Frugal Weirdos' Are Saving 71% Of Their Income So They Can Retire At Age 33

What do you do when you’re fed up with your job and always living for the weekend?

If you’re this young Boston couple, you decide to save more than two thirds of your income so you can retire to a homestead in the woods of Vermont before your 35th birthdays.

From Forbes: Is It Time To Abolish Mandatory Retirement?

A few weeks ago I was at a dinner for the kick-off to a three-day program in New York City I attended called Age Boom Academy, whose theme was Global Aging: Danger Ahead? Our dinner speaker was John Beard, director of the World Health Organization (an arm of the United Nations) Department of Ageing and Life Course, and the question he posed to all of us was: “What is old?”

It made for some lively conversation.

From The Center on Aging & Work: What does the future hold for “emerging” retirees? 

As a society, we are just starting to grapple with the wide-reaching implications of population aging and its effect on working lives. Many reports and surveys have described the changing expectations about work and retirement for the Baby Boom generation. (See for example, recent reports from SHRM, AARP, and Careerbuilder).

This week's bonus article:

From The Sacramento Bee: Here's a List of Public Pension Debt for Every State

View a map of pension debt for each state broken down by debt per resident. The article also links to a more detailed spreadsheet ranking each state by total debt (Missouri is #25).