Showing posts with label retirement security. Show all posts
Showing posts with label retirement security. Show all posts

Retirement Related News for 12/18/2015

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From Pensions & Investments: DB plans consistently outperform DC — Center for Retirement Research

Defined contribution plans consistently underperform defined benefit plans, most likely due to higher investment fees, said a new research brief issued Tuesday by the Center for Retirement Research at Boston College.

Even after factoring in plan size and asset allocation, defined benefit plans outperformed defined contribution plans by an average of 70 basis points per year between 1990 and 2012, the report found.

The full report is available on the center's website.

From CNN Money: How to Tell Whether You Can Afford to Retire Early

I'm 62 years old and concerned that I might lose my job. If that happens, would I be able to retire early on the $500,000 I have in my retirement accounts? --Michael M.

The answer comes down to how much annual income you can realistically expect to count on the rest of your life if you stop working now and whether that income would be sufficient to fund a retirement lifestyle you consider acceptable.

It's impossible, of course, for me to give you a definitive answer without having a lot more specifics about your finances as well as what sort of post-career life you envision. But I can suggest a process that should at least enable you to come away with a decent idea of how you might fare.

From The Huffington Post: The Year in Retirement Security: A Look Back at 2015

For years firefighters, nurses, teachers, social workers, roads crews and others across the country have paid a percentage of their salary toward their retirement security. Notably, in Illinois and New Jersey irresponsible politicians did not do the same. Instead, they skipped or reduced annually required contributions to their pension systems. Between 2001 and 2013, Illinois paid less than 80 percent of what it should have to its pension systems. New Jersey paid less than 40 percent of its obligation over that same time period.

In 2015, workers across the country learned if they work in a state that is naughty or nice. Responsible states that make their yearly required pension contributions, not surprisingly, have pensions that are fully funded and in some cases have surpluses. That protects both taxpayers and workers.

From Forbes: As Trillions Move Into IRAs And 401ks, High Fees Bite Retirement Security

A new study covering investment returns from 1990 to 2012 finds that 401(k)s and other defined contribution plans underperformed traditional defined benefit pension plans by an average of 0.70% a year, even after differences in asset allocation were taken into account. The likely explanation? The high mutual fund fees workers pay when they invest their 401(k) stash—fees that far exceed the investment costs of traditional company run defined benefit plans, conclude authors Alicia H. Munnell, Jean-Pierre Aubry and Caroline V. Crawford of the Center for Retirement Research at Boston College.

While a 0.70% difference might not sound like a big deal, it means a worker who contributes to a 401(k) over his whole 40 year career will have about 15% less in assets at retirement, the CRR calculates.

From BenefitsPRO: Women’s Pension Protection Act introduced in House

The House version of the Women’s Pension Protection Act (H.R. 4235) was introduced by Representative Jan Schakowsky, D-Illinois, and Senator Patty Murray, D-Washington.

Earlier in the year, Murray introduced the Senate version of the legislation.

Among the provisions of the proposed legislation is an increase in spousal protection that requires spousal consent before a married worker can take money out of a retirement account; currently, only defined benefit plans offer such protection, but the WPPA would extend spousal protections to defined contribution plans, including 401(k)s.
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