Archives for October 2012
Employers: Most Workers Don’t Make Good Use of 401(k)s
Is a 401(k) retirement plan “adequate” if most workers who use it aren’t prepared for retirement? That’s the question raised by a new study from benefits consulting firm Towers Watson. The 401(k) system has come under a lot of criticism since the financial crisis hammered workers’ nest eggs. But the study, which polled about 370 large employers, suggests there may be a big gap between how managers and workers view the issue — and that managers don’t necessarily have a high opinion of the hoi polloi. The discrepancy: Towers found about two thirds — 65% — of employers believed…
401(k) fees in ‘plain English’ befuddle employers
Tom Schwab, the owner of a 15-employee mortgage company in Seattle, is used to dealing with complex financial forms. But when he opened a mailing detailing the costs of his company’s 401(k) plan, he was perplexed. “It was like getting a blood test,” Schwab says. “There’s a lot of data but no range to tell you what is normal.” His inability to make sense of the paperwork was all the more confusing because this was one of the new “plain-English” fee disclosures, mandated by the Labor Department, that started rolling out a few months ago. After much careful scrutiny, Schwab…
Among 401(k) Investors, a Big Information Gap
Question: How much time do you spend with the retirement-plan disclosures you receive from your 401(k) or individual retirement account? Answer: Probably little more than the time you’ve just spent reading these two sentences. A new study from Limra, a Windsor, Conn., research and consulting firm, found that two-thirds of Americans with defined-contribution plans or IRAs spend less than five minutes scrutinizing each disclosure statement. About 20% say they rarely — or never — read the documents. The research is tied to new rules from the Department of Labor, which require providers of 401(k)s and related savings plans to disclose additional information…
30-somethings now group most likely to doubt retirement security
WASHINGTON -- Younger Americans in their late 30s are now the group most likely to doubt they will be financially secure after retirement, a major shift from three years ago when baby boomers nearing retirement age expressed the greatest worry. This Sept. 21, 2012 file photo shows Republican vice presidential candidate, Rep. Paul Ryan, R-Wis. speaking at the AARP convention in New Orleans. Younger Americans in their late 30s are now the group most likely to doubt they will be financially secure after retirement, a major shift from three years ago when baby boomers nearing retirement age expressed the greatest…
Why Your Kids Need a Roth IRA
Making modest contributions during a child's teenage years can add up to a good amount by retirement. It's also tax smart. Working at a tender age is an American tradition. I'm sure lots of kids did just that over the summer, and some are still be doing it after school and over the weekends. What isn't so traditional is the notion of kids contributing to their own Roth IRAs. It should be a tradition, because it's such a good idea. Here's the scoop. Roth Contribution Basics All that's required to make a Roth contribution is having some earned income for…