Hopefully the last time you saw your financial adviser, he wasn't in handcuffs, answering to federal investigators about Ponzi schemes he funded with your retirement money.

So how do you ensure that your broker or adviser isn't doing something shady with your cash? Personal finance columnist Eileen Ambrose offered some tips for making sure your financial advisor is no Madoff in her Sunday column.

The simplest way to protect your money stems from an old adage: 

Continue reading "Finding a trustworthy financial advisor: Consumer Sundays" »

Posted by Liz Kay at 10:53 AM | Permalink | Comments (0)
Categories: Personal finance, Retirement
        

Let's face it: it's often difficult for couples to talk about money, and that includes discussing retirement options, according to Eileen Ambrose's excellent Sunday column.

At least 82 percent of those surveyed disagree on at least one element of their futures together, according to her column.

This surprised me a lot, because I thought that people who had been married for years would have an easier time discussing their hopes and priorities than those just starting out.

In this era of credit crises and real estate dilemmas, it seems like financial intimacy is the new intimacy. People seem to have just as hard a time talking about their financial history as their sexual past (if not more so).

But knowing where your partner stands when it comes to money --- both his or her current situation along with their attitudes and habits --- can tell you a lot about his or her personal hang-ups and personality. And unlike when you're single, other people are affected by your money decisions.

It seems like marriage is all about learning to make compromises, particularly about limited resources such as money and time. So, the bottom line is, the sooner you start talking about what your goals for retirement might be (such as travel, where you'll live, whether one or both of you will work, etc.) the easier it will be to plan with those goals in mind.

So how do you make those talks more interesting, no matter what stage you're in?

Here's one unusual recommendation:  

Continue reading "Financial intimacy is the new intimacy" »

Posted by Liz Kay at 11:34 AM | Permalink | Comments (1)
Categories: Personal finance, Retirement
        

There's more to picking a target-date fund than knowing when you'd like to retire, advises Eileen Ambrose in her Sunday personal finance column.

Target-date retirement funds are meant to help people too busy to select their own investments. In a nutshell, most guidelines suggest putting your retirement money into more volatile options like stocks early on and then gradually moving into more conservative alternatives such as bonds as you get older.

With target-date funds, the fund managers make that shift automatically, so investors have fewer decisions to make.

However, Eileen points out that you still have to monitor where that money is going. Look at the prospectus to ensure the fund's investment strategy matches your own risk tolerance, whether you're pretty conservative or if you enjoy the thrill of the market's ups and downs.

Also, don't overlook the fees charged by these funds. Remember: there's a price for convenience, which is valuable. By investing in a target-date fund, you're paying for a fund manager's expertise.

Continue reading "Target-date funds & Lake Montebello restrooms: Consumer Sundays" »

Posted by Liz Kay at 9:11 AM | Permalink | Comments (0)
Categories: Investments, Personal finance, Retirement, Watchdog
        

It’s hard to be optimistic about lots of things in today’s recession. So when the Employee Benefit Research Institute conducted its 19th annual retirement confidence survey, it’s not surprising that our optimism hit a record low.

The 2009 survey released today found that 13 percent of people said they were “very confident” of having enough money for a comfortable retirement. Last year, 18 percent expressed such confidence — which also was a record low since they survey started asking the question in 1993.

Workers say they plan to work longer and work in retirement to pad their income. The survey found that 28 percent changed their retirement date in the past year, and most of those expect to work longer to boost their nest eggs. About one in five plans to work into his or her 70s.

The survey also found that people who planned to continue working in retirement for extra cash rose to 72 percent this year. Just over one-third of retirees actually have a job in retirement.

The median age that people expect to retire is 65, the survey found. The median age they actually retired: 62. Nearly half of retirees said they left employment earlier than planned.

Among current retirees surveyed, only 20 percent — another record low — expressed high confidence of a financially secure retirement. Just two years ago, 41 percent were highly confident that their retirement would be financially fine.

Altogether, not a very optimistic picture. And it appears that what planned for retirement, doesn't quite fit reality. What do you think?

EBRI's survey is based on 1,257 phone interviews conducted in January.

Posted by Eileen Ambrose at 5:00 PM | Permalink | Comments (0)
Categories: Retirement
        

Have you decided to postpone retirement because of the economy or a nest egg that’s been hit hard of late? You have plenty of company.

A new survey by the American Institute of Certified Public Accountants finds that 35 of financial planning clients approaching retirement have decided to postpone their departure from the work force because of the economy. That’s up 3 percentage points from the year before.

Nearly 10 percent of those delaying retirement say they will continue working for six or more years. About two-thirds will postpone retirement by no more than five years. “What this suggests is that 70 is the new 65,” says James Metzler, a vice president with the accounting group.

Besides pushing off retirement, 60 percent of those surveyed said they are delaying vacations; about half are waiting to buy a car or to purchase or sell a home and 42 percent have put home renovations on hold.

The accountants’ survey landed in my mail box around the same time as this email from a reader, responding to today’s column about whether you should continue saving in a 401(k) if your employer no longer matches your contributions. The reader argues that older workers face a new reality.

He writes: “The reality of the situation I think is that few people have enough spare income to save much of anything...Yes savings is a must, but what do you tell someone who is 55 and lost a great deal of money to do now? You tell them that they will probably never retire comfortably, sack money away somewhere that is as safe and bears a modicum of interest, and go get a second job. We need to tell the truth to ourselves I think.”

So what do you think? And let’s hear from you if you decided to work longer or postponed other financial moves.

Posted by Eileen Ambrose at 11:02 AM | Permalink | Comments (3)
Categories: Retirement
        

Sorry folks: somehow this didn't post yesterday as I planned. Enjoy this morning!

We usually like to post Consumer Web Site of the Week a little earlier, but it's been a busy news day. So, here's a late afternoon toy to fool with that's only slightly less depressing than checking out your retirement investment losses.

Yesterday the New York Times posted a "comeback calculator" that allows you to figure out how long it will take for your retirement accounts return to their pre-recession levels. It will also tell you how much you'll have in retirement, but any run-of-the-mill calculator can do that!

Just plug in your previous balance, your current balance and your annual contributions, and let the calculator do the rest. Adjust the rate of return for optimistic outlooks and drearier ones.

Yes, we'll be working for a long, long time. 

Posted by Liz Kay at 4:25 PM | Permalink | Comments (0)
Categories: Budgeting, Investments, Retirement
        

Power of attorney is an important responsibility, so choose wisely, Eileen warned us this week.

According to Eileen's column yesterday,

... the power of attorney gives your "agent," the person acting on your behalf, broad authority over your finances with little or no monitoring.

Few protections exist, unfortunately, to keep the person you've selected from paying their own bills with your savings if you're unable to make those decisions yourself.

AARP is lobbying to have a Uniform Power of Attorney Act to try to keep folks from taking advantage, but until then, consider requiring the agent to share financial records with someone else, to ensure that no hanky-panky happens.

And over in Watchdog World, we addressed a pretty common reader complaint ... 

Continue reading "Consumer Sunday: power of attorney and BGE's tree-trimming schedules" »

Posted by Liz Kay at 8:55 AM | Permalink | Comments (0)
Categories: Personal finance, Retirement
        

Eileen's Sunday column highlights some of the financial lessons we've learned (or been forced to learn) in 2008.

The events of the year really reinforces why financial gurus advise maintaining an emergency fund for unexpected expenses, investing only long-term money in the stock market (nothing you'd need within five years) and to expect risk in all investments --- even real estate.

Some of these concepts might not have been as clear during the boom years, but 2008 definitely put things in perspective.

There are still some questions that remain unanswered in this week's Watchdog, however ...

Continue reading "Consumer Sundays: 2008's financial lessons and lights out at the Harbor Promenade" »

Posted by Liz Kay at 8:10 AM | Permalink | Comments (0)
Categories: Budgeting, Credit cards, Retirement, Watchdog
        

Well, I hope Eileen's column reassured you about what benefits bankrupt or belly-up businesses must pay --- traditional pensions are protected, as are 401(k) plans.

However, there is plenty that isn't guaranteed, like health insurance, and life insurance. So it's worth it to factor that potential uncertainty into your financial plan --- and your emergency fund.

This week's Watchdog sought out the reason why northbound Aisquith Street between Baltimore and Fayette streets has been closed for months. 

It turns out ... 

Continue reading "Consumer Sundays: benefits from bankrupt businesses and details about detours" »

Posted by Liz Kay at 6:01 AM | Permalink | Comments (0)
Categories: Budgeting, Healthcare, Retirement, Watchdog
        

So, hypothetically speaking, you work for a business that has recently declared bankruptcy or otherwise goes kaput.

Unfortunately, given the downward trajectory of our markets lately, this is a reality that affects more and more people every day.

Read Eileen's column Sunday to learn the fate of your 401 (k), pension and other accounts that are tied up with the company's messy finances.

And over in Watchdog ...

Continue reading "Consumer Sundays: what happens to your 401 (k) and pension if your employer goes bankrupt?" »

Posted by Liz Kay at 4:40 PM | Permalink | Comments (0)
Categories: Budgeting, Economy, Personal finance, Retirement, Watchdog
        

How much do you need to save for retirement to maintain your lifestyle?

Aon Consulting suggests some figures in a new study released today. They take into account that expenses in retirement can go down, given that retirees are often in a lower tax bracket and they are no longer saving for retirement.

Here are some examples:

Say you’re earning $50,000 at retirement. You would need to replace 81 percent of that income annually to maintain your standard of living. More than half of your annual income — or $25,500 — would come from Social Security. While the rest, or $15,000, needs to come from your workplace plan or other savings.

Or, what if you make $150,000? You will need to replace 84 percent of your salary to maintain your lifestyle. Social Security, though, will only make up $34,500 of that. You need to come up with $91,500 from savings annually.

Of course, how long you live also determines how many years you’ll need to finance.

Take a married couple earning $80,000. If they are comfortable with a 50-50 chance of running out of money, they should plan for their assets to last 27 years, Aon says. That means accumulating $420,000 in savings before retiring.

A couple wanting a 95 percent change of not outliving their assets should plan to have their assets last at least 38 years and save $715,000 before retiring.

Aon also looked at what percentage of your pay you need to save based on the age you start salting away cash for retirement. Of course, the earlier you start, the less you have to save each paycheck.

A 25-year-old man making $50,000 would have to save 4.1 percent of pay each year until 65, Aon figures. A 45-year-old would have to save 13 percent of pay; a 55-year-old would need to sock away nearly 32 percent of pay.

Aon figures may differ somewhat from earlier studies by other companies. But the message is much the same: Start saving for retirement with your first full-time job. It can be painful if you wait.

Posted by Eileen Ambrose at 10:48 AM | Permalink | Comments (0)
Categories: Retirement
        

With money being tight these days, it may be tempting to borrow against your 401(k).

Many workers do, figuring it’s better than borrowing from a bank. You repay yourself with interest, not the bank. But is it really a good option?

Now there’s an online calculator that helps your show why you might be given on by borrowing.

 “The primary disadvantage of taking a 401(k) loan is the loss of compound interest and dividends that would have accrued if the money had not been borrowed,” says the National Center for Policy Analysis which created the calculator. “Moreover, the interest paid back into the account is unlikely to equal the interest earned by 401(k) investments.”

Check it out. You can plug in your balance, how much you want to borrow, how many years to retirement and the expected rate of return on your investments.

For example, take the case of a 35-year-old with $50,000 in her account. She contributes $500 a month, and her employer kicks in $250. She repays her loan over five years at an interest rate of 6 percent. Her investments are earning a rate of 7 percent a year.

That loan makes a huge difference. By borrowing, her account is $316,443 less than if she didn’t take the money out.

The calculator assumes that you stop making contributions to the plan while you’re repaying the loan. Some companies prohibit contributions from those with outstanding loans, the NCPA says. Sometimes people don’t have enough to money to make both contributions and repayment.

Still, the message that NCPA is trying to get across comes in clear. Borrowing against a 401(k) is far costlier than workers realize and should be avoided.

Posted by Eileen Ambrose at 5:29 PM | Permalink | Comments (1)
Categories: Retirement
        

To keep up-to-date on the latest with traditional pensions and 401(k)s, check out a new blog from the Pension Rights Center. The nonprofit has been advocating for a secure retirement for workers for more than 30 years.

“This blog is a way to highlight things that might have slipped under the radar – under your radar, under policymakers’ radar, under the media’s radar – but that are worthy of discussion. It’s also a way for us to talk about things that are all over the radar – the big issues of the day in pensions,” writes the Center’s Karen Ferguson. “We might alert you to a recent court decision that affects your pension. We might publicize a protest by workers who are trying to protect their pensions. We might explain a recent pension problem that we helped a worker with because it illustrates a loophole in the pension system.”

It also will feature the latest company to freeze its pension. Right now, that’s Gannett.

Posted by Eileen Ambrose at 1:59 PM | Permalink | Comments (0)
Categories: Retirement
        

Maybe it’s because we loved our jobs so much. Or, maybe we realize we just don’t have enough money.

But workers from ages of 25 and up today all expect to retire later than their counterparts polled a decade ago.

In 1998, nearly a quarter of workers expected to retire before the age of 60. Now, only 11 percent are that optimistic.

Back then, only 9 percent envisioned retiring at 66 or later. Now, 30 percent expect that. In fact, no matter what age group - 25 , 35, 45, 55 or older – workers were about three times more likely to say today that they will be retiring after 65 than a decade ago.

These are some interesting findings in the Retirement Confidence Survey by the Employee Benefit Research Institute.

One reason for such a change may be the economic climate. In 1998, we were in raging bull market. Remember when everyone bragged about the size of their 401(k)s? Since then, we’ve had a recession, a bear market and perhaps another recession. These are dimmer times.

The EBRI survey also noted that nearly two-thirds of workers under 55 expect to work for pay in retirement, compared to 54 percent of those 55 and up. Mostly, they said they wanted to stay active and involved in retirement. But health insurance benefits and needing money to make ends meet played a big role, too.

So what age do you expect to retire and why?

Posted by Eileen Ambrose at 7:08 AM | Permalink | Comments (2)
Categories: Retirement
        

Not surprisingly, Americans’ confidence in their ability to comfortably retire has fallen to its lowest level in 7 years. In other words, the last time a recession hit.

These findings about our lack of confidence are part of the 18th annual Retirement Confidence Survey by the Employee Benefit Research Institute.

In the survey released today, the group found:

The most optimistic people surveyed last year suddenly became pessimistic. Twenty-seven percent last year were very confident about having enough money for retirement. That’s now down to 18 percent. That’s the steepest one-year drop in confidence in the survey’s history. Among the least confident were younger workers and lower-income workers.

Last year, 41 percent of retirees were sure they would have a secure retirement. This year it’s down to 29 percent.

Fewer workers — 38 percent —expect to have employer-paid health insurance in retirement. Last year, 42 percent were counting on insurance from an employer.

Health care costs are a big worry for retirees, too. About 54 percent of those who retired early did so because of health problems. And 44 percent of retirees spend more on health care than expected.

Savings are modest. While 72 percent report saving for retirement, about half of workers have less than $50,000 in savings and investments. Twenty-two percent of workers and more than a quarter of retirees have no savings.

Any good news?

 More workers — 47 percent— have tried to calculate how much they will need to retire. Back in 1996, only 29 percent had done so.

The survey was conducted in January with 1,057 workers and 265 retirees.

Posted by Eileen Ambrose at 7:40 AM | Permalink | Comments (0)
Categories: Retirement