Posts

Showing posts from February, 2006

Same Old Situation?

Benjamin Franklin once suggested that the definition of insanity is doing the same thing over and over and expecting different results. Our household was treated to a real live example of that over the weekend when our beagle/German shepherd mix got it into his head - - - and, I might add, for the second time in six months - - - that chasing a skunk was a smart thing to do. What troubles me most about the event (and there are MANY troubling aspects) is that at some level, I think, he actually LIKES his new smell! Last week I was talking to a group of plan sponsors about strategies for boosting participation in their plans, and I was struck by how “traditional” our perspectives on saving for retirement were. Sure, we’re talking in a new way about some old ideas (like automatic enrollment), and we’ve reworked some old ideas so that they seem to be more effective (like lifecycle funds), and while we have added some new thinking to some of those old ideas (like contribution acceleration

An Uncertain Future

Benjamin Franklin once observed that in this world, nothing is certain but death and taxes – and, certainly at this time of year, we’re all reminded in an up-close and all-too-personal way of the certainty of taxes. What we’re not as certain about, of course, is the rate of taxation, and how it will be applied to our individual situation(s). And unfortunately, certainly for those of us who work with qualified retirement plans, we’re also increasingly uncertain about the prospects for the key provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 – EGTRRA. The impact of that legislation on our business can hardly be overstated. In a single stroke, it boosted stifling contribution limits for defined contribution programs, lifted arcane limits on compensation and benefits, provided economic incentives for lower income workers to participate in these programs, and gave older workers a chance to “catch up” on missed opportunities to save for retirement. EGTRRA levele

The Lure of Averages

A couple of weeks ago, Fidelity put out a press release highlighting the fact that Boomers turning 60 this year surpassed the $100,000 mark in average account balance, a figure based on Fidelity recordkeeping data. While there was something almost celebratory about that headline, I couldn’t help but be disappointed by that figure. Sixty-years-old and only $100,000 in their 401(k)? I’ve played with enough retirement planning calculators in my time to know that the odds of that sum providing a comfortable retirement – even with another five to 10 years of accumulation – weren’t very good. Of course, the balance ($112,000, actually) was an average – and one ought always to be cautious in extrapolating too much from those combinations. Still, in the very next sentence, Fidelity projected that the older Boomers (those age 50-59, including those in the aforementioned average) are on track to replace 60% of their pre-retirement income. And while there was a cautionary tone in the press r