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Showing posts from May, 2009

Clock Work?

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In recent weeks, those favoring a government solution to the issue of retirement security/savings have championed the soundness of Social Security. Despite (or perhaps because of) a recent Trustees report that revealed that the markets had taken a toll on Social Security’s finances, Alicia Munnell, director of the Center for Retirement Research, noted, “The system has enough money to pay full benefits for decades, although for a few years less than previously reported because of the financial/economic crisis.” And so it has. The same thing is true of the nation’s private pension plan insurer, the Pension Benefit Guaranty Corporation (PBGC), and in fact that point was made repeatedly by Charles Millard, the former director of that agency, as he was repeatedly questioned about the wisdom of championing a new, although hardly radical, IMHO, asset allocation shift that would have resulted in an asset allocation of 45% in fixed-income, 45% in equities, and 10% to alternative investment c

“End” Points?

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Several years back, after a day of meetings in Manhattan, I caught the train home. I wound up on one of those “milk run” trains that makes every stop along the way—and, trust me, there are a lot of stops between Manhattan and “home.” To make a long story short, I decided to take a short nap…and woke up just as the train was pulling away from my station. It wasn’t a big “miss,” mind you. But that 15-minute nap cost me about two hours of time and a lot of aggravation…and, of course, it could have been a lot worse. It seems that many things long taken for granted in our business are today being subjected to a whole new level of scrutiny, including the very efficacy of the 401(k). The most recent “target” is, of course, target-date funds—and the examiners no less than the U.S. Senate, the Securities and Exchange Commission, and the Department of Labor (see More Details Given on EBSA/SEC Hearing on Target-dates , Senate Committee Takes Aim at Target-Dates ) . That examination is not ne

College 'Bound'

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In just a couple of months, I will find myself in the unenviable financial position of having two children in college at the same time. Now, if you have put—or helped put—your children through college in recent years, you’ll have an appreciation for the impact of that statement. If your kids are younger—or if kids are not yet part of your household budget—well, let me just say you don’t have nearly as much time to get ready as you think you do. First off, you don’t really know how much it’s going to cost. There’s the whole private-versus-public decision (the costs of the latter will be heavily influenced by your current state of residence), and even that decision can be driven by the field of study your graduate chooses to undertake. Each school has different policies (and costs) about things like meal plans, student vehicles, and even how the dorms are furnished. But the worst of the variables is the sheer annual increase in tuition. My eldest, who will be a senior in the fall, w

Poll Positions

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There was an intriguing survey published last week, but one that, IMHO, generates as many questions as answers. The online survey (accurately, if somewhat inelegantly, titled “Investors’ Beliefs about the Role of Target-Date Funds in Retirement Planning”—see Workers Might Have Wrong Idea about Target-Date Funds ) captured the sense of 251 respondents, most (55%) of whom were earning less than $50,000/year, but many (75%) of whom were saving for retirement. A full third were age 55 or older, and none was younger than 25. Consequently, while we know nothing about how they are saving, or the size of the programs in which they participate, one might well expect that they have at least a passing familiarity with one of the most popular and powerful 401(k) investment tools—target-date funds. Not so. Only 16% said they had even heard of target-date funds prior to reading the description in the survey, and apparently even among those, 63% weren’t able to explain the concept. From the respo

Survival "Instincts"

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Several years ago, I bought my Dad—one of the world’s most proficient worriers—a copy of the “Worst Case Scenario Survival Handbook.” I did it tongue-in-cheek, of course. After all, how many of us really need to know how to escape from a mountain lion, how to take a punch, or how to land a plane? Not that there aren’t times when that knowledge might come in handy, but let’s face it—the “worst” case rarely happens. On the other hand, if you’re prepared for the worst case, you’re generally better prepared to deal with the inevitable bumps and potholes along life’s road (in my Dad’s case, I worried only that I would provide him with NEW things to worry about…). Lacking a politician’s motivations, I am disinclined to describe the events of the past several months as “worst case,” though there is no disputing that we are all working our way through a rough period. As a nation we have been in—and come through—rough periods before. Despite that, human beings seem inclined to see travail