Retirement «

    How to invest for retirement

    Investing for retirement is more complicated than opening an IRA or maxing out your 401(k). In fact, according to a survey by Charles Schwab of people 50 and older, nearly one in three say they find investing for retirement a bigger challenge than dealing with expenses or saving money. And no wonder: Pensions have mostly given way to so-called defined contribution plans—think 401(k), 403 (b) and 457 plan—which have placed the burden of investing to provide for a steady income on your shoulders. Park your money in the right accounts. The U.S. tax code offers several advantages for retirement investors. •Go to the max. The government sets annual contribution limits on retirement accounts. Do your best to max them out: 401(k) accounts and other workplace retirement plans have a $16,500 annual contribution...


    What’s the best age to retire?

    Retiring at the optimal age should not be left to chance, according to Kenn Tacchino, a professor of taxation and financial planning at Widener University, and Patricia Tacchino, co-authors of a soon-to-be-published paper in Benefits Quarterly . Rather, choosing a retirement age needs to be a rational decision that accounts for a variety of confusing and competing consideration, the Tacchinos wrote. And to reach a rational decision, the authors say, would-be retirees would benefit from using a systematic checklist of issues to make the optimal choice. TAXES Click to Play How to slash your tax bill in retirement Big tax bills can devastate your retirement savings. MarketWatch’s Robert Powell and Andrea Coombes talk about strategies to employ before and during retirement to lower your taxes. How...


    How student loans could hit your Social Security

    It’s no secret that falling behind on student loan payments can squash a borrower’s hopes of building savings, buying a home or even finding work. Now, thousands of retirees are learning that defaulting on student-debt can threaten something that used to be untouchable: their Social Security benefits. According to government data, compiled by the Treasury Department at the request of SmartMoney.com, the federal government is withholding money from a rapidly growing number of Social Security recipients who have fallen behind on federal student loans. From January through August 6, the government reduced the size of roughly 115,000 retirees’ Social Security checks on those grounds. That’s nearly double the pace of the department’s enforcement in 2011; it’s up from around 60,000 cases in all...


    Who inherits your iTunes library?

    Many of us will accumulate vast libraries of digital books and music over the course of our lifetimes. But when we die, our collections of words and music may expire with us. Someone who owned 10,000 hardcover books and the same number of vinyl records could bequeath them to descendants, but legal experts say passing on iTunes and Kindle libraries would be much more complicated. And one’s heirs stand to lose huge sums of money. “I find it hard to imagine a situation where a family would be OK with losing a collection of 10,000 books and songs,” says Evan Carroll, co-author of “Your Digital Afterlife.” “Legally dividing one account among several heirs would also be extremely difficult.” TECHNOLOGY AND MEDIA • Apple TV rebuffed by the cable guys • Amazon takes pages from Apple playbook •...


    10 things 401(k) plans won’t tell you

    1. We weren’t meant to carry the weight of your future. For more and more Americans, the quality of one’s retirement comes down to the quality of one’s 401(k). Lightspring / Shutterstock.com That’s a lot of pressure to put on plans that started out as a source of extra cash for individuals who were already guaranteed a secure monthly retirement income. When 401(k)s were first introduced in the late 1970s, most workers still had “defined benefit” pensions — retirement plans where employers made all the decisions about what to invest where. Back then, 401(k)s were intended as mere supplements to those plans, says Lee Topley, managing director of the retirement plan consulting group at Unified Trust, a Lexington, Ky., firm that manages the needs of plan participants on behalf of employers....


    Retirees and stocks: Sell now or hold on?

    If you haven’t asked this question, you will. Is it time to take your chips off the table? With the major stock market indexes close to all-time highs, now seems as good a time as any to walk away from the table, especially if you are back to where you were in 2008. The answer truly depends on your personal circumstances, but also on who you ask. To be fair, it’s not quite like the old joke about asking five economists for an opinion and getting six answers, but it’s pretty darn close. In fact, the experts we spoke with offered up recommendations ranging from sell everything to do nothing. Here’s a recap of their advice. Sell, sell, sell Stephen Chen, the founder of NewRetirement.com, thinks now might be the time for retirees to consider selling. “If someone has remained invested through...


    What if your pension runs out of money?

    The zero-interest-rate policy in the U.S. continues to wreak havoc on those saving for retirement. Case in point: Many companies are pouring cash into their defined benefit pension plans because of the low interest rates, according to a report this week in The Wall Street Journal. According to the report, companies are required to calculate the present value of the future pension liabilities—how much they need to pay out to retirees—by using a so-called discount rate, which based on corporate bond yields. As those rates fall, the liabilities rise. And as those liabilities increase, companies make up the difference by pouring cash into their plans. TAXES Click to Play How to slash your tax bill in retirement Big tax bills can devastate your retirement savings. MarketWatch’s Robert Powell and...


    Retire Here, Not There: California

    For the more than 36 million Americans who will turn 65 in the coming decade, the best cities and towns for retirement now have a much higher bar to clear. They can’t just be great places to live—they also have to offer great value. In our “Retire Here, Not There” series, we survey every state to find less-expensive alternatives to the best-known retirement destinations. On a postcard, California looks like the perfect retirement destination. On paper, the picture is a little more cloudy. With a cost of living that’s more than a third higher than the national average, superhigh unemployment in many areas, and the country’s sixth-highest tax burden, the Golden State may be out of reach for many seniors, say financial advisers. Take Santa Barbara, one of the state’s most popular hot-spots...


    Retire Here, Not There: Virginia

    Virginia is home of the “half backs” —retirees from the north who tried Florida, decided it wasn’t for them, and then came halfway back up the coast. With its richly varied landscapes, including the rolling Blue Ridge Mountains in the west and Atlantic coastline to the east, it is easy to see why Virginia draws these migrants. While hot and humid summers in Florida and other states further south can be tough on the over-65 set, Virginia offers a comparatively milder climate. “You can golf nine or 10 months of the year here,” says Robert G. Topping, a financial adviser at Covenant Wealth Advisors in Williamsburg, Va. Combine that with the state’s plethora of recreational activities and urban amenities, along with a healthy smattering of college towns, and advisers say retirees have a broad...


    Write it down: Plan for retirement success

    Whether you’re in your 30s, 40s or 50s, it’s time to create a written retirement plan. And if you’re just five or 10 years out from retirement, it’s crucial that you do so. At its most basic, such a plan entails estimating what your retirement expenses will be, and figuring out where the money will come from to pay those bills. Creating a plan “can be an eye-opening experience for some people,” said Jeff Gorton, a CPA and certified financial planner, of Gorton Financial Group in Oklahoma City. “It can show people that, ‘Yes, I do have enough money for retirement,’ or, ‘No, I have to make sacrifices now.’ It helps them to make the hard choices.” Click to Play Obamacare sign-up deadline extendedAmericans won’t face a health-insurance penalty so long as they sign up for coverage...