FiLife

A few friends asked me how they should invest their retirement money recently. Maybe it’s that time of year. Graduations inevitably lead to new jobs, which lead to new retirement plans.

Plus, the roiling markets are making a lot of people nervous. One friend confided that she just moved all of her retirement savings into bonds. Yikes. Not a good idea.

So, in the spirit of friendship, I’ve put together some simple guidelines about how to set up a retirement plan, specifically for those who still have more than 30 years left in the work force.* (more…)

The fact that 401k plans are replacing pension plans is old news.

But there’s still a lot of work to be done when it comes to providing employees with free, independent advice on how to handle this huge responsibility. Many workers still aren’t saving enough in their 401k plans to ensure a comfortable retirement. And, even when employees are participating in their company plans, they’re often investing improperly.

Sure, 401k plans have improved. Many employers have installed automatic enrollment plans that sign up workers for retirement savings programs when they join the payroll. They’re also offering products like target-date retirement funds, also known as lifecycle funds, where all investors need to do is pick the fund with a date that is closest to the year they expect to retire. The fund, which invests in several other funds, grows more conservative as the retirement draws draws near.

But here’s my problem: we’re not focused enough on finding ways to empower workers with personalized independent advice. (more…)

Warning: Some of the items on your 401k menu might be bad for you.

Components of the plan may create a false sense of security, and others might actually do you financial harm.

Don’t get me wrong. Investing in a retirement plan is critical to keep you from running out of money late in life. If your employer offers a 401k, then you should take full advantage and start socking away funds now.

But please beware of these four plan features:

Automatic enrollment: A growing number of employers automatically enroll new employees in 401k plans. Thing is, these employees still need to check and make sure that the company 1) puts enough away for a comfortable retirement 2) sets enough aside to collect whatever money the employer makes available to match your contributions 3) invests the money in age-appropriate funds.

Don’t be lazy and assume that your employer’s automatic plan will provide for a happy retirement. In fact, it’s unlikely that your employer’s choice works for many employees.

401k loans: Many employers will let you borrow from your 401k plan. When you pay the money back, you pay it to yourself, with interest. (more…)

I wasn’t going to, actually, until the e-mail arrived from my brother yesterday:

Subject: When Should I Panic?

Body: …and start putting my 401k assets in bonds?

The answer was simple.

My reply: Not for another 25 years or so. And it’s what spurred me to push the “Buy” button. (more…)

Many people in our grandparents’ generation continued to receive a paycheck (in the form of a pension) from employers during retirement. They could move to Florida and play golf, or whatever suited their fancy.

Those days are mostly over. We have to pay our own way in retirement. Ok, we get it. So given our situation, wouldn’t it be nice if our employers and the companies that provide our 401k plans did their best to make this formidable task a tad easier?

We’ve compiled a holiday wish list to let the 401k elves – and the employers that provide 401ks (and other similar retirement plans) — know what we’d like to see them work on for the New Year:

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I love my family.

They’re great, inspirational and kind. And last week at Thanksgiving, it was hard not to succumb to the warm fuzzies and think about how lucky I am.

But I was also reminded how clueless caring, loving people can be when it comes to money. (more…)

I turn off the lights when I leave a room. Sometimes I ride my bike instead of driving my car. I recycle my Vanguard statements.

Until this week, however, I had never checked whether the mutual funds I invest in through my 401(k) plan undo all these good deeds. Finally, I bucked up and screened my funds to see how socially (ir)responsible they are.

In less than ten minutes I had my answer. Here’s how I did it, in case you want to see whether your 401(k) is spreading good or bad karma in the world.

(more…)

I like to play financial planner when it comes to investing my retirement money.

So when I started at FiLife and was presented with a brand new retirement plan, I figured I’d use it as an opportunity to do a little check-up on my two existing 401ks and bring everything up to speed.

I’m obviously no professional, though I’ve yawned my way through plenty of dry but informative conferences for real financial advisors. Presenters there drilled the importance of diversification, rebalancing, and investing overseas into my brain. I became a proponent of investing in index funds somewhere along the way and adopted some mantras of my own. (more…)