FiLife

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…)

Until recently, I never thought about when I wanted to retire or how much my retirement years will cost me. I just assumed that 10% of my income plus my employer’s matching contribution, compounded over time, would do the trick.

Then I stumbled upon Boulevard R’s website a few weeks ago. Boulevard R is developing a tool to help young people think about retirement planning in new ways.

After spending a few minutes on Boulevard R’s site, I quickly realized that I had been thinking about retirement all wrong…or rather that I had not been thinking about it at all. (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…)

Electing a president while the nation is at war and scores of people are losing their homes means that candidates can freely ignore longer-term issues.

Ignore, that is, unless someone dresses in an ostrich suit and follows them around primary states accusing them of putting their heads in the sand.

So today, we tip our caps to Jo Jensen and the crew at Students for Saving Social Security. You can read more about their antics in the hysterical story our cousins at The Wall Street Journal did a few days ago. It’s free, so click away.

Meanwhile, you can check out the organization’s web site here. Note the photo of Hillary Clinton good-naturedly (or mistakenly) posing with her Missing poster.

– Ron Lieber