Your Retirement Plan Needs Performance Standards


As a fiduciary, what you want most is confidence that you’re providing your employees with a good retirement plan.  And, we know that a good plan is a top-performing plan.  Makes sense.  But many fiduciaries have no idea whether their retirement plan is a top-performing plan! Clearly, there’s a problem. Continue reading

Fiduciary, What Do You Want?

Business-confidence-24117As a fiduciary overseeing an employer-sponsored retirement plan, what do you want?  Protection?  Good customer service from your vendors?  An easy-to-navigate retirement plan website?  Education for your employees?  Continue reading

A Closer Look at Target Date Funds

In 1978, Defined Contribution (DC) plans were first introduced. Unlike Defined Benefit (DB) plans, participants were given the freedom to choose a savings rate and their own asset allocation. However, participants also became wholly responsible for the risk of the investments and saving enough for retirement (i.e. making sure they don’t outlive their savings). Unfortunately, most plan participants were unequipped to make these decisions on their own. Continue reading

Historic Market Volatility: What Does it Mean?

Equity markets sold off in dramatic fashion beginning Thursday, August 20th. The Dow Jones Industrial Average (Dow) lost about 1,000 points in two days to end the week. It didn’t get better over the weekend as on Monday August 24th the Dow was down over 1,000 points in early trading. While the largest single day drop in the Dow occurred on October 19, 1987 (-22.6%), the past three trading days rank as some of the most volatile in market history. We believe the magnitude and speed of the selloff is due to structural weakness in the global economy ignited by China, as well as ineffective central bank policies of near-zero interest rates intended to stimulate growth. This has led to higher asset prices that may not accurately reflect valuations of current equity securities. Continue reading

Benchmarks – Why, How, and Which to Use?

Why you need a benchmark

A common question from plan sponsors is “why do I need a benchmark?” Let’s answer this with an example. Let’s assume an investment in the small growth asset class returns 7 percent over the past 12 months. Most plan sponsors would consider a 7 percent return good. However, if the asset class small growth returned 10 percent then the investment does not look so good. It is important for plan sponsors to have a benchmark because without one they are only relying on absolute returns which can be deceptive. Continue reading

Planning for retirement: additional healthcare decisions

In the blog post Medicare: A Component of Retirement Planning we highlighted Medicare eligibility, the components of Medicare coverage, and touched briefly on Medigap. This post provides additional considerations to Medigap while also delving into long-term care.

Long-term Care
In addition to regular healthcare, everyone runs the risk of needing some type of long-term care at some point in their lives. And it’s an expensive proposition; in 2010, a semi-private nursing home room cost $70,000 annually on average (Survey). Continue reading

Medicare: A Component of Retirement Planning

One of the risks we each face as we age is declining health. A study by Fidelity Investmentsi found that the average 65 year-old couple retiring in 2010 would have needed $250,000 to pay for medical expenses during retirement, which is 4.2% higher than the finding for retirement medical expenses in 2009. These findings point to two key facts: health care is expensive, and health care costs are rising faster than overall inflation.

You may be asking yourself, “What can we do about this?” On an individual level, we can try to live a healthy lifestyle and prevent various diseases, but in reality even the healthiest of people run the risk of poor health and potentially face the rapidly rising financial costs of health care. So, we have to do our best to prepare financially for some inevitable and possibly substantial medical expenses in retirement.

Although complicated, understanding the Medicare health insurance component of retirement is important. You might currently have health insurance coverage as an employee benefit, and some employers even continue to offer health insurance to their retired employees. However, if you’re going to lose your health insurance coverage benefit when you retire, or if you just don’t have employer health insurance, you’ll want to consider Continue reading

Social Security: Maximizing Your Benefit

In a previous blog titled ‘Five Questions about Social Security’ we discussed the basics of Social Security.  In this follow-up article, we’ll focus on how to actually maximize your Social Security benefit.

People often wonder whether it is best to take Social Security early or to delay taking those benefits to receive a higher monthly benefit.  As an example, let’s assume Bob will receive a monthly benefit of $1,500 if he waits until full retirement age to draw Social Security.  If he instead decides to take his benefit early at age 62, he will receive 25% less ($1,125) per month, and if he delays taking his Social Security benefits until age 70, he will be able to draw 32% more ($1,980) per month. In this example, we assume that Bob Continue reading