Sharon Edwards of Salem, Oregon, may have to move to Mexico, where the cost of living is cheaper, so she can afford her retirement.
Bank of America announced plans Thursday to freeze pension plans, effective in July, and increase its 401(k) contributions instead.
I thought I was clever. Earlier this year I had over half of my 401k assets in cash. I know that investors are terrible at timing the market and I'm way too young not to be fully invested, but I can't get over the fact that stocks look expensive right now.
General Motors has shifted its senior salaried workers away from a traditional pension plan to a 401(k) plan, said a company spokeswoman on Wednesday.
The Obama administration proposed new rules Thursday to help retirees make their savings last throughout their lifetime -- by investing in annuities.
My 401(k) is managed by a brokerage firm that was busted by the SEC for fraudulent practices (although those practices weren't related to my 401(k) plan). Still, I don't want to invest my money with, or pay fees to, to a firm I consider unethical. For now, I've switched all of my money into the bond account figuring it's the safest place to invest until I can figure out what to do. But I'd really like to get into another 401(k) plan. Can I do that? -- Michael S.
I'm 57 and hoping to retire at 68, but I'm behind on my retirement savings. Should I invest as if I were younger and shift more into stocks to help increase my 401(k)? -- Jeff Branstrator, Greensboro, N.C.
If, when you watch or read the financial news, you say to yourself, "This is crazy!" you'd often be right, says David Laibson, a Harvard economics professor.
My fiancé and I are in our late 20s and we contribute to our 401(k) plans. But we'd like to supplement our retirement savings by making additional small contributions (maybe $100 a month) over time. We wouldn't touch this money except in an absolute emergency. Any suggestions? -- M. Barber
I'm 31 and dissatisfied with the funds I now own in my 401(k). So I want to shift my money to different funds within the plan. When making this decision, which do you think I should focus on more: the funds' expenses or the returns the funds have earned? - C.H.
The investment company that manages my 401(k) funds recommends I roll my money into mutual funds managed by a subsidiary of theirs when I retire next year. But I'm wondering whether I would be better off moving my assets to the funds of a different firm. What are your thoughts? -- J. Thomas
Should I hire a financial adviser to manage my retirement portfolio, and can I afford to? -- Robert Stamberger, Fallbrook, Calif.
Should I hire a financial adviser to manage my retirement portfolio, and can I afford to? -- Robert Stamberger, Fallbrook, Calif.
My company doesn't offer a 401(k). I invest the max in a Roth IRA, but I know that won't provide enough for retirement. I'd like to invest another $5,000 a year into some sort of retirement plan. What options do I have? -- Daniel J., St. Paul, Minn.
I contribute to my company 401(k) plan. Problem is, the investment choices are overwhelming. Where should I put my money? -- Blake, Opelousas, La.
You'll be able to contribute more tax-free money to your 401(k) next year, the IRS announced Thursday.
I switched employers recently and I want to move my old 401(k) balance into my new plan. But I'm afraid that if I do, I might miss out on gains if the market moves into more bullish territory while the transfer is taking place. Should I make the move now or wait until the market settles down a bit? -- Mike S.
Drawing up a will may not be the most pleasant task, but it seems straightforward: You leave behind a legal document that specifies how you want your property doled out when your time on this earth is up. What you may not realize, though, is that much of your net worth can be passed along outside of that will. Without some planning, you could unwittingly disinherit intended beneficiaries, including your children, from significant portions of your estate.
I'm just starting out in my career and I'm trying to decide how to divide my contributions between my company's regular 401(k) plan and its Roth 401(k). I've heard that I'm better off putting money into the Roth because I'm probably in the lowest tax bracket I'll ever be in. If I contribute 10% of my pay, should I just put 5% in each? Or should I put it all in the Roth 401(k) and switch to a regular 401(k) later in my career as my tax burden rises? -- Derek, Kansas City, Mo.
I resigned from my job last year. I still have $35,000 in my company's retirement plan, but I don't really understand the investments or fees. I'm thinking of transferring this money to an IRA and investing it in a target-date fund. My husband already has two target-date funds, one in his IRA and another in his 401(k). Does this strategy make sense? -- Sherrie H., Jacksonville, Fla.
As an active duty Marine, I'm eligible to contribute to the thrift savings plan. What are its pros and cons, and how should I take advantage of it? -- Master Sergeant D.E.W., USMC
While the economic recovery remains sluggish, retirement funds are looking the healthiest they have in years.
Don Poffenroth spent more than 20 years watching his 401(k) eke out returns of 3% to 5%. Until, in 2007, he decided to take a bold step: He emptied out his 401(k) into a self-directed IRA and funneled all of his savings -- $300,000 -- into a vodka distillery.
With a combined income of $225,000 and a nest egg of $330,000, Rick and Amy Mendez, 41 and 43, seem like they are in good financial shape. But a closer look reveals that they're lacking something crucial: emergency savings.
Congress wants to make it tougher for workers to tap their 401(k) retirement funds -- and to make it easier for them to repay those loans when they do.
I've always used the rule of thumb of 100 minus my age to decide what percentage of my 401(k) to invest in stocks. But now that I'm getting close to retirement I'm wondering whether that's too conservative? Do you think it is? --Martin, Middleton, Wisconsin
Looking to improve your portfolio's performance? Still licking the wounds from tax day? Then it's time to kill two birds with one stone by making sure your investments are as minimally exposed to taxes as possible.
What's the latest thinking on how much I can withdraw from retirement savings? -- Ann Raymont, Indianapolis.
Last August something spooked me in the markets, so I shifted my 401(k) and Roth IRA accounts out of stock funds and into bond funds. What a mistake! It's pretty much been a steady climb upward since then.
Q: My company stopped its 401(k) match during the downturn. Should I put money into a Roth IRA instead? I'm 41. -- D.R. Westlake, Ohio
The average 401(k) balance hit a 10-year high at the end of last year as the recession waned and more Americans bulked up their retirement savings.
I may write about retirement for a living, but that doesn't mean I like seeing my 401(k) crater any more than you do. Given what's been happening in the market, I sometimes catch myself thinking how great it would be if my financial future weren't tied to something as volatile as Wall Street's mood.
I'm 55 and invest conservatively in my 401(k). The market seems to be on a rebound, though, so should I consider being more aggressive? -- Bob, Richmond, Ind.
My husband and I have never had a credit card during the 37 years we have been married. We pay cash up front for everything. We do not have or want 401(k) accounts and the like. We keep our money in savings accounts and CDs.
How can the average employee get a better handle on the expenses in company 401(k) plans to be able to make more informed choices? -- Chad Tuttle, Hudsonville, Mich.
How can you plan your financial future when the government continually changes the rules, especially regarding taxes? -- Wayne Moffatte, Middleburg Heights, Ohio
Question: I turn 70½ in February and must begin taking required minimum distributions from my 401(k). Do I have to take a second RMD when I turn 71 later this year? If so, how can I minimize taxes? -- Allen Metz, Sun Lakes, Ariz.
There's a reason why diet and money books get moved to the front of the bookstore come January first. We are full of good intentions with the promise of a new year.
Question: Are minimum distributions from IRA accounts required in 2010? And, if so, what balance do I use to calculate the amount that I have to withdraw? -- M. Strange, Falls Church, Virginia
Question: I'm 27 and contribute enough to my 401(k) to get the maximum match. I also invest a significant amount to a Roth IRA account for which I pay a 5.75% sales charge. My question: Would I be better off putting more in my 401(k) since it has no sales charge or continue with the Roth and eat the 5.75%? -- N.F., Minneapolis, MN
Question: My wife and I are in our early 30s, earn a combined $150,000 a year and contribute an overall 13% of our salary to our 401(k)s, plus our employers match another 4%. We also have an emergency fund equal to 12 months' worth of expenses.
Question: I'm 50 years old and contribute 20% of salary to my 401(k), of which my employer matches 6%. The choices in my 401(k) plan are limited, however, so I want to branch out. I already max out a Roth IRA, so I can't invest more there.
For the past two years, target-date funds have been under fire.
Question: I'm increasingly concerned about the larger role the government has taken in our day-to-day lives in areas such as health care and banking and wondering whether this trend might eventually extend to 401(k) plans.
For more than a year, Kim Champney, 40, and Pat Minick, 41, have been kicking in an extra $650 to their $1,048 monthly mortgage payments. "We don't like carrying a lot of debt," says Minick, who stays home with their three kids, ages 7, 8 and 10.
Question: What do you think of the concept of "marriage diversification"? If a married couple has 401(k) plans that are managed by the same investment firm, should they each have the same funds in their accounts, or should they pick different, but similarly performing, funds? -- David, Burlington, Mass.
Question: I'm a 48-year-old software engineer with a wife and two kids. I earn $100,000 a year, but have not enrolled in my 401(k) plan. What investments should I start with so that I can retire as I plan to at age 65? -- Raj, Phoenix, Ariz.
Americans are woefully unprepared to pay for retirement, according to research released Thursday.
Nearly a quarter of the nation's parents saving for their children's college education intend to raid their own retirement accounts, despite increasing their tax liability, according to a new study released Tuesday.
Question: My mother is still working and contributes to her 401(k). She turned 70 in June; is she required to take required minimum deductions from this plan? -- T. Kaufman, Waterford, Mich.
The recent financial crisis is partly the result of something economists call the "agency" problem. Put simply, the people you hire to take care of your money -- your agents -- almost always have their own agendas.
The road to retirement is littered with distractions. In the hurly-burly of life, so many things compete for your attention that you can lose sight of what really matters most.
Question: I consider myself a good 401(k) citizen. I contribute the max, get the company match and have an age-appropriate level of stocks in my account. But one of the bond funds in my plan has a 10-year average return of about 9%, which is better than almost every stock fund. So I'm wondering whether I'd be better off just putting all my money into that bond fund. Would that make sense? -- Dan, Southfield, Mich.
Question: My wife and are in our mid 30s and have begun aggressively contributing to our 401(k) and a Roth IRA. I know we should be looking long term, but it's discouraging that our account balances are lower than they were earlier in the year. If we had just stuffed the money under our mattress, we wouldn't be sitting on a loss. Should we keep investing in this market or go with the mattress theory? -- Daemon Fields, Eustis, Florida
After 30 years studying pension systems around the world, Alicia Munnell knows what works -- and what doesn't. As head of the Center for Retirement Research at Boston College, she warned early on that 401(k) plans would fail to provide the level of income that retirees would need. Not many agreed with her at first.
Question: I participate in a Roth 401(k) plan that also offers company matching funds. My question: Assuming our income isn't too high, can my wife and I also fund Roth IRA accounts? -- Mike Butler, Lindenhurst, Ill.
You could be contributing to a retirement plan without even knowing it.
Hardship withdrawals from 401(k) retirement saving plans rose to the highest level in 10 years during the second quarter, Fidelity Investments said on Friday, in the latest sign of a dismal economy.
Question: I'm 33, make about $150,000 a year and am starting from scratch to plan for retirement. A person close to me wants to sell me life insurance with a cash value feature as a way to save. Can you help me here? What do you think is my best option? --Carlos R., Houston, Texas
Question: When I retire, should leave my money in my company's 401(k) or roll it into an IRA? --Mark, Plymouth, Minnesota
Many early baby boomers may have a hard time making ends meet in retirement, according to a new study.
Question: I have been contributing the maximum to my 401(k) for some time now. But are there any other tax-friendly ways I can save even more for retirement? -- David W., Carlsbad, Calif.
For years, Pat and George Breault gave little thought to their spending. The couple, both IT project managers, earned a handsome $235,000 a year -- more than enough to cover their basic living expenses as well as the extra-curriculars they enjoyed, such as dining out, taking cruises, and entertaining at their second home, a condo at Catawba Island on the shores of Lake Erie in Ohio, where they hoped to retire one day.
How much do you pay for your 401(k)? You probably can't answer that, because providers of the employer-sponsored retirement plans aren't required to tell you in clear language what they're charging. And now it appears that lawmakers in the Senate don't want you to know, either. At least not yet.
Question: I'm 23 and contribute to my 401(k) plan. My employer also invests 4% of my salary in matching funds. But after reading a 2009 TIME Magazine story titled "Why It's Time to Retire the 401(k)" and seeing my parents lose significant amounts of their retirement savings after 9/11 and again in 2008, I'm wondering whether I should stop contributing to my 401(k). I'm confused. What is the best way to save long-term for retirement? --Andrew H.
You've been looking forward to retirement -- and the steady income your employer was supposed to provide -- only to learn that your company has frozen its pension plan. Now what?
Just two weeks after Bill McNabb became Vanguard's CEO in 2008, Lehman Brothers failed, AIG tanked, and the financial crisis became truly frightening. It was one of the toughest times ever to be running America's largest mutual fund company, yet it turned out to be a high-stress boon for Vanguard. As terrified investors pulled out of investments that scared them, they poured dollars into firms they trusted -- Vanguard above all. Today the company manages about $1.4 trillion, far more than before the crisis.
Choice is powerful. It means you have the freedom to find just the right breakfast cereal, car, or mutual fund that suits you. And it means that companies have to innovate, to come up with better products that stand out from the crowd. (There would be no hybrid cars or ETFs in a world where everyone always settled for "good enough.") But choice also overwhelms. You've felt it when you've gone out for a quick trip to the grocery store and found yourself roaming the aisles for an hour. Or when you've scratched your head over which of 16 stock funds you should hold in your 401(k). Sheena Iyengar, a business professor at Columbia University, was among the first academics to study these real-world problems. In a series of ingenious experiments, she found that too many choices can cause people to give up and make no choice at all.
The fight over financial reform has made legislators such as Barney Frank and Chris Dodd fixtures in the headlines. Herb Kohl's name doesn't command that sort of attention, but it should: The Democratic senator from Wisconsin has embarked on reforms that could have a profound impact on the lives of millions of Americans. As chairman of the Senate's Special Committee on Aging, Kohl has become Congress's go-to leader on retirement issues.
I know you've got the major risks in your financial life well taken care of: Your 401(k) is properly diversified to help you weather market volatility, and your reserve cash fund is on call to cover life's inevitable emergencies. Good work!
Question: I'm a 40-year-old single woman who earns $75,000 a year and has $150,000 in savings and $60,000 in retirement accounts. I work for a small company, but am hoping to start my own business within the next five years. My questions: Am I saving enough now for retirement? And should I be doing anything differently once I become self-employed? -- M.Z., Auburn, California
Question: Should I borrow from my 401(k) to pay off debt? -- Verlyn Regehr, Denver, Colorado
Question: I want to max out my 401(k), but my company limits contributions to 20% of salary. Given what I earn, I would have to contribute more than 20% to reach the maximum contribution allowed by law. I know I can handle putting away more, but because of my employer's 20% cap, I can't. Can companies really limit my contributions like that? And, if so, what can I do to save more? -- Laura, Denver, Colorado
Saving for retirement is an intimidating task and everyone makes mistakes. To mark financial literacy month, we asked financial experts about the missteps they see most often and how to avoid them.
Question: My husband lost his job and I had breast cancer. We're turning things around now, but we still wonder: How can we play catch up and start saving again? And at 52 years of age, is it too late? -- V.H., Missouri
A basic tenet of retirement investing states that as you get closer to calling it a career, you should grow more conservative -- tilting away from volatile assets like stocks and toward more stable investments like bonds and cash.
Question: My employer offers a retirement savings plan. I'm turning 30 this year and I'm wondering whether to enroll in it. Do you think I should? --P.J., Boston, Mass.
Question: I'm 40 years old and would like to know whether I should invest in my workplace's tax-deferred retirement plan where expenses average 1.1% for the various options, or put my money into an outside account funded with index funds that charge 0.21% a year. In the long run which option would give me more money? --Michael G., Orangeburg, South Carolina
Question: I have about 10 years until I retire, and I'm wondering whether I should put my 401(k) savings back into high-risk stock funds or a moderate-risk stock fund like a Standard & Poor's 500 index fund. What do you think? -- Paul, Brockton, Mass.
Usually I cringe when our leaders in Washington try to help improve our finances. I'm afraid their efforts may do more harm than good. But two new ideas being discussed inside the Beltway could actually make it easier to prepare for retirement. Both center on the income you'll generate from your 401(k).
You're probably feeling a lot better about your 401(k) these days, and not without reason. The average balance for experienced workers, after declining 19% in 2008, bounced back 29% last year, including new contributions.
Question: I'm 24 and my 401(k) plan matches $1.25 for every dollar I contribute up to 6% of salary. I currently contribute 3% of my salary and then put $75 a month into a Roth IRA. I do that because I don't want all my eggs in one basket. I'm wondering, though, whether I should stop the IRA contributions and take advantage of the company match instead? What do you think? --Matthew, Sacramento, Calif.
Question: I'm 42 years old. What percentage of my weekly paycheck should I contribute to my 401(k)? --Gary, Bronx, New York
Employees who took a hit on their savings last year might finally be in for some welcome news: Companies are stepping up efforts to help them save more for retirement.
Question: I'm 34 and have yet to begin saving for retirement. I'm considering participating in my company's 401(k) plan, but I'm unsure whether to do so since my employer doesn't match my contribution. What do you advise? --Nikia, New York, New York
With stocks up more than 60% since hitting bottom last March, the red ink is finally fading on the typical 401(k) account. Yes, it's safe to look at your statement again: Balances for boomers who have worked 10 to 20 years at the same company are now down less than 3% on average, compared with pre-crash levels; younger employees and 45- to 64-year-olds with less tenure are solidly back in the black.
Like many business owners these days, Bob and Joyce Stubbe are facing a cash crunch.
Question: During the market's dramatic drop in 2008 and the beginning of last year, I couldn't stand watching my 401(k) shrink. I didn't move the money I already had in various stock and bond funds, but I did shift my current contributions into conservative investments. I now want to rebalance my 401(k) and am wondering what my portfolio mix should be at age 42? -- Michael, Atlanta, Ga.
Question: I'm 57 and I think there's a good chance I'll be laid off this year. If that happens, I'll have to move my 401(k) balance to an IRA. On the recommendation of a finance professional, many of my former co-workers have transferred their 401(k) savings into annuities. Do you think this is the way to go? -- E.Z., Deer Park, N.Y.
Question: If I sell a mutual fund to write off the loss on my tax return, do I face any restrictions on reinvesting the money? -- Tom M., St. Paul, Minn.
Question: I'm changing jobs and would like to roll over my $150,000 401(k) into an IRA account. Since I already have other IRAs in individual mutual funds, I would like to put those funds as well as my new IRA rollover in one place so I can split the percentages invested in each individual fund just like my old 401(k) with 15 options. Do you recommend this approach? --Randy P., Montezuma, Iowa
With stocks up more than 60% since hitting bottom last March, the red ink is finally fading on the typical 401(k) account.
Question: My company currently matches my 401(k) contributions dollar-for-dollar up to 5% of salary. But starting in January my employer plans to do away with the match due to the poor economic conditions. I'm still early in my career and don't want to cut back on my retirement savings, so I plan on picking up the slack. I wonder, though, whether I should contribute an additional 5% of salary to my 401(k) or put the extra savings into a Roth IRA. What do you think? --Wes, Conshohocken, Pennsylvania
Question: I lost my job, so I have my retirement savings in three separate 401(k) accounts with three different employers. Should I just leave them there, roll them over into an IRA account or do something else? --Annie, Texas
Question: I've got many investing options in my 401(k) -- small caps, large stocks, emerging markets, fixed-income, etc. What would be the ideal portfolio for me considering that I'm 51 and plan to retire at 65? --D.D., Anaheim, Calif.
Question: I worked for the same company for more than 27 years and then was laid off eight months ago. Although at age 57 I have lots of experience, my employment prospects look bleak. My 401(k) has gone down the drain the past two years and is currently worth about $320,000. As I approach retirement, I wonder: Will this be enough to live on? --David, Los Angeles, Calif.
Nearly half of U.S. workers who left their job last year cashed out their 401(k) accounts, according to a study released Wednesday, despite ongoing efforts to dissuade Americans from doing so.
Question: I'm 47 years old and would like to begin participating in my company's 401(k) plan. But I don't know if this is the right time to do so. Do you think I should start now or wait until the economy gets better? --Frank, Brighton, Mass.
Jason and Patty Simkins, both 40, have saved next to nothing for retirement in the past year. They were rattled by the rocky market, which caused the value of their portfolio to tumble 40% at its low point.
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