Employers and employees have hit a milestone: For the first time, contributions to 401(k) accounts on average have topped $10,000 over a year, according to Fidelity Investments. Unfortunately, 401(k) loans are on the rise as well.
More clients seem interested in reverse mortgages these days. They're drawn by the idea of a lender sending them a monthly payment. But experts say such mortgages are not for everyone, though the profile of a reverse mortgage holder is changing. In the past, they were seen as products for the financially desperate.
Christine Benz notes a professor who once caused a stir by suggesting that a good investment strategy should fit on an index card. "Instead of getting bogged down in byzantine and often expensive products and strategies, investors will have a better shot at reaching their financial goals if they tune out the noise and focus on basics like saving enough and taking advantage of tax-sheltered wrappers," she writes.
Most target-date funds reduce their stock allocations as the holder approaches retirement. But Randy Warren of Warren Financial Service notes that "as people approach retirement, their goal is to sock away as many assets as possible to prepare themselves for post-retirement life." If you are trying to maximize your return, "your target date mutual fund is working against you," he argues.
Millennials, a group that has yet to embrace individual retirement accounts and 401(k)s, are taking an interest in annuities because of the guarantees they offer. Among millennial respondents in a recent survey, 43% said they were interested in annuities and 52% said they were very interested or somewhat interested in the product.
J. Brendan Ryan reviews some of the tax consequences of rolling an annuity into a long-term-care contract. One key question about this technique hasn't yet been addressed by the Internal Revenue Service, he writes.
The standard guidance that people are better off saving for retirement than children's education is off the mark, Edvisors Network Senior Vice President Mark Kantrowitz writes. "You end up with much more money in retirement if you set aside money for retirement and college when your kids are young than if you just put all your savings into retirement accounts," he writes.
Robo-advisors present a competitive threat to traditional advisory firms, but most of the latter also gain an edge, writes Daniel Kern, president of Advisor Partners. He notes three areas of vulnerability, including reliance on paper reports and personal meetings, and three advantages, including an ability to understand clients' complex needs.