|
Retirement How-To
Vacations
"Retirement how-to vacations"
are now available to people in their fifties and sixties to help them learn
about later life, how to make the transition from work to retirement, how to
find a new job or purpose, and how to "field test" retirement plans. Interest
and attendance are on the rise.
"Sometimes a big turn in your
life requires more concentration than we get on a daily basis," says a vice
president for Civic Ventures, a San Francisco nonprofit that advocates for civic
engagement among older adults. "The idea of going away for a week -- and
stepping out from your regular world -- can be really appealing."
Some of these vacations
involve classroom work; others offer hands-on experience in a new field. One of
the leading providers of vocation vacations has been the North Carolina Center
for Creative Retirement, part of the University of North Carolina at Asheville.
It started its "Paths to Creative Retirement" workshop in 2002. The 2 1/2-day
Paths workshop focuses on "helping people clarify what they want to do next in
life," says the center's executive director. The program costs $750, which
includes a few meals but not lodging. About two-thirds of the attendees are
couples and one-third are singles, though some may have partners who don't
attend. Their average age is 57, and most are still working.
Sen. Olympia J. Snowe,
R-Maine, has introduced the Retirement Account Distribution Improvement Act of
2008, legislation that would "amend the Internal Revenue Code of 1986 to suspend
the minimum required pension distribution rules for 2008, 2009, and 2010” as
applicable to traditional IRAs and 401(k)s that require minimum distributions
starting at approximately age 70-1/2.
The bill, introduced on Dec.
8, was co-sponsored by Sen. Orrin G. Hatch, R-Utah. It was referred to the
Senate Finance Committee.
Target-date mutual
funds had promised to be a rock of security for pre-retirees who wanted a
portfolio that self-balanced with retirement goals and time horizon. Fund
holders determine the year they want to retire, and as time goes by, the funds
adjust increasingly toward bonds and away from stocks. These cookie cutters
attract people intimidated by financial choices, but their one-size-fits-all
approach excludes the long-term benefits of personalized investment design.
Additional
problems have been surfacing in the world of target-date funds amidst the
nation’s current economic meltdown. Some of these investments have saddled
shareholders with stiff losses, probably none more severe than for investors in
their sixties who had intended to stop working in a couple of years. Target-date
funds geared to a 2010 retirement lost 27% on average for the year through Dec.
11, according to fund-tracker Lipper Inc.
An analysis by the Center for
Retirement Research at Boston College shows that consumers who have taken out
hefty home equity loans and have spent their credit to the maximum will be worse
off in retirement than those who did not take out such loans.
The report, "The Housing
Bubble and Retirement Security," showed that households that experienced larger
gains in their homes' value relative to their income had a higher probability of
taking cash out. Households responded to the extraordinary growth of housing
prices by increasing their debt.
|
Rising Health Costs
Dislocating Retirement
Before the current economic
crisis hit America, the National Retirement Risk Index released by the Center
for Retirement Research at Boston College in February 2008 estimated that nearly
61% of working Americans may not be financially prepared to retire at age
sixty-five. The rising cost of health care was one factor to blame. This
represents a 17 point increase from the previous study released in January 2007.
The surge demonstrates how the rising cost of health care was impacting
retirement savings.
Savings
Commitments Surviving
Employees participating in
employer 401(k) programs remain committed to saving for retirement despite
current and future concerns about the economy, according to the latest findings
from the annual Mercer Workplace Survey™. The percentage of those who plan to
continue contributing to their savings plans at their current rate remains
virtually unchanged from the past two years.
Monthly
Expenses a More Imminent Worry than Retirement Savings
Nineteen percent of employees
who responded to the Mercer Workplace Survey say keeping up with monthly
expenses remains their biggest financial worry. Fifteen percent of respondents
report that saving enough for retirement worries them most. Nevertheless, 71%
say that saving for retirement remains a major financial objective. That
objective has leveled off for the past two years after several years of decline
as retirement savings gave way to short-term financial needs among employees’
financial priorities.
Working
Couple's Retirement Patterns
Researchers at Case Western
Reserve have gathered information about how 1,118 married couples with dual
incomes came to retire. They published their findings in the article "Retirement
Transitions among Married Couples" in the Journal of Workplace Behavioral
Health. It will also appear in the forthcoming The Older Worker and the
Changing Labor Market, published by Haworth Press.
Prior to this study, the vast
volume of research on retirement primarily focused on the individual. The Case
Western study is one of the most comprehensive analyses of married couples
moving into the retirement phase of their marriage.
The researchers found 41
work/retirement transition patterns for husbands and 49 patterns for wives.
Approximately 40% of the couples have the same retirement pattern as their
spouse. "What became evident is that retirement is a couple-level event," they
report.
Fidelity
Retirement Rewards Card
Fidelity Investments(®) has
launched its new Retirement Rewards Card, which gives investors an innovative
way to save for retirement while purchasing everyday necessities. With no annual
fee, caps or limits on rewards, the Fidelity(®) Retirement Rewards American
Express(®) Card (“Fidelity Retirement Rewards Card”) offers a 2% earn rate on
retail purchases when card members redeem their cash rewards as a current year
contribution into their Fidelity IRA.
Florida’s
Deferred Retirement Options
The State of Florida launched
a Deferred Retirement Option Program (DROP) in July 2005. The program allows
state employees who are near retirement to continue working five years, earning
interest on the pension payments they would have received had they retired. The
pension payments accumulate in a special account for five years. Then the
employee typically leaves the payroll, collects a lump-sum DROP payment and
starts drawing a monthly retirement check.
|
|
