Full Retirement Age

In 2003, the full Social Security retirement age began to increase gradually for people born in 1938 or later. For example, if you were born between 1943 and 1954, your full retirement age is now 66.

Current legislation calls for the Social Security full retirement age to increase gradually until it reaches age 67. You can look up your full Social Security retirement age at www.socialsecurity.gov/pubs/ageincrease.htm.

This age adjustment is in response to average life expectancy increases at age 65 of 4.3 years for men and 5 years for women since the inception of Social Security. People live longer; they are considerably healthier, so they can work longer.

Canadian Retirees Twice as Satisfied as Americans

TD Bank Financial Group, North America's sixth largest bank, conducted a study on the attitudes of Canadian and American retirees.

The data indicates that Canadian retirees fared significantly better through the recession than their American counterparts - while American retirees are twice as likely to worry that they might run out of money, Canadians are twice as likely to be living their retirement dream.

Close to 70% of Canadian retirees say that their retirement is exactly or mostly what they were expecting, in contrast to only 47% of Americans.

28% of American retirees say they might need to find a job to supplement their retirement income (vs. 10% of Canadians.) One in four Americans say they are not living their retirement dream at all and 29% of American retirees say their retirement is quite different from what they imagined.

Plan Sponsor of the Year Awards

PLANSPONSOR, the nation's leading retirement plan resource, has announced the 2010 finalists for its annual Plan Sponsor of the Year awards, across four distinct workplace segments:

1. CORPORATE SECTOR

Johnson & Johnson - Mount Pleasant, South Carolina

NV Energy, Inc - Las Vegas, Nevada

Thermo Fisher Scientific, Inc. - Waltham, Massachusetts

2. PUBLIC SECTOR--DEFINED BENEFIT PENSION

Texas Municipal Retirement System

3. PUBLIC SECTOR/457

California State Teachers Retirement System

State of New Jersey / Department of The Treasury

Ohio Deferred Compensation

4. NONPROFIT/403(B)

Champlain College - Burlington, Vermont

Florida Institute of Technology - Melbourne, Florida

Legacy Health Systems - Portland, Oregon

Nyack Hospital - Nyack, New York

Each Plan Sponsor of the Year finalist will be recognized at PLANSPONSOR's Annual Awards for Excellence dinner in New York on March 25, and also will be featured in the March issue of PLANSPONSOR magazine. The winners in each category will be unveiled later this month.

An Elite Corps of Financial Advisers

Bank of AmericaMerrill Lynch is establishing an elite designation for financial advisers who want to work with large 401(k) plan clients. The designation is part of the bank’s push to become a bigger player in the retirement area.

The retirement designation is part of Bank of America’s strategy to allow more advisers to specialize in retirement issues such as income flow and trust and estate planning. These specialists will form sections who serve the retirement plan market. The first is the Retirement Plan Referral Network, which will include about 250 to 300 advisers with experience working with 401(k) plans in the $5 million to $10 million range.

The firm is also creating a more elite group, Designated Defined Contribution Advisers. It will include about 75 advisers serving plans in the $10 million to $250 million range.

Gillibrand’s Legislation

U.S. Senator Kirsten Gillibrand from New York has unveiled plans to help workers save for retirement. Her new legislative agenda would expand tax credits that match contributions to retirement plans, protect 401(k)s with more security and transparency, and encourage automatic enrollment in Individual Retirement Accounts (IRAs) to help more middle class workers plan responsibly for retirement.

Americans lost over $2 trillion in their individual retirement savings as a result of the financial crisis, making retirement harder for millions of middle class New Yorkers.

Approximately 2.1 million New Yorkers set to retire in the next 10 years and approximately 5 million to retire in the next 20 years.

Uncle Sam Wants to Know

The Federal Government wants your opinion about your retirement plan. The U.S. Labor Department and the U.S. Treasury Department want to know whether you think requiring employers to offer lifetime annuities as a rollover option to retiring workers is a good idea.

We "are soliciting public comments [to determine] what steps to take to enhance retirement security for workers in employer-sponsored retirement plans through lifetime annuities or other arrangements that provide a stream of income after retiring," said the Labor and Treasury Departments in a recent press release.

Typically, you get to do one of three things with your 401(k) when you leave your employer. You may:

1. roll your money into an IRA,
2. leave it behind at your employer, or
3. transfer your money to your new employer's plan

Most people choose the IRA-rollover option and invest their money in stocks, bonds, and mutual funds.

But none of these options addresses issue of longevity risk and/or assure a guaranteed stream of income for life.

The Feds, now, are suggesting that workers who leave their jobs be given the option to invest some or all of their 401(k) money into an annuity that would provide income for life like a traditional defined benefit pension or Social Security. The option would help retirees make sure they won’t outlive their nest egg. It's an option that's often offered to workers in other countries.

The Web sites of the U.S. Departments of Labor and Treasury provide the actual request for information. The following are examples from the broad range of topics about which Uncle Sam wishes your feedback:

• -The advantages and disadvantages of distributing benefits as a lifetime stream of income both for workers and employers, and why lump-sum distributions are chosen more often than a lifetime income option.
• -The type of information participants need to make informed decisions in selecting the form of retirement income.
• -Disclosure of participants' retirement income in the form of account balances as well as in lifetime payment streams.
• -Developments in the marketplace that relate to annuities and other lifetime income options.

Paying Taxes on Social Security

If a taxpayer’s postretirement income is $25,000 for an individual and $32,000 for a joint return, the taxpayer may end up paying taxes on a portion of the Social Security benefits. Currently, about a third of Social Security retirement beneficiaries find themselves in this situation.

Absence of Employer Retirement Plans

Approximately 75 million American workers, one-half of the labor force, do not have the opportunity to participate in a retirement plan at their place of employment. While they are concentrated in agricultural, construction, and retail industries, all of which sectors have many small employers, one-fourth of companies employing 100 or more workers also offer no retirement plan.

Deploying the Social Media

Retirement savings plans are tapping the online social media as sponsors and managers are heading online to educate workers about retirement. Money managers have begun using social media—including Facebook, Twitter, YouTube and LinkedIn—to educate participants about retirement savings.

Putnam Investments maintains an impressive social media arsenal: blogs, Facebook, Twitter and YouTube. At the company’s YouTube connection, for example, and you’ll find video interviews with Putnam executives, as well as links to instructional videos from other sources about 401(k) plans and even a “60 Minutes” segment on problems with 401(k) plans.

At the Teachers Insurance and Annuity Assn., College Retirement Equities Fund, retirees can view a password-protected Web site that enables people to talk about retirement issues. On the organization’s Facebook page, visitors can play the Nest Egg Challenge with friends, an interactive game that encourages discussions about trimming expenses and saving money.

And among several clients of consultants like Hewitt Associates Inc. and Towers Watson & Co., participants can turn to their respective plan sponsors’ accounts on the Twitter real-time messaging service. There they can find an assortment of brief comments alerting them to sources of greater detail about retirement strategies. Some clients of Lincolnshire, Ill.-based Hewitt Associates, use Twitter to post retirement-plan reminders, and they host blogs that allow employees to offer “share my story” retirement planning experiences,

Baltimore-based T. Rowe Price Group Inc. uses some social media and is conducting research about expanding such sources. It has a message board for plan executives to discuss management and regulatory issues, and they can communicate through a Web site, webinars and e-mail, said Matthew McOsker, product development manager for technology.

Selling a Business to Retire

Planning to sell your business and then retire? The Corpus Christi (Texas) Caller Times recently published a Q&A advocating that such planning start early. Three main issues will need to be addressed:

1. getting top dollar for the business
2. having adequate retirement income
3. attaining good quality of life in retirement