Texas Retirement Now Number 2

Texas retirement has become No. 2 in the nation. The state ranks second for number of retirees,  behind first place Florida. That ranking is paying off. Retirees spend an average $42,500 each year in their respective Texas communities.

Go Lampasas

Texas Agriculture Commissioner Todd Staples has announced that the city of Lampasas has been designated a GO TEXAN Certified Retirement Community (CRC). The CRC Program helps communities attract retirees and potential retirees to make their homes in Texas. Lampasas is the 31st community in the state to be certified.

Idaho Governor Butch Otter Wants to Ban Early-Retirement Bonuses

Idaho Gov. Butch Otter says he's prepared to co-sponsor legislation to ban purchases of additional retirement service for state employees to get them to retire early -- a practice that resulted in $125,000 in such state expenditures in 2009, including $72,781 for a single employee.

Save Our Retirement, Inc.

Jim Hovious, an engineer from Soddy-Daisy, Tenn., is heading a group at the TVA known as Save Our Retirement, Inc. Hovious is asking employees and retirees to donate to a fund to hire attorneys to fight what they contend was an illegal change in TVA’s pension benefits.

Critics of the changes adopted last year, including the three employee representatives on the retirement board, claim TVA should make up for the shortfall in the retirement system due to investment losses. They contend the utility took advantage of earlier investment gains to reduce employer contributions from 1990 through 2009.

Aging Lawyers

About 60 percent of law partners may be considered aging lawyers. They are 5 or older. By some estimates, a quarter of all practicing attorneys will be 65 or older by 2011.

Investment Attitudes

A recent survey of defined contribution plan participants conducted by MassMutual's Retirement Services Division reveals some surprising findings about participant attitudes and approaches toward investing – and some striking differences based on gender.

MassMutual conducted the online survey of more than 1,000 of its retirement plan participants between November 15, 2009 and January 15, 2010.

Here are some of the results:

• 75.8% of participants surveyed were optimistic about the stock market, believing that performance will improve in the next 12 months
• Only 7.6% who think it will decline
• Women were just as optimistic as men relative to the market outlook
• Women were significantly less confident in making their own investment decisions (32.5%) compared to men (47.8%).
• More men enjoy managing their investments (61.5%) than do women (48.1%)
• More women also prefer to spend as little time as possible on investment decisions (39.3%) compared to men (28%)
• 70.9% of participants enjoy learning about investments compared to 8.2% who don't

The 401(k)/Annuity Hybrid

In recent years, financial service providers have sought to integrate 401(k)s with annuity programs, but neither employers nor employees are rushing onto those products.

Fidelity Investments and Vanguard, for example, have tried to offer mutual funds that would provide a predictable—albeit not guaranteed—income stream through managed-payout funds. But the bear market tore these products apart.

Now insurers see a chance to get back into the 401(k) game and grab a share of the lucrative baby-boomer retirement market by making annuities a viable option in 401(k) plans.

Prudential Financial, for example, offers deferred annuities in 401(k) plans. They provide at least a 5% annual payout that starts at retirement and continues until death. Among the differences from traditional deferred annuities, the fees are clearly disclosed—1% per year—and investors can take their money out without penalty.

White House Announces Two New Rules

At a recent White House forum hosted by Vice President Joe Biden, the U.S. Department of Labor announced two new rules designed to enhance retirement security and transparency for the millions of workers covered by 401(k), pension and other retirement arrangements.  The announcement was part of the White House Middle Class Task Force's year-end report, which the vice president released at that White House event.

The first of the two rules would ensure workers receive unbiased advice about how to invest in their individual retirement accounts or 401(k) plans.  If the rule is adopted, it would put in place safeguards preventing investment advisors from slanting their advice for their own financial benefit.  Investment advisors also would be required to disclose their fees, and computer models used to offer advice would have to be certified as objective and unbiased.  The department estimates that 2 million workers and 13 million IRA holders would benefit from this rule.

The second rule establishes new guidelines on the disclosure of funding and other financial information to workers participating in multi-employer retirement plans — those collectively bargained by unions and groups of employers.  It will ensure transparency by guaranteeing workers can better monitor the financial condition and day-to-day operations of their retirement investments.  The rule will go into effect in April 2010.

New Planning Tools from Wells Fargo

Wells Fargo & Company has upgraded its online retirement planning site. New interactive tools on the site can help savers select the IRA best suited to their needs and calculate the cost of taking cash from a 401(k) account left at a previous employer. The new, age-based organization of the site allows users to focus on information relevant to their life stage – whether they are in their 20s or retired.

Retirement Preparedness

Wells Fargo has released survey findings about the retirement preparedness of Americans age 50 to 59. Of this group, 67 percent said their expectations for retirement had changed from those held a year ago, and 56 percent expected to work longer by an average of three more years.

Respondents said they will need $800,000 for retirement, but have saved only $300,000, a median amount. This group also had not assessed how long their savings would last in retirement. They expected to live nearly 21 years in retirement, but planned on spending nearly 10 percent of their savings every year despite the industry recommendation is to withdraw no more than 4 percent annually.