Shortcomings in Retirement Planning Software

The Society of Actuarials and Actuarial Foundation notes these shortcomings in all of the 12 retirement-planning software packages it reviewed:

• They are based on unrealistic rates of return.
• They often fail to account for fees, taxation and inflation.
• They underestimate life expectancy.
• They don't factor in Social Security.
• Home equity treatment varies widely.
• Some life events are just difficult to account for.

Classic Residence by Hyatt vs the IRS

Classic Residence by Hyatt, a group of upscale retirement communities, is fighting the Internal Revenue Service (IRS) over allegations it underpaid its taxes by more than $107 million. The dispute centers around the tax treatment of entrance fees paid by incoming residents. Do the entrance fees qualify as taxable income, as the IRS asserts, or are they interest-free loans, as Classic Residence argues. Other retirement communities charge similar fees.

The Retirement Early Warning System

A new online subscription-based service, Protect-My-Retirement-Funds.com, helps investors track the success or failure of their stocks  and then issues alerts when danger is at hand. Entitled "Your Retirement Early Warning System," the system reveals key trends that can guide investors into making prompt, informed decisions regarding their retirement portfolios.

Its reports contain two sections. The first provides a quick visual of how one's securities are performing. It also gives the percentage of price difference between the last report and the current report for each investment option.

The second, the Portfolio Summary, lists the best-performing securities since the last weekly statement. Ranked in performance order, they allow investors to review the leaders and the laggards.

System founder William Earle provides these statistics:

• If one's retirement fund drops by 40 percent, it must grow by 66.7 percent to break even
• If the fund drops by 45 percent, it must grow by 81.8 percent
• If it drops by 50 percent, it must grow by 100 percent
• If it drops by 60 percent, it must grow by 150 percent
• If it drops by 70 percent, it must grow by 233.3 percent

Subscription packages are available for tracking 50 to 150 ticker symbols annually. One-, two- and three-year packages are available. "

Upbeat News from South Dakota Retirement System

The South Dakota Retirement System has started to recover from the losses of the prior two years thanks to recent stock market gains.

The system's assets have grown by about 20 percent in the 11 months since the state fiscal year began July 1. Assets were $6.6 billion as of May 31, up roughly $1 billion from last July.

A Minister’s Plight

A senior minister at a small to medium-sized U.S. church receives average pay of $70,300, according to a survey by the National Association of Church Business Administration. While churches are making very small contributions to the retirement plans of some, about 13 percent of respondents reported not receiving any retirement benefits at all.

Able Workers

Bob Skladany, founder of Able Workers Inc. said the ability to resume or continue working during "retirement" is still the most significant variable workers may be able to control.

"Disability and illness notwithstanding, and that's a big notwithstanding, retirement work income can offset pension, savings and investment deterioration," Skladany said.

Health and physical condition can be a major issue, Skladany said. "Physical capacity to continue to work appears to be a major factor affecting what type and how much work is feasible as we age," he said. "A major portion of the workforce performs manual or physically demanding work. It's particularly important that people who will need work income during retirement have assessed their physical capabilities and made an effort to deal with chronic or limiting conditions."

Skladany said questions about work definitely need to be addressed before one reaches retirement age, and while there's still time to complete training and preparation for new fields.

"Based on the hundreds of age 50-plus workers I've dealt with, failing to be practical about real employment alternatives is the biggest obstacle," Skladany said.

An Improper Balance

According to MetLife, just one in two pre-retirees has taken the time to figure out the "proper balance between work and leisure time if forced to choose" and a similar percentage of those surveyed said they had identified personal goals in retirement.

Relationship Satisfaction

A MetLife study notes that fewer than half surveyed have figured out the implications of retirement for the satisfaction they derive from relationships with family and co-workers.

How Much to Work?

More than one in two surveyed (54%) said they had formulated ideas about how much to work in retirement, according to the MetLife study.

The Importance of Working Past 65

According to the Social Security Administration, those aged 65 and older generate about 30% of their total income in retirement from working.