Invest for Retirement With Market Volatility in Mind -By Tom Halloran

During the past few months, investors have been flooded with headlines warning of market swings and extreme volatility, threatening major companies and Main Street portfolios alike. With eyes still fixed on emerging markets overseas and speculation around regulatory changes at home, many investors may find themselves uncertain of how to best manage their portfolios to ensure that the money they've been working hard to save for retirement remains safe.

Whether your money is in a 401(k), traditional or Roth IRA, 403(b) or any other savings account, the most important thing to keep in mind as the final quarter of 2015 plays out is to keep thinking in the long term. Since the financial crisis, the markets have generally been performing well for everyday investors. Contraction is a normal part of the market cycle and, with the right strategy, it should not have a major effect on your retirement savings.

Create a solid plan. According to the Voya Retire Ready Index study, only 17 percent of working Americans have a written financial plan in place. With that in mind, one of the first basic steps to avoid the consequences of market volatility is to create a solid plan.

Consider meeting with a financial advisor to map out your financial priorities, for both now and your future, in order to determine how you should be allocating funds and diversifying risk within your portfolio. Your goals and your age are important factors for guiding how active you should be in the market, as well as the types of risk you should assume with your investments.

When the market tumbles as it did this past August, your portfolio may see some fluctuations. Understanding your risk tolerance will allow you to better manage through these unsettling times. Working with an advisor can help you hedge your investments in a manner that keeps your portfolio -- and your nerves -- steady over the long term.

Buy low, sell high. When you do see changes in your portfolio during a market downturn, don't assume it's immediately time to start selling. In fact, this could actually be an opportunity to take advantage of lower prices and add new stocks to your portfolio.

The old investing tenet says to "buy low and sell high." Many investors tend to see stock tickers turning red on their television screens and assume they should unload any "unpopular" or poor-performing investments. Before making any major buying or selling decisions, however, it's best to consult with your advisor again to get his or her perspective on how any volatility might impact you. Your retirement plan should be built with a long-term investing strategy in mind, so that it is able to withstand any unexpected turbulence.

Do a quarterly checkup. Often when the markets take a sudden dip, many of us become instantly glued to our computer or television screens in order to make the most educated investing decisions possible. Take advantage of this time to actually evaluate your current strategy. For most people, I'd recommend checking in on your investments about once a quarter.

You can also meet with your advisor or use an online planning tool, such as Voya's myOrangeMoney, to track if you are on the right path to meeting your future monthly income goals in retirement. Market volatility shouldn't necessarily be driving any changes to your strategy, but it may help to remind you to rebalance, adjust your plan, or revisit some important calculations. A market correction is a good excuse to think about potential portfolio corrections.

With a 24-hour news cycle telling us that markets are down day after day, it's easy to worry that the money you're working so hard to save now may not be there tomorrow, when you need it most. That's why it is important to create a holistic plan -- one that you stick to -- that can weather the short-term ups and downs and keep you on the straight and narrow to a financially secure retirement.

Culled from US News

10 least tax-friendly states for retirees, 2015 By Sandra Block

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Retirees have special concerns when evaluating state tax policies: Are Social Security benefits taxed? Does the state impose its own estate tax? Are there property tax breaks for seniors? The answers can greatly affect the financial well-being of fixed-income retirees.

These 10 states impose the highest taxes on retirees, according to Kiplinger's 2015 analysis of state taxes. Three of them treat Social Security income just like Uncle Sam does -- taxing up to 85% of your benefits. Exemptions for other types of retirement income are limited or nonexistent in these states. Property taxes are on the high side, too. (To see how retirement income is taxed by state, go to the Retiree Tax Map.)

#10 New York

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State Income Tax: 4% (on income up to $8,200/individual, $16,450/joint) to 8.82% (on income more than $1,046,350/individual, $2,092,800/joint)

State Sales Tax: 4%

Estate Tax/Inheritance Tax: Yes/No
On average, New Yorkers fork over 12.6% of their income in state and local taxes, according to the Tax Foundation. But retirees catch several breaks.
The state doesn't tax Social Security benefits or public pensions. It also excludes up to $20,000 for private pensions, out-of-state government pensions, IRAs and distributions from employer-sponsored retirement plans.
Food and prescription and nonprescription drugs are exempt from state sales taxes, as are greens fees, health club memberships, and most arts and entertainment tickets. Depending on where you shop, though, sales taxes on everything else can be steep. The average state and local combined sales tax rate is 8.48%, according to the Tax Foundation.
The median property tax on the state's median home value of $277,600 is $4,559, the 11th-highest rate in the U.S.
While New York has an estate tax, a law that took effect last year will make it less onerous. For fiscal year 2014 to 2015, estates valued at $2,062,500 are subject to an estate tax with a top rate of 16%. The exemption will rise by $1,062,500 each April 1 until it reaches $5,250,000 in 2017. Starting January 1, 2019, it will be indexed to the federal exemption, which is $5.43 million for 2015.
#9 New Jersey

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State Income Tax: 1.4% (on income up to $20,000) to 8.97% (on income more than $500,000)

State Sales Tax: 7%

Estate Tax/Inheritance Tax: Yes/Yes
The Garden State's tax policies create a thicket of thorns for some retirees. Its property taxes are the highest in the U.S., according to the Tax Foundation. While Social Security benefits, military pensions and some retirement income are excluded from state taxes, other retirement income could be taxed as much as 8.97%.
Residents 62 or older may exclude as much as $15,000 ($20,000 if married filing jointly) of retirement income, including pensions, annuities, IRAs, and 401(k) and employer-sponsored retirement plan distributions, if their gross income is $100,000 or less.
The median property tax on the state's median home value of $307,700 is $7,331.
New Jersey is one of only two states (Maryland is the other) that impose an inheritance tax and an estate tax. (An estate tax is levied before the estate is distributed; an inheritance tax is paid by the beneficiaries.) In general, close relatives are excluded from the inheritance tax; others face tax rates ranging from 11% to 16% on inheritances of $500 or more. Estates valued at more than $675,000 are subject to estate taxes of up to 16%. Assets that go to a spouse or civil union partner are exempt.

#8 Nebraska

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State Income Tax: 2.46% (on income up to $3,000/individual, $6,000/joint) to 6.84% (on income above $29,460/individual, $58,920/joint)

State Sales Tax: 5.5%

Estate Tax/Inheritance Tax: No/Yes
The Cornhusker State taxes Social Security benefits, but new rules that took effect this year will exempt some of that income from state taxes. Nebraska taxes most other retirement income, including retirement-plan withdrawals and public and private pensions. And the top rate kicks in pretty quickly: It applies to taxable income above $29,460 for single filers and $58,920 for married couples filing jointly.
Starting in 2015, residents can subtract Social Security income included in federal adjusted gross income if their adjusted gross income is $58,000 or less for married couples filing jointly or $43,000 for single residents.
Food and prescription drugs are exempt from sales taxes. Local jurisdictions can add an additional 2% to the state rate. The average state and local combined sales tax rate is 6.8%.
The median property tax on the state's median home value of $132,700 is $2,438, the seventh-highest in the U.S.
Nebraska's inheritance tax is a local tax administered by counties, ranging from 1% to 18%. Assets left to a spouse or charity are exempt.
#7 California

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State Income Tax: 1% (on income up to $7,749/individual, $15,498/joint) to 13.3% (on income above $1,000,000/individual, $1,039,374/joint)

State Sales Tax: 7.5%

Estate Tax/Inheritance Tax: No/No
California exempts Social Security and Railroad Retirement benefits, but all other forms of retirement income are fully taxed. That's significant, because wealthier residents of the Golden State pay the highest state income taxes in the U.S.
Early retirees who take withdrawals from their retirement plans before age 59 1/2 pay a 2.5% state penalty on top of the 10% penalty usually imposed by the IRS.
At 7.5%, state sales taxes are high, and local taxes can push the combined rate as high as 10%. The average combined state and local sales tax rate is 8.44%. California also has some of the highest gas taxes in the U.S., at 41 cents per gallon.
The median property tax on the state's median home value of $373,100 is $3,015.
SEE ALSO: 10 Great Places to Retire
#6 Montana

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State Income Tax: 1.0% (on income up to $2,800) to 6.9% (on income above $17,000)

State Sales Tax: None

Estate Tax/Inheritance Tax: No/No
You won't pay sales tax to shop in the Treasure State, but that may be small comfort when you get your state tax bill. Montana taxes most forms of retirement income, including Social Security benefits.
Montana allows a pension-exemption of as much as $3,980 per person if federal adjusted gross income is $35,190 or less.
Property taxes are slightly lower than average here. The median property tax on the state's median home value of $190,100 is $1,630.
#5 Oregon

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ThinkstockState Income Tax: 5% (on income up to $3,300/individual, $6,600/joint) to 9.9% (on income over $125,000/individual, $250,000/joint)

State Sales Tax: None

Estate Tax/Inheritance Tax: Yes/No
The Beaver State's top income-tax rate of 9.9% hits residents earning more than $125,000 ($250,000 for married couples filing jointly). Although Oregon doesn't tax Social Security benefits, most other retirement income is taxed at your top income tax rate. However, you can deduct as much as $6,250 of federal income taxes paid on your Oregon return, and there is a retirement-income credit for seniors with certain income restrictions.
One bright spot in Oregon's tax picture: No sales tax. You can buy anything in the state and never pay a penny in sales taxes.
Property taxes are average: The median property tax on the state's median home value of $229,700 is $2,494.
Oregon's estate tax applies to estates valued at just $1 million or more. The top rate is 16%. Assets left to a surviving spouse or registered domestic partner are exempt.
SEE ALSO: Cheapest Places Where You\'ll Want to Retire
#4 Minnesota

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State Income Tax: 5.35% (on income up to $25,071/individual, $36,650/joint) to 9.85% (on income more than $154,950/individual, $258,261/joint)

State Sales Tax: 6.875%

Estate Tax/Inheritance Tax: Yes/No
The North Star State is a chilly tax climate for retirees. Social Security income is taxed to the same extent as it is on your federal return. Pensions are taxable regardless of whether they are military, government or private pensions. Income tax rates and the sales tax rate are high.
Food, clothing, and prescription and nonprescription drugs are exempt from state sales tax. A few cities and counties also add a sales tax.
The median property tax on the state's median home value of $180,100 is $2,148. Minnesota homeowners of any age may be eligible for a state-paid refund for homeowners whose property taxes are high relative to their incomes.
Minnesota taxes estates valued at more than $1.4 million at rates ranging from 10% to 16%. Assets left to a surviving spouse are exempt.
#3 Rhode Island

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State Income Tax: 3.75% (on income up to $60,550) to 5.99% (on income more than $137,650)

State Sales Tax: 7%

Estate Tax/Inheritance Tax: Yes/No
Rhode Island, which was first on our 2014 list, became a little less unfriendly this year after lawmakers approved a budget that exempts Social Security benefits from state taxes for single filers with up to $80,000 in adjusted gross income and married filers with up to $100,000 in AGI starting in 2016. Still, Rhode Island taxes most other sources of retirement income, including pension income.
Groceries, most clothing and footwear, and prescription drugs are exempt from sales tax. Over-the-counter drugs such as aspirin are taxed, unless you have a prescription.
The median property tax on the state's median home value of $232,300 is $3,872, the 10th-highest in the U.S., according to the Tax Foundation. Homeowners 65 and older who earn $30,000 or less can get a state tax credit of up to $305 under the statewide property-tax relief program.
Estates valued at more than $1.5 million are subject to Rhode Island's estate tax, which takes 16% of the amount greater than the threshold. Assets left to a surviving spouse are exempt.
SEE ALSO: 6 Good Reasons to Work Past Retirement Age
#2 Connecticut

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State Income Tax: 3% (on income up to $10,000/individual, $20,000/joint) to 6.7% (on income above $500,000/individual, $1,000,000/joint)

State Sales Tax: 6.35% for most items; 7.8% for certain luxury items

Estate Tax/Inheritance Tax: Yes/No
The Constitution State is a tax nightmare for many retirees. Its real estate taxes are the fourth-highest in the nation, according to the Tax Foundation. Most types of retirement income are taxed, along with a portion of Social Security benefits for taxpayers above certain income thresholds.
Social Security is exempt for individual taxpayers with federal adjusted gross income of less than $50,000 and for married taxpayers filing jointly with federal AGI below $60,000. Retirement plans, private pensions, and out-of-state government and federal civil-service pensions are fully taxed. All federally taxable military income is exempt.
There are no local sales taxes in Connecticut, so you'll pay only the statewide rate of 6.35% on your purchases. As of July 1, clothing and shoes under $50 are no longer exempt from the state sales tax. Luxury items, such as jewelry worth more than $5,000, are taxed at 7.8%, which means a $6,000 diamond ring would cost you $6,468.
Median property tax on the state's median home value of $267,000 is $5,280.
Connecticut imposes a tax on estates valued at $2 million or more, at a progressive rate starting at 7.2%. The rate rises to a maximum of 12% for an estate valued above $10.1 million. Connecticut is the only state with a gift tax, which applies to real and tangible personal property in Connecticut and intangible personal property anywhere for permanent residents.
#1 Vermont

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State Income Tax: 3.55% (on income up to $37,450/individual, $62,600/joint) to 8.95% (income more than $411,500)

State Sales Tax: 6%

Estate Tax/Inheritance Tax: Yes/No
The Green Mountain State doesn't coddle retirees. It has a steep top income tax rate, and most retirement income is taxed. Vermont treats Social Security benefits the same way the federal government does, which means as much as 85% of your benefits could be taxed.
In an effort to close the state's $100 million budget gap, Vermont now limits deductions to $15,750 for single residents and $31,500 for married couples. With that in mind, Vermont moves up to the unenviable top spot on our list of least tax-friendly states for retirees.
Local jurisdictions can add 1% to the state sales tax. Food for home consumption, clothing, and prescription and nonprescription drugs are exempt. But you'll pay 9% tax on prepared foods, restaurant meals and lodging, and 10% if you order a glass of wine or beer in a restaurant.
The median property tax on the state's median home value of $218,300 is $3,727, the ninth-highest in the U.S., according to the Tax Foundation. Eligible Vermont residents can make a claim for a rebate of their school and municipal property taxes if their household income does not exceed a certain level. (Generally, household incomes of $109,000 or more do not receive an adjustment.)
Vermont taxes estates that exceed $2.75 million at a flat rate of 16% on the amount greater than the threshold. Assets left to a surviving spouse are exempt.
SEE ALSO: 10 Best States for Retirement
2014 list of the ten least tax-friendly states for retirees:
1. Rhode Island
2. Vermont
3. Connecticut
4. Minnesota
5. Oregon
6. Montana
7. California
8. Nebraska
9. New Jersey
10. New York

Kiplinger updates these rankings annually. Above is our 2014 list of the ten least tax-friendly states for retirees. The list is based on Kiplinger's analysis of state tax laws; information is gathered from state tax department Web sites, CCH and the Tax Foundation.

 Culled from kiplinger

Companies to Workers: Start Saving More—Or We’ll Do It for You- By Kirsten Grind

More American companies are turning to a new way of convincing employees to save more for retirement: make them do it.

Companies from Apache Corp. to Google Inc. to Credit Suisse Group AG have boosted the percentage of worker paychecks automatically diverted to 401(k) plans well above the long-held standard of 3%.

Some are setting aside as much as 10% of their workers’ money or automatically increasing the amounts by 1% a year unless employees opt out. But not all are matching the increased savings with company contributions.

Millions of Americans aren’t putting enough money aside for retirement, despite reforms designed to bulk up nest eggs and encourage employees to sock away more.

There are incentives for companies to urge more-aggressive savings. They want to ensure they can make room for younger employees and aren't left with an aging workforce that doesn’t have enough money “to retire and move on,” said Douglas Fisher, Fidelity Investments’ head of policy development on workplace retirement.

Houston oil producer Apache was among the companies to test out higher rates. It boosted its automatic employee contribution to 8% in 2012 as it tried to attract new workers. Its 401(k) costs have increased by between $4 million and $5 million annually as Apache matched the full amount for employees, executives say, but roughly 97% of its employees now participate.

“If I put in less than 8%, I’m throwing money away,” said Chris Lurix, a 44-year-old Apache systems analyst in Houston, who cited the company’s willingness to match the higher savings rate as a partial reason why he took a job there three years ago.

About 40% of working households with those aged between 25 and 64 have no retirement savings, according to a study released last spring by the nonprofit National Institute on Retirement Security. For those that do, the median balance for households with workers approaching retirement age is $104,000, a rate that experts say is one-fifth of an ideal balance, based on a retirement age of 67.
“The typical American household has almost nothing saved for retirement,” said Nari Rhee, manager of the retirement-security program at the Institute for Research on Labor and Employment.
Many employers in recent decades shed costly retirement obligations by eliminating traditional pensions that guarantee a set payout for life and replacing them with tax-deferred 401(k) plans where employees are largely responsible for saving and investment choices.
Millions of new savers joined 401(k) plans but companies enrolled most participants at a 3% savings rate, partly because of guidance from the Internal Revenue Service in 1998. Companies were long reluctant to take a bigger chunk out of paychecks for fear of stirring employees’ ire or taking on higher costs if they matched the larger contributions.

 

Companies softened that stance as they recovered from the 2008 financial crisis and looked to attract new workers. Large money managers also lobbied employers to be more aggressive.
The number of plans with contribution rates above the old default rate climbed to 40% for the first time in 2013, according to the latest data available from the Plan Sponsor Council of America, compared with 23% in 2006. More are currently discussing moves higher, according to industry consultants and money managers.
Google began boosting its automatic savings rate in its 401(k) plan from 4% in 2008 to 6% in 2010, according to retirement researcher BrightScope Inc.. It now enrolls employees at 10%. John Casey, Google’s director of international benefits, said in a statement that the company wants “Googlers saving for the long-term so they can have the retirements they want.”
Fidelity, Vanguard Group and other large money managers also benefit by collecting more fees on assets under management. Fidelity manages accounts for 13 million 401(k) investors across 21,000 plans, and Vanguard manages retirement accounts for 3.6 million people and 1,900 plans.

Companies that have bumped up the default savings rate say they’ve been surprised by the lack of pushback from employees, who are free to lower their savings rate or opt out of the automatic increases.

Credit Suisse braced for complaints last year when it upped its initial automatic savings rate for new employees to 9% from 6%. It did so after years of experiencing lackluster interest from the firm’s roughly 8,500 employees—specifically younger workers—in the U.S. when meeting to discuss increasing retirement savings, said Joseph Huber, chairman of the bank’s pension-investment committee.

But Mr. Huber said the bank heard concerns from only two people, who weren’t previously putting any money into their 401(k) plans. Credit Suisse also decided to automatically increase the default rate by 1% a year until an employee reaches 15%. It doesn’t match contributions up to the highest rate, although it contributes $3,000 to $10,000 for each employee annually.

“It’s companies’ biggest fear and it was radio silence,” he said.

Jeffrey Barnett, a 24-year-old clinical research assistant at Ohio State University who makes about $28,000 a year, said some of his co-workers grumbled at the university’s 10% default savings rate. But it doesn’t bother him.

“It has definitely put employees in a good position, whether or not they feel that way from the start,” Mr. Barnett said.

Culled from The Wall Street Journal

Your boss can talk you into loving your salary-By Sarah Grant

All workers think they should be getting paid more—that's nothing new. But two recent reports suggest employers may not have to compensate their workers well to keep them happy.

A survey of 71,000 employees in the U.S. by PayScale, a website that tracks salaries, showed that employees who were underpaid—that is, paid less than the market rate for their position—were more satisfied with their work when their company was transparent about compensation. The percentage of underpaid employees who were satisfied with their compensation jumped to 82 percent from 40 percent when a manager simply sat down and discussed their pay.
On the other hand, 64 percent of employees who were paid fairly (at market rate) believed they were underpaid, and would consider looking for higher-paying work elsewhere. The research shows that dissatisfied employees left even if their pay went up.
More from Bloomberg.com: China's Selling Tons of U.S. Debt. Americans Couldn't Care Less.
"There is a huge disparity of information," said Tim Low, vice president of marketing at PayScale. "It used to be that employers had all the information when it came to compensation, and employees had the least."
With salary data more readily available online, it's easier for employees to learn what their colleagues might be making, he said. That should motivate companies to clarify what they're paying and why, especially since the report shows most employees' expectations are off.
More from Bloomberg.com: Volkswagen Offices Searched After Ex-CEO Quits Post at Porsche
Even though it's easier than ever to look up pay rates, most workers don't understand how their paycheck compares to the market rate.
The most confused employees were the ones paid above market rate. About half of this group felt they were being paid at the market rate, and a third of them said they were underpaid. Only 21 percent of the people in this group knew that they were taking home a higher-than-market paycheck.
The only people that overwhelmingly got it right were the underpaid workers. Of that group, 83 percent knew they weren't paid at market rate.
"Fixing the perception gap in pay doesn’t cost any money for companies," said Low. "But it requires companies to teach managers how not to run away from the conversation."

 

It's relevant news for companies, which worry about how to keep their best employees. In a separate PayScale survey of 5,530 companies about how they were compensating workers, 63 percent of employers called retention their top concern.

Still, less than half of the companies PayScale surveyed train managers on how to have tough conversations with employees about compensation. One way to make those conversations go smoothly, said Low, is to provide benchmarks for the different positions offered at the company, with salary ranges to show employees where they fall in the spectrum. Giving real-time salary data is also useful; however, companies would have to invest in systems that track the market rate for salaries.
The survey also showed most companies weren't openly talking about pay. As of this year, less than half of employers said they had or are working on improving transparency with new salary tracking software or manager training.

Companies concerned about holding on to their most valuable employees are incorporating more feedback into their management styles. The annual performance review is being ditched, in many places, for more frequent discussions about compensation and ways to change your pay like acquiring more skills, said Low. "There's not this magical one-year cycle," he said. If companies wait up to a year to discuss giving their star players a raise, they may find those stars are already on their way out. 

Culled from Bloomberg.com

Here's why Americans say they're not spending more - By Janna Herron

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The economy may be expanding with rising wages and a steady drumbeat of newly created jobs, but that hasn't been enough to persuade Americans to open their wallets a little more. A majority still limit their spending, according to a survey that accompanied Bankrate's Financial Security Index for October.

When asked about their monthly budgets, 62% said they were motivated to keep their spending in check. They gave a variety of rationalities for holding back, including the following reasons that were offered in the survey:

• 28% said their income hasn't changed.
• 25% needed to save more.
• 18% cited a general concern about the economy.
• 10% said they were wrestling with too much debt.
• 7% worried about getting fired from their jobs.

Another 4% had an explanation that wasn't offered in the survey, and 6% answered "none of the above."
The survey responses varied greatly depending on the age of the person answering the question. And retirement seemed to play a role in whether people were spending more. Those nearing retirement age (between age 50 and 64) were the most likely to curb spending, while those who were already of retirement age (65 and older) were the least likely.
"These results are not entirely surprising, since the 50-to-64 age group is in 'catch-up' mode," says Leon LaBrecque, CEO of LJPR Financial Advisors. "In my experience, clients in that age segment are catching up from funding college, career changes and raising kids."
It gets a little easier by the time they hit their mid-60s, says Hank Mulvihill, principal at Mulvihill Asset Management. By that time, many Americans have already dealt with a number of financial challenges. They've raised their children and cared for elderly parents. They've downsized their living arrangements, completed accumulating assets and determined their monthly cash flows. They also may see more money in their pockets because Medicare often reduces their overall health insurance and care costs.
"At that point, they can spend fairly freely within their known budget, with fewer likely demands or surprises," Mulvihill says.

When can I start spending more?

The best time to increase spending is when you get a raise, says Austin Frye, a financial adviser in Florida, because you can swallow extra expenditures without shortchanging your savings goals.
But that's difficult in an environment of slow wage growth. The average hourly wage for American workers slipped a penny from August to September, according to the federal government. Wages are up roughly 3% this year when compared with the same time last year -- a big improvement over the past couple of years, but still not as strong as the 4% to 5% growth that workers enjoyed before the recession.
If you're lucky enough to get a raise, Frye says you probably shouldn't spend all of that extra cash. This is also an ideal time to pad your savings account. "It generally takes $1.30 in income to increase $1 in expenses," he says. "So, the $1.30 in income should translate to 50 cents in savings and 50 cents for spending."

The who and why of limited spending

Bankrate's FSI survey broke down why certain groups didn't increase their monthly spending. For instance:

• For those younger than 50, the reason most often cited for limiting spending was the need to save more. Those older were most likely to cite stagnant income.
• Stagnant income was the most common reason to limit spending for Americans who earned less than $50,000 a year. Those making above $50,000 more often cited needing to save more.
• Lower-income Americans were more likely than higher wage earners to limit spending based on worries about job security.

Overall financial outlook

Savings isn't just a reason why Americans are capping their spending. It's been an area of general concern for the past few years. According to Bankrate's October Financial Security Index, only 19% of Americans reported feeling more comfortable with their savings, compared with 28% who felt less comfortable.

Overall, the FSI slipped to its lowest reading in the past 12 months. Americans noted improved job security, net worth and overall financial security compared with a year ago. But, in some cases, the general level of optimism was lower than the previous month.

"A disappointing September employment report undercut feelings of job security," says Greg McBride, CFA, chief financial analyst for Bankrate. Still, he said, "The 19% of Americans feeling more secure in their jobs still outpace the 14% feeling less secure."

Culled from Bankrate.com

Top Retirement Savings Advice for Everyone By Leslie Kramer

 

Most people, in the midst of their working years, don’t spend too much time thinking about retirement. It feels so far away — until it doesn’t. That’s why it’s important to plan ahead, so when would-be retirees are at the finish line they're not panicking at not having saved enough. The truth is that everyone should be saving as much as possible while they still have the earning power to do so.
For those who want to get on track now, here's a checklist that should help.

Deploy a 401(k) or IRA ASAP

For those just starting out, it may be tempting to avoid investing in a retirement account, thinking that there's plenty of time later for that. But these years are important ones to start saving because time is on their side, even if earnings aren't at a high level. Creating good savings habits early is key to enjoying the time value of money.
If savers have the option of investing in a 401(k) plan at work, and if the company offers an investment-matching plan, take advantage of it to the full amount. By matching contributions, the company is essentially giving away free money. Many (though not all) employers will match at least 3% of any investment in a 401(k). And if savers are lucky enough to get a raise, don’t pocket it or spend it all right away. Instead, savers should consider raising their contribution level.
If an employer doesn’t offer such a plan, savers aren't off the hook. This is when you should open up a traditional IRA or a Roth IRA. The government limits the amount that can invest in an IRA to $5,500 a year until the age of 50. At that point the amount increases to $6,500.
Deploying retirement accounts as soon as possible means taking advantage of compounding growth, or earning money by investing any dividends or interest on initial investments back into the investment itself. The beauty of compounding interest is that if when you start investing early on, you'll gain more because you'll have more time for your investments to grow. So rather than spending any profit or interest your investment may bring in, leave it put and let it grow.

Set Up Various Savings Funds

Every saver should have an emergency fund that they can rely on in case they lose their job or are faced with an expensive emergency. It’s a good idea to put aside three- to six-month’s worth of your salary in an accessible savings account. This way, you won’t be forced to take money out of your retirement fund if calamity hits. Having a cushion to rely on will also give you peace of mind, and that's priceless. Keep in mind that having too much cash socked away in a low-interest savings account is counterproductive. If, at the end of the year, you have more cushion money than you need, you can put it to work in an IRA or other investment.

When the saver hits their 30s, there will be additional accounts at their disposal. Setting up a tax-advantaged 529 savings plan when your child is born is key. These plans, also known as qualified tuition plans, are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code.
Contributions to 529 plans are not tax deductible, but as earnings in the fund grow, they will not be subject to federal taxes and therefore will not be taxed when savers take the money out to pay for a child’s college tuition.

Wills and Insurance Investments

Everyone in their thirties should have a will. It should be updated each year or as assets or situation changes. Hopefully, no one will get a look at it for a long, long time, but it’s important to have as no one can predict the future.
You should also purchase life and disability insurance, especially if you are married or have children. Even if there are two parents working, the loss of one of those incomes could have a big impact. Having an insurance plan will give you the reassurance that your family will be protected if one parent becomes unable to work or if there is a sudden death.
In terms of investing style, most financial advisors suggest that people invest more aggressively when they are younger and move to less risky investments as they age. That means investing heavily in stocks early on while there's still time to ride out the market's waves, and then start scaling back the risk as you start accessing your retirement fund. Bonds are a good alternative to equities, as are stable-value funds.

Always Keep Saving

Typically, people find that their prime earning years start in their 40s. So rather than spending more on luxuries, you should use this time period to save more. As of 2015, the IRS allows people to save up to $18,000 annually before taxes in their retirement savings account until the age of 50. Not everyone can afford to do so, but anyone who can should saving as much as possible at this time and even try to increase that savings by 1% a year. Remember the benefits of compound interest? This is where the benefits will begin to become apparent.
Once savers pass the age 50 mark, the IRS lets savers increase their retirement savings through a catch-up contribution. That means that an extra $6,000 before taxes, increasing the total pre-tax savings amount to $24,000.

Don't Quit Working Too Soon

Once people reach their 60s, they may start thinking about retiring. But before taking the plunge, they should be sure they are financially ready. People are living much longer today than in previous generations, so retirement could wind up being much longer than expected. Retirees must be sure they have saved enough to comfortably and enjoyably retire. Don’t forget about the rising cost of health care, or the possibility of needing home healthcare or a care facility.

The Bottom Line

It’s never too early to start thinking about saving for a secure retirement. The key is to start early and not leave things to chance. Ideally, everyone should save as much as possible while younger so that they won’t have to spend as much time and money catching up later in life.

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Women are a quarter million dollars short of retirement Bloomberg -By Suzanne Woolley

Lower earnings and longer lives—it's a powerful one-two punch, and it threatens to keep women on the ropes in retirement.
A recent study measured the retirement savings divide between 45-year-old men and women. It found that women, on average, are more than $268,000 short of what they need to retire comfortably at 65. For the average man, it's $212,000. For every $100 a man sets aside, a woman needs to set aside $126. That's a 26 percent gender gap.
What can be done? Women need to begin their retirement planning all the earlier, to determine what goal would realistically suit them (most people don't even run projections). While estimating future expenses is hard, the websites of large fund companies have calculators to help investors figure it out, and better planning tools are showing up on more 401(k) plan sites.

For the study, Financial Finesse analyzed data on median income, retirement savings, life expectancy, 401(k) salary deferral rates, and projected health-care costs to find out how much men and women would need to save to retire at 65 and live on 70 percent of pre-retirement income.

"Lower Social Security benefits, longer life expectancy, and lower retirement savings balances because of lower-paying jobs all compound into this incredibly large shortfall for women," said Gregory Ward, a senior financial planner at the company. 

Culled from Bloomberg.com

Everything: Here’s How Much Retirees Are Paying for Health Care - By Aimee Picchi

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finance

It may come as a surprise to some younger Americans that health care isn’t exactly free for retirees on Medicare, but the sticker shock may be downright alarming.

An average 65-year-old couple who retires this year will face out-of-pocket health-care costs of $245,000 in their golden years, a jump of 29 percent since 2005, according to a new study from Fidelity Investments. The surge in expected expenditures is due to longer life spans and the rising costs of prescriptions and medical care.
The bottom line, Fidelity says, is that younger Americans need to be saving now to cover their health-care costs when they turn 65, in addition to paying for the basics such as food and housing. Given that three-quarters of pre-retirement Baby Boomers aren’t aware that Americans covered by Medicare pay a monthly premium and have deductibles and co-pays, it’s no wonder that a majority isn’t considering health-care costs into their retirement planning.
Only one out of five couples polled by Fidelity said they are factoring health-care costs into what they need to save for their retirement.

Fidelity’s estimate may actually be on the conservative side, given a forecast earlier this year from retirement-services company Healthview Services that a couple retiring this year will encounter health-care costs of almost $267,000.
Adding to retirees’ pain is the fact that health-care costs are rising at a much faster rate than Social Security’s cost-of-living adjustments, which means older Americans will likely need to devote larger portions of their Social Security payments to cover their health-care costs, according to Healthview. That will place “incredible stress” on retirees’ budgets, the group said.
So how can Americans prepare? Fidelity, which is in the business of managing money, naturally has a few suggestions relating to opening new accounts, such as a health savings account, which can be rolled over into subsequent calendar years to cover medical expenses.

Culled from Fiscal Times

A Performance Review May Be Good for Your Marriage-By Elizabeth Bernstein

A formal evaluation can help a couple set goals, affirm what works and avoid entrenched conflict

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Getting your annual performance review from your boss can be awkward and irritating. Can you imagine getting one from your spouse?

A growing number of marriage therapists and relationship researchers recommend that spouses and romantic partners complete periodic performance reviews. Couples typically wait too long to go to therapy for help, they say. By taking time to regularly evaluate and review their relationship together, partners can recognize what is and isn’t working—and identify goals for improvement—long before problems become entrenched and irresolvable.
“It’s the relationship equivalent of the six-month dental checkup,” says James Cordova, professor of psychology and director of the Center for Couples and Family Research at Clark University, in Worcester, Mass.
This isn’t an exercise to be taken lightly. Couples have to be careful, and constructive, when sharing their assessments. Fairness is crucial. And for couples in a relationship crisis, a performance review is unlikely to help.
Research shows that regular checkups improve relationships. In a study published in Sept., 2014, in the Journal of Consulting and Clinical Psychology, Dr. Cordova and his colleagues gave 216 married couples questionnaires asking them to assess the biggest strengths and weaknesses in their relationship. Half the couples then saw a therapist for a checkup of two sessions to go over their evaluations and brainstorm a plan to address their concerns. The other half were told they were on a waiting list and didn’t discuss their assessments in a checkup.
The researchers, who followed up with the couples after one and two years, found those who had performed the checkup saw significant improvements in their relationship satisfaction, intimacy and feelings of acceptance by their partner, as well as a decrease in depressive symptoms, compared with the couples in the control group who didn’t perform a checkup. In addition, the couples who had the most problems in their marriage before the checkup saw the most improvement.
Kathlyn and Gay Hendricks, relationship coaches and authors of multiple books on marriage, who have been married 34 years and live in Ojai, Calif., schedule informal discussions with each other every Tuesday and Thursday, where they talk about problems or conflicts that have arisen in the past few days. In one recent discussion, Mr. Hendricks told his wife he has been feeling “left out” because she has been traveling so much for work lately, and she assured him that her schedule was going to lighten up soon.
“It gives us a safe, sure place to talk about our emotions,” says Ms. Hendricks, a psychologist, who is 67.
The spouses sit down for a more formal marriage review once every few months, but they are careful to focus on the relationship and not cast blame. They ask themselves, “How are we doing working together as a partnership?” and discuss areas where they need to improve. They examine their top three goals—for example, “working together as a team for our children,” “working together toward financial goals” or “being together so we both have a great sexual experience.” And they talk about how they can make their differences work for them. “It’s like taking the pulse of the relationship,” says Mr. Hendricks, 70, and a psychologist.
Dr. Cordova says while men often resist marriage therapy, they tend to appreciate marriage reviews, because they focus on a couple’s strengths and goals, as well as solving problems without blame.
But how do you review your marriage?
Remember that this is the person you love, and don’t be too critical. “You can’t approach it as you would a subordinate you supervise at work,” says Shannon Battle, a marriage and family therapist in Fayetteville, NC. “You can’t fire your spouse. This is ‘til death do us part.’ ”
Multiple research studies on people’s reactions to performance reviews show that when people feel they have been treated unjustly, they become hostile, But when they feel they have been treated fairly and respectfully, they accept the message of the review.
Rebecca Chory, a professor at Frostburg State University’s business school, in Maryland, who studies reactions to negative feedback, has identified six strategies for giving an effective performance review:
Address the behavior, not the person. Couch your comments with affirmation. “Do not put down your partner,” Dr. Chory says. She recommends saying, “I love you and want to be with you, but there are these behaviors…” or “When you did this, I felt this…”
Explain why you came to your conclusion. What contributed to your assessment? Provide a rationale.
Show that you are aware of the other person’s situation. Is your partner stressed, overworked, sick? Acknowledge the challenges he or she has been facing and how they may have contributed to the behavior you don’t like.
James Cordova James V. Cordova, Ph.D, professor of psychology and director of the Center for Couples and Family Research at Clark University, has studied how regular relationship checkups affect partners’ satisfaction.
Be consistent over time. This doesn’t mean you can nag. But you should never criticize your spouse for something one time and laugh it off another. “A person needs to know what to expect, the rules of the game” says Dr. Chory.
Allow the other person to respond and provide input. The review should be a conversation, not a lecture. And a lot of misunderstandings can be cleared up when people talk openly.
Be clear about what you would like to change. What can be done to improve the situation?
As for the review itself, Dr. Cordova says you should always begin by identifying your strengths as a couple. “It is the positive foundation that keeps a relationship happy and healthy in the long run,” he says.
Then move on to discussing your concerns—but limit yourself to one or two. “You don’t want to kitchen-sink the thing,” Dr. Cordova says. And you don’t need to come up with a solution right away. Aim to understand your partner and to have your partner understand you.

If the review makes your relationship worse, or causes a lot of arguing, you may need relationship counseling. “If you are doing it well, you can tell because you will feel closer to each other and will each feel understood,” Dr. Cordova says.

Culled from The Wall Street Journal

Closing In On Retirement? Read These Tips By Roger Wohlner

Many of the people who engage the services of the financial planner tend to do so as retirement approaches. This is natural; retirement is big step. From my experience in working with this type of client over the years here is a financial planning to-do list if you are within 10 years of retirement.
Sock Away as Much as Possible
For many retirement savers these are the highest income years of their careers. This is the time to contribute the maximum amounts possible to your employer’s retirement plan, IRA accounts, and the like. While these contributions will not have the years to compound as those made in your 20s and 30s, every bit helps.
Check Social Security
While there is some discussion as to the future solvency of Social Security, it's likely that those currently in their 50s will receive their benefits. You can get your statement and check your benefits here. The Social Security Administration has also indicated that they will resume mailing statements, so keep an eye out for yours. I suggest saving them, and always check to ensure that you have received full credit for all of your earnings.
Moreover it is important to know and understand what your benefits will be if claimed at various ages. If you are married there are a number of strategies to consider in terms of the timing of claiming your benefits. Here are a pair of good calculators from Social Security and AARP.
Gather Info for All Retirement Accounts
These days it is not uncommon for someone to have worked at five or more jobs over the course of their career. This can lead to a number of retirement plans with former employers. If you are married and your spouse works this number can easily double. This is of course in addition to your Social Security benefits.
Over the years I’ve seen people with old pensions in which they have a vested benefit, old 401(k) plan accounts that they have basically left with their old employer and ignored over the years, multiple IRA accounts, etc. This is a good time to make sure that you have a list of all of these old plans. It's an even better time to develop a strategy to make sure that old 401(k) and IRA accounts are consolidated and being properly invested and that your old employer has your current contact information regarding any old pension accounts. While many of these old accounts might be relatively small, if you have several this can add up to real money for your retirement.
Figure In Your Other Financial Resources
This is also a good time to get your arms around your other financial assets that are potentially available to support your retirement lifestyle. Here are a few items that you might have: taxable investment accounts; an annuity; life insurance with cash value; interest in a business; stock options from your employer. If your 401(k) account contains company stock you might benefit from the use of the Net Unrealized Appreciation (NUA) rules. Additionally, determine if your company offers retiree health insurance. Will you work full or part-time during retirement?

It's not uncommon for companies to offer incentives for longer tenured employees to take an early retirement. If you are the recipient of such an offer consider taking it on two counts. First, the offer might be quite financially attractive, and second, if you don't take the initial offer the next such offer in most cases is not nearly as lucrative. And make no mistake, after that first offer you likely are "on the list," so to speak.
Some folks might be lucky enough to be in line for an inheritance from parents or others. I generally urge caution in including this as a retirement asset. Things can happen. Your parents might live longer than expected and the cost of their care could eat away at much of their wealth.
Determine How Much You'll Need to Support Your Lifestyle
This is the time to start making some choices about how you will live in retirement, and more importantly, to put some dollar figures to this lifestyle. Will you be moving and/or downsizing your house? Will you be debt-free by the time you hit retirement? Will you have adult children to support?
Another way to say this is to start thinking in terms of a retirement budget.
Do a Retirement Projection
There are many retirement calculators available online, perhaps even through your company’s retirement plan provider. Some are better than others so do a little checking in terms of the methodology and the underlying assumptions. The better ones are great tools to give you an idea if your plans for retirement are realistic or not.
Most retirement projection tools will ask you to input your retirement plan assets, any pensions and Social Security, other investments, etc. Based on variables such as your investment allocation and other factors these programs will give you an idea of how much retirement cash flow your resources might be able to support. While you may not like the answer, it is far better to know you have a potential shortfall as early as possible prior to retirement.
This might be a good point to engage the services of a competent fee-only financial adviser to assist you. Besides their expertise, a qualified adviser can add a detached third-party perspective to your retirement planning.
Think About a Withdrawal Strategy
One of the more complex aspects surrounding retirement can be determining which of your accounts to tap and in what order. Different types of accounts have different income tax consequences. Traditional IRA account and 401(k) account withdrawals are generally taxed as ordinary income. Roth IRA accounts will generally not be taxed as long as certain rules are followed.
Annuities are may be taxed in part or totally depending upon how you take the money. Taxable investments can qualify of preferential long-term capital gains treatment if certain rules are followed. The point is that the rules can be complex and making poor choices can result in adverse consequences to your financial health in retirement.
Consulting with a qualified tax or financial adviser is a really good idea here, especially if you expect to be in a high tax bracket during retirement.
Stress-test Your Plan
Even the best-laid plans don’t always go according to plan. Give some thought as to what could go wrong. What happens if you suffer a serious medical setback that prevents you from working until retirement? What if your company decides to lay you off prior to your desired retirement age? Will your plans for retirement still work financially? (For more, see: How an Advisor Can Help Cut Your Healthcare Costs.)
The Bottom Line
The 10 years leading up to retirement are the time for investors to get their “retirement ducks in a row,” so to speak. Get a handle on all of your resources for retirement including Social Security, pensions, retirement accounts, and other assets. Determine what you will need to support your lifestyle in retirement and determine if your financial resources will support your lifestyle. If you need the help of a financial professional, get it. A successful retirement takes planning and this time period is crucial to help ensure a successful retirement.

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Culled from Investopaedia