My $200,000 retirement fund is sitting in cash because the political situation in the Middle East has me very concerned about the future of the stock and bond markets. How do you think I should be invested if I plan to retire in 30 years M.N., West Boylston, Mass.

I don't think the turmoil in the Middle East should play much of a role, if any, in developing an investing strategy for your retirement savings, especially since you probably won't even tap that stash for another 30 years.

That's not to say that the political upheaval and violence there isn't upsetting. Or that unrest in that part of the world can't influence the price of all sorts of assets in the short run, oil being an obvious example.

But as far as your retirement nest egg is concerned, the issue is whether problems there are likely to depress your returns over the long-term. A quick look at long-term returns in the wake of past flare-ups in the region suggests that's not the case.

Over the 30-year span following the 1956 Suez Canal crisis, for example, U.S. stocks returned an annualized 10%. After two other major incidents -- the 1967 Six Day War and the 1973 Yom Kippur War -- U.S. stocks managed 30-year annualized gains of roughly 12%. Those figures are pretty much in line with the stock market's annualized return of 10% or so since 1926.

Besides, even if it became apparent that problems in that part of the world were so severe that they'd affect the financial markets for decades to come, I'm not sure what you could do about it.

Asset values adjust instantaneously as millions of investors worldwide react to new information. Even if you were able to figure out which investments were going to be the winners and losers in the years ahead, by the time you scoop them up chances are their prices will already reflect the new reality. Any advantage you hoped to gain would be blunted.

So while I certainly wouldn't discourage you from following events in the Middle East -- or Europe, Asia, Latin America or anywhere else -- I also wouldn't recommend you overhaul your investing strategy every time tensions build in that region or any other.

How, then, should you divvy up your dough in a world where political turmoil or the threat of it is pretty much a constant?

Clearly, going to cash is the wrong move. Cash equivalent investments like money market funds and FDIC-insured accounts provide security, but the returns are too low to create a large enough nest egg to maintain your standard of living once the paychecks stop rolling in.

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Will turmoil overseas hurt my retirement portfolio?

Danny Sullivan dreams of gardening and spending time with his grandchildren, but that's just a fantasy. Retirement is out of his reach, at least for the foreseeable future.

The 62-year-old founder of a small catering company spends his days helping stock bars with beer and ice, wooing potential new clients and juggling the 20 to 30 different events his firm handles daily.

"I am so tired," he says. "I don't know that I'll ever be able to retire."

The weak economy has been tough for small-business owners across the board, with their total revenue inching up by just 3% since 2007 and declining in fields such as construction (-12%), real-estate services (-3%) and retailing (-2%), according to financial-software maker Intuit Inc. But for entrepreneurs in their 60s and 70s, the consequences have been particularly vexing.

Danny Sullivan has struggled to sell Arguello Catering. (Jason Henry for WSJ)Many of them are stuck in "business purgatory," unable to retire and forced to hang on for a recovery that economists say could still be a long way off.

Mr. Sullivan has struggled to sell Arguello Catering Inc., the Redwood City, Calif., business he started 21 years ago, at a price anywhere near the $850,000 or so he figures he needs to stop working. He reckons that about 70% of his nest egg is tied up in the 25-employee company.

Its annual revenue has fallen to roughly $2 million from $3 million before the recession, Mr. Sullivan says. He has tried, without success, to boost the business's value by branching into new markets, expanding hours of operation and adding healthier menu options. He says he got three offers for Arguello this year, but they were far too low.

Nearly half of the 799 small-business owners surveyed in August by The Wall Street Journal and Vistage International, an executive-mentoring organization, expect to retire after age 65, with 38% saying that their planned retirement date is later than they had predicted five years ago. In addition, 56% said most of their retirement nest egg is tied to their business.

Baby boomers, in many cases, were blindsided by the recession and its effect on their retirement plans, says George Vozikis, director of the Institute for Family Business at California State University in Fresno.

[More from WSJ.com: A Vacation Spent Shopping]

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'The Economy Stole My Retirement'

Here's your assignment: Gather up all of your retirement accounts and shape them into a portfolio that will supply you with the income you'll need during your retirement years. Oh, and one other tiny to-do: You'll also need to make sure you never run out of money, even though you don't know exactly how long you'll need it.

In the past, one simple and elegant solution to the above problem was to buy an immediate annuity that would pay you a stream of income for the rest of your life. But many investors don't like the loss of control that accompanies annuities. A more temporal problem is that today's ultralow interest rates mean that payouts from annuities are lousy right now, as I explored in this article (http://news.morningstar.com/articlenet/article.aspx?id=332113).

One other intuitively appealing idea is to sink your portfolio into income-producing investments such as bonds and dividend-paying stocks and live off whatever yield they generate. That way you might never have to tap your principal at all. The big drawback, however, is that you're buffeted around by whatever the interest-rate gods serve up. When yields are up, you're living high off the hog; when they're miserly, as they have been for the better part of a decade, you have the unappetizing choice of scaling your spending way back or venturing into riskier income-producing securities to get the yield you need.

Given that each of those approaches has become more challenging in the current low-interest-rate environment, it's no wonder that so many retirees and pre-retirees have been receptive to another strategy: "bucketing" their portfolio for retirement. At its core, bucketing is a total-return approach in which you segment your portfolio based on when you expect to need your money. Money for near-term income needs is parked in cash and short-term bonds, while money needed for longer-range income needs remains in bonds and stocks. Financial-planning guru Harold Evensky was a pioneer of the bucket approach; he discusses the basics of the strategy in this video (http://www.morningstar.com/cover/videocenter.aspx?id=330323).

Aiming for the Buckets Why has bucketing become so popular? First, it bows to reality by acknowledging that all but very wealthy investors will need to tap their principal during retirement; it provides a sensible and easy-to-use framework for doing so. And given that many retirees will live for 25 or more years in retirement, the bucket approach provides a necessary dose of long-term growth potential, enabling a retiree to hold stocks as well as safer securities for nearer-term income needs.

Another big advantage of bucketing is that it's flexible. It can incorporate many of a retiree or pre-retiree's existing holdings, and a bucket plan can be readily customized to suit a retiree's own specifications. For example, an older retiree with an expected 10-year time horizon might have just two buckets--one for very short-term needs and another bucket earmarked for the medium term. A younger retiree with a longer time horizon, meanwhile, might have similarly positioned short- and intermediate-term buckets as well as a sizable equity bucket for long-term growth. The unifying theme among all bucket strategies is that the retiree sets aside a pool of cash for near-term income needs, thereby enabling him or her to ride out any volatility that accompanies the mid- and long-term assets.

To help illustrate what an actual bucketed portfolio might look like, let's assume we're building a portfolio for a soon-to-retire couple with the following attributes:

They have a $1.5 million portfolio.Their time horizon is 25 years, and they have a very high risk capacity.They plan to withdraw 4% of their initial balance in year 1 of retirement ($60,000), then inflation-adjust that amount every year.Given those variables, here's a sample bucketed portfolio employing some of Morningstar analysts' favorite funds. (Note that because this portfolio is geared toward risk-tolerant investors with a very long time horizon, it's quite equity-heavy, with a roughly 50% stock/50% bond asset allocation. This profile will be too aggressive for many retirees.)

Bucket 1: Years 1 and 2

$60,000: Cash (certificates of deposit, money market accounts, and so on)$60,000: PIMCO Enhanced Short Maturity Strategy(MINT)This portion of the portfolio is designed to cover living expenses in years 1 and 2 of retirement. Its goal is stability of principal with modest income production. Risk-averse investors who want an explicit guarantee of principal stability will want to stick with FDIC-insured products for this sleeve of the portfolio. On the flip side, investors comfortable with slight fluctuations in their principal values may steer less than a year's worth of living expenses to true cash instruments.

More:
A Sample Retirement Portfolio Using the Bucket Approach

ORLANDO, Fla.--(BUSINESS WIRE)--

The Newport Group, a leading provider of retirement and executive benefit plans, announced today that it has completed a year-long initiative designed to help companies and their employees better understand the true costs of their retirement plans.

One year ago, we told our plan sponsors and their advisors that the Department of Labor had issued final regulations for sponsor and participant fee disclosure, said Dennis Sain, Newport Senior Vice President, Retirement Services.

This was an initiative we supported fully and enthusiastically. For many years, Newport has led the industry in fee transparency, and our plan sponsors have consistently recognized this by naming us 'best in class' for both fee disclosure and fee fairness.

Sain noted that Newports year-long information campaign included regular legislative updates to plan sponsors and advisors as the Department of Labor (DOL) changed deadlines, clarified rules, and updated regulations and requirements. These updates included not just newsletters and sample disclosures but workshops and live and recorded webcasts featuring the firms legal experts.

These presentations proved so popular that some of our client and advisor firms requested individual sessions as well, Sain said. Throughout this year in particular, we received a great deal of positive feedback about the effectiveness of our approach. Although much of this was complex information about rules on deferrals, investments, restrictions, costs, and fees, Newport presented it in a way that could be easily assimilated and used by plan sponsors and financial advisors.

The deadline for providers such as Newport to disclose fees to their existing plan sponsor clients was June 29 of this year. Sponsors themselves are required to provide the initial full fee disclosure to their employees by August 30. Sain noted that although this second deadline has arrived, the DOL does not intend retirement fee disclosure to be a one-time event.

In accordance with these new regulations, Newport will be providing plan sponsors and participants with ongoing explanations of individual services and costs, he said. We believe that raising awareness of these issues is a positive development, and one that fits well with Newports long tradition of full disclosure and fee fairness.

About The Newport Group

Founded in 1984, The Newport Group is a leading retirement services firm specializing in the creative design and administration of retirement and executive benefit plans. Through its innovative and customized solutions, Newport is uniquely positioned to satisfy the distinct financial needs of employers and employees, and has done so for hundreds of the countrys largest and best-known companies.

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Newport Completes Year-Long Campaign to Help Raise Awareness of Retirement Plan Fees

The year you get your first full time job is the best time to start saving for your retirement. The power of compound interest will have much more time to work in your favor if you start investing as soon as you start making some money. However, most people in their 20s are way too busy to think about retirement.

Most of us have experienced the starving student lifestyle, and it was not fun. When your first paycheck rolled in, I'm sure you had a list of things to spend it on. Young people these days also have large student loans to contend with, and it's difficult to find any extra money to put toward retirement. I'm sure most new college graduates who just started a new job are not ready to even think of retirement. Most young people are focused on working and enjoying that money when they can.

Here are seven things 20-somethings can do to get ahead:

1. Avoid consumer debt. It's difficult to avoid debt at any age, but it's worth the effort to start out right. While young people often live in the moment and enjoy going out and having a good time, it is very important to spend less than you earn so you can avoid credit card debt. The interest will chip away at your income, and it will be much more difficult to save if you take on more debt.

2. Avoid lifestyle inflation. Most of us are unable to avoid lifestyle inflation after we start making more money. Who wants to drive an old jalopy around when a car dealer is offering a new car with a low interest rate? Spending money is fun and our consumer culture encourages that. However, it's difficult to reduce monthly expenses once they creep up. It's best to avoid lifestyle inflation as much as possible.

3. Grow your income. People in their 20s do not make as much money as older folks, but their compensation has a lot of room to grow. If you work hard, you should be able to get promoted and grow your income quite a bit early on in your career.

4. Sign up for a 401(k) account and start saving. A 401(k) account is a great retirement savings tool. Everyone should sign up even before their first paycheck rolls in if they can. That way your 401(k) contribution is automatically deducted from your paycheck and you won't see that amount in your checking account. This will help with lifestyle inflation because if you don't see the money, you won't be tempted to spend it. Start contributing right away and then increase this amount a little bit every year until you reach the contribution limit.

5. Open a Roth IRA. The best time to contribute to a Roth IRA is when you are in a low income tax bracket. The money invested in a Roth IRA is after tax, but you won't have to pay tax on any earnings.

6. Open a taxable brokerage account. It can be difficult to max out a 401(k) and Roth IRA. If you have any money left over after doing these two things, then consider opening a stock brokerage account. Investing in the stock market can be daunting when you are new to it, but you can start by investing in a low fee index fund. Once you learn more about investing, then you can branch out.

7. Buy income producing assets instead of a new car or other stuff that will break. Think about depreciation before spending money. If you buy a new car, it will be worth much less in a year. If you buy some dividend stocks instead, you will receive dividend income and the stocks might gain in value. Another example of an income producing asset is a house. You can buy a house and rent out some rooms to generate income to help pay the mortgage.

Link:
7 Ways to Prepare for Retirement in Your 20s

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Amanda Morrall discusses "no frills" retirement on Good Morning. - Video

BOSTON, Aug. 29, 2012 /PRNewswire/ --TRUSTIVO, the secure social retirement network transforms the way individuals and trusted advisors connect, engage and develop strategies for retirement. "The addition of ACA to our platform extends a unique and valuable service to our Retirement plan advisors, plan administrators, employers and plan participants," says Rad Pasovschi, Chairman of TRUSTIVO. "ACA's patented and automated loan processing solution is indeed unique in the market today," he says.

Access Control Advantage (ACA) provides an efficient loan solution for DC plan participants by lowering plan administration costs, eliminating loan repayment through payroll processing, reducing participant borrowing, enabling faster loan repayment, keeping more assets in the plans, and encouraging employee participation because of the knowledge that they can access their pension savings in an emergency. Because borrowing is more precise, employees only take out what they need when they need it, not a pre-determined lump sum. Also, if a loan is outstanding when an employee separates from their employer, ACA will continue to handle loan servicing on the same amortization schedule preventing the need to call for repayment of the loan during a difficult financial period for the employee.

"This is a win-win-win for recordkeepers, employers and employees because it reduces plan leakage and the cost of loan processing and at the same time, provides maximum payment flexibility and protection for the employee," says Bruce Bent II, President of ACA. ACA works with401k plans, 457 plans, and 403b plans.

TRUSTIVO's secure social retirement network transforms the way Boomers and trusted advisors connect, engage and develop strategies for retirement. Access Control Advantage (www.acaonline.com) is the pre-eminent industry source for loan administration for the financial services industry. Access Control Advantage, Inc. is an affiliate of Double Rock Corporation. Double Rock is a financial technologies company providing the industry's most innovative cash management and cash-related solutions to the broker-dealer, banking, qualified plan and retail direct markets.

CONTACT Beth ChapmanInk&AirPhone: (508) 479-1033 beth_chapman@inkair.com

Continued here:
TRUSTIVO Adds Access Control Advantage (ACA) to its Secure Social Retirement Network.

JP

Brace yourself for political drama, because we are nearing the final stretch of the presidential election. As all elections go, promises will be made and broken, character attacks will consume every free minute of TV advertising, and each side will accuse each other of threatening the financial future of everyday Americans.

The problem is it may not matter which side is elected. Many of the major political policies being proposed by either party have severe consequences for future retirements. While there is no way to fully avoid potential losses to your retirement via changes in legislation, there are some actions you can take to mitigate risks.

Tax Increases

Over the last 25 years, taxes on the middle class have mostly fallen. Some would argue that we are overdue for higher income taxes.

The last thing any retiree wants to see is Uncle Sam take a bite out of his retirement thanks to tax increases. Luckily, a Roth IRA account is designed to shield you from future income tax increases. Contributions to Roth accounts are made after tax. When you withdraw your money in retirement the proceeds are tax-free. It ensures that the highest tax rate that youll pay is your rate at the time you make contributions.

Income Tax Decrease and Adoption of a National Sales Tax

I wish I could say open a Roth IRA and your retirement is safe from tax policy. Unfortunately, there is a particular scenario that could put Roth savers at a serious disadvantage. What if income taxes decrease and the nation adopts a new tax, like a VAT or sales tax, to replace lost revenue?

If taxes are to decrease in the future, then Roth savers made the wrong bet since theyd be saving when taxes are high and receiving a tax advantage when taxes are low. A new VAT or national sales tax would make the problem worse since Roth tax advantages are limited to income taxes. Roth savers would be paying more tax money to contribute funds and paying more tax money to withdraw funds. They lose at both ends of retirement saving.

This isnt a made-up scenario. In fact, politicians on both sides of the aisle have supported this exact policy. Former Republican frontrunner Herman Cain ran on a plan for a 10 percent income tax and 10 percent national sales tax. Romneys vice presidential pick, Paul Ryan, has also supported similar policies in the past. Obamas debt commission supported the same strategy.

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Political Risks to Your Retirement

SAN RAFAEL, Calif.--(BUSINESS WIRE)--

Financial Telesis, Inc. (FTI) announces ABD Retirement Services, a division of ABD Insurance & Financial Services, has joined the FTI team. The alliance marks an exciting step for Financial Telesis bringing ABD Retirement Services representatives on board is the latest in a growing number of retirement plan specialists that haven chosen FTI as their broker dealer/registered investment advisor.

"We are very pleased to have the team at ABD Retirement Services join forces with our Financial Telesis team," notes James Williams, President of FTI. "They are exactly the type of rep/advisor that we are seeking experienced, professional, and committed to providing plan sponsor clients with outstanding fiduciary level services. ABD Retirement Services had many broker dealer options, but elected to engage with Financial Telesis and affiliate with a BD/RIA that understands the retirement plan marketplace. We share their passion for providing fiduciary services to their plan clients."

Chris Call, President of ABD Retirement Services is also enthusiastic about joining the FTI team: "We chose Financial Telesis because we wanted to align ourselves with a top-notch retirement investment specialist, and they rank as one of the best." The veteran financial professionals at ABD Retirement Services are well established in Northern California. The group has worked together since 2005 and has built a reputation for innovation always looking for better ways to serve their clients. This responsiveness fits with FTI's tailored approach to meeting the needs of its representatives.

About Financial Telesis Inc. (FTI)

Financial Telesis, Inc. is a comprehensive financial services firm catering to registered representatives and investment advisors that work with retirement plans as well as retail customers. FTI has over 430 registered representatives and advisors, and over 200 offices across the U.S. FTIs home office is located in San Rafael, California. More information can be found on the FTI website at http://www.financialtelesisinc.com.

About ABD Insurance & Financial Services

ABD Insurance and Financial Services is a collective with more than 75 years of history in the insurance industry. ABD is headquartered in San Mateo, with additional offices in San Francisco, Redwood City and San Jose. ABD is an independently owned and operated insurance brokerage and has no affiliation with Wells Fargo Insurance Services or its predecessor firms. More information can be found on the ABD website at http://www.theABDteam.com.

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Financial Telesis, Inc. to Partner With ABD Retirement Services

5 tips for readjusting your financial game plan.

I heard from an old friend recently who had been financially responsible her whole life, but a layoff several years ago derailed her savings. Now shes nearing 60 and panicked about whether shell be able to retire when she had originally planned to if at all. Sound familiar? As the slowly recovering economy plods along, and many Americans confront shortfalls in retirement savings, these are common refrains from baby boomers and generation X.

It can be a shock to realize that your much-anticipated retirement may not happen on the day or month or year you initially envisioned it and in the style you dreamed about. But many Americans are continuing to work past the traditional retirement age of 65 or are re-entering the workforce after theyve retired. July data from the U.S. Bureau of Labor Statistics shows that 7 million Americans age 65 and older were still in the workforce, up 63% from a decade ago. Some may continue working by choice, but many are likely still working due to financial necessity.According to new survey findings from the Society of Actuaries, more than 4 in 10 pre-retirees who do not expect to retire say its because they cant afford to do so.

(MORE:Stay-at-Home Parents: Six Money Secrets for Families Shifting to One Income)

To add to the stress, the emotional adjustment can be an even bigger challenge if youre reconsidering your retirement date. So if youre looking at your financial statements with a gulp, what can you do?

1. Dont get hung up on age. You might think of 65 as being the year that you should retire. But consider when and how this traditional retirement date originated and whether it makes any sense today. In 1935 the Social Security Act set the minimum age for receiving full retirement benefits at 65. But men born in 1930 were only expected to live until age 58. Today the average life expectancy is 75 for men and 80 for women. So look on the bright side: you might need to work longer because youre probably going to live longer.

2. Understand your options now and later. When calculating your retirement date and income, its important to get your financial facts straight about future income sources. Make sure you fully understand your Social Security benefit and what types of accounts your savings are held in. Determine how much your savings may grow if you work for another six months, one year, five years, etc. You may be surprised by how much your nest egg could increase if you delay withdrawals from your tax-deferred employee sponsored plan, such as a 401(k) or 403(b), by staying in the workforce for just a bit longer.

(MORE:Kids and Money: Is It O.K. to Play Financial Favorites?)

3. Focus on your health. Many people want to keep working past traditional retirement age but have health problems that prevent them from doing so. If your plan is to stay employed, its critical to do everything you can to maintain your physical health so you may work as long as you desire. Ensuring that you get adequate exercise, sleep and nutrition can actually be very important financial considerations. Similarly, its critical to have adequate health care coverage in place. A recent survey of retirees from the Society of Actuaries indicated that 24 percent of those interviewed were working in retirement in order to maintain employee benefits like health insurance a valid financial reason to keep punching the clock. However, taking the time to understand the benefits of Medicare can be advantageous as you make employment choices.

4. Reconsider what kind of work you do. Retirees are going back to work for a variety of reasons. While the Society of Actuaries survey indicated that 51 percent of retirees who are working in retirement are in it for additional income, an even greater percentage (55 percent) say theyre still in the workforce because they want to stay active and engaged. If youre working for a living, it might be helpful to think about how work will help you create and maintain your social life, sense of belonging and productivity. If you dread Monday mornings, your decision to stay in a 9-to-5 job may make you feel caged. So liberate yourself by finding something you love to do that will still provide a paycheck. Its not too late to make a career change into a full-time or part-time job that will help you maintain meaning or challenge you.

See more here:
Postponing Retirement: Will You Have to Work Forever?