Retirement might seem far in the distance for young workers, but a staggering 44% of 24-to-34 year olds don't know how to reach their retirement goals, whileonlya third have calculated how much money they will need to continue their current lifestyles. It's never too early to begin planning for your golden years. Here are five expert tips for young adults to get ahead:

1. Develop a clear plan.

Barrie Christman at Principal Financial Group encourages young workers to set a number goal for retirement funds to serve as a powerful motivation. To obtain adequate savings by age 65, she suggests saving enough to have a retirement account balance that is a third of your current employment income by age 30, but twice your then level of employment income byage 40.

Christman adds that most people need to save between 11% and 15% of their salaries over the course of their careers.

Online retirement planning calculators or help from a financial professional can be useful tools when evaluating your retirement goals.

2. Start saving today.

As a young investor, your investments could potentially experience massive growth thanks to compounding interest. Someone who starts saving later in life would have to contribute a lot more money to catch up.

Young workers should enroll in your company's 401(k) program. If your employer offers a match program, contribute enough to get the full match and take advantage of what is essentially "free money."

Certified Financial Planner Jon Ulin prods younger workers to save up to $5,000 a year in a Traditional IRA or Roth IRA as a first step if they do not have an employer-based savings plan or are self-employed.

According to Ulin, the principal contributions to a Roth IRA can be accessed penalty free at any time, potentially making it a more viable option for workers who need less of a tax incentive today.

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Five Steps Young People Should Take to Prepare for Retirement

Video Link: https://www.youtube.com/watch?v=P8wbe9KH9wA

09-07-2012 14:39 65 may no longer be the magic number when it comes to retirement. CNN's Suzanne Malveaux has more. For more CNN videos, check out our YouTube channel at Or visit our site at

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65 no longer the American retirement age - Video

Many of us think of retirement as the point at which weve made it financially. Retirement arrives, and its time to put our finances on autopilot and cruise through the rest of life, enjoying our hard-earned money.

Its not that simple, though. If you want to make sure your money lasts and that your assets are properly protectedand your spouse is protected tooyou need to continue to manage your money throughout retirement. Here are three financial moves that you shouldnt neglect during retirement:

1. Rebalance your portfolio. Even in retirement, you might still need to rebalance your portfolio. The economic situation is always changing, and the markets are always responding. While you dont want to completely overhaul your portfolio in the midst of retirement, it doesnt hurt to tweak it occasionally, and periodically assess what your portfolio is doing for you. Make sure you have the income streams you need, and reallocate assets as needed.

2. Consider life insurance. It seems strange to buy life insurance during retirement, especially since your kids are likely grown up. However, life insurance isnt just about making sure the kids are taken care of if you pass on while theyre young. Its about taking care of any dependents, and that includes your spouse. If your spouse would suffer from the lack of pension income if you passed on, or if you have other obligations, such as a mortgage that it would be nice to pay off with the life insurance, consider a policy that protects your spouse.

Additionally, its worth noting that your life insurance policy can be used by your heirs to pay funeral expenses and estate taxes. Before you shrug off the value of life insurance during retirement, consider those who will be left behind when you pass on.

3. Estate planning. During retirement, you need to keep up with your estate plan. Consider the items that will protect you and your assets. This includes setting up power of attorney and health care proxy situations so that you are properly taken care off and your wishes are followed if you become incapacitated.

You can also use trusts and other financial arrangements to ensure that your money passes smoothly. The structure of your estate and assets matters when your assets are transferred to heirs. Review these items regularly (at least once a year) to ensure that everything is in order.

Part of estate planning and smart finances during retirement also includes regularly checking your beneficiaries. You want to make sure beneficiary information is up to date because the information on your retirement accounts, pensions, bank accounts, and insurance policies supersedes what you have in your will. Regularly review your beneficiary information to make sure the money is going where you want it to go.

It doesnt take a lot of time each year to review your financial situation and make updates. Being on top of your situation will help you improve your finances and ensure that your retirement years truly are your golden years.

Jeff Rose is a certified financial planner and U.S. combat veteran. He blogs at Good Financial Cents and Soldier of Finance.

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3 Financial Moves to Make During Retirement

By Glenn Ruffenach

Yes, working beyond your planned retirement date might be the best way to secure your financial future. But you might not have to work for as long as you think or fear.

A new study from the Center for Retirement Research at Boston College looks at how much longer households have to work beyond age 65 to be prepared for retirement. The finding: Over 85% of households would be prepared to retire by age 70. Put another way, many Americans who now fear they will have to work forever could enter retirement after working between one and six years beyond age 65, depending on the size of their nest eggs.

The results paint a different picture than recent opinion surveys, which find that people anticipate that they will have to work much longer, the report states.

The study is titled: National Retirement Risk Index: How Much Longer Do We Need to Work? The National Retirement Risk Index measures the share of U.S. households at risk of being unable to maintain their pre-retirement standard of living in retirement.

Currently, in the wake of the financial crisis of 2008-2009, just over half 51% of todays working households are at risk, according to the center. But an important assumption in calculating that number is that people retire at age 65. If people were to work longer, the percentage at risk would fall. Thus the question, as outlined in the report: At what age would the vast majority of households be ready to retire?

By estimating target replacement rates (retirement income as a share of wage-adjusted lifetime income) and calculating the age of readiness (the age at which a households projected replacement rate equals its target replacement rate), the center estimates that:

While the numbers suggest that todays workers will need to work longer than their parents, the study concludes, workers today are also healthier and better educated, generally have less physically demanding jobs, and can expect to live longer. In short, working longer is feasible for most households, and it does not mean working forever.

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Is 70 the New Retirement Age?

The last five years have been tough for those in retirement. Portfolio valuations have been hammered, annuity rates have plunged and uncertainty has ruled the roost. There's no sign of things improving any time soon, either, as the eurozone and the UK economy look set to muddle through at best for some years to come.

A great way of protecting yourself from the downturn, however, is by building your retirement fund with shares of large, well-run companies that should grow their earnings steadily over the coming decades. Over time, such investments ought to result in rising dividends and inflation-beating capital growth, especially if you keep the shares within a tax-efficient ISA or SIPP.

It's no coincidence that the world's most successful investor, Warren Buffett, prefers such companies, and recently invested in a large FTSE 100 (Euronext: VFTSE.NX - news) (UKX) company that fits the bill perfectly (you can find full details in this free report).

In this series, I'm tracking down the UK large caps that have the potential to beat the FTSE over the long term and support a lower-risk income-generating retirement fund. I'm going to kick off the series with a look at SSE (Frankfurt: A0RFBG - news) , the UK's third-largest electricity utility and a share that's a big favourite of income investors, thanks to its superb dividend record.

Defensive performer

Utility shares are traditionally 'defensive' shares -- shares that are popular during times of economic volatility, such as we have seen in the last few years. SSE has benefited from this defensive bias and from the attraction its dividend policy holds for long-term investors looking for a reliable income. As a result, it has massively outperformed the FTSE 100 over the last 10 years:

If you are building up a retirement portfolio, total return is a useful metric for measuring the performance of your stock, as it captures the effects of share price changes and reinvested dividends. These two ingredients combined are what make it possible for equity portfolios to regularly outperform cash and bonds over the long term.

The trailing 10-year average total return highlights just how valuable SSE's stability and strong dividend performance is for retirement investors. Despite SSE getting left behind in the rebound rally of 2009, it didn't crash in 2011 and its trailing total return over the last 10 years is double that of the FTSE 100.

What's the score?

To help me pinpoint suitable investments, I like to score companies on key financial metrics that highlight the characteristics I look for in a retirement share. Let's see how SSE shapes up:

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Is SSE The Ultimate Retirement Share?

(MoneyWatch) COMMENTARY The topic of retirement already causes many people to lose sleep at night, as they realize they don't have enough money saved up to retire any time soon. Making matters worse is the understanding that we may need to help our parents with long-term care in their final years, placing another emotional and financial burden on our finances and families.

Then another troubling reality hits: We may need the same special care in a few decades.

Several heart-wrenching stories have appeared in the news of late describing the travails of baby-boomers struggling to cope with aging parents. (If you haven't experienced these challenges first-hand, I encourage you to read "A Life Worth Ending" in New York Magazine, "The Long Goodbye" in Time Magazine, and "Preparing for a Future That Includes Aging Parents" on National Public Radio's website.)

These reports give you an up close and personal look at the challenges we'll all face, either with our parents or for ourselves down the road. The stories sounded all too familiar to my wife and I, as our families scrambled in recent years to help my father and her mother receive the care they needed in their final years. Our experience provided a wake-up call to plan ahead in order to address this challenge for ourselves in the years to come.

Long term care for aging parents could reach $300,000 per person: How to cope Should you buy long term care insurance? Don't let Alzheimer's and dementia spoil your retirement

A long-term care event -- either with your parents or yourself -- can easily destroy anyone's retirement plans. The cost of paying for long-term care at a nursing home for a few years -- which insurance firm Genworth recently calculated at more than $80,000 per year -- could pay to send a grandkid to Harvard or fund a nice retirement.

Since we're on a roll, let's get all the bad news on the table. Recently, major insurers such as MetLife (MET), Prudential (PRU), and Unum (UNM) have stopped selling new policies for long-term care insurance, citing low interest rates, growing life expectancies, and uncertainty surrounding the prevalence and duration of Alzheimer's and dementia. The Obama administration also announced last year that it was shelving implementation of the Community Living Assistance Services and Supports program because of problems in designing a financially viable program to pay for long-term care. If feds couldn't solve this problem, what are our chances?

OK, I've got your attention. Now what? Well, you can't just sit around and brood about it. One of my favorite quotes comes from singer Joan Baez: "Action is the antidote to despair." So what can we do to take action, either for ourselves or our parents?

There are only two things we can do: (1) Take steps to reduce the odds of needing long-term care, and (2) prepare a plan for paying for the costs in case we need such care. Much easier said than done, of course, but that's the plan.

If you're now facing these issues with your parents, the die has already largely been cast. It's most likely too late to buy long-term care insurance, and your parents can't go back and retroactively save more money to pay for the care they need. But they can still take steps to improve their health, regardless of their age, and you can make the best use of existing financial and family resources.

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Facing the national retirement nightmare

EAST GRANBY, Conn., July 9, 2012 /PRNewswire/ --The Retirement Advisor Council made public and freely available a template Request for Proposal (RFP) questionnaire for use by 401(k) and 403(b) plan sponsors looking to select an Advisor. The document covers all the elements of service typically available from Professional Retirement Plan Advisors, including investment services, participant services, provider services, fiduciary support, and compliance support. This customizable document includes 65 questions on five pages. You can obtain the template RFP questionnaire in Microsoft Word document form on the Web site of the Council at http://www.retirementadvisor.us. The template is provided for use without copyright restrictions.

To supplement the template RFP questionnaire, the Council developed an Advisor search protocol for use by plan sponsors also posted on the Web site of the Council.The protocol outlines a suggested process for plan sponsors seeking to select a professional retirement plan advisor, or to perform due diligence on a current advisor.

"The advisor RFP questionnaire will assist plan sponsors in complying with recent legislative regulations centered on fee / service benchmarking; it also provides a turnkey solution saving both time and resources for the plan sponsor relative to production of the questionnaire. The fact that the questionnaire stems from the experience and business models of a highly successful and nationally recognized group of advisors enables a sponsor to avoid the "guess work" in regards to what should be asked or measured in the benchmarking of an investment/fiduciary advisor." says Council member Gregg Andonian, AIF, Principal, Baystate Fiduciary Advisors, Inc.

The Retirement Advisor Council developed the protocol and the accompanying advisor search RFP template over a twelve-month period between July 2011 and July 2012 with input and feedback from the Plan Sponsor Council of America and Asset International, Inc., publisher of PlanSponsor Magazine and PlanAdviser Magazine. The document is the result of months of hard work by a dedicated Cabinet of advisors, advisory firms, service providers, and investment managers collaborating to enhance plan and participant outcomes. The Cabinet was headed by Steve Davis, Regional Vice President at The Hartford. The Council intends to periodically review the protocol and the advisor search RFP template to keep both documents current.

About the Retirement Advisor Council

The Council advocates for successful qualified plan and participant retirement outcomes through the collaborative efforts of experienced, qualified retirement plan advisors, investment firms and asset managers, and defined contribution plan service providers. The Council accomplishes this mission by its focus on:

Learn more about the Council at http://www.retirementadvisor.us

For more information and/or interview requests:Eric Henon (860) 653-1705 ehenon@eachenterprise.com

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Request For Proposal Template For Retirement Plan Advisor Search Freely Available

Americans worried about running out of money in their golden years are trying a new investment strategy: day trading their retirement funds.

Disillusioned with the conventional buy-and-hold approach, baby boomers are anxious to improve their retirement prospects after two punishing bear markets in the last decade.

Some people are trading the mutual funds in their 401(k) plans more frequently. Others are venturing into options. And some aggressive investors have begun day trading their nest eggs all in a bid to make up for lost time.

"A lot more frequent trading is happening," said Chad Carlson, a financial planner based outside of Chicago. "People are saying, 'I'm that much closer to retirement so I have to do something.'"

That thinking prompted 49-year-old Vlad Tokarev to start day trading his three individual retirement accounts last year.

The Minneapolis biomedical software engineer wants to quit working before age 65. But after watching his 401(k) get pounded in the last bear market, he fears that another plunge in the stock market could wreak havoc with his plans.

Minutes before the market closes every day, Tokarev buys or sells a mutual fund linked to the Standard & Poor's 500 stock index. His goal is to profit from temporary fluctuations in stock prices, so he buys when stocks are falling and sells when they're rising.

"I didn't see a lot of returns using the buy-and-hold method," he said.

Most Americans with IRA or 401(k) accounts embrace the "set it and forget it" philosophy. Only about 15% of investors made any change to their 401(k)s last year, according to benefits firm Aon Hewitt.

But among those willing to make shifts, there's a growing inclination to do so more frequently as retirement approaches, according to some financial planners. These experts sympathize with investor frustrations but predict that this type of trading will backfire for most.

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Anxious investors day trading with retirement accounts

The traditional financial-planning prescription for life's financial emergencies is to hold three to six months' worth of living expenses in cash.

But how should retirees handle unplanned expenses? Should they also have an emergency-fund cash cushion on hand, or should they simply increase their withdrawal rates when they need to and then tighten their belts at a later time?

With an eye toward unearthing some best practices on how to handle unplanned expenses during retirement, I turned to the Investing During Retirement forum of Morningstar.com's Discuss boards.

Not surprisingly, our healthy contingent of retired posters had already given this question considerable thought, and many worthwhile strategies poured forth. Some retirees have carried on with the traditional rainy-day fund in retirement, while others have attempted to factor in unplanned expenses into their withdrawal-rate projections. Several advised that with some advance planning--putting a time horizon on new-car purchases, for example--it's possible to circumvent unexpected expenses.

To read the complete thread or share your own in-retirement strategy for managing unplanned expenses, click here (http://socialize.morningstar.com/NewSocialize/forums/p/307666/3267735.aspx#3267735).

'The Old-Fashioned Rainy-Day Fund'Several posters stated that there's no need to reinvent the wheel; unplanned expenses should be anticipated and addressed just as they were during the working years--by maintaining a liquid reserve that can be tapped in a pinch.

For steelpony10, that means "a cash reserve of uninvested money for nonroutine and unpredictable expenses. The old-fashioned rainy-day fund. It's been around for years. The same thing people should have when they weren't retired."

Bobk47 noted that he and his spouse haven't had to tap their emergency reserve to date, but it's there if they need it. "We do have an emergency fund that I pretty much just keep in an FDIC-insured account. It isn't earning anything but I know it will be there in an emergency."

Festus is also a believer in setting aside extra for the inevitable unexpected expense, writing, "In retirement it really is all about having enough money and being able to stay ahead financially, regardless of what comes along the way. I have a savings bucket to cover the unexpected surprises that seem to appear from time to time, no matter how prepared you think you are, they arise from nowhere."

Richendric and his spouse maintain two liquidity pools. "We have owned a home for 40 years and always had a 'maintenance accrual' account for large unplanned expenses on the home. For real emergency expenditures not covered by insurance, such as acts of God, personal accidents/health related issues, and emergency cash for children (already had one of these), we would use our cash reserve."

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How to Manage Unplanned Expenses During Retirement

Estimating expenses over the duration of one's retirement is a fundamental part of retirement planning. Yet, there's surprisingly little agreement among financial planners about spending behaviors.

Some suggest that retirement spending rises as clients age due to accumulating health care expenses. Others suggest that expenditures decrease as retirees reduce their spending in areas such as travel and entertainment. Still others suggest that retirement spending stays relatively level and simply keeps pace with inflation.

The long-term impact of inflation is a fundamental risk for retirees. Yet most individuals never adjust their portfolio withdrawals each year for inflation. Instead, the checking account bears the brunt of inflation, which means funds need to be replenished. To determine how much inflation you are experiencing, you must look at changes in the checking/savings account balances over time, preferably over one year.

A recent article by Wade Pfau, director of the Macroeconomic Policy Program at the National Graduate Institute for Policy Studies, Tokyo, Japan, examined the question of How do spending needs evolve during retirement? It concludes that most people's spending patterns change over the course of retirement. Expenses look very different at age 90 than at age 65.

He cites a paper by Californian Lutheran University Professor Somnath Basu, Age Banding: A Model for Planning Retirement Needs, that discussed post-retirement spending patterns.

Basu considered a 30-year retirement divided into three 10-year intervals. Rather than assuming a constant rate of inflation for expenses in retirement, he divides spending into four general categories: taxes, basic needs, health care and leisure. Within these categories, he investigated the spending patterns by age and made allowances for differential inflation rates among these categories.

For example, he noted that retirees spend more on leisure (7 percent inflation rate) in the early part of retirement and more on health care later. Health care expenses, which had an inflation rate of 7 percent, were adjusted upward by 15 percent at age 65, 20 percent at 75 and 25 percent at 85. Taxes and basic living expenses were assigned an inflation rate of 3 percent, and 7 percent for health care and leisure.

This methodology provides a useful tool for planning long-term retirement budgets. Having a system to track your expenses is a must. Make it a habit each year to review where your money is going and what increased and decreased.

Your expenses will change during retirement.

Thomas M. Rush is a wealth adviser with Yuma Investment Group. He can be reached at 329-1700.

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How will your expenses change in retirement?