Video Link: https://www.youtube.com/watch?v=QsDlQNk0guQ

30-08-2012 18:27 Andy Roddick holds press conference to announce his retirement from professional tennis at the age of 30. Roddick is a former world #1 and won the 2003 US Open.

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Andy Roddick Announces Retirement at 2012 US Open - Video

Anyone with a 401(k) retirement plan has been painfully aware of the gyrations in the stock market in recent years. The market has come back up lately, but the economy is still in low gear, so many analysts aren't too bullish in the short term. Also, treasuries and CDs are offering tiny returns.

So what's the average American trying to save for retirement to do? Answers are percolating at an annual economics retreat in Maine.

Every year in August, some of the nation's top economists, money managers and some Federal Reserve officials gather in the woods up near the Canadian border. They do some fly-fishing, they schmooze, and they talk shop about investing.

This year, one of the topics of discussion is fees. The takeaway, especially these days, is that you want to avoid paying big ones.

The 'Compounding Effect'

John Mauldin, president of Millennium Wave Advisors in Dallas, says annual mutual fund fees of 1 percent or 2 percent might sound small. But consider the advisers' fee, which is also required every year. Those, Mauldin says, are a very big deal.

"The difference of 1 to 1.5 percent in commissions on an annual basis over 30 years is the difference between $1 and $2 at the end of the time period," he says.

In other words, paying too much in fees is the difference between retiring with half a million or $1 million.

"It's a huge compounding effect. It only seems like a small amount today, but it compounds over time," Mauldin says. "I think Einstein said that compound interest is the eighth wonder of the world."

Keeping Down Costs

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Saving For Retirement? Here's A Tip

PHILADELPHIA, Sept. 1, 2012 /PRNewswire/ -- If that 401(k) retirement fund that you pay into each pay period is not growing as fast as you like, it might be because of hidden fees no one really explained to you. New rules will require disclosure of those hidden fees, which can add up to sizeable figures, especially in light of the 72 million Americans who participate in 401(K) type retirement plans.

"This rule provides uniform disclosure to workers about what they pay forinvestmentoptions in their retirement plans," said Secretary of Labor Hilda L. Solis. "For the first time, workers will have at their fingertips important and accessible investment-related information to comparison shop among the plan options available to them."

Due to new federal disclosure rules, most 401(k) plan participants will be able to clearly see how much their accounts are being charged in fees for the first time by the end of August. "Participants will be surprised by the size of these fees," predicts business and tax attorney Christopher Ezold (ezoldlaw.com). "In fact, many will be startled to see that they are paying investment management fees at all. The new rules will likely strengthen a trend to reduce fees on all 401 (k) plans as long as participants learn what action they should take."

Under the new rules, the Department of Labor will require plan providers to disclose detailed 401(k) fee information to employers in a new format for quarterly statements that will clearly lay out the fees and actual returns for each investment before taking out any fees. These fees often run more than 1 percent annually, which can become a sizable hit over time, especially when many workers need at least 7% annual return to reach their retirement goals (if not more).

According to a research group,New York City-based Demos, the total fees paid on401(k) plans reduce the total retirement accounts by 30 percent on average.

A partner at Philadelphia-based The Ezold Law Firm, P.C., Ezold agrees that the rule will be economically significant. But he warns that having the information will not necessarily spark a reduction in fees.

"Now that the proverbial curtain has been pulled away, the heightened focus on fees will empower the participants to demand a better return on their investment," says Ezold. "However, participants need to do their homework and take action. These new quarterly reports need to be examined and compared if the plan participants expect to see change."

Ezold suggests getting educated on your fund's expense ratio because higher fees do not guarantee a higher return. Then compare those ratios to other plans and consider shifting money into lower-cost funds.

Christopher Ezold is a partner at The Ezold Law Firm, P.C. (ezoldlaw.com), a Philadelphia-based boutique law firm focusing on business, employment and health care law.

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New 401(K) Rules Could Help 72 Million Americans Save More For Retirement

Video Link: https://www.youtube.com/watch?v=4HSYkyAD8fI

30-08-2012 20:06 US Open fans react to Andy Roddick's unexpected retirement announcement

Link:
US Open 2012 Roddick Retirement Reaction - Video

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

Video Link: https://www.youtube.com/watch?v=qwSly7Cyj0U

28-08-2012 19:17

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