Tag Archives: retirement

Considering Tax Diversification Benefits of Roth Accounts May Be Timely

The S&P 500® was up 22.1% YTD as of Dec. 19, 2017 (including reinvested dividends), and international stocks were generally even more kind to USD investors (S&P Global Ex-U.S. BMI Gross Total Return [USD] was up 26.3% YTD). However, in most types of accounts we do not get to keep gross returns. Capital gains and Read more […]

Why Does Sequence of Returns Risk Matter for Retirement?

Sequence of returns (SoR) risk refers to the situation when the market experiences random movements in such a way that returns are not uniformly distributed. For example, in the 32-year period from 1966 to 1997, the DJIA had an annualized return of 8%. However, the returns were not evenly distributed over time. For the first Read more […]

S&P STRIDE Target Date Funds: Making STRIDEs in Evaluating the Performance of Retirement Solutions

Back in the Great Recession of 2008-2009, participants experienced a dramatic stock market decline.  The S&P 500 index had a “peak-to-trough” decline of 51 percent! Coincidentally, many retirees and near-retirees were gaining their initial experience with something called a Qualified Default Investment Alternative (QDIA). The QDIA is a “safe harbor” (Department of Labor Regulation 29 Read more […]

Optimal Timing and Strategy for Claiming One’s Social Security Retired-Worker Benefits

The decision to claim social security benefits is not as straightforward as it seems and involves a number of key considerations.  Given that it is a one-time decision and locks in one’s benefits permanently, aside from periodic cost of living adjustments, it is important for retirees to rethink whether there is an optimal timing and Read more […]

Don’t Confuse Income With Yield

Yield conventions differ for stocks and bonds, but the various calculation methods for both asset classes have an important characteristic in common—they are alternative expressions of price.  Measures of yield specifically relate current price to how much dividend or interest income holders of a particular security are likely to get.  Thinking of yield as income Read more […]

Potential Risks When Constructing a Sustainable Lifetime Income

In retirement, financial ruin is taken to mean when one’s savings have been depleted before one passes away.  If one’s savings are invested in a diversified portfolio, financial ruin is taken to mean the combined effects of withdrawals and adverse market conditions that can potentially deplete the portfolio before one’s passing. Financial ruin to one’s Read more […]

Whether the Market Is Overvalued or Not, It Can Pay to Rebalance

Current valuations of U.S. stocks inevitably lead to debate over their prospects for future returns, earnings sustainability, and whether we are in the midst of a stock market bubble.  Some measures indicate the market is richly valued by historical standards, but no one knows what the future holds.  However, one thing is clear—the potential value Read more […]

How to Address Retirement Income in Investment Policy Statements

Recently, the US Department of Labor (DOL) turned its attention to the adequacy of a retirement plan participant’s account balance, stimulating two debates about how to improve participant outcomes.[1] The first debate concerns how to help participants measure their “retirement readiness” in terms of income replacement at retirement. The second centers on whether there are Read more […]

History of the 401(k)

Thirty-nine years ago, the Revenue Act of 1978 was signed, adding section 401(k) to the Internal Revenue Code and creating the first US defined contribution plans. While the code itself simply described a provision under which employees would not be taxed on the portion of income they chose to receive as deferred compensation, it ushered Read more […]