Tag Archives: retirement

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 […]

The Lifetime Income Disclosure Act of 2017

Earlier this month, both the Senate and the House introduced bipartisan legislation to amend the Employee Retirement Income Security Act that would mandate annual income disclosures on 401(k) and other defined contribution account documents.  The language in the legislation is identical to a bill introduced in 2009, early in the Obama administration.  This new effort Read more […]

How to Build a TIPS Ladder Portfolio for Millennials

In his January blog post entitled “Try a TIPS Mixer in Your Equities Cocktail,” Phillip Murphy described the potential benefits of including Treasury Inflation-Protected Securities (TIPS) in one’s portfolio.  In this blog aimed at Millennials, I would like to propose an easy way to build up a 30-year TIPS portfolio for retirement. Let us assume Read more […]

How Much Is Your Social Security Benefit Worth?

Social Security benefits are the gold standard of retirement income.  As Nobel Laureate Robert Merton commented in his article “The Crisis in Retirement Planning,” published in the Harvard Business Review (July/August 2014): “Ask someone what her pension is worth and she will reply with an income figure: ‘two-thirds of my final salary,’ for example.  Similarly, Read more […]

Next Generation Retirement Investing

For many plan participants, the goal of a retirement account is to provide a steady stream of income that will sustain their standard of living in retirement. Therefore, participants need a framework that aligns the management of their savings with their retirement income goal. This framework has three related components: Risk management that addresses the Read more […]

Benchmarking Retirement Withdrawal Strategies

Capital market benchmarks are, of course, widely used yardsticks of investment performance. For the production of the S&P STRIDE Index, in addition to providing performance data we also calculate hypothetical retirement income for vintages of the index that are at, or past, their target date. Hypothetical retirement income is expressed in index points, and can Read more […]

The Price of Retirement

In my last post, I discussed variability in cost and affordability of retirement income.  I used some data from S&P STRIDE, our new benchmark that provides a cradle-to-grave yardstick for wealth accumulation and income generation.  This week, I will look a little closer at how we measure retirement income, as well as its present value Read more […]

What Is Your Retirement Number?

Wealth drawdowns and volatility of returns are not the only risks facing defined contribution (DC) retirement plan participants.  Those relying primarily on 401(k)s and other DC plans for retirement income also need to address longevity, inflation, and variability in the price of income.  Furthermore, many traditional guidelines for withdrawal policies are simply insufficient for real-life Read more […]

Passive Investing can be good for your retirement and health

In the print edition of the Wall Street Journal this weekend, there were two unrelated stories side by side, one about a firm’s self-dealing with 401(k) and another about Medicare.  After reading them together it became clear that these seeming unrelated stories unintentionally show that while active funds can be bad for your retirement and Read more […]

Make Room for a New Target Date Category

Defined contribution (DC) plans, such as 401(k)s, place challenging demands on individuals, the highlights of which are to save diligently (which implies having adequate income, as well as budgeting abilities), to rationally select from among numerous investment vehicles, and to judiciously transition from wealth accumulation to income generation as retirement approaches. Innovations in plan design, Read more […]