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Retirement Roundup: Retirement’s First Five Years are Critical

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Photo credit: Monkey Business Images – 93267900 – Thinkstock

A digest of news from publications around the nation about finance, investing, and retirement.

Opinion: Why your first five years of retirement are critical | MarketWatch

Spending is often highest in the first years of retirement. Travel, eating out, and shopping for clothes, furniture, and household goods all typically decline as we age. It’s important to reflect these spending patterns as you plan your retirement budget. Trying to shoehorn in an average spending amount that stays steady throughout retirement is often not realistic. Eating into your savings to fund early-retirement fun is an option, but it’s important to make sure the math adds up.

How the State Pension Funding Gap Fares in an Unpredictable Economy | PEW Trusts

Market turbulence in 2020 has affected state retirement systems, just as it has affected individual investors. Global equities have recovered much of the losses seen earlier this year, but a thorough analysis won’t be possible until after this year is complete and fiscal reports are compiled. The story states that “plans that pay down a portion of debt each year are among the most robust” and gives suggestions for methods for navigating the economic landscape: “In addition to setting a strong actuarial funding policy and following through on making required contributions, Pew finds that lowering investment return assumptions, implementing pension stress testing, and adopting cost-sharing policies contribute to strong fiscal health positions.”

How Exposed are Retirement Savings to Market Risk? | Center for Retirement Research at Boston College

Between February 19 and March 23, the major stock indexes had fallen by more than 30 percent. This study examined how that market-wide drop affected retirement savings, specifically. The study noted that, because many employers have moved from a defined benefit plan to a defined contribution plan, this market decline affects individuals more than it would have in previous decades. The report concludes that “individuals were sheltered from the immediate impact…in defined benefit plans. But they did experience a direct hit…in 401(k)s/IRAs.”

Majority of Americans Plan Financial Changes Post-COVID-19 | Insurance News Net

The sudden change in economic conditions has led to people making changes to their household budgets. Nearly all (94 percent) of respondents to a recent poll said they are spending less on non-essential items. One in five said they would increase contributions to their retirement plans after the impact of COVID-19 subsides, and two in five said they would save more, in general.

Defined benefitA mandatory retirement savings plan in which a participant’s future benefits are known or can be calculated, but contributions are subject to adjustments. Defined contributionA voluntary plan in which participants can save pre-tax income for retirement. Contributions are “defined” by the employee, but the future benefit is not guaranteed.

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  1. YOUNG says:

    I am working on my taxes. Where do I find my tax info.

  2. Nestor Gallegos says:

    I am working on my taxes, where do I find tax information

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