Our daily roundup of retirement news your clients may be thinking about.
Bond fund investors should lower duration
Retirement investors need to act to protect their investments if their portfolio experienced a severe blow from the decrease in bonds last summer, according to this article on Marketwatch. That way, they won't experience modifying their portfolio hastily amidst interest rate increases in the future. This is because its difficult to find the link between the percentage change in net asset value and changes in interest rates, and these factors tend to be complicated if the portfolio is mixed with different types of bonds. --MarketWatch
Retirement health costs: Planning for the wild card
Pre-retirees who participated in a survey by Age Wave and Merrill Lynch saw health care costs to be a major financial concern in retirement. Only 15% of the participants made an estimate of retirement health care costs, while 71% of senior couples failed to discuss the amount of money they need to save for these expenses, the survey finds. Read the eight ways that pre-retirees can prepare for these expenses in their golden years.
Retiring soon? Here are 3 important things to think about
Clients who continue to invest after they retire may take on risk by having stocks or stock funds. But you also don't want to go overboard on selling your equity stakes. You need to find a compromise between risk and return, according to this Motley Fool article, so your portfolio will produce enough income that your nest egg will last throughout your retirement but not be at risk of losing a substantial portion of your portfolio if the economy goes bad. Clients need to consider their portfolio's size in relation to their income requirements, their retirement age, and other factors to determine the mix of investments most suitable to them. They also need to adjust their retirement withdrawal rate based on their expenses, which vary every year, and changes in market conditions.
Clean up that cluttered portfolio
Investors can save money, boost their portfolio's earning potential, and help their loved ones handle their finances when needed if they opt to clean up their cluttered portfolio, according to this article in The Wall Street Journal. 401(k) accounts left with previous employers are usually found to be a mess, but workers can have a simple asset allocation and more diverse investment types if they seek advisors' help to roll these 401(k) investments into an IRA at their current employer. It will also be easy for retirees to calculate their required minimum distributions when they turn 70½ from their 401(k) plan and IRA if they consolidate these accounts.
--The Wall Street Journal
401(k)s: Why "set it and forget it" can be a disaster
Some 25% of workers didn't opt to make changes to their investments while 28% did not modify their portfolio in more than 12 months, according to a survey by TIAA CREF. Millennial workers were more inclined than their older counterparts to have made changes to the way their assets were invested over the past year, the survey finds. Retirement investors' decision to leave their investment portfolio unchanged for the long term can be a "recipe for disaster," says a financial planner with Atlanta-based Palisades Hudson Financial Group. --CBS Moneywatch
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