Don’t raid retirement accounts to pay for Johnny’s college
Tapping into retirement accounts, even to pay for something as worthwhile as a child's college tuition, can be a bad move for clients, according to this contributed article on CNBC. That's because it's entirely possible that the client may be forced to retire earlier than planned and will need the savings to cover their living expenses. Also, investors will miss out on the power of compounding to grow their savings. Finally, taxes and penalties on early withdrawals can be steep, and complicated. Withdrawals from retirement accounts are added to other income, which can push the client into a higher tax bracket. But that's not all. Unless you are age 59½, or retired and older than age 55, you'll be hit with a 10% federal early withdrawal penalty when you pull the funds from your 401(k). Plus, some states tack on their own early withdrawal penalty, as California does with its 2.5% hit. --CNBC

How portfolio managers tackle asset allocation
No matter what asset allocation clients use for their portfolio, they would still end up getting almost $23,000 from $10,000 worth of investments, according to discussions Morningstar's Investment Conference. But their experiences would vary because of the different volatility levels. Experts at the conference showed various approaches to creating target strategies and other multi-asset portfolios that could balance investor needs, goals, and risk tolerance. They reiterated the need for security selection and the option to customize asset allocation to suit the investors' goals. For example, investors may consider shifting to lower-risk dividend paying stocks as they approach retirement, says an expert. --Morningstar

What do Americans do after they retire?
Some 37% of American retirees who participated in an informal survey claimed that they are still working when asked what they are currently doing. The poll found that another 14% are self-employed and 11% are traveling, with 10% claiming they are doing volunteering work. Results also showed that some 9% of the participants said they returned to college while 8% are engaged in leisurely activities, the survey also found. --MarketWatch

Are clients' retirement calculators accurate?
The accuracy of retirement calculators gets increasingly crucial as investors approach the golden years or leave the labor force for good, according to this article on Money. More often than not, retirement calculators oversimplify the numbers and produce erroneous results, and it is not advisable to make a life-altering decisions pertaining to retirement based on inaccurate figures. An accurate retirement calculator offers a realistic cash flow and adjust Social Security benefits according to the retiree's age. --Money

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