401k

A 401k is an employer-sponsored, long-term savings plan that is intended to help you sock-away money for your retirement. A 401k offers significant tax breaks and has a few drawbacks. The money you put away now to be used later after 59 ½ years of age or at retirement is not taxed until it is distributed. Some companies match part of the dollars that you stash away. Your retirement savings are increased through these employer matching contributions. You can borrow against a portion of a 401K, as long as you pay it back plus the low interest. Otherwise, if you tap into your savings before 59 ½, you pay penalties for early withdrawal and the early distribution is also treated as regular income for tax purposes.

Disconnect Between Retirement Savings and Income Highlighted by JP Morgan Report

The majority of Americans are keenly interested in retirement income , but they are unable to make the connection between how their retirement savings translates to income. A recent survey and related report from JP Morgan indicates that 86 percent of 401k plan participants acknowledge that they need to know how much of their pre-retirement income they will be able to replace. At the same time, however, two thirds of the survey respondents indicate that they have no idea how much they need to...

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Will You be Able to Retire?

Roughly 10,000 Americans will retire each day for the next nineteen years. Many millions of these retirees will have financial profiles that are considered statistically average.

What, exactly, does it mean to be financially average, and what might retirement look like for the average person or household? How might the financial aspects of retirement play-out for you, your parents, or your family and friends?

Let’s take a look at some data sources to consider the average profile and how it may apply to your situation. For simplicity, I’ll give the average American retiree a name – I’ll call him William.

Who is William?

Let’s lend some definition to William by building a...

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Retirement Sustainability

Life Expectancy

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Cracks Starting to Show in 401(k) Plans

A recent story in The Wall Street Journal provides a sobering and objective assessment of the current state of retirement savings in the United States. The average worker with a 401(k) account is facing drastic shortfalls in the amount of savings required to support retirement spending levels that are comparable to pre-retirement income levels. The Journal story finds that the median household age 60-62 with a 401(k) account has less than one quarter of what is needed in the account to maintain...

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China's Annuity Market Developing Slowly

Despite the demographic challenges associated with an ageing society, individual annuities are non-existent in China. Some individuals in China do have access to what is referred to as an enterprise annuity . Enterprise annuities are a form of supplemental pension plan that is supported by the Chinese government. Enterprise annuities were enabled through legislation that went into effect in May of 2004. In order to offer enterprise annuities to employees, Chinese employers are required to...

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Meir Statman on the Behavioral Obstacles Affecting Investing and Retirement Planning

Meir Statman is the Glenn Klimek Professor of Finance at the Leavey School of Business, Santa Clara University, and Visiting Professor at Tilburg University in the Netherlands.

His research on behavioral finance has been supported by the National Science Foundation, CFA Institute, and Investment Management Consultants Association (IMCA) and...

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Defined Contribution Plan