Our daily roundup of retirement news your clients may be thinking about.
Experts want tighter rules for 401(k) plans to curb leakage, the practice of withdrawals and taking loans from retirement accounts, writes Ruth Davis Konigsberg, a director of Arden Asset Management. But small loans from 401(K)s are regularly paid back with interest, so they usually aren't a drain on savings. The problem is when you turn your 401(k) into a short-term savings vehicle, ignoring basic budgeting and emergency planning, Konigsberg concludes. -- Time Money
Saving for retirement early will allow millennial workers to take advantage of career opportunities later on, writes Stacy Francis, president and CEO of wealth management and financial planning firm Francis Financial. The contributions they will make will grow over time, giving them, "more freedom to pursue other opportunities down the line," and accept financial risks, such as "taking a substantial drop in salary to pursue [their] dream job," the expert says. The Wall Street Journal
Clients are advised not to change the amount of retirement savings they aim to have too often since it can undermine their plans for the future. By doing so, retirement investors will endlessly adjust their portfolios to achieve the level of performance they want and consequently increase their risk exposure, says Dan Caplinger, a financial consultant. For Dan Dzombak, clients also need to have a retirement plan first and revisit their retirement number after five years to know the progress of their plan and update when needed. The Motley Fool
Although the Labor Department has unveiled a proposal requiring financial advisors to meet a fiduciary standard when helping retirement investors, a solution is unlikely to arrive very soon, writes Carl Richards, director of investor education at the BAM Alliance. To get the best assistance from financial advisors, clients need to ask if these professionals take time "to diagnose before offering a prescription" and reveal any conflicts of interest, Richards says, adding that clients also need to ask financial advisors about the mode of payment they prefer. The New York Times
The Financial Freedom Fund is a strategy that can help clients know the right percentage of their income that will be set aside for retirement, according to this article on Forbes. The approach uses a specific savings rate and assumed rate of return to determine the length of time needed to amass enough savings for their annual living costs. By using this formula, clients can then adjust the savings rate according to the age they intend to retire. -- Forbes