Our daily roundup of retirement news your clients may be thinking about.
Major corporate pension funds have missed on the gains of the stock-market rally as they opted to boost their hedge-fund investments over the past five years, according to an analysis by Wilshire Consulting. These funds incurred an investment return of 9.7% from their hedge-fund investments last year, lower than 13.7% earnings and dividends posted by the S&P 500, the consulting firm finds. "There's certainly regret. The last five years have been disappointing for pensions invested in hedge funds," said Jim McKee of Callan Associates. The Wall Street Journal
Clients who want to know how much of their portfolio should be invested in bonds need to know whether their goal is to get the highest return without going beyond their risk tolerance or to meet their financial needs with the lowest risk possible, according to this article on MarketWatch. Data show that investment returns are mainly a result of good or bad luck. Since clients cannot determine the best time to invest their money or withdraw it, they are advised to simply make the investment if they have the money to invest and make the withdrawals only when needed. MarketWatch
Clients can expect Social Security rules on retirement benefits to be complicated if they are divorced and remarried and intend to take a spousal benefit, according to this article on Forbes. Regardless of the strategy, clients can only claim a spousal benefit on their ex-spouse's record only if their former spouse starts collecting their retirement benefit. However, they can no longer claim such a benefit if they remarried. Forbes
Lawmakers are likely to pass this year measures to revamp Social Security, Medicare and Medicaid-entitlement programs representing 45% of the payouts made by the federal government, according to this article on Kiplinger. Congress is likely to address the dwindling Social Security disability fund before disabled workers face 20% cuts in monthly payments. A possible for Medicare would be a move to make 30% of the payments to providers value-based by next year and 50% by 2019. Medicaid also could face short-term changes, with more states expanding eligibility in exchange for federal subsidies. Kiplinger
A TDAmeritrade survey revealed that more self-employed Americans don't save for retirement. 28% of self-employed Americans don't have retirement savings compared with 10% of traditional employees who don't have savings. An expert attributes this behavior to entrepreneurs' thinking that they would never retire. CNBC