Our daily roundup of retirement news your clients may be thinking about.
People are less likely to save more in their 401(k) plans when they learn they lag behind their peers in retirement saving, according to a study by researcher with the Yale School of Management. Workers who don't save in workplace retirement plans with no auto-enrollment feature were also less likely to engage in retirement saving after knowing that others are ahead of them, the study also found. “It could be that learning that your peers are ahead of you financially is much more demoralizing than, say, learning that you use more energy than your neighbors. And when people are demoralized, they tend to disengage from a problem rather than address it,” according to one of the researchers. –Time Money
Clients who consider buying annuities need to know the various types of fees that come with the products, according to this article on The Motley Fool. These fees include administration and contract maintenance charges, surrender charges and mortality and expense risk fees. Annuity buyers also need to consider paying premium taxes, rider fees and to determine other, underlying investment expenses. –The Motley Fool
Clients who want to secure their finances in retirement may need more than $1 million, which is what financial advisors typically advise, according to this article on CNBC. This is because people are expected to live longer and there are concerns over Social Security's solvency. A survey by Legg Mason found that people's nest egg should be at least $2.5 million so they can continue their lifestyle through their golden years, while another poll by the Employee Benefits Research Institute found that many workers will need to have $1.5 million or more in savings to have a comfortable life in retirement. –CNBC
401(k) plans are an important part of retirement planning for many Americans, who have invested $4.4 trillion in these tax-deferred savings accounts based on data from the Investment Company Institute, according to this article on Kiplinger. BrightScope compiled a list of 101 funds that are popular among retirement savers. On top of the list are Vanguard Institutional, PIMCO Total Return, and Fidelity Contrafund. –Kiplinger
Clients should not heed to Social Security's advice to account for their life expectancy when making decisions affecting their benefits, according to this article on Forbes. Since Social Security is a form of insurance, they should consider the maximum ages of life so they can prepare for the worst-case scenarios of retirement. –Forbes