Our daily roundup of retirement news your clients may be thinking about.
There is an ongoing debate about the generosity of Social Security benefits that retirees receive, writes Alicia Munnell, director of the Center for Retirement Research at Boston College. One way to measure the generosity of retirement benefits is to treat these benefits as a replacement rate or a percentage of pre-retirement income, Munnell writes. Another way to gauge how generous these benefits are is by determining the benefit payout an average retiree receives. "The most recent published data show that the average benefit for a newly retired worker in 2014 was $1,363 or $16,356 a year." -- MarketWatch
Retirement savers are advised to stick to their asset allocations in their portfolios in the face of market volatility, according to CNBC. They should consider rebalancing their portfolio only when the holdings move away from their retirement goals. "January is a great time to check in with yourself to be sure your portfolio is still aligned with your financial situation, goals and risk tolerance," says Lena Haas of E-Trade Financial. "Once you are confident in your baseline asset allocation, then consider rebalancing."-- CNBC
Auto-enrollment and auto-escalation of contributions are 401(k) features that will allow participants to end up with bigger retirement savings, according to U.S. News & World Report. 401(k) participants will still have control over the plan even if it auto-escalates contributions and employers will need to conduct a test to ensure that the plan benefits not just highly compensated employees. "Auto features are a great way of getting people into the plan but employers must continue to engage employees afterward," says Lenny Sanicola of nonprofit organization WorldatWork. -- Yahoo Finance
Picking the right investments is key to building a successful retirement portfolio, writes Christine Benz of Morningstar. To identify the right investment options, clients need to determine whether they should use multi-asset funds or discrete holdings and whether there is a need to achieve tax efficiency. Retirement investors also need to know the volatility level they can tolerate so they can choose the most suitable investments to include in their portfolio.-- Morningstar
Clients who are concerned about outliving their nest egg may consider using a portion of their savings in 401(k) plans or IRAs to buy qualified longevity annuity contracts, according to CBS Moneywatch. They may use 15% of their retirement funds to purchase a QLAC commencing at age 85 and invest or tap the rest of the funds using a systematic withdrawal plan. By using this strategy, clients will continue to have control over their savings, which they won't have if they opt for traditional payout annuities. -- CBS Moneywatch