Our daily roundup of retirement news your clients may be thinking about.
A capsizing disability-insurance program
Congress needs to pass legislation that would allow reallocation to fix the financial woes of the Social Security Disability Insurance trust fund, writes Lanhee J. Chen, director of Domestic Policy Studies in the Public Policy Program at Stanford University. The legislation should also include provisions that would curb the number of fund beneficiaries and enable more of them to return to the workplace, says Chen, also a research fellow at the Hoover Institution. "Wasting this opportunity for reform will only exacerbate SSDIs problems, hurting taxpayers and imperiling the program." --The Wall Street Journal
Calpers is not in danger of breaking up with private equity
The California Public Employees Retirement System is not considering significant cuts to its private equity allocation, but does plan to redistribute it among managers, according to Joe DeAnda, a spokesman for the country's biggest pension fund. This was in response to a story earlier this week in the Financial Times that caused market buzz by saying that Calpers planned to cut its number of private equity managers by more than two-thirds, to 120 or even below 100. DeAnda clarified to the New York Times that Calpers may actually increase its allocation to individual private equity managers even as it culls the total number of managers. As of October, Calpers had $31.2 billion invested in private equity, or about 10.5% of its overall portfolio.
Why confidence may be your biggest financial risk in retirement
People's cognitive decline accelerates when they reach the age of 60, and this can affect their ability to manage their finances in retirement, according to this article on Time Money. While researchers say that seniors in their advanced years can handle financial decisions so long the terms and features remain relatively the same because of practice and experience, the problem is that things change over a short period of time. They are more likely to take care of their finances if they seek advice from experts whom they can trust. --Time Money
How much can you safely spend in retirement?
Asset allocation choices, current interest rates, and the use of income annuities or bonds are among the factors to determine a sustainable spending rate in retirement, writes Wade D. Pfau, a professor at The American College. Other factors include the desired spending pattern, the degree of flexibility to adjust spending in response to market performance, and the length of the ones planning horizon, says Pfau. Clients need to estimate their sustainable spending rates if market volatility is a major consideration in their retirement income strategies, the expert notes. --The Wall Street Journal
5 things American seniors should be entitled to
The federal government should accord present-day seniors five essential benefits in recognition of the fact that they were the ones responsible for making the U.S. the world's number one economy, according to this article on MarketWatch. These benefits should include housing supplement, free public transportation, and free medical services. Seniors should also be forgiven for their student loan debt and their retirement income should not be subject to taxes. --MarketWatch
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