Our daily roundup of retirement news your clients may be thinking about.
Hedge funds in your 401(k): Do they fit?
More 401(k) and other retirement plans are including hedge funds as an alternative investment, but plan sponsors need to be cautious when taking such a strategy, according to The Wall Street Journal. Choosing good hedge funds as alternatives could be more difficult than looking for over performing mutual funds, an expert says. Alternatives are also meant for long-term investments and won't work for 401(k) participants, who want more flexibility with their assets. 401(k) participants should look into how the alternatives fund manager went through a period of poor liquidity before making a decision. -- The Wall Street Journal
Persistence angle adds to active-passive fund debate
Investors and advisors who opt for active management painstakingly scrutinize past performance of active funds under consideration, making performance persistence an important concept for them, according to MarketWatch. Persistence studies show that past performance matters, funds with poor past performance are likely to underperform in the future, and the funds' performance within the category is more persistent than their overall market performance. Studies also show that short-term persistence is more persistent than long-term persistence, and international equity fund persistence is greater than U.S. fund persistence. -- MarketWatch
Retirees: Best ways to snag a job
The government and employers stand to gain from workers who opt to continue working past their retirement age, an expert says. The best way for retirees to return to the workforce is to take temporary jobs in a company, as these positions could become permanent over time. They can also work as volunteers for charitable organizations, as their stint in these groups will allow them to meet people who will employ them in the future. Retirees may also start a business, but they need to carefully weigh their options. -- USA Today
Your 401(k) is healthy; Maybe you are, too
People who are more inclined to act to improve their physical health are those who are keen on engaging in financial planning to secure their future, according to a study. While the findings are similar to previous research, the study was based on real-world data, such as employees' 401(k) contributions and health records. -- The New York Times
13 states that tax Social Security income
Workers who want to make the most of their Social Security benefits should avoid retiring in Rhode Island and 12 other states that subject the benefits to tax, according to an article on the Motley Fool website. The other 12 states are: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Utah, Vermont and West Virginia. Younger clients can also boost the value of their benefits by working more years, while retirees can defer their benefits especially if they have other sources of retirement income. Retirees who claimed their benefits within the past 12 months may file form 521 and return all claim payments if they want to defer benefits for higher value in the future. -- Motley Fool
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