Taking Too Much Risk May Sink Your Retirement

85016_Retirement-Further-by-Frederick-Deligne-Le-Pelerin-France-515x349.jpgThanks to the Fed's zero interest rate policy (ZIRP), baby boomers are facing a much tougher road to retirement than those in the past. While it may seem like an eternity, it was only 10 years ago when you could park your money in a savings account and earn interest of 5%. Retirees who worked hard and saved their money could safely invest their assets in retirement and not have to worry about suffering any losses.

Today is an especially challenging environment for investors who are looking to generate a safe income stream. No Treasury bond will pay a safe 5% return as a 30-year Treasury Bond yields just 2.69%. This is causing a massive gap between what boomers say they want in retirement and what they're doing to make it happen.

401K Providers: 2015 Top 20 Lists

Editor's note: There is a more up-to-date version of this article at 401k Providers: 2016 Top 20 Lists. Thanks!

The good news is that plan sponsors have many choices when selecting a recordkeeper for their defined contribution plans. The challenge for many businesses, especially for small businesses, is that day-to-day running of their businesses leaves little time to review, monitor, and optimize their DC plan. The result is that many plan sponsors lack a comprehensive understanding of who the top 401k providers are. PLANSPONSOR magazine conducts an annual recordkeeping survey profiling top providers. Here is their list of the 2015 top 401k providers and a few of my thoughts.

Why 401K Education is Important

"An investment in knowledge pays the best interest."
     - Benjamin Franklin

Your 401K plan can be a beautiful thing. With the benefits of favorable tax treatment, employer match programs, investment customization, portability, and loan and hardship withdrawals, the 401K empowers employees with a vehicle to grow their nest eggs for retirement. Trouble is you never learned about how to manage a 401K account in school. It's like your parent tossing you the car keys on your seventeenth birthday, telling you to drive cross country, and walking away. You're in charge of your financial destiny but you don't have the training or time to properly care for it.

Just say No to front end load mutual funds

sad-mutualfundWhen we started the Runnymede blog a couple of years ago, our number one priority was to educate investors about investments and finance. Since then, we have received hundreds of questions. We take pride in answering each and every one of them.

Last week, I reviewed a woman's investment portfolio who asked, "Are my fees huge for the investments that I have?" After a bit of quick research, I was shocked by the results. In fact, it nearly made me sick to my stomach. Her retirement accounts held five mutual funds and all of them had outrageous front-end load fees. Here is the shocking truth:

Three Reasons to Combine Old 401k and IRA Accounts

7027595775_3738f2757e_zIt is not uncommon to have multiple 401(k) accounts after switching jobs several times over a career. According to a Fidelity survey, almost a third of people who transitioned jobs were not sure what to do with their old 401(k) or 403(b).1 Changing jobs is a busy time so thinking about what to do with your old 401(k) is often not a priority. If you are among the many busy people who have multiple retirement accounts at different firms, this post is for you.

Know Your Mutual Fund Fees and Expenses

MP900387271For many banks and insurance companies, wealth management means selling products loaded with fees, especially mutual funds. According to ICI, 82% of investors own fund shares through financial professionals such as a broker, investment advisor, or financial planner. Just because you pay your advisor 1% each year, do not think that your mutual funds do not cost you anything. 

How much are your mutual fund fees? Much more than you realize!

In a recent AARP survey, a shocking 71% responded that they didn’t pay any fees for their 401(k) mutual fund investments. I didn’t realize that Wall Street had suddenly earned a reputation for working pro bono. Well this simply isn’t the case, and investors need to better educate themselves on the cost of owning mutual funds which can be very reasonable (index funds) to exorbitant (load funds.)

5 Shocking Facts about Target Date Funds

If you are a 401(k) participant, it is very likely that you are invested in a target date fund. Vanguard expects that by 2016, 80% of new participants will invest solely in target date funds up from 64% in 2011.target date funds miss mark

If you aren’t familiar, target date funds combine several mutual funds into one easy to digest fund and are managed to become more conservative as participants move closer to retirement age.


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