Rollovers From Employer-Sponsored Retirement Plans

A rollover is generally a transfer of assets from a retirement plan maintained by your former employer. Rollovers from an employer-sponsored retirement plan can take one of four forms:

1. A transfer from your old retirement plan directly to an IRA trustee (this is a type of direct rollover)
2. A transfer from your old retirement plan to you, and then, within 60 days, from you to an IRA trustee (this is a type of indirect rollover)
3. A transfer from your old retirement plan directly to the trustee of the retirement plan at a new employer (this is a type of direct rollover)
4. A transfer from your old retirement plan to you, and then from you to the trustee of a retirement plan at a new employer (this is a type of indirect rollover)

Generally, rollovers come from defined contribution plans. A defined contribution plan is a retirement plan in which contributions are based on a set formula (e.g., a percentage of the employee's pretax compensation), while the payout is based on total contributions and investment performance. The 401(k) plan is the most common type of defined contribution plan.

If a rollover is done properly and rules are followed, there will be no taxes or penalties imposed on the retirement plan distribution. In addition, a rollover encourages retirement savings by allowing you to continue tax-deferred growth of the funds in the IRA or new plan. When you are eligible for a rollover from your plan, the plan administrator must send you a timely notice explaining your options, the rollover rules, and related tax issues.

Advantages of Doing a Rollover

A rollover is not a taxable distribution

A properly completed rollover (direct or indirect) is a tax-free transfer of assets, not a taxable distribution. That means that if you complete the rollover within 60 days of receiving the distribution and follow other federal rollover rules, you will not be subject to income tax or early withdrawal penalties on the money. You will not have to pay federal or state income tax on the money until you begin taking taxable distributions from the IRA or new plan. By that time, you may be retired and in a lower income tax bracket. Also, if you are 59 1/2 or older when you take distributions, you will not have to worry about premature distribution penalties.

A rollover allows continued tax-deferred growth

When you do a rollover, you are simply moving your retirement money from one tax-favored savings vehicle to another. This allows the money to continue growing tax deferred in the IRA or new plan, with little or no interruption. Tax-deferred growth allows your retirement money to potentially grow more rapidly than it might outside an IRA or retirement plan. To understand why, consider the power of compounding. As your IRA or plan investments earn money, those earnings compound on top of your principal and any earnings that have already accrued. As this is happening, no tax is due while the funds remain in the IRA or plan. Depending on investment performance, the long-term effect on your savings can be dramatic. In most cases, this benefit is lost if you receive a distribution from your employer's plan and do not roll it over.

A rollover may be an option every time you leave a job

You may be able to roll over your vested benefits in former employer's retirement plan every time you leave a job (whether voluntarily or involuntarily). You generally have the option of rolling over benefits from the old plan to the new plan. There is no limit on the number of rollovers from an employer-sponsored retirement plan you can do, which is an advantage for those who change jobs frequently.

Disadvantages of doing a rollover

You cannot revoke a rollover election

Once you have elected in writing to roll over your retirement plan benefits to an IRA or another plan and received payment, you typically cannot change your mind and revoke the election. If you do try to revoke it, you will generally be subject to income tax and penalties on all or part of the distribution. Before you elect the rollover option, be absolutely certain that this is what you want.

You cannot roll over certain amounts

You generally may not roll over any distribution that is not includible in your taxable income (direct rollovers of after-tax contributions from one qualified plan to another qualified plan and to a traditional IRA are permitted in some cases). Also, you cannot roll over amounts to be taken as required minimum distributions or as substantially equal payments.

An indirect rollover can be costly

If you are considering an  indirect rollover, bear in mind the 20 percent mandatory withholding requirement. To complete the rollover, you must make up the 20 percent out of your own funds, or be subject to income tax and possibly penalties on the shortfall. This can be a problem if you do not have cash available to replace the 20 percent. Also, with an indirect rollover, you generally have only 60 days to complete the rollover. The 60-day period begins with the date on which you receive the distribution from the former employer's retirement plan. If you fail to complete the rollover within this time frame, all or part of the distribution to you will be taxable and perhaps penalized.

Loss of lump sum averaging and capital gain treatment

If you roll over all or part of a distribution from a qualified employer retirement plan into an IRA, neither that distribution, nor any future lump-sum distribution you receive from the qualified plan will be eligible for special 10-year averaging or capital gains treatment.

This information is just a basic overview on rollovers from employer-sponsored retirement plans. For more detailed information or questions, use the contact me link at our website.$

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Fundamental Indexing: A Different Approach

Investors generally can divided into two camps: those who believe the market constantly misprices stocks, leaving opportunities for active traders to take advantage of; and those who accept the "efficient market theory" and believe that it is better to just hold index funds. But this "active versus passive" debate often leaves out a third viewpoint.

That view reflects the belief that while the market is not always perfectly efficient, it is difficult to consistently pick enough "winners" to overcome the management fees, trading expenses and income taxes associated with active stock trading.

Passive investors - meaning those who think that the market's pricing generally reflects the approximate current value of a company, given its future prospects - typically turn to index funds as the vehicle of choice. An index, like he S&P 500 or the Barclays U.S. Aggregate Bond Index, represents that particular small or large part of the market: If the market goes up or down, the index will move in parallel, since it is invested in the same way the market itself is constructed. Index funds are less expensive to operate, as their managers do not have to work to continually beat the market.

That said, most indexes have some disadvantages. Traditional indexes are "market cap weighted" (number of shares outstanding times their stock price). The higher the relative market value of a company, the greater portion of the index it will represent. However, when securities become over- or under-valued, market cap-weighted indices must assign a greater relative share to overvalued stocks; as a result, the market-cap indices exaggerate the market movement. For example, if a tech stock is trading at an excessive price/earnings (PE) ratio, a market-cap index will hold a larger amount of this stock than a similarly-sized company trading at a reasonable PE ratio.

Fundamental indices represent a different approach. Company size is measured by four equally weighted factors: sales, cash flows, book value and dollar value of dividends paid. These four factors are used to generate a ranking of the stocks in the sector being tracked. Note that his method completely ignores stock price, so while the market may be overvaluing that tech company mentioned above, the mispricing has no impact on how the stock ranks in a fundamental index. The fundamental methodology does not completely avoid owning "overvalued" stocks; it just holds them based on a truer measure of their value, not their stock market value. There is a large overlap when comparing the two - the names are most often the same, but the ranking is different.

Not many advisors have made the switch to fundamental indices, and we're glad they haven't. It's one more way that we can create an advantage for our clients. As we continue to scan the horizon for "best practices," we'll bring you what we find, so that there will be more and more ways for you to benefit from working with Retire Village.$

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Retirement: Five Financial Risks Ahead

In retirement, there are five major financial risks that must be accounted for. Your retirement income plan needs to have a solid strategy that helps you address and navigate these risks.

1. Interest Rate Risk. Traditionally, bonds were a great option to provide interest income to help supplement a retirees' Social Security or pension benefits. If a retiree required an extra $40,000 in annual income, and bonds were paying 4%, they would have to purchase $1 million worth of bonds. This would basically be an all-in strategy, where all of a person's savings went into bonds. That was ok when people retired at 65 and lived to age 72. Now, we have potentially 30-year periods in retirement. This leaves the retiree exposed to interest rate risk. Just what is interest rate risk? A fundamental principle of bond investing is that market interest rates and bond prices generally move in opposite directions. When market interest rates rise, prices on fixed-rate bonds fall. Interest rate risk is common to all bonds, even U.S. Treasury bonds. A bond's maturity and coupon rate generally affect how much its price will change as a result of changes in market interest rates. A bond's yield to maturity shows how much an investor's money will earn if the bond is held until it matures. If you have to sell your bonds before maturity, say when interest rates are rising, they may be worth less than you paid for it.
2. Market Risks. Another strategy is a mix of stocks and bonds. Bonds provide interest and stocks would give growth, providing a hedge for inflation. The problem with this drawdown strategy is that the markets have to cooperate. If you start taking income when markets are down, you are really decimating your portfolio. You're exponentially increasing the chances of running out of money in retirement. Stocks and bonds can be down at the same time. Market risk is the possibility for an investor to experience losses due to factors that affect the overall performance of the financial markets. Market risk cannot be eliminated through diversification, though it can be hedged against. The risk that a major natural disaster will cause a decline in the market as a whole is an example of market risk. Other sources of market risk include recessions, political turmoil, changes in interest rates and terrorist attacks.
3. Longevity Risk. Individuals often underestimate longevity risk. In the United States, most retirees do not expect to live past 85, but this is in fact the median conditional life expectancy for men at 65 (half of 65-year old men will live to 85 or older, and more women will). For individuals, insurers provide the majority of products designed to help individuals manage the risk that they outlive their assets. Individuals without defined benefit plans can ensure lifetime income by purchasing annuities within their defined contribution plans and personal retirement accounts.
4. Inflation Risk. Inflation risk, also called purchasing power risk, is the chance that the cash flow from an investment won't be worth as much in the future because of changes in purchasing power due to inflation. Although the record inflation of the 1970s is history, inflation risk is still a common worry for income investors. Inflation causes money to lose value, and any investment that involves cash flows over time is exposed to this inflation risk. The ramifications of this can be serious: The investor earns a lower return than he or she originally expected, in some cases causing the investor to withdraw some of a portfolio's principal if he or she is dependent on it for income. It is important to note that inflation risk isn't the risk that there will be inflation, it is the risk that inflation will be higher than expected.
5. Healthcare Risks. Inflation on healthcare costs coupled with living longer in retirement can spell disaster if not properly managed. Compounding this issue further is the rate of inflation on items such as prescription drugs and preventive care, which have historically exceeded the 3% general rate of inflation. According to a 2011 Fidelity Investments study, a 65-year-old couple would need $230,000 to pay for medical expenses through retirement, not including long-term care costs ranging from $35,000 for assisted living facilities and home health care, all the way up to $70,000 or more for nursing home care. These are significant expenditures which show no sign of decreasing. Traditional solutions such as Medicare and Medicaid are helpful, but they aren't always enough to meet an individuals needs. Around 69% of pre-retirees are very or somewhat concerned about having enough money to afford adequate healthcare; 51% of retirees share that level of concern. Additionally, 63% of pre-retirees are concerned about having enough to pay for long-term care; 52% of retirees share that concern.

If you are nearing retirement, or are already there, you need a strategy that addresses ALL of these risks. Professional mountain climbers know that most fatalities and injuries happen on the way down the mountain, not during the climb. Likewise, you have successfully navigated your way to the retirement savings summit. Now, you need a way to safely de-cumulate. There are a lot of risks to staying retired. If your current advisor is not helping you address all, or at least most of these risks, it's time for a second opinion.$

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Destination Retirement: Women Take the Wheel

Women have many decisions to make when approaching that point in life called retirement. There are critical decisions that will help them arrive safely at a financially secure old age.

Women retiring today are more financially independent than their mothers and grandmothers were. They have spent more time in the labor force than their forbears. Many have held highly paid jobs. As a result, many more women are eligible for their own Social Security and pension benefits than ever. In addition, the Retirement Equity Act helps to ensure that married women will not unknowingly miss out on survivor benefits from pensions for which their husbands might be eligible.

Even so, women face financial challenges. For instance, intermittent work history and part-time employment with few benefits have been the norm for millions of women who are now about to retire. Women have also generally earned less than men over their working lives.

The result is that women generally have lower savings accounts, Social Security benefits, pension benefits, and 401(k) accumulations than men. This has long-term implications since the life expectancy of women is longer than that for men. It is compounded by the fact that women typically marry men older than themselves, so many spend more years alone in old age. Their retirement years frequently include periods of caring for spouses and other older relatives as well.

Urgent: All women need to get a big picture understanding of their family finances, even if not directly involved with managing the money. This prepares them to handle not only everyday finances but also the future financial challenges of retirement.

Getting Papers in Order
The decisions women face in retirement range from choosing the family and personal papers to keep in a safe place to deciding how to handle special needs and situations.

Paperwork gathering is especially critical when retirement is approaching. Women should know the location of all important papers. They should also tell the location to their adult children (or key relative or friend).

If they already have a will, they should update it. If they do not have a will, now is the time to draft one.

A married woman should make sure her husband has a will and know its location. But ideally, married couples will make out wills together, and each spouse will know how the other intends to dispose of property. Both should also have a living will and durable power of attorney for health care, which are documents providing guidance on end-of-life preferences.

Figuring Out How Much Retirement a Will Cost
Women who are thinking about retiring should take a careful look at how much money they are likely to need in retirement and the possible sources of this money. They should be aware that, if they spend resources too fast, they may encounter serious financial problems later on. That is especially so since women live longer than men on average, and most often outlive their husbands and a few will live beyond age 100. A financial planner/adviser can provide personalized assistance and advice. Online calculators can help as well.

Many retirement experts recommend that retirement income replace 70  percent to 80 percent of pre-retirement earnings to maintain pre-retirement living standards. That can work well if the woman has moderate retirement savings, stable health care premiums and little change in consumption. Unexpected expenses or an active retirement could require a higher replacement rate.

Retirees also need supplemental health insurance plus a contingency fund to pay for health care costs not covered by primary insurance (typically Medicare). For couples, retirement resources must last for the lives of both. For singles, estimate the need at about 75 percent of the need for a similarly situated couple.

Unfortunately, few options exist for retired women who do not have an assured, adequate stream of income and health care insurance. One thing they can do is opt for a lower standard of living - for instance, by moving to a smaller home or less expensive community. They can also strive to stay healthy and thus avoid out-of-pocket health and long-term care costs.

Another option: Women can work longer. This has many advantages. Women will gain more time to save, may have higher earnings that replace lower earnings years in the Social Security benefit formula, and will need to finance fewer years of retirement. In addition, for each year they work between age 62 and age 70, they will receive higher monthly benefits from Social Security. This can make a big difference later in life when out-of-pocket health costs often soar.

Reviewing the Retirement Plan
Because women live longer than men and have, on average, lower Social Security and pension benefits, women should pay a good deal of attention to survivor benefits. Here are some factors to review:

• Defined benefit (DB) pensions. These are also called traditional pensions. They typically pay out retirement benefits as monthly income. DB plans may also offer a lump-sum distribution option. Married couples with DB plans should consider taking a joint and survivor income if they want benefits to be paid to the survivor after the first spouse dies. Since women tend to live longer then men, electing this option could make a big difference in a woman's later years.
• Defined contribution (DC) plans. These plans allow workers to deposit money into various investment accounts, where it grows tax deferred. An example is a 401(k) plan. At retirement, retirees can opt to take money out via an immediate lifetime annuity (which makes monthly payment to the retiree for life) or take a lump-sum distribution. Those having no source of monthly income other than Social Security may want to consider the annuity option, at least for part of their money. Those with additional sources of monthly income might benefit from either option.

Starting Social Security
When should one start taking Social Security? This is one of the most important decisions women can make. Social Security accounts for half or more of the retirement income of nearly six in 10 older women (aged 65+) in beneficiary families. For about one in six older women, it is the only source of income.

Here is a general guideline: The later the start date, the larger the monthly benefit. However, women need to consider several other factors too.

For instance, married women and divorced women who had been married for at least 10 years to a worker eligible for Social Security can be entitled to Social Security benefits in one of three ways: 1) As a retired worker. 2) As a spouse or survivor of an eligible worker. 3) As a dually-entitled beneficiary.

Men can qualify for benefits in the same way. But due to their generally higher career earnings, they rarely receive spouse or survivor benefits.

Important: Husbands who delay collecting Social Security until they are age 70 will ensure that their wives have the largest survivor benefit possible.

Assessing Divorce and Other Special Situations
Women face a number of retirement decisions that don't fit the broad categories above. The following are examples:

• Divorce: As noted, if married for at least 10 years, a divorced woman is eligible for Social Security benefits and, if her ex-husband dies, survivor benefits based on her former husband's earnings record. She will receive either her own retired worker benefit or the spouse or survivor benefit, whichever is higher.Women who are in the process of divorcing can generally secure rights to pension benefits of the husband, but this is subject to negotiation. They need to understand their husband's benefits and know which benefits have legal protections that apply to them. Divorcing women should also make sure their lawyer has expertise with Qualified Domestic Relations Orders (QDROs). It is very important that a QDRO be written correctly; the format varies by state. Public employee benefits have different rules, but the benefits can be divided on divorce as well.
• Women living with a partner: Unmarried women living with a partner generally lack the same protections as spouses except in states that recognize common law marriages. Common law marriage requirements vary by state. Cohabiting couples should work with a lawyer and financial advisor to ensure that the surviving partner inherits, retains, or acquires the rights to specified assets. They should make these decisions well before retirement.
• Women in second (or subsequent) marriages: Remarriage raises complicated financial planning decisions, especially when children and/or substantial assets are involved. Seeking the advice of a financial planner and tax advisor is a good idea.
• Long-term care insurance. this is a particularly important consideration for women, since it is common for women to live many years alone in old age. Some women have no family members available to help them, at least not on a regular basis. The insurance will help pay for their home and nursing care when they are frail, and it may provide access to care advisors  who will offer guidance.

The road to retirement can be a bumpy one for women. Fortunately, many resources are available to provide guidance on the decisions that lie ahead!$

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Managing Retirement Decisions: Designing a Monthly Paycheck

"Where's My Paycheck?" That is a common question for new retirees and near-retirees when they start mapping out the retirement journey ahead. In their working days, many had regular pay checks coming in to cover ongoing expenses. But what will take its place in retirement?

Social Security checks provide a portion of monthly income for most older people. Some also receive monthly checks from a traditional pension plan. These sources typically form the foundation of a retiree's income plan. But to maintain their standard of living, many people also need additional monthly income during retirement. How to build that additional income stream is the challenge.

For many, the discussion revolves around two questions: "Should I just take withdrawals from my savings and investment accounts whenever I need money beyond my Social Security or pension check? Or, should I purchase financial products - like annuities - that will pay me a guaranteed income stream?"

The choice between taking withdrawals and purchasing an income annuity involves many trade-offs, so it pays to look at the issue from many angles before reaching a decision.

A good place to start is to assess how much flexibility you are likely to need. Early in retirement, for example, people may have considerable flexibility to spend discretionary funds on hobbies or vacations. In the later years, however, this flexibility may decline or uncertainty may rise concerning health care costs or long-term care costs.

Early Steps

An early step in the retirement planning process is to project future sources of income and estimated expenses. Sources of future income may include Social Security, work-related pensions, or income from continuing to work.

Some income items will adjust for inflation, like Social Security, and others, like most corporate pensions, are fixed for life.

For future expenses, experts suggest splitting them into two categories: 1) required living expenses, including taxes; and 2) discretionary expenses.

Individuals who have mortgage debt at the time of retirement need to decide whether to pay down all or part of the debt. A key decision factor is the amount of assets and liquidity that will remain after paying down debt. Ask this question: Will the pay-down of debt be too constraining?

Those who have work-based retirement plans may have decisions to make before considering purchase of any retirement products.

Prior to separation from the company, retirement plan participants will likely be given a choice between: 1) Leaving your money parked in the plan; 2) Take a lump-sum distribution; 3) Roll the money into an IRA; 4) Take periodic distributions; or 5) Purchase an annuity through an insurer recommended by the plan sponsor.

Keep in mind that employer offers usually come with a fixed time frame for making a decision. Also, if the participant is married, they will have to consider the impact their choice might have on their spouse.

Products with Lifetime Guarantees

Once an individual chooses an approach and income plan, he or she will need to scope out the available products that can help implement the plan. To the extent that future required living expenses exceed future income, people may decide to fill the gap with a product containing guarantees. Some examples follow.

Income annuities. The most straightforward choice would be an income annuity. This is an insurance policy. The purchaser pays a certain dollar amount up front and the annuity pays a fixed amount per month for life. Income annuity products come with various features that make them adaptable for individual situations. For example, income annuities:

• Cover either single or joint lives. 
• Come with various refund options - for example, a guarantee that payments will last at least 10 years even in event of death of the payee. (The more attractive the refund feature, the lower the monthly payment.)
• Pay a flat monthly amount for life, in most cases, or make payments that step up by a set percentage each year. 
• May adjust the monthly payments each year for actual inflation. Not all income annuities do this. 

Other products.  Annuities, including variable annuities with a guaranteed lifetime withdrawal benefit (GLWB) , fixed annuities and fixed indexed annuities with guaranteed income riders, also 

offer lifetime income that retirees may want to consider. 

Bottom Line

When comparing regular investments versus products with longevity guarantees, retirees and their advisors will find some very attractively priced regular investment products available. These include index funds and exchange-traded funds, both of which cost a fraction of 1 percent a year. 

Some retirees and near-retirees may prefer to invest in products with guarantees. The market for income annuities is competitive, and low-cost products are available. 

In choosing these products, they will need to pay attention to the tax effects. Tax treatment varies among the different financial products, so after-tax results may look quite different from before-tax results. They should also pay attention to the financial strength of the insurance company selling the product. 

It is essential to work with advisors who are experts in this market and who understand tax effects. Advisors and individuals who use financial projection software in their planning should check to be sure the software takes tax considerations properly into account.$

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Financial Risks in Retirement: A Clear and Present Danger

In a recent survey conducted by The Society of Actuaries, U.S. retired and pre-retirees were surveyed regarding their understanding and management of post-retirement risks. 

Concerns About Retirement Risk

Respondents were asked to indicate their level of concern about eight post-retirement risks. The respondents expressed high levels of concern about having enough money to pay for adequate health care.  In addition, their next four concerns were:

• Depleting all of their savings
• Having enough money to pay for long-term care expenses
• Maintaining a reasonable standard of living for the rest of their lives
• Maintaining the same standard of living for their spouse/partner, if the respondent should die first (among those married or living with a partner)

Three risks that were less important were:

• Their financial ability to stay in their current home for the rest of their lives
• Leaving money to children or other heirs
• Relying on children or other family members to provide assistance

Income, health and gender

Concern about these issues, in general, is inversely related to household income and health status. Those respondents who have higher levels of income or enjoy better health tend to have lower levels of concern while those who have lower levels of income or suffer poorer health tend to have higher levels of concern. Females are more likely than their male counterparts to express concern about many of these issues. More females are likely to have experienced some of the adverse consequences of these risks, either personally or through a friend, because females have longer life expectancies than males. 

Inflation

Over two-thirds of the respondents indicated that they believe inflation will have a great deal of or some effect on the amount of money they need for retirement. 

Many respondents will still recall the high levels of inflation experienced during the late 1970s and 1980s. Many may recall the effects of these high levels of inflation on their parents' or grandparents' financial security. Those with a high household income will have a level of descetionary expenditure that can act as a buffer against the ravages of inflation. Those with a lower level of household income will have less available protection against high inflation. Because women live longer than men they are more likely to be concerned about inflation eroding their financial security over time. 

Impact of Death of Spouse/Partner

At least half of the respondents indicate that the death of their spouse would have little impact on them financially. Similarly, more than half say that their own would have little impact on their spouse's financial situation. The remaining respondents were split about evenly between those who think their financial situation would worsen and those who think it would improve. 

The fact that most respondents say the death of a spouse would not materially effect the financial well being of the survivor may indicate that many couples have not seriously considered this issue. On the other hand, but considerably less likely, it may indicate that they have arranged their financial affairs so that the first death does not create financial hardship for the survivor. 

Gender

Pre-Retired female respondents are more apt than their male counterparts to indicate that they would be worse off after the death of their spouse or partner. 

Females are more likely to say that they will be worse off after the death of their spouse because the male partner is more likely to be or to have been the main contributor to the financial well being of the couple during his working lifetime and after his retirement. Partnerships where both partners have full uninterrupted careers outside the home and partnerships where the female income is higher than the male are fairly recent developments. Couples in this situation are still the exception and few of them have already reached retirement. 

These are some of the main concerns regarding retirement. Having a solid plan in place will help ensure that you are prepared for these and other retirement risks. It is also very important to involve your spouse/partner in every step. With the proper planning and preparation, you will have a less stressful and more enjoyable retirement!$

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Balancing Growth and Income in Retirement

If you are nearing retirement or are already there, one of your most important tasks will be balancing your investment choices between income production and growth potential to stay ahead of inflation. 

Today's retirees are facing higher costs for fuel and food, an increasing share of growing medical costs, and lower housing values. How will they manage their retirement income given these pressures? What options are available to them to help them adjust to these changes?

For many Americans, retirement, once viewed as a time of relaxation, travel and enjoying life with family and friends, has evolved into a time of financial uncertainty and fear. In a poll of over 3,000 people ages 44 to 75, more than three in five (61 percent) said they feared depleting their retirement assets more than they feared death.

Need For Informed, Integrated Decision Making

Over the past twenty years, the continuing shift toward personal responsibility has placed increased pressure on individuals. Given the continued importance of individual responsibility in accumulating and managing retirement assets, there is a greater need than ever before for education and guidance. Individuals who do not fully understand their situation can be unduly influenced by emotions. Research indicates that retirement decisions are often influenced by behavioral factors - such as fear of the unknown, lack of trust, and desire for control.

According to the most recent data from the Federal Reserve, more people turn to friends, family members, or associates for financial information than to any other source of information on borrowing or investing.

Research shows that some people fail to plan and others plan for too short a time.

Hueler Companies: "The Retirement Income Challenge: Making Savings Last a Lifetime."

Hueler Companies, an independent consulting firm known for independent research, analytical reporting, suggests that if retirement plans offer access to low cost, transparent annuitization and lifetime income options through an institutional framework, lifetime income payments from these converted retirement savings can provide a reliable level of financial security while reducing risk and enhancing quality of life. Lifetime income options can create significant financial benefits for participants who use a portion of their retirement savings to create a supplemental "paycheck for life" and can help avoid the three primary financial risks in retirement: 1) longevity risk, or outliving one's retirement savings; 2) investment risk, based on market performance; and 3) inflation risk, or the erosion of buying power over time. Plan sponsors are often wary of offering access to lifetime income or annuity products because they fear that this increases their liability or creates the perception that they endorse a particular approach.

Bottom Line: Ensuring Income Throughout Retirement Requires Difficult Choices

As life expectancy increases, the risks that retirees will outlive their assets is a growing challenge. There is increased responsibility for workers and retirees to make difficult decisions and to manage their retirement assets so that they have enough income throughout retirement. If you feel that you are not getting the absolute best advice for your particular situation, use the contact us button at our website.$

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