Retirement

Three Rs for Risk Control: Retirement, Recession and REITs

twocents@thestreet.com (Brad Thomas) — Mon, 14 Jan 2013 16:25 GMT

NEW YORK (TheStreet) -- Remember in school when we learned about the "3 Rs" that referred to the basic skills of reading, writing, and aithmetic?

These days, investors are more concerned about the future: retiring and, more important, when the next recession may start. Of course, nobody can forecast the future but we intelligent investors can manage to acquire that necessary "trace of wisdom" that Benjamin Graham calls for.

It is critical to recognize that risk control is invisible in good times, but essential. ...

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3 Last-Minute Retirement Savings Strategies

twocents@thestreet.com (TheStreet Guest Contributor) — Sat, 29 Dec 2012 22:13 GMT

By Matthew Malone NEW YORK (TheStreet) -- The apocalyptic talk of the fiscal cliff likely has you worried about your own financial health, particularly your retirement savings, and what you can do before year-end to ease any looming pain. The good news is that there are moves you can make (or not make) to insulate your portfolio from pending tax increases and ward off the more general effects of a neglected retirement account.

Convert to a Roth IRA. A Roth IRA differs from other retirement accounts in that you don't take a current-year tax deduction for contributions. Instead, you pay income taxes now and don't pay any taxes when you withdraw money in your retirement years. That's particular important in an environment like today's when taxes are set to rise.

For instance, if you're in the 15% tax bracket this year and convert $1,000 from a traditional to a Roth IRA, you'd pay $150 in taxes on the converted amount. Put the $1,000 in a traditional IRA and you wouldn't pay anything in taxes today. But what if taxes go up to, say, 20% in the future? If both accounts increased to $2,000 by the time you retire, when you withdraw the money you would pay $400 in taxes with a traditional IRA. With a Roth, you pay nothing but the original $150. ...

Get Some Guarantees Before You Retire

twocents@thestreet.com (Brian O'Connell) — Tue, 18 Dec 2012 16:47 GMT

NEW YORK (TheStreet) -- Add low interest rates to the updated list of lead-pipe locks in life, right up there with death, taxes and the Cubs failing to win the World Series.

According to the BankingMyWay Weekly Savings Rate tracker, bank savings rate bottomed out again this week, falling to 0.079%. But that's like winning the lottery compared with bank checking account interest rates, which stand at 0.052%.

Bank rates are low because the Federal Reserve wants them that way -- savers be damned. ...

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When Retirees Should Consider Renting When They Downsize

twocents@thestreet.com (Jeff Brown) — Tue, 11 Dec 2012 19:26 GMT

NEW YORK (TheStreet) -- Older homeowners are often urged to consider "downsizing" -- selling the big family home and using the proceeds to buy a cheaper one and put some cash aside. But there's another downsize option that's rarely discussed: selling the old home and becoming a renter.

Clearly, this goes against the grain, as most people prefer owning to renting. But would the own-to-rent downsize ever make sense? It's worth some thought.

In a standard downsize, the long-term homeowner, typically someone in or near retirement, sells the big home in which the children were raised, then buys something that is cheaper, has lower taxes and utility costs and is easier to maintain. Ideally, the equity on the old home is more than enough for the homeowner to pay cash for the new one, and the difference goes into a rainy-day fund or investment. More on Managing Your Credit >> ...

Finding Hefty Yields in Emerging Markets Bonds

twocents@thestreet.com (Stan Luxenberg) — Wed, 28 Nov 2012 14:54 GMT

NEW YORK (TheStreet) -- Emerging markets bond funds have been rallying. The funds returned 15.0% this year, outdoing the Barclays Capital Aggregate Bond index by 11 percentage points, according to Morningstar. Investors have taken notice, pouring $19 billion into the funds this year, a huge inflow for a category with $73 billion total assets.

Can emerging bonds continue to deliver solid returns? Probably. The bonds pay compelling yields. At a time when 10-year Treasuries yield 1.65%, some emerging markets funds yield more than 5.0%. Besides paying rich yields, many countries in Latin America and Asia boast strong balance sheets. That has special appeal in an era when developed countries are plagued with huge debt burdens.

After struggling with financial crises in the 1990s, many emerging countries tightened their belts, reducing budget deficits and paying down debts. As a result, ratings agencies have upgraded many emerging countries, including Brazil, Turkey, and Russia, that were once considered below-investment grade. The upgrades have helped bond prices to rise sharply. ...

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Mutual Funds That Get High Returns From Low-Quality Companies

twocents@thestreet.com (Stan Luxenberg) — Mon, 19 Nov 2012 14:51 GMT

NEW YORK (TheStreet) -- Plenty of mutual funds focus on high-quality stocks. Their portfolios include familiar names such as Coca-Cola and Johnson & Johnson , companies with rock-solid balance sheets.

But Aquila Three Peaks Opportunity Growth takes a different approach. The fund specializes in stocks with below-investment grade ratings. Buying low-quality names has proved to be a winning formula lately. This year Aquila has returned 16.5%, outdoing the S&P 500 by 6 percentage points and topping 99% of competitors in the mid-cap growth category, according to Morningstar.

Aquila is not the only investor to prosper by buying companies with heavy debt burdens and shaky balance sheets. According to a study by Morningstar, companies with above-average debt levels outdid those with below-average debt by 2 percentage points this year. ...

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5 Ways the Election Results May Affect Your Retirement

twocents@thestreet.com (TheStreet Guest Contributor) — Mon, 05 Nov 2012 17:05 GMT

By Matthew Malone NEW YORK (TheStreet) -- Between all the debating, advertising and robocalls, it can be difficult to focus on the many everyday parts of life that will be affected by a Romney presidency or Obama re-election. When it comes to finances, for most of us "Big Bird" and "big government" are less important than the things, big and small, that will influence the way we spend and save.

Retirement planning, of course, is among the most important elements of a sound financial plan, so it's critical to understand how the incoming administration's policies will make that more or less secure. Also see: TheStreet Predicts Obama Will Win the 2012 Election >>

Here are the five most important ways the election can make our golden years more -- or less -- so. ...

Cramer on Retirement: Should You Buy a Small Business With Your Nest Egg?

twocents@thestreet.com (Jim Cramer) — Mon, 29 Oct 2012 10:00 GMT

By Jim Cramer and Wally Konrad, former senior editor for Smart Money magazine

NEW YORK (TheStreet) -- The ads are peppered throughout the Internet:

"Buy or start a small business using your retirement savings!" ...

Democratic, GOP Anxiety Over Retirement Looks Different

twocents@thestreet.com (Brian O'Connell) — Tue, 23 Oct 2012 17:08 GMT

NEW YORK (TheStreet) -- Americans' viewpoint on retirement savings and the role employers pay in advancing workers' wealth depend significantly on political affiliation.

That's one conclusion drawn by a study from Wells Fargo . saying adults are "teetering on the edge of the retirement cliff."

Among other issues, the study focuses on 401(k) plans and "political party affiliations" associated with how consumer them, as well as what role their companies play in managing those plans. ...

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10 Holiday Jobs for Retirees

twocents@thestreet.com (Caitlin Walsh) — Fri, 12 Oct 2012 14:01 GMT

BOSTON (TheStreet) -- As the holiday shopping season approaches, retailers hire more seasonal employees to keep up with the crowds. It's not just the traditional sales cashier positions that are in demand; possible holiday jobs include everything from Santa Claus impersonator to home holiday decorator or product demonstrator.

Retirees could be looking for part-time work that keeps them occupied or to help make ends meet, and their flexibility during the holidays makes them an asset for retailers.

"Employers are also looking to hire someone who is responsible and reliable -- two attributes an older worker has in their quiver," says Kerry Hannon, author of Great Jobs for Everyone 50+: Finding Work That Keeps You Happy and Healthy ... And Pays the Bills. ...

October's Market Highs Got You Spooked?

twocents@thestreet.com (TheStreet Guest Contributor) — Thu, 11 Oct 2012 14:00 GMT

By Richard Schmitt

NEW YORK (TheStreet) -- This year investors seem to like what the stock market is offering. Through three quarters, the Standard & Poor's 500 index stands 14.6% higher than where it began 2012. With the broad U.S. stock market still hovering near multi-year highs, many giddy investors continue to pile into the market for more good times in this election-year rally.

Never mind the market support offered by some pretty serious government intervention in the form of more monetary easing and continued deficit spending. When that gig is up, those sticking it out in the market can only hope that good old American ingenuity and resourcefulness will prop up an otherwise limp economy hobbled by tepid GDP growth of less than 2%, continued high unemployment that recently just eked below 8%, and an impending fiscal cliff that promises higher individual taxes to pay off record debt of over $16 trillion. ...

Dear Larry Fink: Street Whispers

twocents@thestreet.com (Dan Freed) — Fri, 05 Oct 2012 12:11 GMT

NEW YORK (TheStreet) --

Dear Larry Fink,

You and the BlackRock executives who work for you have been talking to anyone who will listen about the importance of me getting back into the markets. While you may be right, there is something about this sales pitch that grates on my nerves. ...

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New Funds Limit the Risks of Bond Investing

twocents@thestreet.com (Stan Luxenberg) — Wed, 03 Oct 2012 15:13 GMT

NEW YORK (TheStreet) -- Plenty of financial advisers are wary of bond exchange-traded funds and mutual funds.

The problem is that bond ETFs and mutual funds sink when interest rates rise. The drop could be particularly steep in this cycle, because bonds have reached sky-high levels after rallying for years.

If rates rise by one percentage point next year, iShares Barclays Aggregate Bond ETF could fall by more than 4%. ...

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Taking the (Investing) Road Less Traveled

twocents@thestreet.com (Steve Cordasco) — Tue, 02 Oct 2012 16:24 GMT

NEW YORK (TheStreet) -- I believe the portfolios of retirees and near-retirees can benefit from alternative investments. But I'm not sure that hedge funds really reprsent the alternative investment asset class.

Hedge funds seem like a way for Wall Street's brightest stars to make obscene amounts of money by doing what they have always done, but with a lot less transparency.

But because hedge fund managers are some of the best and brightest and tend to hold ideas close to the vest, it is worth listening to them when they do talk. ...

How to Do a Reverse Mortgage Right

twocents@thestreet.com (Jeff Brown) — Tue, 02 Oct 2012 15:37 GMT

NEW YORK (BankingMyWay) -- Switch on the TV and sooner or later you'll see an aging actor pitching reverse mortgages for retirees. Nothing wrong with that: The point is to use a reverser to tap your home equity after turning 62.

But most seniors are doing it the wrong way, taking a lump sum in cash instead of a more flexible, potentially more valuable credit line, monthly income for life or combination of the two.

In fact, the most widely used reverse-mortgage program, the government-backed Home Equity Conversion Mortgage, offers flexibility that can be valuable for retirees who don't really need a big lump sum right away, says Jack M. Guttentag, professor of finance emeritus at the University of Pennsylvania's Wharton School. ...

Mutual Funds Investing in Unloved Mortgage Bonds Are Soaring

twocents@thestreet.com (Stan Luxenberg) — Tue, 02 Oct 2012 14:06 GMT

NEW YORK (TheStreet) -- Mutual funds that invest in mortgages have been rallying.

The big winners include Angel Oak Multi-Strategy Income , which has returned 20% this year and ranked as the top performing intermediate-term fund, according to Morningstar.

Mortgage specialist TCW Total Return Bond returned 11.4%, compared to 4.0% for the Barclays Capital Aggregate benchmark. ...

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An Argument for Retiring in a Bad Economy

twocents@thestreet.com (Brian O'Connell) — Thu, 27 Sep 2012 16:42 GMT

NEW YORK (BankingMyWay) -- U.S. workers are increasingly, maybe even exceedingly, nervous about achieving a stable retirement, and another looming shadow over the economy may give many good reason to stave off retirement for a few years.

Delaying retirement for a few year would provide a twofold advantage to workers: It would buy time to earn more cash for their golden years. It would help avoid retiring into a miserable economy, hopefully with the idea that in a few years things will be back on track and issues such as high consumer prices and a lousy real estate market will heal themselves.

A study from the Washington, D.C.-based Employee Benefit Research Institute supports the idea of delaying retirement from a cash accumulation point of view. The study says Americans are financially better off retiring at age 70 than at age 65 (left unsaid is the fact that workers who push off retirement will have to deal with five more years in the workforce). ...

Wall Street Needs to Retire Cops and Teachers Defense: Street Whispers

twocents@thestreet.com (Dan Freed) — Thu, 27 Sep 2012 11:00 GMT

NEW YORK (TheStreet) -- Ever since the 2008 crisis, it has become fashionable for Wall Street multimillionaires to trumpet their "regular guy" status.

When public animus toward AIG reached a fever pitch in March 2009, mid-level executive Jake DeSantis proclaimed in the resignation letter he sent to The New York Times that he was "raised by schoolteachers working multiple jobs in a world of closing steel mills."

Private equity giant Blackstone Group, never misses an opportunity to remind anyone who will listen that its investors include over half the pension funds in the U.S. On its home page, this heartwarming video tells us that "when private equity succeeds, public schoolteachers in Michigan, police and firefighters in Colorado, nurses in Ohio and college students in North Carolina reap the benefits." Carlyle Group, another one of the world's largest buyout shops, has a similar video on its home page, with photos of the cops and firefighters its executives are supposedly serving with the utmost dedication. ...

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Time to Go to Cash in Your 401(k)?

twocents@thestreet.com (Bill Gunderson) — Wed, 26 Sep 2012 11:00 GMT

NEW YORK (TheStreet) -- The big debates are right around the corner, the big election is just six weeks away, and the fiscal cliff is just over the horizon. Is it time to just sit this one out for now?

For many, the 401(k) or other tax-deferred retirement plan is absolutely their best vehicle for accumulating retirement dollars.

One can't start early enough to start putting money away. The more one puts away every week, the faster the money will accumulate. Not only is the money going in a tax benefit, but many companies today also do some matching to encourage employee participation. ...

Why Foreign Bond Funds Look Appealing

twocents@thestreet.com (Stan Luxenberg) — Tue, 25 Sep 2012 13:46 GMT

NEW YORK (TheStreet) -- Since the financial crisis, investors have poured $900 billion into bond mutual funds.

Nearly all the money has gone into U.S. mutual funds. Only a trickle of cash has found its way to world bond funds, which invest in overseas securities. Investors have seen little reason to look abroad at a time when European markets have been in crisis.

But there are considerable reasons to consider foreign bonds. Foreign issues can help to diversify portfolios, and world bond funds have been rallying lately. ...

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What Would You Give Up to Buy Your Dream Home?

twocents@thestreet.com (Marilen Cawad) — Mon, 24 Sep 2012 16:38 GMT

NEW YORK (TheStreet) -- With interest rates at record lows, it's hard to ignore the constant "buy now" real estate pitches. If you're renting and thinking now is a good opportunity to see what house you can afford, you are probably also thinking about what you may have to give up to buy that house.

In a survey released by Century 21 Real Estate, renters said they are willing to contribute less to their 401(k) to buy their dream home. Not a good idea, says Eve Kaplan, a financial adviser with Kaplan Financial Advisors in Berkeley Heights, N.J.

"The problem we often face as planners is convincing folks to postpone the 'here and now,' including enjoyable things, and focusing more on the future," Kaplan says. "It is really difficult to live on Social Security, which never was designed to be the sole source of retirement savings." ...

Biggest U.S. Investors Face the Cold, Hard Truth: Street Whispers

twocents@thestreet.com (Christopher Westfall) — Mon, 24 Sep 2012 16:19 GMT

NEW YORK (TheStreet) -- Public pension funds, among the largest U.S. investors, are dimming their outlook for stock and bond returns for the next decade.

The Illinois Teachers Retirement System on Friday lowered its "assumed rate of return" from 8.5% to 8%, according to a fund statement. While a half-percentage-point drop may seem like small potatoes, the decision has a domino effect in the $36 billion fund. If returns are indeed lower, the state's contribution to the fund (paid by taxpayer dollars) would rise by $300 million in 2014 alone. That would likely balloon to even greater heights in following years as fewer participants pay into the system.

The group rarely alters its assumptions. In fact, it was downright generational. The last time Illinois Teachers changed its assumed rate of return was when it was revised up nearly 15 years ago during the late-'90s stock-market boom. ...

The Neo-Classical Retirement Portfolio

twocents@thestreet.com (Steve Cordasco) — Mon, 24 Sep 2012 11:00 GMT

NEW YORK (TheStreet) -- Last week I wrote about how investors need to rethink how they track investment performance, with the focus more on cash flow of investments verses total account value.

I received lots of feedback from TheStreet.com readers, with many suggesting it was an "A-ha" moment.

So with this in mind, let's talk about how someone with an IRA or 401(k) and other retirement savings should be positioning their investments. ...

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Fat 401(K) Plans Spread Savers Thin: $3.3 Trillion Vs. $54,000

twocents@thestreet.com (Brian O'Connell) — Fri, 21 Sep 2012 14:19 GMT

NEW YORK (BankingMyWay) -- U.S.-based 401(k) plans hold $3.3 trillion in assets, more than seven times the amount 20 years ago, according to the Profit-Sharing/401(k) Council of America.

But that money is apparently spread fairly thin: the average 401(k) account held only $54,000 in 2010.

That problem has not gone away in the past two years. ...

Two Newly Rated ETF Ranked at Buy

twocents@thestreet.com (Kevin Baker) — Wed, 19 Sep 2012 16:41 GMT

NEW YORK (TheStreet Ratings) -- TheStreet Ratings initiated coverage of seven exchange-traded funds, or ETFs, that accrued a sufficient track record of risk and performance data by the end of August 2012. Of the seven newly rated exchange-traded funds, two start out at 'Buy' with grades of B- or better on superior first year results.

Just one fund earned an initial 'Hold' level ratings of C+ to C- by finishing in the middle of the pack. Finally, four ETFs begin at 'Sell' with grades of D+ or worse after underperforming alternative ETF investments in the past year on a risk-adjusted return basis.

Here are the two newly rated ETFs ranked at 'Buy': ...

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More Young People May Enjoy Secure Retirements

twocents@thestreet.com (Stan Luxenberg) — Tue, 18 Sep 2012 13:28 GMT

NEW YORK (TheStreet) -- According to a variety of polls, many young people are glum about their retirement prospects. The pessimists fear their savings will be inadequate to cover living costs. Some members of the younger generation worry that Social Security will disappear.

In fact, the outlook may not be so bleak. In recent years, more people have begun saving. After facing pressure during the financial crisis, the Social Security program has rebounded and remains on solid footing.

The improvement in savings patterns is particularly noteworthy. According to a survey by TD Ameritrade, young people are proving to be better savers than their parents. While 46% of people aged 48 to 66 have regular savings plans, the figure is nearly 60% for those aged 23 to 47. ...

IRA Cheats Become Focus on IRS Cop Beat

twocents@thestreet.com (AdviceIQ) — Mon, 17 Sep 2012 10:00 GMT

NEW YORK (AdviceIQ) -- The word is out that the Internal Revenue Service is less and less lenient regarding individual retirement account mistakes. Potential penalties are large.

Failing to take a required minimum distribution (RMD) from your IRA socks you with a whopping penalty that is 50% of the RMD itself. The penalty for an improper IRA contribution is 6% annually, potentially accumulating for years on end. As a result, you should be more cautious than ever complying with all IRA rules.

A recent article in the Wall Street Journal described how the IRS appears to be cracking down on IRA snafus with increased audits and less leniency in forgiving penalties and interest. ...

Four Money Questions to Answer Before Retirement

twocents@thestreet.com (AdviceIQ) — Sun, 16 Sep 2012 10:00 GMT

NEW YORK (AdviceIQ) -- Every now and then you probably ask yourself, "When should I retire?"

Is it simply a matter of finances? Or do you retire when you've "had enough" and are simple unwilling to take it anymore? Of course, there is no one answer for everyone. But you can ask yourself the following four questions and easily come to a better-informed conclusion:

1. How much does it cost you to live on average each month? Before you quit your job, find out if you have the money to start living the life of Riley or not. And to determine if you have enough money to retire, you must first know what it costs you to live. ...

The 0% Solution: Fed Strands Bank Savers, Retirees

twocents@thestreet.com (Brian O'Connell) — Fri, 14 Sep 2012 17:40 GMT

NEW YORK (BankingMyWay) -- Stock market investors, bankers and "gold bugs" may well be popping the bubbly after news the Federal Reserve will inject $40 billion a month into the mortgage market for the foreseeable future.

The Federal Reserve will also extend its low-interest rate policy into 2015.

The Fed confirmed the moves Thursday, and the stock market, especially financial stocks, and gold prices skyrocketed on the news. ...

10 Best Retirement Cities In America

twocents@thestreet.com (Jason Notte) — Fri, 14 Sep 2012 12:30 GMT

NEW YORK (MainStreet) --aRetirement restricted to Arizona or Florida was just fine for the Greatest Generation, but their kids want more. a

The World War II generation grew up in cities during the Depression, headed to the suburbs after the war and retired in the sunshine -- so the American fable goes. Ensuing generations raised their kids in the suburbs, sent them off to college and suddenly found themselves with two incomes and no kids. Warm coastal life is still alluring, but dinners out, wine tastings, movies under the stars and full-service buildings with elevators, free gyms, window washers, delis and convenience stores downstairs and the occasional free meal in the lobby have just as much appeal. a

For a generation that wants to set the wayback machine to 30 or 40 years ago, just about any affordable location that isn't in a remote suburb or Good School District, USA, will do. We consulted with the American Association of Retired People, the Census Bureau and the National Association of Realtors and found 10 cities that may not fit the golf-carts-and-community-game-nights stereotype, but reward retirees who aspire to more than socks, sandals and a sensible early bird special: a ...