The champions of the 401(k) lament the revolution they started
One of the early proponents of the employer-sponsored 401(k) plan, Herbert Whitehouse, a former HR executive with Johnson & Johnson, is not happy with the outcome, according to this article on The Wall Street Journal. In 1981, his hope was that a 401(k) would supplement a company pension that guaranteed payouts for life. More than 35 years later, he has misgivings about what he helped start, according to this article in The Wall Street Journal. What Mr. Whitehouse and other proponents didn’t anticipate was that the then-new savings plans would largely replace pensions as big employers looked to cut costs. But today, just 13% of all private-sector workers have a traditional pension, compared with 38% in 1979. “We weren’t social visionaries,” says Whitehouse.
Retirement planning, estate planning and investing: all struggles
More than half (52%) of workers aged 53 to 64 and 59% of those in the 40-52 age bracket are having a tough time planning for retirement, according to this article on MarketWatch, which cited a study by data and consulting firm Hearts & Wallets. “A lot of the retirement planning solutions today are very focused on the math of ‘providing income’ and I think life is a lot more complicated than that,” says an executive with Hearts & Wallet. “There are hopes and dreams. For boomers, the list of things they want to accomplish is very salient for them and the hyper-rational solutions miss some of the emotional complexity of real life.”
Tax-smart strategies for retirement savings
When engaged in tax planning for retirement saving, clients should maximize their contributions to tax-deferred accounts, according to this article in USA Today. This strategy allows them to reduce their taxable income, consequently minimize the tax bite and qualify for certain tax credits and deductions, the expert says. Clients should also make the most of Roth IRAs and other tax-advantaged savings vehicles, and make catch-up contributions once they are eligible. "Charitable contributions via Donor Advised Funds are also a very effective way to manage taxes in a given tax year. With these funds, you can donate money or appreciated assets and take the tax deduction for the charitable contribution in the year you contributed it."
The problem with this boomer "retirement plan"
A survey by the Transamerica Center for Retirement Studies has found that two-thirds of baby boomers intend to continue working past their retirement age, according to this article on CBS Moneywatch. However, it is unlikely for some boomers that they will be able to work longer, as a separate study shows that 46% of workers retired earlier than planned. It is also uncertain whether employers are open to keeping or hiring older workers.