The Partners Circle

The mission of the Partners is to empower all of us to go directly to each other with our expertise. FiduciaryFirst is considered an industry leader and our knowledge and informative blogs can help you gain an understanding about key topics within the industry.

Advisors Help Small Companies Feel Better About Retirement Plans

For small businesses, 401(k) plans are an increasingly important way to attract and retain talented employees, while helping those employees retire with confidence. A recent study, commissioned by Guardian Retirement Solutions1, looked at some of the challenges small business owners faced in establishing 401(k) plans, and highlighted some of the ways that financial professionals help those business owners to administer their plans. The study looked at businesses with 25 to 249 employees, and some of the key findings include: Most small plan sponsors like their plans. Sixty-one percent of these plan sponsors say their plans are very successful at helping them recruit good employees, and another 32 percent say they are somewhat successful. Most sponsors also said that their plans helped them stay competitive with benefits, helped retain good employees, and helped employees retire with an adequate income. There are some drawbacks. Small plan sponsors cited the cost of plans (particularly...
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Retirement Planning is Critical for Women

Retirement planning is important for everyone, but it’s particularly crucial for women. According to the 2014 Transamerica Retirement Survey, women are at a much greater risk of not achieving a comfortable retirement than men are.1 Reasons include: Women are more likely than men to be single parents. Women are more likely than men to leave the workforce or to work part-time to care for children or aging parents and are, therefore, less likely to have access to workplace retirement plans. The annual income for most women is about 81 percent of the earnings for men2, which reduces lifetime earnings and savings, as well as Social Security benefits. Women typically have longer life expectancies and a greater need for savings. 5 Steps to Get Ready for Retirement In light of these factors, how should women effectively plan for retirement? There are a number of steps women can take to work toward a...
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401(k) Balances Are Up, but Are Employees Saving Enough?

The stock market’s gains since 2009 have helped raise retirement plan balances, according to Fidelity Investments, which released its quarterly report on retirement savings in April. Fidelity, a leading provider of 401(k) plans and individual retirement accounts (IRAs), said that their average 401(k) balance had increased to $88,600 at the end of the first quarter of 2014 from $80,900 the previous year. That’s an increase of more than 9 percent. 1 Since the first quarter of 2009, when the markets reached their lowest point following the recession, Fidelity’s 401(k) plan average balances have nearly doubled from $46,200 to $88,600. Fidelity noted that 75 percent of that growth was due to market gains, and the rest was attributable to employees and their employers adding money to their 401(k) plans.2 While these gains are impressive, many workers aren’t able to take advantage of them. That’s because almost one-third of workers who have access...
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Plan Participants Seek Advice

Employees’ confidence in retiring comfortably is increasing, but it still isn’t very high. The 2014 Retirement Confidence Survey from the Employee Benefit Research Institute (EBRI) shows that 18 percent of workers are very confident in their plans to retire, up from 13 percent in 2013.1 Of course, that means that 82 percent aren’t very confident in their ability to retire. Much of that confidence stems from having access to a retirement plan. The EBRI survey says workers without plans are four times more likely to say they are not at all confident about financial security in retirement. Simply having access to a plan isn’t enough, though. A 2013 plan participant survey from J.P. Morgan Asset Management shows that many plan participants are confused by the process of planning for retirement.2 In fact, over half of the respondents (52 percent) say they don’t have enough financial knowledge to plan for their retirement,...
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Employers Seek New Ways to Improve Employees’ Financial Health

Financial wellness is a hot topic among employers. There’s a lot of stress generated by personal financial issues, and that stress spills over into the workplace, taking a toll on employees, increasing health-related costs, and reducing productivity. A 2013 white paper released by Purchasing Power, a national e-tailer, reveals the results of a nationwide survey conducted by Harris Interactive on financial wellness:1 More than four in 10 workers (41 percent) report that they have at least a fair amount of financial stress today, with one in five (20 percent) saying that they have a great deal of financial stress. More than a quarter of workers (28 percent) say they have trouble meeting monthly household expenses. Almost half (49 percent) weren’t able to make major purchases, such as computers, appliances, or furniture, that they wanted or needed over the last year. More than four in 10 workers (44 percent) don’t have at...
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Generation Y More Prepared for Retirement

The financial crisis of 2008 deeply affected many consumers and investors, causing them to become more aware of their finances and to take greater control of their futures. Generation Y, however, seems to have learned the most and taken more positive steps to address their finances, according to Fidelity Investment’s “Five Years Later” study.1 Generation Y is defined as those born between 1981 and 1988. The results of the survey included: Eighty-one percent of Generation Y respondents stated they were more knowledgeable about finances now than they were before the crisis, as compared to 66 percent of older generations. Fifty-five percent of Generation Y feel that they are more confident investors, while only 47 percent of other generations feel the same. Generation Y has begun to save more systematically, with 64 percent saying they are saving more, compared to 54 percent of other generations. In fact, 34 percent increased liquid assets,...
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Why Are 401(k) Investors Over-Cautious?

Many people would argue that it’s impossible to be too cautious with money. That may not necessarily be true for everyone. When investing in a 401(k) plan, participants are naturally reluctant to invest in options with higher risk, like stocks. After all, that’s their retirement money. But paradoxically, by trying to avoid risk, 401(k) investors could actually be increasing their risk. The reason is simple: Over time, stocks have provided the highest returns of any asset class. While past performance is no indication of future returns, from 1926 through 2011 stocks have provided a compounded average annual return (adjusted for inflation) of 6.8 percent. Over the same time period, Treasury bills, considered a low risk investment, have returned only 0.5 percent1 , as measured by Morningstar. Of course, few investors have been in the market since 1926. But, even over more recent time frames, stocks have outperformed Treasury bills (T-bills). Since...
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Retirement Plan Consultants Advise Against MyRA Plans

In January, President Obama signed a memo directing the Treasury Department to create government-backed retirement accounts, called MyRAs. These accounts are designed to encourage middle- and low-income Americans (individuals earning below $129,000 and couples earning below $191,000 annually) that don’t have access to employer retirement plans to save for retirement, including part-time workers. Employers will be encouraged to offer the plans, since they don’t have to administer or contribute to the accounts. The accounts will function like Roth IRAs, and savers can invest after-tax dollars and withdraw the money tax-free in retirement. However, they will be backed by the U.S. government, which means those who use them can never lose their principal investment. There will be no fees, and accounts can be started with as little as $25 and contributions can be as small as $5 through payroll deductions. Saver can contribute up to $5,500 annually, and when their balance hits...
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