Retirement Fitness

According to a Retirement Fitness Survey produced by Wells Fargo & Company, only 23 percent of pre-retirees are saving more for retirement than they were a year ago. Fifty-seven percent are saving the same amount while 20 percent are now saving less.

Save More for Your Own Retirement Act

Rep. John Campbell, R-California, has introduced the Save More for Your Own Retirement Act in Congress. The legislation would amend the Internal Revenue Code of 1986 to eliminate contribution limitations for retirement plans and increase penalties attributable to such contributions. It was introduced on Dec. 16 and then referred to the House Ways and Means Committee.

Lutheran Publishing Board Eliminates Defined Benefit Plan

The Evangelical Lutheran Publishing Board (ELCA) will terminate its defined benefit plan effective March 5. The decision affects 500 plan participants. In contrast, the 150 participants in the organizations 403(b) plan, a defined contribution plan, will not be affected.

Mintel and the Anti-Aging Market

A mega-market has emerged for anti-aging skincare products. According to Mintel International Group Ltd., Chicago, sales in that market in the U.S. reached almost $1.6 billion in 2008. Furthermore, Mintel expects the market to expand another 10 percent between 2008 and 2013.

An Educational Internet Portal

Fidelity Investments Consulting Services has developed a new Internet portal to educate employees about how to sustain and grow their personal finances. It offers employees a peek into their retirement future as if it were a time machine.

Employees can reallocate their current compensation to show how much they could save for retirement by adjusting their percentage and time span of savings, or how much money they contribute to the employee stock purchase plan or other elective company benefits, such as a 401(k) or flexible spending account.

The platform goes beyond modeling retirement with its strong emphasis on education. It is currently available only to employees of high-tech firm EMC, but other companies are expected to jump on the WealthBuilder bandwagon soon.

Early Retirement at Washington State University

Washington State University (WSU) has received state approval to offer a voluntary retirement incentive plan for employees participating in retirement plans through the Department of Retirement Systems. To be eligible, an employee must have been employed by WSU for at least 10 years, must have been eligible for normal retirement for at least 12 months under their retirement plan, must begin drawing their retirement benefit and must be a permanent employee.

WSU estimates that 114 employees university-wide would be eligible to participate.

Retirement Planning Software

The Society of Actuaries and Actuarial Foundation released the new report Retirement Planning Software and Post-Retirement Risks. It highlights the need for more long-term retirement planning following the economic downturn.

The report analyzed 12 financial planning software programs most commonly used by individuals and financial advisors. The tools were either available to individuals over the Internet or were designed for use by financial planners for their clients. According to the report, the majority of available tools are still not effectively addressing the wide range of individual issues related to retirement.

The conclusions: software packages need improvement in addressing key planning drivers such as:

• Longevity: Consideration of the retirement planning period and the handling of longevity risk vary considerably among the programs with
some apparent inconsistencies. This is an important planning factor because the range of lifetimes between users can be significant with different probabilities of living beyond a given age.
• Unexpected Events and Risks: Financial planning software under-represent
extreme events, such as the current financial crisis. The examined retirement programs generally were unable to analyze the risks of variable rate mortgages or large declines in housing prices. The majority of software surveyed did not consider the possibility of a large stock market and housing market decline occurring at the same time that a person nearing retirement has lost a job.
• Housing: There is inconsistent treatment of housing as an asset for use
in financing retirement. Some programs allow users to specify whether they are willing to sell their home to meet retirement expenses.
• Social Security: Software programs inadequately estimated the level of
Social Security benefits users are entitled to, and did not direct consumers to the Social Security Administration Web site to obtain an accurate benefit estimate at no charge.
• Annuities: Software programs usually did not evaluate the possibility of
annuitization, converting assets into lifetime income annuities, as an option to reduce risk. There was also a lack of consideration of different options for timing of payouts.

Early-Out in the Chino Valley

The school board of the Chino Valley (California) Unified School District may consider offering teachers early retirement incentives to help offset anticipated budget shortfalls next year. The board hopes to save money by replacing retiring senior teachers with less experienced, lower-paid teachers. It will vote on January 6 on whether to proceed with the early retirement option.

Over-Investment in Stocks?

According to the Employee Benefit Research Institute, 40% of people between 56 and 65 had more than 70% of their 401(k)s invested in stocks at the beginning of 2008. Somewhat disconcerting, almost 25% had 90% or more in stocks.

56% of Retirement Income

The Social Security Administration states that today's retirees count on corporate pensions and Social Security for 56 percent of their retirement income.