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Tag: retirees

Why the GameStop frenzy may hurt retirees along with hedge funds

Finance
Jakub Porzycki/NurPhoto via Getty ImagesReddit users and other retail investors who piled into GameStop stock aimed to take down Wall Street.Pension funds, which support ordinary Americans in retirement, may be an unintended casualty.Some hedge funds have sustained big losses as a result of bets against GameStop stock. Melvin Capital, for example, lost more than 50% in January.But pension plans — which invest assets on behalf of workers like teachers and police officers — may hold big positions in hedge funds. That means a financial hit for hedge funds could spill over to workers' retirement assets."Your 'eat the rich' mentality just took a bite out of the pension funds of working Americans," Barbara Roper, director of investor protection at the Consumer Federation of America, said of Game...

Op-ed: Retirees need to make these financial moves before Dec. 31

Finance
PeopleImages | E+ | Getty ImagesBack in March, a couple who had recently sold their business called me to express concerns about their decision to sell and retire. With Covid-19 raging, the stock market quickly dropped in value and their retirement savings were in decline. They asked a straightforward question: Did they need to worry or worse, consider going back to work?To address their concerns, we conducted a financial "stress test."It's a simulation of scenarios to evaluate if their financial plan and investments could withstand the chaos in the stock market. Even though their investments had declined more than 10%, the test assured them their portfolio was well positioned to withstand further volatility. With this information in hand, the couple quickly dropped any thought of returni...

This risk threatens retirees’ nest eggs. Here’s how advisors are protecting them

Finance
AJ_Watt | E+ | Getty ImagesForget volatility. The thing that keeps certified financial planner Neil Waxman on edge is clients' cybersecurity practices and the threat of identity fraud."It's not the markets that keep me up at night," said Waxman, managing director of Capital Advisors in Shaker Heights, Ohio. "This is the thing that concerns me."It's the thing that keeps me up at night more than anything else: a client getting hacked or something coming into our system, even though we have best practices," he said.Waxman is right to be concerned.More from Advisor Insight:What to tell your older kids about your estate planYour advisor may be able to sidestep this federal ruleDon't hide these things from your financial advisorIdentity fraud — what happens when scammers use your personal inform...
Op-Ed: With today’s market volatility, the ‘4% rule’ creates risk for America’s retirees

Op-Ed: With today’s market volatility, the ‘4% rule’ creates risk for America’s retirees

Finance
For decades, financial advisors have counseled clients that they should be able to safely withdraw 4% of their assets each year as a means of providing income, while maintaining an account balance large enough to keep income flowing through retirement. While some of the underlying thinking behind the so-called 4% rule was prudent, it was hatched in an era in which interest rates were much higher, capital markets less volatile and, most important, Americans had shorter lifespans.Given today's market volatility and changed retirement landscape, it's safe to assume that the 4% rule may be obsolete. To validate this assumption, we set out to determine whether this rule was sufficient to compensate for the many financial risks that retiring baby boomers and subsequent generations will carry wit...
Retirees may fare worse reinvesting their IRA or 401(k) withdrawals under the Secure Act

Retirees may fare worse reinvesting their IRA or 401(k) withdrawals under the Secure Act

Finance
Planning to reinvest those pesky required withdrawals from your individual retirement account or 401(k) plan because you don't need the money?Under the Secure Act, a bill pending in Congress right now that aims to improve the nation's retirement savings, you'd have to start taking withdrawals from your IRA (and most other retirement accounts) at age 72 instead of 70 ½.The kicker: Due to the reduced time that the reinvested cash would have to grow, its value over time could be smaller under the proposed change than under current law.Allocating expenses into needs, goals and aspirations can help provide a better framework for managing your cash flow and living comfortably.Pascal Broze | Getty Images "You'd have more money in your IRA but less in the reinvested account," said certified financ...