Retirement Plan Blog

11 | 29 | 2009 Posted By Jerry Kalish

The Employee Benefit Research Institute (EBRI), an independent non-partisan research organization, in their annual Retirement Confidence Survey (RCS) has been asking workers how confident they are in having enough money for a comfortable retirement since 1993.

And in today’s economy, it should be no surprise that EBRI reported The 2009 Retirement Confidence Survey: Economy Drives Confidence to Record Lows; Many Looking to Work Longer. The Executive Summary stated

Workers who say they are very confident about having enough money for a comfortable retirement this year hit the lowest level in 2009 (13 percent) since the Retirement Confidence Survey started asking the question in 1993, continuing a two-year decline. Retirees also posted a new low in confidence about having a financially secure retirement, with only 20 percent now saying they are very confident (down from 41 percent in 2007).

The 2009 RCS reports that workers who have lost confidence in their ability to secure a comfortable are responding as follows:

• 81% have reduced their expenses
• 43% are changing the way they invest
• 38% are working more hours or a second job
• 25% are saving more money , and
• 25% are seeking advice from a financial professional

Sounds reasonable, yes? But here’s the rub. The RCS concludes that faulty assumptions and a lack of planning still hinder the ability of many Americans to realistically assess the preparations they need to take to ensure a financially secure retirement.

And that’s the problem that Frank Armstrong, III and Paul B. Brown address in their new book, Save Your Retirement: What To Do If You Haven’t Saved Enough or If Your Investments Were Devastated by the Market Meltdown.

So what’s so special about this book amidst the glut of books about retirement planning? Simply this. It reflects the real life experience of the authors in contrast to the media-created “investment experts” for many of whom the current recession is their first.

Frank Armstrong has more than 35 years of experience in the securities and financial services industry and is the founder and principal of Investor Solutions, Inc., a fee-only registered investment advisor, based in Miami. Paul Brown is a longtime contributor to the New York Times and co-author of the best selling retirement plan guide Grow Rich Slowly. He is a financial expert for ThirdAge.com, the popular website devoted to the concerns of people over age 40.

There’s nothing magic in their book. It’s just basic, old-school financial management in which Armstrong and Brown respond directly to what I call the “new financial realities” by showing battered investors

• Where to move their savings
• How to recalculate what they’ll really need to retire
• How to assess when they can now afford to retire
• How they should change their approaches to investing
• How to use the federal tax system to save more
• What to expect from Social Security now

So if you’re one of those people worried about how and when you can afford to retire, then this book can be an excellent guide. Here's a link to Amazon if you want to purchase the book, and you can also subscribe to Frank's companion blog, Sink or Swim.

You can also check out other book reviews I’ve done: Josh Itzoe's timely Fixing The 401(k); Fran Hawthorne's controversial Pension Dumping: The Reasons, The Wreckage, The Stakes for Wall Street; and Christian Jarrett’s and Joannah Ginsburg’s This Book Has Issues - Adventures in Popular Psychology.

02 | 26 | 2009 Posted By Jerry Kalish

So what’s a nice book about psychology doing on a blog like this. Take a seat on the couch, and we can talk about it. 

It’s a small world when it comes to blogging. One day I came across the British Psychological Society's Research Digest Blog, which is written and edited by Christian Jarrett, Ph.D., a British psychologist. I’ve referenced studies that Christian wrote about in several of my blogs. (See One More Reason to Consider A Commuter Transit Benefit, ERISA, It’s Not Elementary, and What We’ve Got Here Is Failure To Communicate.

So when I learned that Christian and his American co-author, Joannah Ginsburg, an American psychotherapist and journalist, published a book, I was eager to see whether it was as interesting and as helpful as the BPS blog. The answer is a resounding yes.

Here’s how the publisher describes it:

This Book Has Issues delves deep into the human consciousness and casts light onto the reasons why we think, feel, and act the way we do. Packed with illuminating real-life examples, introductions to groundbreaking psychologists, and plenty of experiments and tests to unveil the way your own mind works, This Book Has Issues has the power not just to intrigue and entertain, but also to change the way you think. Divided into eight fascinating chapters, This Book Has Issues covers everything from the real reasons we fall in love to the science behind a good night’s sleep. From extreme disorders to the truth behind the ways we live our everyday lives, This Book Has Issues takes you on a journey through the amazing landscape of the mind.

That’s from the publisher's marketing department. So let me translate it from “popular psychology” into “retirement plan psychology”.

The success of any retirement plan depends on how the needs and expectation of the plan sponsor, participants, and beneficiaries can be met. In other words, the human factor drives the plan’s success.

So in that context, if you want to:

• Learn how our brains can sometimes make mistakes
• Get tips to boost your memory abilities
• How to look at problems some people have with language and counting
• Challenge your basic ideas on behavior and communication
• Get the latest research on relationship, leadership, and brainstorming
• Get to know yourself better using a range of tests
• Learn how to deal better with stress
• Learn how to get better sleep

Then This Book Has Issues is for you.

It travels well also. You can listen to two excellent book reviews from Radio New Zealand (MP3 file), and on the Australian radio show, Faster Than Light.

Christian’s and Joannah’s book is available in the U.S. from Barnes and Noble and in the U.K from Amazon U.K.

Author's Note: Here are links to the other book reviews I've done: Josh Itzoe's timely Fixing The 401(k) and Fran Hawthorne's controversial Pension Dumping: The Reasons, The Wreckage, The Stakes for Wall Street.

01 | 4 | 2009 Posted By Jerry Kalish

I was one of those commentators who ended last year on a “glass half empty” note when I characterized the 2008 retirement plan year as The Good, the Bad, and the Ugly. Some commentators like Mark Miller were much more direct. Mr. Miller ended the year in his column that appears on his website, RetirementRevised, by writing 2008 ends with alarming retirement benefit trends.

But this is a new year when we can look ahead – and indeed, look ahead with optimism. The present retirement plan system can be fixed. And whether or not changes are made on either the legislative or regulatory level, or waiting for whenever the economy improves, the process can and should start now.

Josh Itzoe is among those of us that believe that many of the “broken” retirement plans, i.e., 401(k) plans, can be fixed by plan sponsors and other fiduciaries. Josh is both a CFP® and AIF® and is a Principal of Greenspring Wealth Management, Inc., a registered investment advisory firm and Independent Fiduciary in Towson, MD.

And to the point of this post, Josh is also the author of a recently published book, Fixing The 401(k): What Fiduciaries Must Know (And Do) To Help Employees Retire Successfully. So what’s so special about this book amidst all of the many 401(k) books out there. Here’s how Matthew D. Hutchison, MS, CPC, AIFA®, CRC®, answers that question in his Forward to the book.

There are many books about 401(k) plans. There are hundreds of thousands of professionals who want to invest your 401(k) assets. Very few of them, unfortunately, embrace a “participant first” approach to delivering retirement plan services. That is what makes this book so special. It is focused on one thing: Protecting future participant benefits. The goal of this book is to serve the best interests of nearly fifty million individual participants.

Those of us who have been around 401(k) plans for a while know who Matthew Hutcheson is. He’s an Indepenent Fiduciary himself and a published author and internationally recognized authority on retirement plans and their associated fiduciary issues. He's also testified before Congress on these matters.

There’s nothing magic in Josh’s book. It’s just basic, old-school procedural prudence, the process by which fiduciaries act solely in the best interests of plan participants and their beneficiaries. It’s not only good risk management for fiduciaries, it's just good management period.

 Here are some of the areas that Josh covers in his book:

• The basic fiduciary responsibilities outlined under ERISA.
• The roles, responsibilities, and motivations of the various people/companies involved in selling and servicing these plans.
• Which questions to ask and what information to gather in order to uncover and reduce the various fees and expenses associated with 401(k) plans.
• How to design a 401(k) plan to deliver successful outcomes.
• How to help employees use the plan most effectively.

So if you’re a plan sponsor concerned about both your personal responsibilities and your participants’ retirement security, then this book can be an excellent guide.  Here's a link to Amazon if you want to purchase the book. You can also follow Josh through his new blog of the same name, Fixing The 401(k).  

04 | 18 | 2008 Posted By Jerry Kalish

Fran Hawthorne is an accomplished journalist who over the last 20 years has specialized in finding and writing about the intersection of corporate America and timely and sometimes contentious social issues. She’s written articles for publications such as Fortune, Business Week, and Institutional Investor and has authored books on such issues as the dangers of obesity drugs, the trade-off between campaign contributions and state bond underwriting, and Medicaid manipulation.

Now Ms. Hawthorne has turned her attention to an important issue that in today’s economy isn’t going away anytime soon, pension plan terminations. In her new book, Pension Dumping: The Reasons, the Wreckage, the Stakes for Wall Street, Ms. Hawthorne takes an in-depth look on what happens when financially troubled companies terminate their defined benefit pension plans through bankruptcy.

I had the opportunity to interview Ms. Hawthorne who has, no doubt, a point of view starting with the title of her book. She builds a case about why pension dumping (her term) has become an increasingly common practice in the wake of bankruptcy and how investors are profiting off the wreckage.

Agree or disagree with her, her well researched book which includes case studies and interviews provides analysis and insight on the complicated and competing dynamics involved with the termination of a defined benefit pension plan:

• Competing interests in bankruptcy court
• The choices that unions have to make
• The financial burdens assumed by the Pension Benefit Guaranty Corporation
• The risks that investors take and the returns they look for
• The issues that companies must deal with as they restructure

Ms. Hawthorne’s book should appeal to anyone involved with pension plans, e.g., CEOs, CFOs, HR professionals, union leaders, professional advisors, and policy makers. And if so, here is a link to Amazon.