Five years ago, my firm, CREATE Research, first partnered with Principal Global Investors to examine trends within the asset-management industry. Many things have changed since 2009; one of the biggest changes has been how defined benefit and defined contribution plans have altered their approach to asset-allocation strategies. The infographic below brilliantly details how investor behaviors have shifted from “wants” to “needs” over the past five years. I encourage you to download the entire survey, entitled “Asset Allocation Leaders, Laggards, and Newcomers: 2009 – 2013.” You can read the full trends analysis and other research at create.principalglobal.com.
Infographic Read more
Among the many perils facing today’s workers and retirees, four in particular stand out: longevity risk, inflation, market volatility, and abandonment risk. I wrote a post on this topic in June.
In this post, I’ll take a closer look at longevity risk — one of the most common retirement concerns. In fact, the risk of outliving their savings is a worry that keeps about one-third of workers and retirees awake at night, according to the Principal Financial Well-Being IndexSM (third quarter 2011).
Your retirement could span two decades or more (knock on wood), but have you considered whether your retirement savings will last? Well, your answer will depend on three things:
- How much you set aside now.
- Your withdrawal rate during retirement.
- How you invest your savings once you retire.
To stockpile enough income for retirement, most experts recommend saving between 10-15 percent of your annual pay throughout your career. If you haven’t done so, don’t give up; but start saving as much as you can, as soon as you can.
Where a lot of people get in trouble is when they try to determine a safe withdrawal rate. They retire with what seems like a lot of money in the bank; but then they start spending it, forgetting that money has to last. This might seem like a no brainer, but it’s easy to kick off retirement with lots of celebratory spending (world cruise anyone?) Read more
As you may recall, earlier this year, payroll taxes in the U.S. went up by 2% and I discussed how that tax increase could potentially affect spending. Well, we’re done with first quarter, so how have consumers reacted to that $16 less (based on average weekly earnings on non-farm payrolls) in take-home pay each week?
- Consumer spending increased the first two months of the year (up 0.7% in February and up 0.4% in January).
- Consumer confidence took a temporary hit in January, and then generally recovered in February and March.
And, here’s the real kicker, according to a survey recently done by Bankrate.com, almost half of Americans surveyed (48%) didn’t even notice the payroll tax increase. Read more