Most DB plan sponsors that freeze their plan want to terminate it completely someday.
Terminating the plan allows plan sponsors to:
- Pay plan participants the benefit they have earned.
- Eliminate the liability that they have had to manage as part of the plan.
There are a lot of moving pieces leading up to a DB plan termination including:
- Administrative tasks (such as participant notices, election forms, government filings, etc.),
- Plan document amendments,
- Annuity purchase decisions,
- Protecting the plan’s funding status (which is so critical to maintain during this process).
A new cottage industry has emerged in the financial world called “behavioral finance theory” (BFT). The foundation of BFT is that people often make decisions that rational economic theory fails to predict. In other words, there is something about human nature that drives us to make different choices around money and finances that a formula or financial plan might otherwise suggest we do.
Laurie Santos*, Director of Yale University’s Comparative Cognition Laboratory and Associate Professor at Yale University, and her colleagues conducted very interesting research regarding this subject. It involved a series of experiments involving capuchin monkeys (a good proxy for human behavior) that explored a handful of key behaviors as they related to behavioral finance theory. Read more
You’ve heard the expression, “When the going gets tough, the tough get going.” When it comes to investing for retirement, however, going when the going gets tough isn’t always the right thing to do.
On the same note, going when the going gets easy isn’t always the right thing to do, either.
True or false? It doesn’t matter how much an investment goes up or down in value, as long as the average return over time is good.
If you chose “true,” you’re wrong. But you’re not alone. Many investors don’t realize the impact volatility can have on returns over time.
Forget the Joneses. When it comes to saving for retirement, what investors really need is to keep up with inflation. Because bit by bit, year by year, inflation steals away our purchasing power.
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).
There’s been a lot of rumbling in the news lately about the bond market.
With interest rates recently bouncing off of historic lows, the economic community is in general consensus that the end of a more than 30-year bull market for bonds is near.
While no one can predict the future of any investment option, there are signs of a sea change for the bond market.