Tag Archives: defined contribution

09.11.15
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Single and Broke In Retirement?

We recently came across a news report that highlighted the fact that “singles” in the U.S. are more likely NOT to have a retirement account. In fact, only 51 percent of unattached people have a retirement savings account, according to a study released Wednesday by Mintel. (Mario Petitti / Chicago Tribune)

The population of single people is rising with almost half of adults today not living with a spouse, according to the U.S. Census. That’s up from about 30 percent in 1967.

“More Americans are staying single longer, and our data shows this trend will hold out for the foreseeable future,” Robyn Kaiserman, Mintel financial services analyst, said in the report.

Regrettably, the percentage of singles that have a retirement account is far less than people who are living with a partner or who are married, the research firm said.

Retirement savings accounts have been set up, in contrast, by 68% of people living with a partner and 84% of married adults.

We, at KCS, suggest that Americans overall need to take retirement more seriously, especially those not in a traditional DB plan.

For participants in defined contribution plans, just 27% contribute the maximum allowed to their plan, and 22% say they contribute only enough to get the employer match.

Whether you are single or not the key to funding a successful retirement is to start saving / investing early in life and be consistent (save with every paycheck). Taking advantage of a matching 401k plan should be a no brainer. Unfortunately, the power of compounding is lost on many people. But, why should that be a surprise? We provide so little financial literacy in our schools!

04.24.14
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When everyone expects one thing, you may want to prepare for a different outcome

On January 9th, and again on April 4th, we at KCS addressed the issue that US interest rates wouldn’t necessarily rise, and in fact, with everyone in the world seemingly believing that interest rates had only one way to move – UP – we thought that there was a good chance that rates might fall.  In fact, the interest rate on the 10 year US Treasury has fallen by more than 30 bps so far this year.  That is a fairly meaningful move.  With many plan sponsors and asset consultants trimming, eliminating, and restructuring their US fixed income exposure, a plan’s asset allocation is now more disconnected from the liabilities than before.  This disconnect exacerbates the volatility in funded ratios and contribution costs. 

Don’t believe us, then how about the following.  Here is a brief research piece that I found on Cullen Roche’s website today.

“Jim Bianco, of Bianco Research, points out in a market comment Tuesday that a survey of 67 economists this month shows every single one of them expects the 10-year Treasury  yield to rise in the next six months.

The survey, which is done each month by Bloomberg, has been notably bearish for some time now, with nearly everyone expecting rising rates. In March, 97% expected rising rates. In February, 95% expected yields to climb. And in January, 97% held that expectation. Since the beginning of 2009, there have only been a handful of instances where less than 50% expected rates to rise.”

Read more at http://pragcap.com/the-metamorphosis-of-the-bond-bears#6KE3VCCCBLDYV554.99

The US Retirement industry cannot afford to get the direction of rates wrong.  A continuation in the decline of rates will only further inflate the underfunding of US pension liabilities, and continue to put pressure on both private and public DB plan sponsors to do something else, such as close or freeze the DB plan and move more participants into DC.  At KCS, we’ve spoken and written about alternative strategies that go along way to improving funded ratios and stabilize contribution costs.  We are waiting to hear form you.

The beneficiaries of our collective effort cannot afford to have us screw up any more. DC plans are not the answer, but are quickly becoming the only game in town.

 

“Jim Bianco, of Bianco Research, points out in a market comment Tuesday that a survey of 67 economists this month shows every single one of them expects the 10-year Treasury  yield to rise in the next six months.

The survey, which is done each month by Bloomberg, has been notably bearish for some time now, with nearly everyone expecting rising rates. In March, 97% expected rising rates. In February, 95% expected yields to climb. And in January, 97% held that expectation. Since the beginning of 2009, there have only been a handful of instances where less than 50% expected rates to rise.”

Read more at http://pragcap.com/the-metamorphosis-of-the-bond-bears#6KE3VCCCBLDYV554.99

“Jim Bianco, of Bianco Research, points out in a market comment Tuesday that a survey of 67 economists this month shows every single one of them expects the 10-year Treasury  yield to rise in the next six months.

The survey, which is done each month by Bloomberg, has been notably bearish for some time now, with nearly everyone expecting rising rates. In March, 97% expected rising rates. In February, 95% expected yields to climb. And in January, 97% held that expectation. Since the beginning of 2009, there have only been a handful of instances where less than 50% expected rates to rise.”

Read more at http://pragcap.com/the-metamorphosis-of-the-bond-bears#6KE3VCCCBLDYV554.99

04.08.14
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Here is some DC advice that you should take seriously!

Here is some DC advice that you should take seriously!

How your 401(k) could disinherit your kids via

The above Tweet caught my attention earlier today.  I hope that you’ll take a few moments to read the article.  The advice that they give is critically important.  KCS partner, Dave Murray, experienced this issue while working with one of his clients.  In Dave’s case, a young woman, with a decent-sized DC plan balance passed away.  Her parents assumed that they would inherit her plan balance, but unfortunately years before she had designated a boy friend as her beneficiary.  Despite the fact that this young man was no longer in the picture, the plan document superseded her will, and he was given the proceeds. 

Given the serious consequences that this lapse can create, we’d recommend that you review your designated beneficiary(ies) annually.

01.06.14
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KCS’s January 2014 Fireside Chat: 2013 – A Year In Review

KCS’s January 2014 Fireside Chat: 2013 – A Year In Review

“My role in society, or any artist’s or poet’s role, is to try and express what we all feel. Not to tell people how to feel. Not as a preacher, not as a leader, but as a reflection of us all.” (John Lennon) 

 

As we gaze back on 2013, as we do following any year, we reflect on both the positives and negatives that impact our lives, our families, friends and colleagues, our community, our industry, our country and the world. We wonder why these events occur, why we may or may not have been involved, and whether or not there was anything that we could have done to alter the outcome through our collective experience. (please click on the link to continue to read the latest FC)