Smart401k Blog

The following is a guest post from James Garvin, the co-Founder of FiGuide.com.

Preparing for retirement can seem like an uphill battle, especially if you didn’t start early. Sue Bradley, a subscriber to the FiGuide.com daily retirement tips, recently sent an email asking for advice. In her mid-forties, Sue felt she wasn’t adequately prepared for retirement and wanted to know what she should do.

According to Lon Jefferies, a contributing financial advisor at FiGuide, she isn’t alone. In fact, according to a survey conducted by Deloitte and the International Foundation of Employee Benefit Plans, 82 percent of people with 401k plans aren’t properly prepared for retirement.

(more…)

During these last few weeks of market instability I have heard one question from investors more frequently than any other, “The market seems to being doing badly, should I move to cash until things get better? “

While the response depends on the particular investor, the answer is usually, “no.”*

It is human nature to want to avoid short-term discomfort, even when we know it may cause greater pain down the road. There are many cases when people look to ease their current burdens, not thinking of the problems it may cause in the future.  As investors we are sometimes tempted to act this way during periods of high market volatility or market downturns.

(more…)

Volatile times in the market can be a cause of concern and questions for investors. But if market slides are causing a rise in your blood pressure and a decline in your sleep, it may be time to reassess what kind of investor you are. One important step for any investor is to find their comfort zone. That way, when the market enters an unstable time, you can rest easy knowing you have planned your investments to match your attitude toward the market.

To find your comfort zone, there are two important terms to know:  risk tolerance and asset allocation. Having an understanding of these two investing concepts can go a long ways in determining what kind of investor you.

(more…)

Recently I’ve read about some get-rich-quick investments targeting people’s retirement savings. Unfortunately, these schemes are generally way too risky for a retirement nest egg.

If an investment sounds too good to be true, it probably is. Check out this SmartMoney article about structured products:  (more…)

I’m petrified to fly. When I was younger I loved it, but my neurotic personality mixed with a bad flying experience have snowballed into a full-scale phobia. I know it’s not rational, so I overcome it. And here I sit at 25,000 feet.

(more…)

Most articles about retirement planning focus on you – the future retiree. Oftentimes authors also discuss how spouses’ retirement savings will interact in a retirement strategy. Have you ever thought about how your retirement savings decisions will affect everyone else in your life?

Think about all your family, and even your friends. Your financial situation during retirement could be part of their lives too.  (more…)

We don’t like to see retirement investors jump from one investment to the next to the next. It’s not a good practice for retirement investing because (1) it increases risk and (2) there could be fees associated with frequent trading in retirement accounts. On the other hand, there are times that it’s OK to say ‘farewell’ to an investment.

There’s a term from the world of finance and investing called the sunk cost fallacy. Lots of us will deal with it at some point.  (more…)

An article in the May 23, 2011, edition of MarketWatch digs into the root causes of the problems retirees are facing.

SAN FRANCISCO (MarketWatch) — The idyllic, play-golf-and-travel vision of retirement may well be a thing of the past. Most new retirees are either nervous or downright frightened about their golden years, according to a new study.

Uncertainty about the future, fear of poverty, lack of confidence in their investing abilities, and distrust of the financial-services industry were four of the most common feelings expressed by 300 recent or soon-to-be retirees in interviews conducted between 2008 and 2011 …    (more…)

We’ve heard from an increasing number of people who are asking ‘what’s the deal with target-date funds?’

This newer category of mutual funds has popped up as a popular topic in the news and the blogosphere during the past couple years. (They’re also called lifecycle funds and retirement date funds.)

Are you wondering whether target-date funds are right for you? (more…)

If you’re thinking about using advice or an advisory service to help you invest in your retirement plan, you have lots to consider.

Where do people find investment advice for employer-sponsored plans? Some people use an independent, unaffiliated advice service. Some companies offer investment advice for plan participants as an employee benefit. Some 401(k) plan advisers – who have helped your employer to establish a retirement plan – also provide participant advice. Or you might have a financial adviser who handles other elements of your personal finances and also provides advice for your employer-sponsored plan investments.

So how do you decide which option fits you best? (more…)