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Averages versus medians March 16, 2015

Posted by forwardfinancialplanning1 in 401k plans, Retirement Savings.
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It’s been said that “the data will say anything if you torture it enough”. Unfortunately, there’s no way to torture this distressing information on America’s collective preparedness for retirement. We often see reports of average 401k balances approaching six figures. While these amounts will only sustain about $4,000 annually to supplement Social Security benefits, the picture is far worse when median balances are considered.

According to the National Institute of Retirement Security, the 2014 median retirement account balance was only $2,500. This figure is so low because roughly a third of households have saved nothing for retirement. When all of those $0’s are included in the calculation of a median, it quickly becomes obvious that we have a major national calamity brewing.

The big question is: “Who’s going to support these millions of people when they can no longer support themselves???”


It’s no better up north March 2, 2015

Posted by forwardfinancialplanning1 in Investing-General, Retirement Savings.
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Frequent readers have seen us cite statistics and surveys depicting how much our American populace struggles with finances and financial literacy. A recent study of Canadians completed by BMO Global Asset Management shows our friends to the north have similar challenges.

They noted that 56% of Canadian respondents needed assistance in deciding which investments best suited their needs. A full 53% wanted help in understanding how retirement portfolios will react in certain markets, while the same percentage wanted help in making portfolio adjustments because of market conditions. Further, 51% wanted assistance in ensuring that their portfolios were diversified while a similar number stated that they needed help in determining how much they’ll need to retire.

Different country—same problems.

The good Lord must like defined contribution plans better…. March 1, 2015

Posted by forwardfinancialplanning1 in 401k plans, Pensions.
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A recent survey from USI Consulting Group found that a majority (57%) of Catholic dioceses are planning to freeze or terminated their defined benefit pension plans.

Eighty percent of the diocesan respondents currently offer lay employees a 403b plan while 15% offer a 401k plan.

Private corporations saw that this was the way to go twenty years ago and now we have religious organizations following suit. Living in the state (Illinois) with the nation’s most poorly funded governmental sector pension plans causes me to wonder—“When will our so-called political “leaders” figure this out?”