The holiday season is fast approaching. It is a time most people feel more generous to loved ones or to the less fortunate. Not so when it comes to Congress. If lawmakers have their way, taxpayers may have to work longer in their lives, work more hours or have to take more risk in the investment markets to live the retirement they envision now. This is what reducing the 401(k) plan contribution limit could mean. This is what Congress is calling "tax reform." There are 54 million American workers participating in about 550,000 401(k) plans, according to the Investment Company Institute. These plans hold more than $5 trillion in assets. This tax reform measure will most likely affect the wealth of most American households and certainly affect the way they save for retirement. … [Read more...] about Congressional Scrooges want to cut 401(k) contribution limit
Social Security may be a long-awaited retirement perk, but it's not without its headaches and complications. (It is, after all, a government program, so that shouldn't come as a complete surprise.) Retirees must manage their Social Security and other retirement income well if they hope to avoid the "tax torpedo." The tax torpedo is a name given to the unexpected way that Social Security can get taxed, depending on how much other income you have. "It sneaks up on people," said Justus Morgan, a certified financial planner with Financial Service Group. "The majority of folks don't understand if or how Social Security can be taxed." Because the income amounts that are subject to tax aren't indexed for inflation, more and more retirees will be ensnared in the tax torpedo in coming years. … [Read more...] about Will the ‘tax torpedo’ blow up your retirement?
A raging stock market has investors more satisfied with their finances than they have been in decades. Financial satisfaction has risen steadily upward since the financial crisis that began in 2007. More from Active/Passive:Top House tax writer suggests 401(k) changes could still happenThe top 10 US companies by market capitalizationBlackRock CEO: Expect just 4% returns over 10 years This is the third consecutive quarter that the pleasure indicators hit a record, American Institute of CPAs said. The primary contributor to the boost is the stock market, measured by a proprietary large-cap stock index. That index is composed of the 750 largest companies trading in the United States, excluding American depository receipts, mutual funds and exchange-traded funds. AICPA's real estate index … [Read more...] about US financial satisfaction hits 24-year high on market boom
The top House tax writer on Wednesday signaled that Congress could still propose changes to a popular retirement savings plan in its tax bill, contradicting an assurance made by President Donald Trump. At a Christian Science Monitor event, Rep. Kevin Brady said Republicans are "exploring a number of ideas" to "create incentives for Americans to save more and save sooner." The House is "continuing discussions with the president" in that area, the House Ways and Means Committee chairman said. "I do have a worry. Not enough Americans are saving," Brady said at a separate Yahoo Finance conference later in the day. Brady said Republicans have "asked for ideas how Americans (can) save more and save earlier in their lives." On Monday, Trump emphatically tweeted that "there will be NO change to your 401(k)." He called the 401(k) tax benefit a … [Read more...] about Top House tax writer suggests 401(k) changes could still happen, contradicting Trump
There are fewer listed companies in the United States today than there were in 1976, despite the fact that the country's gross domestic product is three times larger now than it was then. Take that in for a moment. With the To better understand what this means for investors, it's instructive to start with the reasons for the drop in U.S. listings (which fell 50 percent from 1996 to 2016). First, costs have risen, driven in part by increased regulation. Costs are both financial, including listing fees and the expenses associated with mandatory disclosures and other regulatory requirements, and less tangible, such as the perceived burden of quarterly earnings releases, the risk of being targeted by activist investors, and higher visibility that can result in political or competitive pressure. Smaller-growth companies are at a clear … [Read more...] about Where have all the public companies gone?
Larry Fink said Tuesday investors should expect only a 4 percent investment return with a balanced portfolio of stocks and bonds. "We're talking about a balanced portfolio. We're talking about over a 10-year horizon," Fink said on CNBC's "Squawk Box." "Obviously, this year we are making far better because of the equity market return," he added, but warned some years could be much worse. "There are going to be some times where you're going to have a market setback where you could lose 20, 30, to 40 percent of the market." BlackRock is the world's biggest money manager with nearly $6 trillion in assets under management. Fink was reiterating a prediction he made during a panel discussion at a Saudi investor summit moderated by CNBC's Andrew Ross Sorkin earlier Tuesday. His comments raised … [Read more...] about BlackRock CEO Fink says investors should expect just 4% returns over the next 10 years
As as investor, if you're feeling calm about this long bull market, don't let the lack of volatility lull you to sleep. The risks of a pullback are still there. Do you actually know how your portfolio would react in another downturn? When was the last time you took a look at your retirement investments and subjected them to a stress test? We are now multiple years into what feels like the longest bull market ever. However, anyone taking a peek at the past knows that "what goes up must come down." And in the case of this current ride, it's not a question of how, but when the market will correct itself and turn bearish. The lack of volatility continues, but for how long? Over the past two decades, we have seen two major market downturns, courtesy of the dot-com bubble and the financial crisis. During each of these incidents, the stock … [Read more...] about How investors can prepare for the pain of a market pullback
About 80 percent of retired National Football League players go broke in their first three years out of the league, according to a report in Sports Illustrated magazine. The average working person asks, "How is that possible?" That's a fair question, because the average NFL player's salary is close to $2 million per year. The median income is $750,000. The money drains away quickly for a variety of reasons, and at the top of the list is a lack of financial planning and education. Many top young players, like many kids just out of college, aren't adequately prepared to handle budgets. Player agents such as Leigh Steinberg have pointed out that young NFL players need to have qualified financial advisors who can help protect and grow their money. But some players don't get great advice; some, instead, are vulnerable to agenda-driven agents … [Read more...] about We have a retirement crisis in this country: Former NFL player
On Monday, Oct. 19, 1987, the New innovations, such as program trading, which powered portfolio insurance and trading on indexes and index futures, were blamed for what happened on Black Monday. At the time, as much as half of the market's trading volume was programmatic. When index futures in Chicago were lower than the actual indexes on Wall Street, the programs would sell stocks. Unfortunately, the rout was on when the futures market remained lower throughout the day and investors panicked and sold, too. From the beginning of 1987 through August of that year, the Dow had jumped up 44 percent in value — but then fell roughly 10 percent in the week before Black Monday. Those declines happened amid rising tensions between the United States and Iran and were exacerbated by Iran shooting missiles at U.S. ships the … [Read more...] about Lessons learned from Black Monday that can guide you now
With interest rates still close to all-time lows, conservative investors are realizing that traditional forms of low-risk investments are not keeping up with inflation. According to Bankrate.com, the average interest rate for a five-year bank CD is 2.13 percent, and the average bank money market is 0.12 percent APY. Considering inflation is historically 3 percent, that discrepancy between return on investment and rising prices can be detrimental to a retirement plan. Look at it this way: If your investments are returning 1 percent per year and inflation is 3 percent per year, you actually lost 2 percent in value on your money in one year. That might not seem like a big deal, but when you look at the increasing life expectancy in the United States, it becomes an issue. Currently, the average life expectancy is around 85 years old. Assuming that life expectancy does not increase … [Read more...] about Try these low-risk investment alternatives with higher returns