Smart Money on Retirement

Today’s Wall Street Journal includes a Smart Money Magazine highlighting two themes related to Later Living.

First, Ian Salisbury, “Fix Your 401(k)”, calls attention to the limits—especially high fees and lack of important investment options—in 401(k) plans. Such plans were not designed to be a primary pillar of retirement, but they are quickly evolving into that role. Some of the problems include:

    • Many new “target funds” are plagued with high, probably unnecessary costs (index funds are probably the best choice in 401(k) target funds)
    • Many 401(k)s lack important options like bond index funds, real estate funds, and alternative investment vehicles, all of which can help in a choppy stock market
    • Many 401(k)s come with little, incomplete, and generic investment advice

Near and current retirees need to shoulder responsibility for learning, gradually but systematically, about investments, just as one might learn about health.

Second, Anne Kadet, “Working 9 to 5 — at 75”, describes how the nation’s “massive asset meltdown” has forced people to delay retirement or return to work. The percentage of Americans over 65 who work reached a low of about 13% in 2000, and it has been climbing since, more sharply in the last few years. Polls show that significantly fewer people now intend to retire early, and significantly more people expect to work until age 70 or later.

Work can be challenging for older people. Many mental functions noticeably decline after age 50, and increasingly, modern work is information and technology intensive. Older workers have strengths too—”accrued wisdom and a strong work ethic”. Ms. Kadet’s article includes several interesting stories of people staying in harness beyond 65. You gotta do what you gotta do.