Yes, absolutely. I tend to agree with current research done by Money Magazine staffers, which indicates that ending your career voluntarily, having a guaranteed income and staying active, make for a happier retirement than just having more money.

University of Wisconsin economist Keith Bender's research shows that people who left their jobs voluntarily were 30 percent more likely to be happiest in retirement than those who were pushed out. I would venture to say it could be an even higher percentage. But you cannot control whether you'll have to stop working because of ill health or corporate downsizing, two of the most common reasons for unexpected retirement, so I firmly tout the benefits of advance planning with disability and long-term care insurance and staying informed regarding your investments and Social Security status.

Establishing a disciplined income from your investments tends to give retirees a more secure feeling than sitting on a pile of savings. Traditional pension plans are going the way of Nero jackets and beehive hairdos, but there is a world of opportunities and options for conscientious individuals who have the incentive and desire to pursue them.

Thirdly, my happiest clients tend to be those who stay active. I see several become involved in the assortment of activities commonly offered through retirement communities and groups. Volunteering to local agencies is also a hugely popular pursuit. There seems to be a fine line, however, for doing too much and allowing their activities to become a kind of work replacement.

And finally: It appears that the older retirees enjoy their time and each other more, feeling better about the lived behind and in front of them. Perhaps life, like fine wine, really does improve with age.

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*These answers are specifically related to the question they are answering. They should not be viewed as advice for your individual situation. You are encouraged to meet with qualified specialists regarding your own unique circumstances.
(Q&A from Fall 2006 Profit Zone Magazine)

This is indeed a hot topic - let's go straight to the experts on this: A study by New York University's Department of Finance in March of 2004 found that 62 percent of 401(k) plans, the types of choices are inadequate and this had a massive impact over a 20-year period - upward of 300 percent! Also, the funds included in the plans are riskier than the general population of funds in the same categories.

And if you've been waiting for a Roth 401(k) offering, more patience may be needed. According to benefits-consulting firm Hewitt Associates in June of this year, just 13 percent of the 220 companies surveyed by the firm said they were very likely to offer the new Roth IRA-like retirement plan option in 2006.

That's just one of several findings of recent Hewitt studies that provide a status report on what has become the primary retirement savings vehicle for most employees. The news is mixed, with participation rates and average account balances growing to 70 percent and $69,000, respectively, but some counterproductive tendencies were found among savers. The survey results suggest dos and don'ts for improving your retirement outlook:
Don't neglect your plan. While the quickest was to derail an investment plan may be to trade frequently and chase hot stocks or funds, that's not the problem for most 401(k) investors. Rather, they're taking a normally commendable buy-and-hold mentality to extremes. According to Hewitt, only 17 percent of plan participants made any adjustments to existing investments in 2004. That can be a mistake if, say, stocks have a great year, gaining 25 percent, while bonds drop 10 percent. Suddenly, your 60/40 mix of stocks and bonds shifts to 67/33. If those trends continue for a few years, as they often do, you could end up with almost all your money in stocks just when bonds are poised to outperform equities.

Do take advantage of automatic plan options. Worker's hands-off tendencies are apparently stoking employers' worries. In another Hewitt survey, just six percent of companies expressed confidence that employees will take accountability for their retirement future. Chief concerns are that employees will not sign up for a 401(k), will neglect to increase contributions, and will let the mix of investments get dangerously out of balance.

So now many employers are changing the way 401(k) plans are structured, requiring you to opt out, rather than in, for automatic enrollment, contribution hikes and rebalancing. With other plans, you need to choose these helpful options, for example, signing up for a feature that increases contributions on a regular schedule, perhaps timed so that a percentage of an annual raise gets funneled to your 401(k).

Don't cash out. This is chiefly a problem among younger workers, so if you have adult kids, you may want to remind them of the benefits of long-term, tax-deferred compounding. According to a Hewitt survey of 200,000 retirement plan participants, almost half had opted to withdraw 401(k) account balances when leaving a job. Among employees aged 20-29, two-thirds took the cash, incurring income taxes and a 10-percent IRS early-withdrawal penalty, rather than leaving the savings in place or rolling the money into a new employer's plan or an IRA. Even a small balance may compound into a sizable sum over several decades. For example, a 25-year-old's $10,000 account, left to earn a six percent return for 40 years, would grow to more than $100,000.

A major trend in pension plans offered by companies is a movement from defined benefit plans to defined contribution plans. The majority of defined contribution plans offered by companies are 401(k) plans. It is more important than ever to make sure your company is offering a plan that will give you the opportunity to have a comfortable retirement.

So, does your 401(k) need more care? Now, rather than later, would be the best time for you to visit with your financial advisor and find out.

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*These answers are specifically related to the question they are answering. They should not be viewed as advice for your individual situation. You are encouraged to meet with qualified specialists regarding your own unique circumstances.
(Q&A from Fall 2006 Profit Zone Magazine)

Answer 5