Stop Betting Your Retirement on Your Employer’s Stock

There are many large businesses that subtly encourage their employees to own company stock inside their retirement accounts. This is a big mistake in my opinion. In practical effect you are doubling down on the future success of your employer. First, your income depends on a continuation of your job. Second, your retirement depends – at least in part – on the strategic decisions of upper management. Bad decisions by management can cost you your job and cause your stock to tank. Folks working at Wall Street’s “too big to fail” banks have learned this lesson the hard way

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Monitoring Year to Date 401k Performance

I wrote recently that I am trying to be more active and vigilant in managing our retirement investment holdings. In particular, I want to be sure that (a) there is a reason that we own each of the particular investments in our portfolio and (b) that I have targets for selling if necessary. Part of the vigilance is monitoring the performance of our portfolio in comparison to overall market conditions. If and when the market tanks, I don’t want our portfolio to suffer an identical fate.

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Reallocating to a Real Asset Return Fund

I made a re-allocation move yesterday to a real asset return fund inside our 401k plan. I transferred money that I had been accumulating in a stable value return fund. I intend to use this money eventually to buy more TIPS for our guaranteed retirement income plan but the time just isn’t right for that now. Read more

Risk Management Adjustments in Our Retirement Portfolio

Several months ago I changed the asset allocations in my 401k plan. The prior allocations were based on the Ten Speed portfolio published by Scott Burns. I simplified our holdings into another of Burns couch potato portfolios, a slightly modified version of the Four Square. One of my reasons for doing this was improve my ability to control risk . Shortly thereafter, I entered stop loss orders for our major holdings. This morning, I made some further risk management adjustments.  Read more

Changing Our Retirement Asset Allocation

I am making a number of significant moves this week in our 401(k) asset allocation. It started yesterday with selling all of our mutual fund holdings after a temporary market rally, except for the Vanguard Inflation Protected Securities Fund (VIPSX).  I will briefly explain the reasons for what I am doing. Read more

Retirement Income Predictions from Your 401(k)

Many 401(k) plan sponsors and participants seem to forget or overlook that 401(k) plans were intended to get people to retirement but not necessarily through retirement. Consequently, most of the focus has been on accumulation – the size of the account – with too little attention paid to the retirement income that a future retiree can expect to receive from that account. Fortunately, this may be starting to change. Read more

Retirement Plan Contribution Limits for 2010

It’s time to adjust our retirement plan contributions for 2010. These plans include 401(k) plans, individual and spousal IRAs, and our Health Savings Account, which we use for retirement savings. Read more

Do Not Cash Out Your 401(k) Account

This message is for baby boomers who have not retired and in particular for those who have not reached 59  1/2 years of age.

Stop cashing out those 401(k) accounts! Read more

Deadline Extended for Returning Required Mininum Distributions

Most retirees know by now that in the Worker, Retiree, and Employer Recovery Act of 2008, Congress waived required minimum distributions in 2009 from IRAs, 401(k) accounts, and certain other retirement plans. The intended benefit was to prevent retirees from being forced to sell invested assets during a severe market decline. Read more

Retirement Plan Hardship Withdrawals

One of the worst financial decisions a baby boomer can make is to raid a tax-deferred retirement account such as an IRA or 401(k) to pay for non-retirement expenses. I like to call these early withdrawals “retirement plan leaks” although sometimes they are more like floods! Read more

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