RETIREMENT PLANNING » IRA & ROTH Accounts

Americans looking for retirement income from their state and local governments could be disappointed to learn that U.S. public pensions are facing a shortfall of $2.5 trillion, according to the former chairman of New Jersey’s pension fund. He and other experts believe the main cause of the shortfall appears to be the damage caused by the U.S. economic recession along with years of fiscal mismanagement.

Chronic Underfunding of Retirement Promises a Problem

Investors were given good news on Friday from analysts who said financial institutions are ready to pay dividends again after a three-year break. Some of the nation’s largest banks plan to restore dividends in the first half of the year now that they’ve been able to repair some of the damage to their balance sheets.

Billions to Hit Pension Funds

Potential growth opportunities co-mingled with true safety within the same financial vehicle is rare to find. Investors are either compelled to risk safety for better growth of the funds or succumb to lower growth prospects considering questions of safety. However, with innovations like Equity Indexed Annuity hitting the insurance sector, you can now expect higher returns along with proper security of your investments.

What is an Equity Indexed Annuity?

Can you imagine living on less than $200 a month for the rest of your life? That’s the reality that many baby boomers are facing as they close in on retirement. According to a study by Wells Fargo, the average retirement savings of the average American in their 50s is $29,000.

That may seem like a decent chunk of change, but if you simply crunch those numbers in a retirement calculator, you’ll find how drastically scary that outlook is. Based on a retirement period of 20 years and a 5 percent return, you’re looking at a monthly allowance of $190 a month. One hundred and ninety dollars a month. For most people, that doesn’t even cover food costs, let alone rent, utilities, clothing and just about anything else that involves any type of lifestyle.

Hello, 2011! You sure got here quick.

A new year is upon us, and with it comes a mix of hope and uncertainty. Looking back at 2010, the previous year certainly had its share of good and bad, yet all things considered, the economy has made a lot of progress from being on the verge of collapse just a few years ago to making its current climb–albeit slow and uneasy–back to recovery.

The Federal Reserve and the Obama administration seem committed to jump-starting the economy, whether or not the rest of the population will follow will be the biggest ongoing development of 2011. Here’s a look into a few of the key 2011 predictions and areas that will determine whether your money has a good year, or one that leaves more to be desired.

While 2010 marked the end to a very fascinating decade, the year itself did have its own shares of ups and downs. Looking back at some of the biggest 2010 stories, you’d see the economy and stock market carried over some momentum from last year’s recovery effort, and the recession was declared officially over. On the other hand, unemployment still hovered around 10 percent, the housing market failed to bounce back and Americans are slowly starting to spend again.

There were also major cultural events that didn’t really a direct personal finance impact on 2010, but did take hold of the nation’s attention. You may remember the NBC late night fiasco where Jay Leno and Conan O’Brien tussled over The Tonight Show. There was Avatar, which led to a flood of 3-D movies. The Apple iPad was introduced, and Larry King abdicated his throne on CNN.

If you’ve missed having 401(k) matches for the past year or longer, you’ll be happy to know the 80 percent of employers who suspended matches should have them restored by mid-2011. This news comes from the Profit Sharing/401(k) Council of America, which recently announced that in addition to the 40 percent who had already restored matches, another 40 percent are expected to do so in the coming months.

Restoring Matches a Top Priority

A lack of retirement savings may force many middle-class Americans to cut back their lifestyles later in life, according to a recent study from Wells Fargo & Co. The study revealed the average American has saved less than 7 percent of his or her desired retirement nest egg. As a result, retirees will likely have to keep working into retirement to supplement their income.

Middle Class Falls Short on Retirement Savings

You may not have heard much about 401(k) theft, but it happens–not the kind where employees take money from their own accounts illegally, either. This is a different type of theft–one that results in an employer stealing money from your retirement plan.

Many people believe their employer has their best interests at heart, but in a cash-strapped economy, everyone is trying to get their hands on free money and people can become desperate. If you don’t want to lose the funds you’ve worked for years to save, learn about this type of theft and the 401(k) protection that’s available to keep it from happening to you.

Employers offering 401(k) accounts with “target date” mutual funds may soon have to abide by a newly proposed rule that would require them to provide more information to their employees. Currently, the specifics of these mutual funds, including the mix of investments used, are not disclosed. But if the proposed rule becomes official, employers will have more work ahead of them in making the funds more transparent.

What are Target Date Mutual Funds?