SEC Cautions Against Facebook Stock Tips

If you’re using social media to help make decisions regarding investments and retirement finances, place a sign next to your computer: Proceed With Caution.

That’s the message in a new report from the Securities and Exchange Commission and its Office of Investor Education and Advocacy. In a recent Investor Bulletin, the agency notes that growing numbers of older adults are turning to web-based platforms that allow interactive communication – like Facebook, LinkedIn, bulletin boards and chat rooms – to research stocks, discuss the markets and gather news.

Deficit Reduction the Hard Way

Alicia Munnell, the director of the Center for Retirement Research at Boston College, is a weekly contributor to “Encore.

The confluence of fiscal events scheduled for the end of 2012 represents both a major opportunity and an enormous risk.  Taken together, the restoration of taxes and large spending cuts would reduce ten-year deficits by about $7 trillion and place the budget on a sustainable course. On the other hand, the Congressional Budget Office estimates that, in the short term, these scheduled events would reduce GDP growth by about 2 percent and increase the unemployment rate by about 1 percentage point, potentially throwing the economy back into recession. The question is how to deal with this conundrum when members of Congress cannot agree on the day of the week. The answer may be not to lump all the events together because different components could benefit from different approaches.

Health Care in Retirement Costs More Than Most Homes

Every year, Fidelity Investments calculates the amount a recent retiree will need to cover medical costs throughout retirement. And almost every, the number rises. This year is no exception. According to a news release Fidelity issued Wednesday, a 65-year-old couple retiring in 2012 will need an estimated $240,000 to pay their medical costs–up 4% from last year’s $230,000 estimate.

Your Social Security Statement — Now Online

One of the best tools to help with retirement planning is back: Social Security statements are now available online.

Last week, the Social Security Administration added a feature to its website – My Social Security – that enables workers to view online their earnings and benefit information. Starting in 1999, that data had been mailed annually to workers, but the agency suspended the paper mailings early last year as a cost-cutting measure.

Why Did Social Security’s Deficit Increase?

Alicia Munnell, the director of the Center for Retirement Research at Boston College, is a weekly contributor to “Encore.

Social Security’s 2012 Trustees Report shows a significant increase in the program’s 75-year deficit from 2.22 percent to 2.67 percent of taxable payroll and an advance in the date of trust fund exhaustion from 2036 to 2033.  Why did the deficit increase? What are the implications?

The increase in the deficit primarily reflects three developments: 1) moving the valuation period ahead one year; 2) recalibrating 2012 demographic and economic variables to reflect the impact of the slow recovery from the recession; and 3) changing two sets of long-run assumptions.  The table summarizes the changes.

Will 401(k)s Abandon Revenue Sharing?

A recent ruling by a U.S. District Court may accelerate moves away from the practice of revenue sharing within 401(k) plans. This will make it easier for participants to figure out how much they are paying for their plan—and to whom.

“This could be a landmark case,” says Lori Lucas, leader of consulting firm Callan Associates Inc.’s defined-contribution practice. “It definitely has revenue sharing in the cross hairs.”

Revenue sharing involves using a portion of the investment-related fees participants pay to cover the costs of a 401(k) plan’s administrative expenses.

Nearly Half of Boomers Fully Retired By 65

The advice – and, in many cases, the warning – has become a given: Most Americans entering their 50s and 60s will have to keep working well past their planned retirement dates to make up for shortfalls in savings.

Well, some baby boomers, apparently, didn’t get the memo.

A new report from the MetLife Mature Market Institute, “Transitioning into Retirement,” looks at the oldest boomers, those who turned 65 in 2011. Among the key findings: Almost twice as many 65-year-olds told researchers that they were fully retired as were working full time: 45% and 24%, respectively.

Social Security: Should Those Over 55 Be Protected?

Alicia Munnell, the director of the Center for Retirement Research at Boston College, is a weekly contributor to “Encore.

Someone asked whether any of the reforms enacted by state and local pension funds seeking to solve their funding crises could be applied to Social Security. Some states reduced or temporarily suspended their yearly cost-of-living adjustments (COLAs) for their retirees – a solution that seems fair to me. This approach raises the inevitable question of whether the traditional notion of protecting those 55 and older from benefit cuts under Social Security is appropriate.

Preserving One’s Standard of Living in Retirement

Chances are good you’re familiar with individual strategies for filling income gaps in later life: saving more at work or cutting household expenses, among other steps. But carefully combining a handful of these efforts could be the best way to reach your retirement goals.

That’s the argument that Fidelity Investments makes in a paper and survey published last week: “Don’t Take a Lifestyle Cut in Retirement.” The report notes that the average worker expects to face a 28% income shortfall after leaving the office. That recognition, not surprisingly, is prompting many Americans to take individual steps – such as delaying retirement – to shore up their nest eggs.

Retirement Planning: Beyond Asset Allocation

Alicia Munnell, the director of the Center for Retirement Research at Boston College, is a weekly contributor to “Encore.

The financial industry puts considerable time, effort, and advertising dollars into showing Americans how to invest their retirement savings. Of course, wise investment of one’s hard-earned money is important. But the fact is that many Americans have saved very little for retirement. Actually, the typical person approaching retirement has less than $100,000 in his 401(k). Thus, for many people, even perfect investing is unlikely to have a significant effect on their well-being in retirement.