According to a recent survey, more than 70% of participants in 401(k) retirement plans think they pay no fees on their accounts. Less than a quarter got the answer right, acknowledging that they do, in fact, pay fees.
It’s enough to drive true-blue Vanguard investors to despair. But before we give up entirely on our fellow investors, I’d like to suggest that there are some important issues here at play.
In my last post, I asked if you have a specific number in mind when it comes to saving for retirement, how you arrived at that number, whether you’re on track to reaching it—and, if not, what it would take to get you there.
Your response was tremendous, with more than 300 of you writing in. As Philip Moeller wrote in his blog, “the responses to Rinaldi’s blog post are uniformly thoughtful and heartfelt. Rinaldi learned a lot from them. So did I. So can you. Enormous amount of information, wise counsel, and guidance shared.”
We’ve just launched some new content on vanguard.com designed to provide insights into generating and taking income in retirement, and we’re interested in hearing your thoughts about it.
Our new web content is based on 3 ideas. First, if you’re comfortable with your existing portfolio, the question may be how to generate a reasonable income from your portfolio in a tax-efficient way. The process starts with redirecting income distributions (i.e., dividend and interest income) from taxable accounts into a cash buffer account, such as a money market fund. You would then direct withdrawals from tax-deferred accounts into that same cash buffer. Over time, you also need to think about how quickly you are “spending down” your savings.
My brother-in-law will be graduating from college in a few days, and that has me thinking back to when I started my career a few years ago.
As I set out on my own, I had many questions about finances: How much should I spend on rent? Should I have a roommate? What car should I buy, and how I will afford to keep gas in the tank? (And, of course, how many pairs of shoes can I afford?)
The “future of retirement” seems very much on the public’s mind. The topic is surfacing in the press, in the institutional marketplace, and will be the focus of a Washington, D.C., policy forum I’m attending in May. Here are some of my thoughts. I welcome your comments and will try to incorporate them in my upcoming discussions.
It’s very clear that there is a future for retirement. But to me, it’s really a tale of two futures: the future of retirement income, and the future of retirement health benefits.
