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☆ Why your financial advisor may not give you the best Social Security claiming advice
▼ + stars: | 2024-05-01 | by ( Lorie Konish | ) www.cnbc.com time to read: +3 min

Ascentxmedia | E+ | Getty ImagesMany people claim Social Security retirement benefits at the earliest possible claiming age of 62. Yet recent research finds working with a financial professional does not necessarily encourage individuals to claim Social Security at later ages. Why it pays to wait to claim Social SecurityWhen Social Security retirement beneficiaries claim at age 62, their benefits are permanently reduced. As the Social Security full retirement age moves to age 67, benefits available at age 62 are even further reduced. Delaying Social Security benefits is so valuable not only because of the increase to benefits, but also the annual cost-of-living adjustments tied to inflation.

Persons: David Blanchett, Jason Fichtner, Center —, " Blanchett, Fichtner, Joe Elsasser, Elsasser, they've, Blanchett Organizations: Getty, Social, Social Security, DC Solutions, Center

☆ How to construct your portfolio for maximum income in retirement
▼ + stars: | 2024-02-23 | by ( Michelle Fox | ) www.cnbc.com time to read: +4 min

An efficient portfolio typically focuses on both income and price returns, said certified financial planner David Blanchett, head of retirement research at PGIM, the asset management arm of insurer Prudential Financial. "It really depends on that retirees' perception of how they're going to access their savings to fund their retirement spending," Blanchett said. Higher yields are doing the heavy lifting Generally, the rule of thumb is to withdraw about 4% of your portfolio a year during retirement. His firm uses the Dodge & Cox Income (DODIX) fund and BlackRock Strategic Income Opportunities (BSIIX) fund. "If you have a diversified portfolio, in theory, you can actually get higher income over time as the companies that you own pay out higher dividends," he said.

Persons: David Blanchett, who's, Blanchett, Barry Glassman, Glassman, Brandon Goldstein, " Goldstein Organizations: Prudential Financial, Treasury, Wealth Services, CNBC, Dodge, Cox, Prudential Locations: PGIM, North Bethesda , Maryland, BlackRock

☆ A study comparing 8 investing portfolios shows the stock allocation that returned $790,000 more than the worst performer and reduced the risk of running out of money in retirement
▼ + stars: | 2024-02-15 | by ( Laila Maidan | ) www.businessinsider.com time to read: +7 min

The study, published in November 2023, compared eight mainstream approaches to retirement investing. The portfolio with 100% domestic stocks did just as well as the one split between domestic and international equities on average, Cederburg noted. AdvertisementTherefore, Cederburg pointed to the second-best contender as the portfolio comprising an equal split between domestic and international stocks, with a small percentage allocated to bonds. The study also showed that the all-stocks investor was least likely to run out of money during retirement. The target-date fund combines domestic and international stocks, bonds, and bills.

Persons: Scott Cederburg, Cederburg, Jeremy Stempien, Stempien, David Blanchett, PGIM's Organizations: Service, Finance, University of Arizona, Cederburg

☆ Annuity sales hit a record in 2023. Here's what to know about one popular option
▼ + stars: | 2024-01-30 | by ( Michelle Fox | ) www.cnbc.com time to read: +6 min

Fixed indexed annuity sales brought in a record $95.6 billion, up from 20% from the record hit the year prior. Indexed annuities earn interest that is calculated based on the changes within a market index, such as the S & P 500 or the Nasdaq 100. However, they also receive downside protection: They are credited zero interest if the index their annuity is tracking declines. The term of index annuities typically range from three to 15 years, according to Annuity.org . Fixed indexed annuities can also be complicated, warned David Blanchett, head of retirement research for PGIM DC Solutions.

Persons: Bryan Hodgens, Buyers, Hodges, Cannex, Melody Evans, Evans, David Blanchett, Blanchett, DIAs Organizations: Nasdaq, Cannex, Products, Insurance, TIAA, DC Solutions, FIA Locations: Connecticut

☆ Having too many options can paralyze investors. Here's how you can overcome 'choice overload'
▼ + stars: | 2024-01-29 | by ( Greg Iacurci | ) www.cnbc.com time to read: +3 min

Humans get overwhelmed by too many options, a behavioral finance concept known as "choice overload." How investors encounter choice overloadChristopher Ames | E+ | Getty ImagesIt's not just investing: The choice paradox can extend to things like ice cream flavors and apparel, for example. Given these behavioral biases, retailers and others have evolved, making it less likely consumers will experience choice overload "in the wild" today, said Dan Egan, vice president of behavioral finance and investing at Betterment. Do-it-yourselfers may have about one to two dozen investment options, at most, from which to choose, reducing the choice friction. If you don't give people an easy choice, "it's really hard for them," Blanchett said.

Persons: Philip Chao, Brian Scholl, David Blanchett, Samantha Lamas, Christopher Ames, Sheena Iyengar, Mark Lepper, Dan Egan, Egan, that's, Blanchett Organizations: Sdi, U.S . Securities, Exchange Commission, Investor, Morningstar, Finance Locations: John , Maryland

☆ Some HENRYs are saving too much for retirement — and it may backfire
▼ + stars: | 2023-11-09 | by ( Noah Sheidlower | ) www.businessinsider.com time to read: +7 min

AdvertisementAdvertisementWhile it's rare that people are saving too much for retirement, Malani said it happens among HENRYs somewhat frequently. AdvertisementAdvertisement"If you're under the age of 40 and saving more than 20% for retirement, that's more than you might need to be saving," Blanchett said. "Saving for retirement takes some level of knowing what type of lifestyle you'll want in retirement," Malani said. There's little reason for wealthier young Americans to push back buying a home or starting a family due to anxiety about retirement saving. "For individuals that are 'over-saving,' are you not doing things that you would fundamentally enjoy because of how much you're saving?

Persons: —, Priya Malani, Malani, David Blanchett, Rowe Price, Gen, Zers, Blanchett, that's, we're Organizations: Service, Transamerica Center, Retirement Studies, DC Solutions, National Institute on Retirement Security, WealthCare

☆ Social Security's trust funds are running dry. Here are 4 things to know
▼ + stars: | 2023-09-11 | by ( Greg Iacurci | ) www.cnbc.com time to read: +3 min

The vast majority of older Americans get Social Security benefits, which either partially or even fully fund their income in retirement. Social Security is 'America's pension safety net'Virtually every retiree receives some sort of guaranteed income stream — and Social Security is "by far" the most prominent of these income sources, Blanchett said. About 97% of Americans age 60 and older either receive or will collect Social Security benefits, according to Social Security Administration data. Workers would continue to pay Social Security payroll taxes, and those collected funds would still be payable to retirees. There will be 'losers'Congress will almost surely tweak Social Security to fix the solvency problem.

Persons: MoMo, David Blanchett, Blanchett, Doug Boneparth, Lorie Konish Organizations: CNBC's, Finance, Security, U.S, Social Security, Prudential Financial, CNBC, Social Security Administration, Insurance, Workers, Social, SSA Locations: PGIM, New York

☆ High interest rates make these guaranteed-income products attractive. Here's what to know about fixed annuities
▼ + stars: | 2023-08-08 | by ( Michelle Fox | ) www.cnbc.com time to read: +7 min

Americans have flocked to annuities for guaranteed income over the past year, as interest rates rose and investors looked for safety amid the market turbulence and recession concerns. One of the popular products has been fixed-rate deferreds which — as the name implies — provide a fixed rate for a specific period of time. "So that opportunity to get a more competitive rate on a fixed annuity is not an indefinite window." Multiyear guaranteed annuities Traditional fixed annuities typically guarantee the rate for a portion of the contract, while a multiyear guaranteed annuity, or MYGA, has a rate of return that is guaranteed over the duration of the contract. When buying a fixed annuity, investors need to figure out the term that works best for them, said Limra's Hodgens.

Persons: we've, Bryan Hodgens, Doug Ornstein, David Blanchett, TIAA's Ornstein, Ornstein, Limra's, " Blanchett Organizations: TIAA Wealth Management, Federal Deposit Insurance Corporation, guaranty, DC Solutions, Insurance, TIAA Institute, Social Security Locations: Connecticut

☆ Are U.S. seniors among the developed world's poorest? It depends on your point of view
▼ + stars: | 2023-08-05 | by ( Greg Iacurci | ) www.cnbc.com time to read: +6 min

Peopleimages | E+ | Getty ImagesIs old-age income poverty too high? Consider this thought exercise: What is a tolerable poverty rate among American seniors? This ranks the U.S. behind 30 other countries in the 38-member bloc, which collectively has an average poverty rate of 13.1%. That old-age income poverty rate has declined by over two-thirds in the past five decades, according to the Congressional Research Service. Researchers seem to agree that a looming Social Security funding shortfall is perhaps the most pressing issue facing U.S. seniors.

Persons: Andrew Reilly, Reilly, Mitchell, David Blanchett, —, Zhe Li, Joseph Dalaker, hurtling, Olivia Mitchell, Blanchett Organizations: Organization for Economic Co, U.S, Employment, Labour, Social Affairs, Social Security, OECD, Security, Census, Congressional Research Service, CRS, Prudential Financial, Social, Insurance Trust Fund, Olivia Mitchell University of Pennsylvania, Pension Research, Social Security Administration Locations: U.S, Mexico, that's, PGIM, American

☆ You may be overlooking an important point about target date funds
▼ + stars: | 2023-07-27 | by ( Greg Iacurci | ) www.cnbc.com time to read: +3 min

Meanwhile, the John Hancock Preservation Blend and American Funds Target Date Retirement 2055 funds had lower average allocations — 80% and 84%, respectively, Morningstar said. The idea that everyone in a five-year age cohort should have the same asset allocation, it's just not correct. David Blanchett managing director and head of retirement research at PGIMOf course, TDFs can vary in many ways aside from asset allocation. For example, some are known as "through" funds, which continue to get more conservative throughout retirement; others are "to" funds, whose stock-bond proportions stay steady in retirement. Why asset allocation is more important for retireesPaying attention to asset allocation is particularly important for investors in or near retirement, Pacholok said.

Persons: Lourdes Balduque, John Hancock, Morningstar, Rowe Price, that's, Megan Pacholok, David Blanchett, Pacholok Organizations: John, John Hancock Preservation, Morningstar, of America, Financial Industry Regulatory Authority Locations: BlackRock, TDFs

☆ The rich often misjudge the potency of their retirement savings, report finds
▼ + stars: | 2023-06-12 | by ( Greg Iacurci | ) www.cnbc.com time to read: +5 min

Thirty-two percent of high-income households are "not worried enough" about their retirement risk, a larger share than the 26% of low- and middle-income earners. The Center for Retirement Research uses the survey data to construct a National Retirement Risk Index. The index models retirement preparedness according to a range of assets like Social Security, pensions, home equity and employer-sponsored retirement plans, such as a 401(k). Anqi Chen assistant director of savings research, Center for Retirement Research at Boston CollegeIn 2019, 47% of American households were at risk of not being able to maintain their standard of living in retirement, according to the index. Why the rich are more likely to underestimate riskWestend61 | Westend61 | Getty ImagesNineteen percent of U.S. households correctly identify as being at risk of falling short in retirement, according to the center's report.

Persons: Anqi Chen, Chen, they're, David Blanchett, Louis Organizations: Getty, Center for Retirement Research, Boston College, Finance, GOP, Federal Reserve's Survey, Consumer Finances, Retirement Research, Social Security, for Retirement Research, Westend61, Prudential Financial, Federal Reserve Bank of St, Center for Locations: U.S, PGIM

☆ This common early retirement strategy is a 'terrible idea,' says financial planner
▼ + stars: | 2022-11-08 | by ( Ryan Ermey | ) www.cnbc.com time to read: +3 min

If you're hoping to retire early, you'll have to find a way to replace your salary without working. When it comes to using it as the sole basis of your early retirement, experts are skeptical. Consider smaller withdrawals for a longer retirementIt's not as though proponents of early retirement are just misunderstanding the study. Researchers at Morningstar say a safe withdrawal rate may lie somewhere between 3.3% and 4%, for instance. Aiming for a lower withdrawal rate means you'll need to save more money if you want to fund the same lifestyle.

Ascentxmedia | E+ | Getty ImagesAdd this to the list of challenging questions for retirement savers: Should I contribute to a pre-tax or Roth account? The key difference between a pre-tax and Roth accountThe tax code offers a financial benefit to Americans who contribute to a qualified retirement account like a 401(k) plan or individual retirement account. The core difference between a pre-tax and Roth account is when savers reap those benefits — and when their taxes come due. In a pre-tax account, savers get an upfront tax benefit. The opposite is true of a Roth account: Savers pay tax upfront when they contribute money, but don't pay income tax on withdrawals in retirement.

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