Money Magazine Wants Your Story.

ARE YOU A FEW YEARS OUT FROM RETIREMENT BUT STILL HAVE A BIG MORTGAGE?

More and home homeowners are heading into retirement with the debt of their house on their shoulders, having bought homes at peak prices during the bubble. We are looking to talk to couples in their 50s or 60s who are in this situation, and are wondering what to do as they near retirement.

You must be willing to appear in a national magazine, and reveal some of your financial numbers. In exchange, you will be given free, personalized advice from some of the country’s most respected financial planners.

Please send an email with your names, ages, incomes, home value and mortgage amount, and when you’d like to retire to Lauren_Kelleher@moneymail.com ; include a recent picture of you and your spouse.

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How Green is Your Portfolio?

As we age, we tend to be come more concerned.  And not just about our own retirement, although we should be as concerned as anyone about it.  But we become more caring.  We have children who may needs us more now than when they were younger.  And they in turn may have children, your grandchildren. More than how much can we leave them in terms of inheritance, Boomers are increasingly concerned about the state of the world they are living in and whether they can change it for the good.

But can the investment choices we make have an influence.  And of so, can we make any money switching to a more sustainable approach?  As the investment year that was 2009 came to a close, one interesting group of funds came to the top of the heap: socially responsible funds or SRI.

They have long been derided by mainstream investors.  And in many cases, with good reason.  Socially Responsible mutual funds were small (higher risk), cost more (generally at the top of the list for fees-charged) and unable to beat the usual benchmarks most funds are held against.  That is until this year.

As it turns out, investing in socially responsible funds would have done the investor a world of good while doing the world some good.  We all know now that actively managed mutual funds outperformed the S&P 500 index in 2009.  While critics suggest that this is cyclical - and they may be right on some counts - the fact that 65% of these SRI funds who focus on businesses doing the "right thing" not only for their shareholders but the world in which these shareholders live, took much of the investment world by surprise.  Read more to find out whether it is socially responsible to outperform.

Paul Petillo is the Managing Editor of Target2025.com

Is Your Retirement in Your Client's Hands?

Your retirement horizon is within ten-years.  You don't know whether the investments you have made will provide enough of a post-work income.  What if your company offered you an investment option you couldn't refuse?  Not simply an investment that would do better for you but also for the very businesses your company works with?  Would this be a smart move?  Would you cave to peer pressure and perhaps company pressure as well?

A recent article in the New York Times focused on a start up mutual fund crossed my desk recently. The article, written by Stuart Elliott, dealt with the advertising agency Kirshenbaum Bond Senecal & Partners in New York, part of MDC Partners.

While Mr. Elliott normally deals with the advertising industry, this particular article offered something different. Two employees of the firm believed that if the company had an investment stake in the clients they represent (eighteen of the thirty clients they work with are traded on major exchanges), the focus on their client’s success would improve – with any luck, as their employee’s interest in those businesses via investment would as well.

To that end, MDC launched a new index with those companies as the template for the fund. “The index,: Mr. Elliott writes, “was the brainchild of two Kirshenbaum Bond employees: Aric Cheston, partner and creative director, and Matt Powell, chief technologist. They will each receive a cash bonus of $10,000 from MDC.” The fund, with the ticker symbol KBSPX has yet to show up on any searches as yet.

“Agency executives are opening a brokerage account with another client, the Vanguard Group, into which will be deposited 300 shares of each of the 18 companies."

Mr. Elliott explains further that “The 300 employees of Kirshenbaum Bond will be offered long-term cash and compensation incentives to mirror the performance of the stocks in the index, which they will be able to track each trading day on an intranet on the agency’s Web site.

“MDC is spending an estimated $500,000 to start the index, which includes contributing four restricted shares of MDC stock to the fund for each Kirshenbaum Bond employee, for a total of 1,200 shares.”

Why is this important? Read more about "Skin in the Game: Is investing in your clients worth the Risk?"


Paul Petillo is the Managing Editor of Target2025.com and a fellow Boomer.

New Tools for Retirement Planners

The small start-up Brightscope has done it again.  While the tool they originally introduced offered plan sponsors a look at how well their offerings served the needs of those who use the business' 401(k) and plan users the opportunity to confront those sponsors about the adequacy of those plans, a new tool puts more of the information in the employee's hands.

Designed to offer the plan participant a more in-depth look at how their 401(k) plan performs, their new tool, which Brightscope founders Ryan and Mike Alfred suggests is free because you already pay fees, takes the whole process to the next logical level.  Drawing from a database of 30,000 plans, you can, after registering for free, drill down into your personal plan.

The tool asks for your age, salary, annual contribution and plan sponsor.  From there, all that is needed to complete the analysis is the actual funds you own.  This tool profiles not only the fees, expressed as an average across all of the funds listed, but the option to roll it over (if your investments are with a company you no longer work for) to an IRA.

Even if you are not rolling your investment from an old plan to an IRA, the tool will give you greater insight into the real costs of your plan.  These costs are often overlooked, or worse, masked by the plan sponsor.  In many instances, there is little you can do about getting those fees lower short of picking lower cost funds in the plan or complaining to the plan administrator.

But knowledge, as they say, is power.  And if Messrs. Alfred keep doing what they are doing, an uprising among participants can not be to far in the future.

To use the tool, simply go to the Brightscope site and register - as I mentioned earlier, it is free.

Paul Petillo is the Managing Editor of Target2025.com and a fellow Boomer.

The Weight of the Economic Recovery

Seems that there isn't a day goes past that I am not asked about the concept of buying a house.  These questions usually come from younger workers who may be barely into their thirties.  And the answer I offer them is not what they want to hear.  In fact, it flies in the face of everything they have ever heard about home buying, much of it now like the retirements of our parents: not something we can count on for us.

But what about Boomers who find themselves underwater in their homes? Can you walk away?  Will you know why?

For more on this topic, visit Target2025.com: Is Owning a Home No Longer Smart Money Management?

Paul Petillo is the Managing Editor of Target2025.com and a fellow Boomer.

The Tax Question: Roth or Traditional, 401(k) or IRA

You don't know what your taxes will be when your retire.  You don't really know whether your retirement expenses will exceed your projections or not.  In fact, your retirement picture might just be a little on the hazy side of things.  So how do you make the decision of whether to use a Roth 401(k) or the traditional 401(k)?

This can be easier than you think.  More...
Paul Petillo is the Managing Editor of Target2025.com and a fellow Boomer

When the Match Doesn't Match Your Objectives

We should know better.  We know about diversity.  We know about spreading the risk.  We know that we are older investors, eyeballing retirement. Why then, do we continue to take the offering of the company's stock in our 401(k)?

There are several reasons.  First of which is how your company’s 401(k) plan in structured. When an employee becomes eligible to begin investing in the plan, they often find that the company match, the funds the company invests with you, up to a certain percentage, is often only offered in the company’s stock.  And because we are always suggesting that the employee take the company match, at the very least, they take our advice and begin to load up their portfolio with shares of their employer.

Often, when this sort of offering is available, it is one of the few buy-and-hold restrictions in the plan.  That means that if the fortunes of your company drop, for whatever reason – poor quarterly earnings, lackluster forecasts or simply a cyclical turn of events, the employee must ride out the downturn. This can be a big deal if the employee is long-term and because of that, has a huge chunk of their retirement tied up in that stock.

More on owning stock in your company.

Paul Petillo is the Managing Editor of Target2025.com and a fellow Boomer.

The Worrisome Nature of Less Risk

Ask any Boomer of a certain age what the meaning of life is and they will probably say retirement. So, if retirement is the goal, why would you handicap your chances of arriving when you imagined? Evidence of this shift has challenged those imaginations: Year-to-date (third quarter 2009), the US household sector is shown to have purchased $529 billion of US treasuries. Granted, a great deal of this was due to money flowing into more conservative 401(k) investments via mutual funds. This pace, the purchase of approximately 45% of what the Treasury was selling, is four times that of the previous year.

This sort of immunization has not gone unnoticed. The problem with many of these commitments to a more conservative approach may be creating a bubble of their own. These types of debt instruments are based on price and yield. As one goes up, the other goes down. The more someone is likely to pay for a bond, the lower the yield that is offered.

If this sort of pace continues, and it looks as if it may as the temptation to be able to even consider retirement strengthens as the economy gradually improves.

But with more people flocking towards these fixed income investments, the price paid will begin to become unattractive, in large part because inflation remains benign. That won’t last forever. And when those conservative investors begin to realize that the yield is now negative to inflation, the selling will begin.

The real paradox will then kick in. Now what?

Paul Petillo is the Managing Editor of Target2025.com and a fellow Boomer.

The Argument of Active versus Index, post 2009

In 2009, actively managed funds, despite lower inflows, outperformed their respective benchmarks handily.

In any given year, a handful of active mutual funds will do better than the benchmark index fund. And investors are usually warned, and I obligated to as well, that what is hot today or last quarter, even over the past year in all likelihood will not be so after you invest. This is why it is always recommended to look much further afield, at least five years, ten is even better see how well a fund has performed.

Should you switch your investment style in your retirement portfolio as a result? Read more here.

Paul Petillo is the managing editor of Target2025.com and a fellow Boomer.

Will Knowing change How You Invest in Your 401k?

Can too much information about your 401k be a bad thing? As we enter in the next decade, already eight days old, most of us have broken, or fudged just a little, on the New Year's resolutions we promised ourselves. In many cases, these commitments to change your lifestyle, reverse the bad habits, or embrace some new ones are often loftier than life allows. While change is good and change is constant, it is also incredibly difficult.

Read more here.

Paul Petillo is the Managing Editor of Target2025.com and a fellow Boomer.

The Risk of New Annuity Products

Annuities come in all sorts of flavors. Single premium annuities are an all-in type that is purchased in a lump sum. Flexible annuities spread the payments over a period of time. Sometimes these are deferred until a later date whereby the investor can withdraw money all at once or in scheduled payments. Investments grow in a tax-deferred environment. Fixed annuities offer the investor the lowest risk (in part because the insurance company invests in bond funds) which insures your principal is never lost. Immediate annuities are also lump sum investments that begin distributions immediately.

But there is a new variable annuity product coming to market that will attempt to lure Baby Boomers into its trap. Question is whether you understand what this trap offers to your retirement and whether it is worth paying the high cost.

Paul Petillo is the Managing Editor of Target2025.com and a fellow Boomer

Breaking Bad Investment Habits in the New Year

We all have them, some worse than others. The older we get the more dangerous these habits become. Boomers need to be extremely cautious with every investment decision.

Most of us look at the turn of a calendar year with the hope that the investment mistakes we made in the previous year will not be made in the new one. This is noble and in many cases futile. These attempts are usually too difficult to handle, which is why, in many cases you haven't done anything before this point.

But with little effort, you can change how you invest. For the vast majority of us, investing requires far too much time. It requires continued education (which I fully recommend), frequent monitoring (which can involve little more than opening your statement just to make sure your investments are going where you intended) and a clear-cut understanding of where you are on the timeline (beginning to invest or at it for awhile).

Altering bad investment habits is not that difficult. Five Tips for 2010...

Paul Petillo is the Managing Editor of Target2025.com is also a fellow Boomer.