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Information to Act On
| Investing | Retirement plans | Taxes | Government | Health | Housing | Work | Travel
INVESTING
 Record retirement assets. Americans' nest eggs hit a record $16.4 trillion in 2006, says the Investment Company Institute. Tha's an 11% increase over 2005 and a 55% rise since 2002. Retirement assets now account for nearly 40% of household financial assets, up from about 24% two decades ago. Half of assets were held in IRAs and defined-contribution plans, and the rest were in annuities and pension plans.
Be careful with niche ETFs. Exchange-traded funds can be a low-cost way to invest in popular stock indexes. But a growing number of ETFs are focusing on niche areas, such as water utilities, so it's easy to get sidetracked into fad investing. While ETFs that track untraditional indexes offer the potential for superior returns, they're riskier than ones following traditional indexes and their trading costs are higher.
Don't panic. Although the stock market's volatility is likely to continue, we still believe overall returns could run 7% or so for 2007. Consider high-quality stocks. Large U.S. firms that generate a large portion of revenue overseas include Johnson & Johnson, Procter & Gamble and General Electric. Bond investors should stick with high-quality bonds.
Passing on quarterly forecasts. More big companies are expected to stop giving out earnings guidance. Executives say the estimates tend to distract public attention and resources from long-term growth. About 100 blue-chip companies, including Citigroup, General Motors, PepsiCo and Xerox, already shun quarterly forecasts.
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RETIREMENT PLANS
Boomers snub 401(k)s. One in three baby-boomers still do not contribute to their 401(k) plans, according to Fidelity Investments. The average boomer contributes 7.7%, slightly higher than the average level of 7%. Fidelity recommends that employees contribute 10% to 15% of pretax salary.
Gender gap shrinking. The difference in the percentage of men and women covered by retirement plans has been steadily shrinking, reports the Employee Benefit Research Institute. The gap, which was about 11 percentage points in the late 1980s, narrowed to just over 2 points in 2004. The shrinkage was a result of a higher percentage of women working full-time and their prevalence in the public sector.
Annuities allow for more risk. By covering at least basic living expenses with income annuities, consumers can take more risk with their remaining portfolio, says a study co-sponsored by the Wharton Financial Institutions Center at the University of Pennsylvania and New York Life Insurance Company. Researchers found this strategy enables retirees to keep money invested in equities longer and to delay taking Social Security benefits until they max out.
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TAXES
Hurricane victims get extension. The IRS has given victims of 2005 hurricanes Katrina, Rita and Wilma another year to sell vacant land that had been used for their principal residence that was destroyed. Typically, tax rules allow individuals two years to sell such land and take advantage of the exclusion on any gain from the sale of a home.
Start tax planning now. The IRS is offering Summertime Tax Tips on what you should be doing now to save on taxes later. The agency is publishing three tips a week, with topics including charitable contributions and selling your home. Read the tips at IRS.gov or sign up to have the tips e-mailed to you.
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GOVERNMENT
Bill encourages volunteerism. The House Committee on Education and Labor has approved the Generations Invigorating Volunteerism and Education Act, which would require states to develop a plan to tap seniors for volunteer and paid work. The House also will consider $1,000 scholarships to people age 55 and older who volunteer at least 500 hours a year.
Solutions for Social Security. The Center for Retirement Research at Boston College has released an easy-to-read publication that examines the various options for fixing the program, from cutting benefits to raising revenues. Download the Social Security Fix-It Book free from the center's Web site at www.bc.edu/crr/fixit.shtml. Hard copies are available at Amazon.com for $5.
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HEALTH
Staying fit. People over 50 are generally healthy and physically active, according to a survey commissioned by Humana that polled members of Eons.com, a baby-boomer Web site. Of respondents, 97% said they were in good, very good or excellent health. The survey also found that 74% of boomers exercise at least three days a week.
Exit a private plan. Participants in private Medicare fee-for-service plans can change coverage if they signed up after receiving misleading information, according to the Centers on Medicare and Medicaid Services. Seven companies have been forced to suspend marketing of their plans. To find out if you're eligible, call 800-633-4227. For example, if a promised benefit is not available, you could qualify.
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HOUSING
Room for reverse mortgages. Americans age 62 and older have about $4.3 trillion of home equity, according to the National Reverse Mortgage Lenders Association and the Hollister Group, a consulting firm. About 300,000 reverse mortgages were originated in the last five years, less than 1% of the market. Average home equity in a senior-owned household is estimated at about $230,000.
Senior-housing award winners. The National Association of Home Builders has announced its 2007 Best of 50+ Housing Awards. Categories included active retirement communities, continuing-care retirement communities and assisted living. For a list of the winners, visit www.nahb.org/50plusawards.
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WORK
Site for "encore careers." Marc Freedman, author of Encore: Finding Work That Matters in the Second Half of Life (Public Affairs, $25), has launched a Web site called Encore.org. The site includes job listings as well as daily updates and links to articles about "encore careers." You can also read stories about people who are working in their new careers. Freedman is a founder of Civic Ventures, a think tank devoted to helping seniors find meaningful activity.
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TRAVEL
Search for a bargain cruise. The weak dollar is making trips to Europe pretty pricey. One way to cut costs is to book a cruise. Many expenses, such as room and meals, are paid for in advance in dollars. Check travel Web sites such as Kayak.com or Travelocity.com, as well as the cruise lines' Web sites. A recent search on Royal Caribbean's site (www.royalcaribbean.com) pulled up several cruises in the Mediterranean in November starting at $750 to $900 per person (based on double occupancy).
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