Millennial employees: stop ‘saving’ for retirement

Welcome to Retirement Scan, our daily roundup of retirement news.

Why millennials should stop ‘saving’ for retirement
Putting aside money for retirement is important, but the word saving "is really a misnomer," according to the author of this USA Today article. Instead of stashing their money in  savings accounts, she writes, young workers must overcome their fears of investing to unlock compounded growth for their 401(k) and IRA accounts. Target-date funds can help introduce them to the concept of compound growth.

Retirement Priorities.3.26.19.png

How much it costs employees to retire in their state
The cheapest states to live in retirement are Mississippi, Oklahoma, Arkansas and Missouri, where seniors can get by comfortably on less than $55,000 a year, according to MarketWatch coverage of an analysis by GoBankingRates.com. The analysis counted the cost of senior spending on necessities in each state, plus a 20% savings buffer.

Will your client’s income stream survive long-term inflation?
Immediate annuities with inflation protection can blunt the impact of price increases on your clients’ income, according to this article in MarketWatch. While some analysts say annuity products are expensive, “never overlook” the impact of inflation over long periods of time and to remember that any course of action is “making an implicit bet on inflation," according to the article.

Protecting your client’s portfolio against sequence risk
Investors who want to protect their retirement portfolio from sequence of return risk should consider saving in another account designed to preserve capital, according to this Forbes story. “Your savings goal for this account is to accumulate enough money to cover at least two years of retirement expenses,” according to the writer of the article. “The preservation account acts as insurance against you randomly falling on the wrong side of the sequence of return risk fence. If things go sour immediately upon retiring, you can draw from the preservation account and allow your primary account time to recover.”

For reprint and licensing requests for this article, click here.