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Pete D'Arruda

401(k)s: A Good News/Bad News Story (Part II)

Last time, we talked about the good news about your 401(k).  So what’s the bad news? A lot of people I talk to in the financial industry have unpleasant things to say about the 401(k). Some call it the biggest rip-off in history. That may be a little harsh, but few dispute the charge that 401(k)s were set up for the purpose of advancing the cause of mutual funds, which is where most of the money from such programs is invested. One negative aspect to 401(k)s is hidden fees. Fees associated with 401(k)s should be disclosed transparently on the...

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401(k)s: A Good News/Bad News Story  

When President Jimmy Carter signed into law the United States Revenue Act of 1978, he probably had no idea that he was changing America’s retirement landscape forever. The legislation contained a little noticed (at the time) section 401, paragraph (k) that permitted American workers to save money for retirement and lower their taxes at the same time. The new law was music to the ears of Ted Benna, a benefits consultant from Philadelphia, who seized upon the language of section 401, paragraph (k) right away. Benna was somewhat of a retirement plan visionary. The wording of the law allowed...

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Planning For Children Without Sacrificing Retirement (Part 2)

Those good grades your kids are getting in high school could be worth thousands of dollars when applying for college. Educational institutions look at grades and standardized test scores in their admissions process, but that’s not all those scores and grades are used for. They are also considered when colleges and universities make financial aid decisions. Just 10 points higher on an SAT score could be worth thousands of dollars. Why? Universities are businesses. They want students with high test scores, and they are willing to compete to get them. How? By offering students better financial aid packages. Money...

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Planning For Children Without Sacrificing Retirement

We had the beatniks of the ‘50s, the hippies of the ‘60s and the yuppies of the ‘70s. Now we’re seeing something called the “sandwich generation” emerge. This group finds itself in the awkward position of preparing kids to leave the nest, taking care of elderly parents and trying to plan for their own retirement. Studies conducted by the Pew Research Center confirm that roughly one out of every eight Americans aged 40–60 is still caring for both their children and at least one parent. Census Bureau statistics indicate that the number of older Americans (over 65) will double...

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When Inflation Tides Rise (Part 2)

One financial planner is reported to have told his clients following the 2008 market crash, “You have to remember, all boats sink some in a falling tide.” The couple had just gotten the news that 40 percent of their life savings had been virtually wiped out overnight. Money counted on for retirement was now blowing in the wind like a dandelion poof. The reverse side of the axiom was then uttered, “And when the tide rises, all boats rise with it.”

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When Inflation Tides Rise (Part 1)

With 10,000 people retiring every day, we are reminded of the start of a big city marathon. The image of runners clogging the starting line stretches back into seeming infinity, waiting for the signal to start a 26.2-mile run. Some of them will sail, and some of them will fail. Others will make it, but not without a struggle. But one thing is sure: the ones who succeed are the ones who know what is in front of them and are prepared for it. The race for success in retirement similarly hinges on us knowing what challenges may confront...

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Little Engines And Big Retirement Accounts

During our accumulation years, while we are still working and saving, we are called upon to haul freight uphill, as it were, in preparing ourselves for retirement. In our younger years, it may be a struggle to chunk away the money we know we ought to save. We are hardwired for having fun. Every cell in our body and every neuron in our brain is thinking of ways to live beyond our means.

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Lifetime Income Is Possible (And Necessary)

When 401(k) programs began replacing traditional pension plans in the early 1990s, the masses thought it was a great idea. After all, employees got to manage their own money. The 1990s rocked when it came to returns. Workers thought that 10 percent annual returns would continue for life. This sure beat the pants off the old pension plans, which locked them into a fixed income for life.

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Debt Vs. Savings

These days, America is addicted to credit the way drug addicts are hooked on narcotics. The actual number is hard to nail down, but one source recently stated that the United States owes more than $2.5 trillion in consumer debt. Even if it’s off a billion or two, that’s a lot! How much is a trillion? Our standard nine-digit calculator can’t display it. It’s a one followed by 12 zeros. A trillion one-dollar bills, laid end to end, would reach the sun. A trillion dollars amounts to $3,333 for each of America’s 300 million people. David Schwartz, a children’s...

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Wants Vs. Needs

I was a “honeymoon baby.” That is, I was a souvenir of my parent’s honeymoon. I was born exactly nine months to the day from when it started. My arrival was a mixed blessing at best. My father, a full time student working on his Master’s degree and a Ph.D. in Physics, and my mother, also a college student, needed an addition to the family like they needed a hole in the head. To say that I grew up in a family of modest means is an understatement. But we never went hungry. One of my earliest memories is...

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