MONEY 401(k)s

401(k)s Are Still a Problem, But They’re Getting Better

Employers are providing more and better choices and driving down fees as they come to grips with their place in the retirement equation.

As 401(k) plans have emerged as most people’s primary retirement savings account, the employers who sponsor these plans generally have beefed up investment choices and driven down fees, new research shows. Small plans remain the most inefficient by a wide margin.

The typical 401(k) plan has 25 investment options, up from 20 in 2006, and the average worker in a plan has annual plan costs equal to 0.53% of assets, down from 0.65% of assets in 2009, according to a study from BrightScope and the Investment Company Institute.

These findings suggest that after years of dumping traditional pensions and trying to avoid the role of retirement planner for workers, companies have on some level accepted their critical place in the retirement security equation. Change has come slowly. But the BrightScope/ICI study shows positive momentum in key areas.

Expense ratios are down by every measure: total plan cost, average participant cost, and average cost of invested dollars. Volumes of research show that costs are a key variable in long-term rates of return. That is why low-cost index funds, most often championed by Vanguard’s John Bogle, have become investor favorites and 401(k) plan staples. These funds account for a quarter of all 401(k) plan assets, the study shows.

Meanwhile, investment options have increased in a way that makes sense. The broadened choice is largely the result of adding target-date mutual funds, possibly the most innovative financial product for individuals in the past 20 years. These are one-stop investments that provide diversification and automatically shift to a more conservative asset allocation as you near retirement. Nearly 70% of plans now offer them, up from less than 30% in 2006, and in many plans they are the default option.

For those in small plans, though, the news isn’t so good. Expenses remain high: In plans with fewer than $1 million in assets, the average expense ratio for domestic equity mutual funds is 0.95%, versus 0.48% for plans with more than $1 billion in assets. Small plans are also far less likely to include an employer matching contribution: Just 75% of plans with fewer than $10 million in assets provide a match, vs. 97% of plans with more than $100 million in assets. Small plans are also less likely to automatically enroll new employees.

The most common match is 50 cents on the dollar up to 6% of annual pay, followed closely by a dollar-for-dollar match on up to 6% of pay.

One area with clear room for improvement is the default contribution rate in plans that automatically enroll new hires. Nearly 60% of these plans set the rate at just 3% of pay and 14% set it at 2% of pay. Only 12% had a default contribution rate of at least 5% of pay. Most advisers say you should contribute at least enough to get the full company match, which is often 6% of pay, and contribute even more if possible. Your savings goal, including the company match, should be 10% to 15% of pay.

The venerable 401(k) still has many problems as a primary retirement savings vehicle. Too many people don’t contribute enough, don’t diversify, and don’t repay loans from the plans; too many take early distributions and try to time the market. 401(k) plans don’t readily provide guaranteed retirement income, though that is changing, and because you don’t know how long you’ll live you have to err on the conservative side and save like crazy.

But we are headed the right direction, which is good, because for better or worse the 401(k) is how America saves.

Get answers to your 401(k) questions in the Ultimate Retirement Guide:
How Should I Invest My 401(k)?
Which Is Better for Me, Roth or Regular?
What If I Need My 401(k) Money Before I Retire?

 

MONEY Retirement

Don’t Choose These 10 Cities If You Want to Retire Comfortably

These spots fall short when it comes to housing costs, taxes, health care, and activities.

Retirement is a time to enjoy hobbies, move a little slower in daily life, travel, and after decades of hard work, just rest. All of which is tough if you pick the wrong retirement city. (See also: 10 Unexpected Things You Should Consider When Picking Where You Retire)

When looking at locations, you’ll generally want to weigh six categories: cost of living, housing costs, taxes, the health care system, activities for seniors, and, yes, the weather. And with those in mind, you’ll likely want to steer clear of these 10 cities that fall short in one or two or more of those categories.

 

  • 10. Providence, RI

    Providence Performing Arts Center in Providence, Rhode Island, USA.
    Sean Pavone—Alamy

    Across numerous rating scales out there, Providence almost always appears at the top of the worst lists. This is due to a high cost of living, high tax rates, and one of the highest unemployment rates in the nation (currently at a rate of 10% for the city and 3rd highest for the entire state.) If you are hoping to supplement your income or kill some boredom during your retired years, finding a part-time job in Providence may be impossible.

  • 9. Washington, D.C.

    Georgetown, Washington, DC
    Glowimages—Getty Images

    In addition to brutally cold winters, economics continues to be a problem for our nation’s capital, with the numbers of those under the poverty line increasing — despite a rise in median income. With seniors living on a fixed income, the high cost of real estate can also cause concern.

  • 8. Philadelphia, PA

    House of James Madison on Spruce Street.
    Franz Marc Frei—Getty Images/Lonely Planet Images

    While it’s not as expensive to live in as New York City, there are some issues that may keep the 65 and older crowd away from the city of brotherly love. A higher-than-average sales tax and poor air quality may be of concern to retirees. Throw in the high rate of crime (it ranks 5th nationwide), and you have a few good reasons to shop around for your retirement abode.

  • 7. Chicago, IL

    El train crossing North Clark Street, The Loop, Chicago, Illinois, United States of America, North America
    Amanda Hall—Getty Images/Robert Harding Worl

    Illinois as a whole gets a low approval rating from its own residents, with one in four saying the state is the worst place to live. Why? It could possibly be because of the high income tax hikes and lower bond rates, both signs of a troubled economy. Add in the fact that many Chicago residents have decided to leave the city altogether, making Chi-town the 6th most-abandoned large city in the U.S. and it’s a less appealing option to live out the rest of your years.

  • 6. New York, NY

    Brownstone townhouses, Brooklyn, New York City
    Antenna—Getty Images

    The Big Apple requires a big budget, as real estate is pricey and hard to afford on a fixed income. By taking your current retirement budget and adjusting it to the high cost of living for any of the more popular parts of NYC via this calculator, you can see that the real estate isn’t the only thing that will cost you. Even retirees who own their own homes will feel the pinch of higher utility bills and transportation fees.

  • 5. Bridgeport, CT

    Bridgeport, CT
    iStock

    High taxes are a major concern for retirees, and some states tax retirement income much more than other states. (Florida’s low rate is what makes it one of the most desirable states for retirees, for example.) But Connecticut is one of those states that taxes both Social Security and pension income. Bridgeport, more specifically, has expensive housing costs and even more expensive health care costs. Assisted living facilities in this area of the country can charge over over $400 a day — almost twice the national average for long-term care, which will deplete your nest egg very quickly should you require assistance at some point.

  • 4. Louisville, KY

    Louisville, KY
    GoToLouisville

    The low cost of living, modest housing costs, and picturesque mountains may make it appear to be a good choice for retirement, but Louisville has been named as the “worst place for allergy sufferers to live,” making it an easy destination to avoid by retirees with respiratory or other health issues.

  • 3. Oklahoma City, OK

    Downtown Oklahoma City skyline, Oklahoma.
    Gary Cralle—Getty Images Healthcare is a concern for all seniors, and it will be a real concern if you retire to Oklahoma, which ranks among one of the worst in the country for health care (trailed only by West Virginia). Crime is also a problem here, with the city ranking 7th in the nation for crime among large cities.

    Healthcare is a concern for all seniors, and it will be a real concern if you retire to Oklahoma, which ranks among one of the worst in the country for health care (trailed only by West Virginia). Crime is also a problem here, with the city ranking 7th in the nation for crime among large cities.

  • 2. Honolulu, HI

    Honolulu, HI
    iStock

    While the location is beautiful and the weather gorgeous year round, Honolulu will require you to have quite a large nest egg. According to a recent study done by WalletHub, cost of living in the city are among the highest in the country. It’s also very expensive to travel to and from Hawaii, making family gatherings more difficult.

  • 1. San Francisco, CA

    San Francisco, CA
    Scott Chernis

    The weather is very mild — it doesn’t get hot in the summer and winters are usually rainy. However, the cost of housing in this area is so high that most retirees are not going to be able to find it within their budget. Retirement income is taxed heavily in the state of California, unlike many other states. The cost of living is also very high. In fact, Kiplinger ranked California as the worst state to retire.

     

    Read more articles from Wise Bread:

    The Five Types of People Who Never Retire (Are You One of Them?)
    Book review: Cash-Rich Retirement
    Tiny Nestegg? Retire abroad!

MONEY IRA

How to Use Your Roth IRA to Buy Foreign Stocks

Investing illustration
Robert A. Di Ieso, Jr.

Q: I would like to invest in foreign stocks and LLPs within my Roth IRA. Do I need to file any special forms at the end of the year? Are there any type of investments within the Roth that would not require a special filing? — Tom

A: Depending on what’s available in your Roth IRA or whether you have a self-directed Roth, there are any number of investments you can own beyond the usual stocks, bonds and funds. But just because you can, doesn’t mean you should.

Let’s start with the question of foreign securities. Assuming you’re able to buy stocks listed on foreign exchanges in your Roth — policies vary from brokerage to brokerage — you will need to file IRS Form 8938 to report these foreign assets, says David Lyon, CEO of Main Street Financial in Chicago.

One way to avoid having to file this paper work, among other headaches, is to stick with foreign stocks that are available to U.S. investors as American Depository Receipts, or ADRs. Most of the largest foreign companies have ADRs, which trade on U.S. exchanges and in U.S. dollars, and don’t require the additional paperwork, though there may be other tax considerations.

As always, consider how any such holdings fit into the bigger picture of your portfolio. By all means, you want exposure abroad, but buying individual securities on your own, a la carte, may not yield the best results over the long run.

To wit, a much easier way to gain exposure to foreign companies is via an exchange-traded fund or mutual fund that invests in foreign stocks on your behalf, says Lyon. For broad market exposure, he likes the Vanguard FTSE All-World ex-U.S. ETF (ticker: VEU). As the name indicates, this low-cost fund gives you broad, diversified global exposure, ranging from the developed markets of Europe and Japan to emerging markets in Asia, Latin America and the Middle East.

If you’re looking for a more targeted approach, you can find ETFs that specialize in just one sector of the global economy, or one region of the world, or even one country.

Similarly, if you hold a limited liability partnership (LLP) in your Roth IRA you will need to fill out Form 990-T for unrelated business taxable income.

That said, you probably don’t want to invest Roth IRA assets in an LLP. The reason: “Essentially you’ll be taxed twice,” says Lyon. In addition to first paying tax on the contributions you make to the Roth, he says, you will be taxed on LLP income above $1,000 a year. He adds: “Investors are typically better off focusing their investable assets in traditional investments that allow them to take full advantage of the tax deferred growth and tax free distributions.”

 

TIME Innovation

Five Best Ideas of the Day: December 5

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

1. Peak gas: According to some forecasts, the fracking boom could be a bust.

By Mason Inman in Nature

2. To end the conflict with Boko Haram, Nigeria needs to address the alienation of its Muslims.

By John Campbell at the Council on Foreign Relations

3. “Protecting our coal workers is critical to successfully solving the climate problem.”

By Jeremy Richardson in the Union of Concerned Scientists

4. Tanzania can fight child marriage and protect the next generation of women by keeping girls in schools.

By Agnes Odhiambo in Human Rights Watch

5. When the last baby boomers move into retirement around 2030, today’s youth will carry the weight of our economy. They need support now.

By Melody Barnes in the World Economic Forum Blog

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

MONEY Social Security

6 Things You Need to Know About Social Security Benefits in 2015

knife cutting dollar bill
David Franklin Hedge fund managers take a big cut of returns

Make sure you're on course to get as much in Social Security benefits as possible both in 2015 and beyond.

Anyone who has ever taken a look at their Social Security planning knows how complex the program can be. With a huge number of variables involved in calculating your benefits, it can be a huge challenge to estimate exactly what you’ll receive when you decide to retire. But that doesn’t mean you should give up on trying to figure out what Social Security is likely to mean for you. To help simplify your planning, below you’ll find six key numbers related to Social Security in 2015 that everyone should know about.

1. Social Security tax wage limit: $118,500

Wage earners pay 6.2% of their earnings in the form of Social Security taxes, with employers matching that amount out of their own pocket. Self-employed individuals pay both halves of the tax, adding up to a 12.4% rate. But the Social Security tax only applies up to a certain wage limit, and benefits are therefore calculated based on those maximum taxed earnings, rather than your actual income for a given year. Each year, that number rises with the increase in the national average wage index, so 2015’s rise of $1,500 represents about a 1.3% gain from last year’s figure. As a result, the maximum amount of Social Security taxes that employees could pay will rise by $93 to $7,347 for those at or above the wage limit.

2. Cost-of-living increase for Social Security benefits: 1.7%

Each year, Social Security benefits are adjusted to reflect changes in the cost of living. Over the past year, the relevant measure of inflation rose 1.7%, defining the rise in Social Security benefits that will take effect in January 2015. The change makes 2015 the third year in a row that Social Security recipients will see a rise of less than 2% in their benefits, as tepid levels of inflation have held back the cost-of-living adjustment from its typical higher level.

3. Earnings required to receive one coverage credit: $1,220

In order to receive retirement benefits, you need to earn 40 coverage credits over the course of your career. Each year, you can earn a maximum of four credits, and the amount of income you need each year rises according to changes in wages. The 2015 figure is up $20 from 2014, so as long as you make $4,880 or more in 2015, you’ll get the full four credits available and get that much closer to locking in your Social Security benefit eligibility.

4. Maximum monthly benefit for worker retiring at full retirement age: $2,663

The most that you can receive from Social Security is based on work histories that have the maximum taxable earnings for at least 35 years during a worker’s career. Because Social Security benefits are progressive, increases in maximum earnings don’t translate to proportional increases in the monthly payments that retirees receive. The 2015 figure is $21 higher than the $2,642 maximum for 2014. For those who choose to wait beyond retirement age to claim benefits, though, additional amounts are still available: Delayed-retirement credits amount to an extra 8% in benefits per year beyond full retirement age.

5. Average monthly Social Security benefit for retired workers: $1,328

Most workers don’t come close to receiving the maximum amount of Social Security benefits possible. The average monthly benefit expected in January 2015 amounts to just less than half of the maximum. That’s up $34 from the $1,294 average of January 2014, reflecting both the 1.7% cost-of-living adjustment and changes in the typical work history for those receiving benefits in 2015.

6. Maximum amount those under full retirement age can earn in wages and salaries without forfeiting benefits: $15,720

Those who take Social Security early have limits imposed on their benefits if they continue to work. Specifically, those who earn more than a certain threshold have their benefits reduced, losing $1 in benefits for every $2 they earn above the limit. For 2015, that limit is $15,720, up $240 from the 2014 figure.

Losing benefits isn’t necessarily as bad as you think, because for each month in which benefits are eliminated, the Social Security Administration will essentially treat you as though you had started getting benefits a month later than you actually did. That will pump up your future monthly benefit amount, helping to offset the money that was taken away from you.

Understanding the ins and outs of Social Security can be a mind-boggling challenge. But by keeping these simple numbers in mind, you can get the basics of what the program will give you when you retire and make sure you’re on course to get as much in Social Security benefits as possible both in 2015 and beyond.

MONEY Social Security

This Letter Can Be Worth $1 Million

envelope with $100 bills
Steven Puetzer—Getty Images

Paper Social Security statements are back. Here’s how to use that information to plan smarter.

This fall the Social Security Administration began mailing out benefit statements for the first time since 2011. It’s crucial information, especially if you’re poised to move to your beach condo in Boca soon. “For many upper-middle-class couples, those benefits can be worth as much as $1 million over the course of your retirement,” says Chris Jones, chief investment officer of 401(k) adviser Financial Engines.

To save money, Social Security had been directing people to its website for benefits information. After a backlash, the agency resumed mailings to most workers reaching landmark birthdays—ages 40, 45, and so on. Of course, you don’t need to wait for a paper statement to find out how your benefit stacks up. For an estimate, simply sign up online.

YOURThat’s well worth doing if you’re within a few years of retirement. Your future Social Security income is key to determining if your financial strategy is on track. Then take these steps.

Proofread it. Make sure your earnings history is accurate. “If Social Security doesn’t have an earnings record for a particular year, there will be a zero, which may reduce your benefit,” says Boston University economics professor Laurence Kotlikoff, who heads MaximizeMySocialSecurity.com, an online benefits calculator.

Set your target. Your statement will have the income you can expect at three different retirement ages, assuming you keep working at your current salary. But you have far more options for when to start collecting benefits. If you are single, have never married, and don’t plan to work in retirement, your choice will be straightforward most of the time. Your main decision is whether to delay filing, which will boost your benefit by 6% to 8% a year up until the maximum at age 70. Financial Engines and AARP have free online tools that let you compare your annual and lifetime benefits based on the age you claim.

Plot the best strategy. If you’ve ever been married, your choices are more complex. “Your claiming strategy can be the biggest retirement decision you’ll make,” says Jones. Coordinating benefits with your spouse the right way can add as much as $250,000 to your lifetime Social Security income, according to Financial Engines. That’s why you may want to pay for a calculator that allows you to add more variables, such as working in retirement or a wide age gap in your marriage. MaximizeMySocialSecurity.com ($40) and SocialSecuritySolutions.com (starts at $20) both do that.

Get a reality check. Once you have a rough idea of your future benefit, plug that number into a retirement-income calculator, such as the tool at T. Rowe Price. You’ll see if your payouts, plus your portfolio withdrawals, are enough to ensure a comfortable retirement. If not, use the tool to see how saving more or working longer can help, or consult an adviser. Given the dollars at stake, devising a smart Social Security strategy can be well worth a fee.

MONEY Financial Planning

7 Pre-New Year’s Financial Moves That Will Make You Richer in 2015

champagne bottle with $100 bill wrapped around it
iStock

Before you pop the champagne this December 31, get your financial house in order.

Didn’t 2014 just start? At least that’s the way it feels to me. Well, regardless of how things seem, the reality is the year is just about over. But that doesn’t mean you can’t make a big impact on your financial future before the big ball drops in Times Square.

You can still achieve some very important financial goals before Dec. 31.

1. Make a Plan to Get Out of Debt

You may not be able to get out of debt between now and the end of the holiday season but you can set yourself up now so you’ll be debt-free very soon. Of course the first step is to watch your spending over the holidays. Don’t overdo it. That only makes it harder to solve your debt situation.

Next, create a system to eliminate debt by first consolidating and refinancing to the lowest possible interest rate. Once you do that, put all the muscle (and money) you can towards paying off the highest cost debt you have and make the minimum payments towards other credit card balances. As you pay off your most expensive debt continue to keep your debt payments as high as possible towards the next highest-cost debt. Repeat this process until you are debt-free. Believe me it won’t take that long. But you won’t ever be done if you don’t start. Why not begin the process of lowering your cost of credit card debt today? (You can use this free calculator to see how long it will take to pay off your credit card debt. You can also check your credit scores for free to see how your debt is affecting your credit standing.)

2. Track Your Spending

Even if you aren’t in debt, it’s important to know what you spend on average each month. Once you know where the money is going, you can decide if you are spending it as wisely as possible or if you need to make some changes.

Many people think they know how much they spend on average but most of us underestimate our monthly nut by 20-30%. You can use a program, a spreadsheet or simply look at your bank statements and track your total withdrawals for the month. It doesn’t matter how you do it. But if you aren’t tracking your spending, I recommend you start doing so now.

What’s great about starting to track spending before the new year is that you get used to your system and if you use a program or spreadsheet, it will also simplify your tax reporting for next year. This is especially helpful if you do your own taxes.

3. Review Your Estate Plan

Things usually slow down at work during the holidays. That gives you time to get to important items you may have been putting off. Estate planning is one of those items that people often procrastinate on.

I’m not asking you to get your will or trust done by Dec. 31 (although you could). But at the very least do two things:

  1. Educate yourself about the difference between wills and trusts.
  2. Find a good estate planning attorney or legal service and start the process.

My parents completely ignored this topic. When they both died young and unexpectedly, it made it monumentally more painful, difficult and scary for my siblings and I. Don’t take chances. You can and should start taking care of your estate planning now.

4. Review Your Life Insurance

As long as we’re talking about estate planning, we might as well dust off your old life insurance policies and give them the old once over. Some people have outdated and overly expensive life insurance they no longer need. Others walk around woefully under-insured, exposing their loved ones to great risk that is completely avoidable.

Pull out your old policies today. Do you still need those policies? If not, cancel them. If you do need insurance, start comparison shopping to make sure you have the right coverage at the right price.

5. Start Investing

If you’ve been on the fence about investing it’s time to stop thinking and start doing. If you don’t know how to get started, there are plenty of great resources on the Web. You need to understand the basis, of course, but you don’t need a Ph.D. in economics before you leave the starting gate. Once you read up on the basics of investing, be prepared to start slow and learn as you go. You will be fine.

And remember: You don’t need a pile of dough in order to start investing. If you are a DIY investor, there are plenty of good online brokers who will open an account for as little as $500. Can you think of a good reason to wait until next year to start investing? I can’t either. Let’s go.

6. Maximize Your Retirement Contributions

Before year-end, make sure you have maximized allowable contributions to your retirement plan at work. Unless you are in debt, you want to take advantage of employer matching if at all possible. Even if there is no matching program at work, try to maximize your plan contributions. This will give you the benefit of tax deferral and a forced savings plan.

Call your HR department today to find out if you can bump up your retirement plan contributions for the year.

7. Get in Front of Your Finances

You have an amazing opportunity right now. Make sure you are on top of your financial game now, next year and beyond. Take out a calendar right now and schedule when you are going to begin and follow through on the items on this list.

Look at your calendar for the next seven days. When are you going to:

  1. Inquire about refinancing your debt?
  2. Set up your spending tracking system?
  3. Start asking for estate planner referrals?
  4. Review your life insurance?
  5. Set up your investment account?
  6. Call HR and make sure to bump up your retirement contributions to max out for the year?

Taken all together, the list above might seem overwhelming. But if you do one task each day, you can really change your financial life this week. Each task above will take you between 15 minutes to three hours to complete. Are you going to do one item each day this week? How will you feel once you’ve begun? Or are you going to wait until “after the holidays”?

More from Credit.com

This article originally appeared on Credit.com.

MONEY Social Security

Can I Collect Social Security From My Ex?

Ask the Expert Retirement illustration
Robert A. Di Ieso, Jr.

Q: I have been divorced twice and currently am not married. Can I draw Social Security off either of my ex-husbands? I was married to the first one for 16 years and the second for 11. And would I be able to remarry and still draw off the ex? I am 62 now. – Rita Diestel, Bruce, Miss.

A: You can collect Social Security benefits based on the earnings of a former spouse if you were married 10 years or more, and you are at least 62 and not currently married. So, you’re good on all three counts.

But there are a few more wrinkles, says Adam Nugent, managing partner of Foresight Wealth Management, an investment advisory firm in Sandy, Utah.

You can collect benefits from the ex-husband with the larger payout but only if you’re not eligible for a higher amount based on your own work record. You can check how much you’re entitled to and your ex-husbands’ payouts (if you have their Social Security numbers) at ssa.gov.

To collect on an ex, you must be divorced at least two years. The former husband that you base your benefits on must be at least 62, though he doesn’t have to have started receiving his benefits yet for you to get yours.

But just because you may be able to collect now doesn’t mean it’s the best move for you, says Nugent. You are entitled to 50% of your former husband’s benefits but, like anyone collecting Social Security, you’ll get less if you start taking it before your full retirement age of 66. The longer you delay the better. If you decide to take it before 66, your benefits will be permanently reduced, 8% for each year you take it before 66. “You will be rewarded for waiting,” says Nugent.

As for marrying again, if your ex is remarried, that won’t affect your benefits. But if you remarry that’s a different story. Nearly 60% of U.S. divorcees remarry and if you do, you are no longer able to get a divorced spouse’s benefits, unless you get divorced again yourself.

If you remain single, you can use many of the same strategies that married spouses use to boost your payouts, says Nugent. One option is to file a restricted application with Social Security (at full retirement age) to collect a divorced spousal benefit, which is half of what your ex gets. Then, once you reach 70, you can stop receiving the ex-spousal benefit and switch to your own benefit, which will be 32% higher than it would have been at your full retirement age.

The rules are a bit different if your former spouse dies. You are entitled to 100% of your deceased ex-spouse’s Social Security, the same as any widow even if he was remarried. And if you are married when your ex passes away, you can collect survivor benefits as long as you didn’t remarry until age 60 or later. If you are collecting Social Security based on your own work history, you can switch to survivor’s benefits if the payment is larger. Or, if you’re collecting survivor’s benefits, you can switch to your own retirement benefits — between 62 and 70 — if it offers a larger payment.

There’s a lot to think about, says Nugent, but most important is that there are big benefits for delaying. As a woman you’re more vulnerable in retirement than a man because women typically live longer. Of course, your health, expected longevity, and other retirement savings should be factored in as well. “But if you can wait at least a few more years to start collecting Social Security, that will give you more security in the long run,” says Nugent.

Do you have a personal finance question for our experts? Write to AskTheExpert@moneymail.com.

Read next: Why Social Security Suddenly Changed Its Benefits Withdrawal Rule

MONEY strategies

Woulda, Coulda, Shoulda: What You Can Learn From the Top 3 Pre-Retirement Mistakes

Researchers recently asked people nearing retirement what specific things they wish they'd done differently to better prepare for their post-career lives. Here's your chance to go to school on their answers.

There’s no shame in making retirement-planning mistakes. But it would be a shame not to learn from other people’s mistakes if you have the opportunity to do so. And now you do.

In May, researchers for TIAA-Cref’s Ready-to-Retire Survey asked people age 55 to 64 what steps they wish they had taken during their working years to increase their chances of achieving a secure retirement. You’ll find their answers below, along with the percentage of people who wished they’d made each of these moves. Think of it as your chance to turn their hindsight into your foresight, and boost your retirement prospects by learning, and profiting from, their mistakes.

1. They wished they’d started saving sooner (52%). Retirement can seem like a far-off horizon in the early and even the middle stages of your career. Which makes it easy to put off committing to a serious savings regimen to some vague date in the future. But procrastination can seriously stunt the eventual size of your nest egg.

For example, a 25-year-old who earns $40,000 a year, gets 2% annual pay raises and contributes 10% of salary to a 401(k) plan throughout his career would end up with an account value of almost $830,000 at age 65, assuming a 6% annual return.

If that same person waits just five years until age 30 to start saving for retirement, his nest egg would total just under $645,000 at 65, or roughly $185,000 less than with the earlier start. And if this 25-year-old doesn’t begin saving until age 35, come retirement time his 401(k)’s value would be about $492,000, or about 40% less than had he started in his mid-20s. Better to understand now the bite procrastination can take from retirement security and start saving sooner rather than later.

2. They wished they’d saved more of their paycheck (47%). Given the financial obligations we must take care of in the present—paying the mortgage, funding health insurance, raising a family—it’s not surprising that saving for the future often gets short shrift. That said, if most people take a hard-enough look at their budget, they can usually find smart ways to free up extra bucks to save for retirement.

And it doesn’t take a huge bump in annual savings to significantly boost the eventual size of your nest egg. For example, by just upping the percentage of salary saved from 10% to 12%, the 25-year-old above would end up with a nest egg of just under $1 million at 65 compared with almost $830,000 by saving at a 10% rate. And if through a combination of his own retirement-plan contributions plus any employer-provided match, he can increase his annual savings to 15% of salary—the level recommended by the Boston College Center For Retirement Research—he would have $1.2 million at retirement. The key is to free up those extra bucks for saving as early in your career as you can to maximize the benefit of long-term compounding of investment returns.

3. They wish they’d invested more aggressively (34%). This one is tricky. Yes, investing more of your retirement savings in stocks can lead to higher long-term returns and boost the eventual size of your retirement stash. For example, if our hypothetical 25-year-old saves 15% annually but earns a 7% vs. 6% annual investment return, his age-65 nest egg would jump to nearly $1.6 million.

But a more stock-intensive portfolio is also more vulnerable to setbacks, such as the 57% tumble stock prices took between October 2007 and March 2009. The key is arriving at a portfolio of stocks and bonds that can deliver solid long-term returns that’s also compatible with tolerance for risk, which you can gauge with a Risk Tolerance Questionnaire.

Fortunately, pulling off that balancing act between risk and return is eminently doable. And while the near-retirees surveyed didn’t say anything about investing expenses, I will: Namely, whatever mix of stocks and bonds you eventually settle on, you’ll increase your chances of earning a higher return if you stick to investments with low fees.

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MONEY year-end moves

3 Smart Year-End Moves for Retirement Savers of All Ages

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To give your long-term financial security a boost, take one of these steps before December 31.

It’s year-end, and retirement savers of all ages need to check their to-do lists. Here are some suggestions for current retirees, near-retirees, and younger savers just getting started.

Already Retired: Take Your Distribution

Unfortunately, the “deferred” part of tax-deferred retirement accounts doesn’t last forever. Required minimum distributions (RMDs) must be taken from individual retirement accounts (IRAs) starting in the year you turn 70 1/2 and from 401(k)s at the same age, unless you’re still working for the employer that sponsors the plan.

Fidelity Investments reports that nearly 68% of the company’s IRA account holders who needed to take RMDs for tax year 2014 hadn’t done it as of late October.

It’s important to get this right: Failure to take the correct distribution results in an onerous 50% tax—plus interest—on any required withdrawals you fail to take.

RMDs must be calculated for each account you own by dividing the prior Dec. 31 balance with a life expectancy factor (found in IRS Publication 590). Your account provider may calculate RMDs for you, but the final responsibility is yours. FINRA, the financial services self-regulatory agency, offers a calculator, and the IRS has worksheets to help calculate RMDs.

Take care of RMDs ahead of the year-end rush, advises Joshua Kadish, partner in planning firm RPG Life Transition Specialists in Riverwoods, Ill. “We try to do it by Dec. 1 for all of our clients—if you push it beyond that, the financial institutions are all overwhelmed with year-end paperwork and they’re getting backed up.”

Near-Retired: Consider a Roth

Vanguard reports that 20% of its investors who take an RMD reinvest the funds in a taxable account—in other words, they didn’t need the money. If you fall into this category, consider converting some of your tax-deferred assets to a Roth IRA. No RMDs are required on Roth accounts, which can be beneficial in managing your tax liability in retirement.

You’ll owe income tax on converted funds in the year of conversion. That runs against conventional planning wisdom, which calls for deferring taxes as long as possible. But it’s a strategy that can make sense in certain situations, says Maria Bruno, senior investment analyst in Vanguard’s Investment Counseling & Research group.

“Many retirees find that their income may be lower in the early years of retirement—either because they haven’t filed yet for Social Security, or perhaps one spouse has retired and the other is still working. Doing a conversion that goes to the top of your current tax bracket is something worth considering.”

Bruno suggests a series of partial conversions over time that don’t bump you into a higher marginal bracket. Also, if you’re not retired, check to see if your workplace 401(k) plan offers a Roth option, and consider moving part of your annual contribution there.

Young Savers: Start Early, Bump It Up Annually

“Time is on my side,” sang the Rolling Stones, and it’s true for young savers. Getting an early start is the single best thing you can do for yourself, even if you can’t contribute much right now.

Let the magic of compound returns help you over the years. A study done by Vanguard a couple years ago found that an investor who starts at age 25 with a moderate investment allocation and contributes 6% of salary will finish with 34% more in her account than the same investor who starts at 35—and 64% more than an investor who starts at 45.

Try to increase the amount every year. A recent Charles Schwab survey found that 43% of plan participants haven’t increased their 401(k) contributions in the past two years. Kadish suggests a year-end tally of what you spent during the year and how much you saved. “It’s not what people like to do—but you have a full year under your belt, so it’s a good opportunity to look at where your money went. Could you get more efficient in some area, and save more?”

If you’re a mega-saver already, note that the limit on employee contributions for 401(k) accounts rises to $18,000 next year from $17,500; the catch-up contribution for people age 50 and over rises to $6,000 from $5,500. The IRA limit is unchanged at $5,500, and catch-up contributions stay at $1,000.

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