Data & Research June 26, 2008

Retirement Savings Tab Just Got Bigger

Another estimate from Fidelity Investments adds to the financial resources individuals need to save for retirement.
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Fidelity estimates that a 65-year old couple in 2008 will need $85,000 to insure against long-term care needs. In March, Fidelity revealed that its data estimates a 65-year-old couple retiring in 2008 will need approximately $225,000 to cover medical costs in retirement (see Retiree Health-Care Costs $225,000).

“With the average cost of a one-year stay in a private room estimated at more than $76,000, not preparing for these potential costs can result in personal and financial burdens for family members,” Fidelity warned in its release.

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Joan Bloom, senior vice president, Fidelity Investments Life Insurance Company, said in the release the costs of some long-term care services have been rising by as much as 7% per year for the last five years.

To illustrate the potential cost of long-term care on family-member caregivers, Fidelity said a 50-year old individual earning $50,000 annually who ends up providing four years of long-term care to a family member, can lose more than $140,000 in wages, retirement savings, and Social Security over his or her lifetime.

Products June 26, 2008

TIAA-CREF Releases 403(b) Plan Transaction Monitoring Tool

TIAA-CREF added another 403(b) offering by introducing a Web-based application for plan sponsors to manage participation transactions.
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TIAA-CREF, provider of retirement services in the academic, medical and cultural fields, has said the tool will allow sponsors to manage participant transactions as required by 403(b) regulations effective next January.

According to a release, TIAA-CREF’s Compliance Coordinator will aggregate data from multiple vendors to assist in preventing non-compliant transactions before they occur and help plan sponsors verify compliance with Internal Revenue Service (IRS) loan limits and hardship withdrawal regulations.

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All data will be transferred in accordance with standards created by the Society of Professional Asset-Managers and Record Keepers (SPARK), based on input from a number of leading 403(b) providers (see SPARK Releases Final Best Practices for 403(b)s).

In addition, each approved plan investment provider will have access to data for its participants and will be able to use the data to approve or decline requests as appropriate, the release said. For plan sponsors working solely with TIAA-CREF, the company will continue to ensure all loan limits and hardship withdrawal rules are met and provide an enhanced reporting package to better enable these clients to track their own plans’ activity.

The application will be developed in partnership with and hosted by Advent Software, Inc., provider of software and services to the investment management industry.

In April TIAA-CREF released a guide to new 403(b) regulations for TIAA-CREF clients (see TIAA-CREF Puts Out 403(b) Guide).

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