Deals & People April 22, 2008

The Online 401(k) Adds More Adviser Relationships For Small Businesses

The Online 401(k) added 15 new adviser relationships in the first quarter of 2008.
Reported by

The Online 401(k)’s new relationships include:

  • Allgen Financial (Orlando, FL)
  • Anthony R. Maniscalco, Jr. (Holtsville, NY)
  • Arbor Asset (Ann Arbor, MI)
  • Clear Financial Solutions (Houston, TX)
  • Demand Insurance & Benefits, LLC (Mandeville, LA)
  • Hagen & Co (Eden Prairie, MN)
  • HMA Direct (Newton, MA)
  • Kendall Capital Management (Sandy Spring, MD)
  • Knade Financial Group LLC (Easton, MD)
  • Knight Field Fabry LLP (Denver, CO)
  • Register & Akers Advisory Services (Atlanta, GA)
  • Southport Group (Southport, CT)
  • Union Financial Partners, Inc. (San Francisco, CA)
  • Velocity Investment Partners (Ypsilanti, MI)
  • Xerxes Financial Group (Burke, VA)

“With The Online 401(k), we’ve been able to offer our small business clients access to a reasonably priced 401(k) plan built for small businesses,’ said Mike Rogers, director of Pension Services for BPM Wealth Management LLC, a Bay Area-based accounting and business consulting firm.

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The Online 401(k) is a provider of full-service Web-based 401(k) plans for small and single-person businesses. The company says it is important for small businesses to benefit from a financial adviser because the adviser not only serves as the investment expert, but he can also provide some relief from fiduciary liability.

More about The Online 401(k) is available at www.theonline401k.com.

Data & Research April 22, 2008

Do People Really Spend Less in Retirement?

A newly released research study casts doubt on the traditional notion that calculations of a person’s retirement nest egg should take into account a post-retirement spending dropoff.
Reported by

RAND Corporation researchers Michael D. Hurd and Susann Rohwedder, in a project undertaken for the National Bureau of Economic Research, assert that spending in retirement only falls off by 1% to 6%, depending on the population group and how the falloff is measured, contrary to the often touted estimate that one needs 70% of pre-retirement income annually in retirement.

Hurd and Rohwedder contend that the spending decline seen in their analysis could be explained by:

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  • the end of daily work-related expenses such as for clothing and restaurant meals
  • a sudden health problem
  • having more available time to economize on one’s spending habits.

“The increased leisure can be used to purchase goods more efficiently or to substitute home-produced goods for purchased goods,” the authors write. “In this interpretation, spending declines, but actual consumption does not.”

Those in less wealthy population groups showed a spending decline which the researchers attributed to being forced to retire because of health issues.

Hurd and Rohwedder also cast aside the traditional contention among some retirement researchers that Americans are poor retirement planners and reach retirement age with inadequate resources. After they stop work, the theory has held, the now-retired Americans assess their financial situation and cut back spending in response.

“We found little support for an explanation based on a lack of forward-looking planning,” the two researchers wrote. “…For most workers, retirement is a predicable event, and workers should be assessing continuously their financial situation so that they will not be surprised. They should have saved enough so that they would not have to reduce consumption at retirement.”

The research report is available by subscription at http://www.nber.org/papers/w13929.

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