Business Week's 2008 Retirement Guide is out this week. As expected from a magazine of this stature, it was fairly well put together. The tone of the headlines seems to reflect the dour mood prevailing in the financial economy, and in some ways a tad alarmist, starting right from the headlined article.
"Retirement Strategies for Tough Times"
and one chock full of cautionary tales:
"Will You Outlive Your Money" visits the familiar topic which we have covered before in "WSJ Report - How to Bulletproof Your Nest Egg." Notable by their absence, are any references to the new payout mutual funds developed by Vanguard and Fidelity. These funds offer the retirement-stage investor the ability to cheaply obtain a regular income stream without paying the higher fees typically associated with retirement annuity products.
Vanguard's products called "Managed Payout Funds" are based on a given investor's appetite for risk, whereas, Fidelity's product called "Income Replacement Funds" are similarly structured with the biggest difference being their emphasis on "target dates" kind of like target date date portfolios in reverse.
One great article mentioned in the 2008 report is, "Target-Date Funds Hit Their Stride." Some interesting factoids on target date funds:
- Assets collectively hit $204.2 billion at the end of May 2008, as compared to $116 billion last year
- Funds managing for a 2020 retirement date snagged the largest share of target date assets
- Exposure to international equities increased from 7% in a typical fund in 2005 up to 17% in 2007
- Exposure in REITs has also increased with AllianceBernstein target date funds allocating up to 10% of their assets in this asset class
- Hedging strategies are also turning up in this class of funds, with TIPs and commodities (the "usual" hedges), along with Bank of America's funds considering some exposure to Asian currencies, nuclear power and water.
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