Retirement made easy, sort of

Updated: Sep 30 2006, 05:56am hrs
If we cant make you rich, maybe we can make you feel better about not having enough money.

In essence, that increasingly will become the pitch of the financial services industry, according to Financial Planning. Life planning, which effectively drops the assumption that the advisers role is to maximize wealth, is becoming mainstream, the magazine writes.

A recent advertisement from Ameriprise shows what this is all about: In the headline What assets do you have, the word assets is crossed out and replaced with dreams.

The change in focus has come about for two reasons, Joan Warner writes. First, financial services companies have discovered that baby boomers a core audience -- are uncomfortable with material success for its own sake.

Thats fine. But the second reason is more troubling. Many boomers are discovering they simply have not saved enough money and dont have enough time to eliminate the shortfall.

Life planning can keep boomers from panicking, Warner writes. Instead of starting with their peak cost of living and trying to match it after retirementand despairing that theyll never be able to do so the adviser will focus on whats most important to a client and help her figure out what it will cost.

No one is in favor of panic. But this shift in approach sounds dangerously close to the old joke about asking the doctor to touch up the X-rays when you dont like the diagnosis.

An increasingly popular choice when investing for retirement is using target-date, or life cycle, mutual funds.

These funds invest in a combination of stocks, bonds and cash. What differentiates them is that the investment mix automatically becomes more conservative the percentage in stocks decreases and the amount of money in bonds and cash increasesas the investor ages.

You would think that funds designed for people who plan to retire in, say, 2030 would be pretty much in agreement on how the money is spread out between stocks and bonds, Rob Wherry writes in Smart Money. Think again. T Rowe Prices Retirement 2030 fund is 93.5% invested in stocks, while Barclays Life Path 2030 fund thinks 78% in equities is the right mix for a 40-year-old retirement investor.

Heres why that disparity is important: According to a specialist quoted, a typical retirement portfolio that starts with 90 % of its assets in stocks, dropping to 65 % at retirement could add up to as much as $2.5 million after 40 years of savings.

A similar portfolio that starts with 70% of its holding in equities could be worth $1 million less.

Of course, the higher the %age of your assets in stocks, the more volatile the performance of the fund, and how much risk to take is a personal choice.

But, says Thomas Fontaine, a senior portfolio manager quoted in the article, We would argue a more conservative approach is actually a riskier one. The biggest risk retirees face, he said, is not that they will lose money in the market, but that they will outlive their money.

Redoing a kitchen is always popular, and homeowners are constantly adding on a room. But the current housing trend may surprise you.

Garage makeovers are the hottest home improvement category today, Michele Meyer writes in Weekend. Last year, Americans spent $800 million on garage-organising products, double what they spent six years ago. And there are more than 500 garage-organizing firms helping out.

There is a reason for all this activity: Most Americans use their garages for everything but the family roadster, Meyer writes. In fact, 91 % of two-and three-car garages in America hold only one car.

The HR department giveth, and the HR department taketh away.

CFO magazine reports more than half of Fortune 500 companies now provide benefits that cover domestic partners of employees. That is more than double the figure just six years ago.

At the same time, Parenting writes that only 18% of employers provide fully paid maternity leave today; that figure stood at 27% in 1998.

NY Times/ Paul B Brown