From the May 2010 issue of Investment Advisor • Subscribe!

May 1, 2010

Retirement News

Recent research by Vanguard covering the stock market downturn from September 2007 to December 2009, and the ensuing recovery, confirms earlier findings that retirement plan participants mitigated damage to their retirement savings by reacting only marginally in terms of trading, contribution, and distribution behavior. The study, Resilience in Volatile Markets: 401(k) Participant Behavior September 2007-December 2009, analyzed trends over that period and found that most participants adopted a "stay the course" or "path of least resistance" approach and maintained their retirement programs through the economic downturn, but that a small minority made changes that could undermine their long-term retirement security.

The study found that the median participant account balance grew by 33% in 2009, after a decline of 31% in 2008, reflecting the effects of both market improvements and ongoing contributions. Also, the study says, between September 2007 and December 2009, the median participant account balance grew by 10%, and six in 10 participants saw their account balances grow. In 2009, despite the ongoing market volatility, only 13% of participants traded in their retirement accounts, compared with 16% in 2008.

More women than men receive privately paid care at home for lingering health issues, according to a new report from the American Association for Long-Term Care Insurance (AALCI). The independently conducted study examined the usage of home care services received by 1,000 men and women during a one-week period in March 2010. "The vast majority of both men and women home care recipients were over age 71 and most received care for three days a week or less," says Jesse Slome, executive director of AALCI. The study found that 88.6% of users were women age 71 or older compared to 81.1% who were men. When it came to the number of service days per week, two-thirds (66%) of women used private in-home care for three days a week or less. Just under half (49%) of men received care for three days or less. The remainder paid for four or more days. Both men and women appear to pay for about the same number of hours of care per-day, the study found.

Putnam Investments's interactive Roth IRA Conversion Evaluator is now available to both advisors and their clients to help in determining whether to convert from a traditional IRA to a Roth IRA. The Roth IRA Conversion Evaluator, previously available only to advisors, is featured on a new blog (www.rothirablog.com). The Roth IRA Conversion Evaluator, www.rothirablog.com/roth-evaluator, is designed to facilitate discussion between advisors and their clients on the merits of a Roth IRA conversion, Putnam says.

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