Three-legged stool wobbles into the sunset

Part of Invesco’s Retirement Strategies series

Three-legged stool wobbles into the sunset

You’re probably aware of the traditional metaphor of the “three-legged stool” to represent what have historically been the three major retirement income sources — Social Security, pension plan and personal savings. But things have changed, and that metaphor for a secure retirement has become a bit wobbly.

Pension plans are disappearing. In 1982, there were 25,398 pension plans; by 2012, the number had dwindled to only 9,514.1 Then there’s Social Security — various projections call into question whether the program has, well, a leg to stand on. Estimates indicate that Social Security will either be depleted by the 2040s, or it will be “fixed” by substantially lowering benefits for retirees. So I guess it’s time for a new symbol of secure retirement.

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Fiduciary finale: Will torrent of negative comments sway the DOL?

Part of Invesco’s Insights series

Fiduciary finale: Will torrent of negative comments sway the DOL?

After four days and 75 witnesses, the Department of Labor (DOL) hearings on the proposed fiduciary rule — known as the “conflict of interest” rule — concluded on Aug. 13, capping the latest chapter in the proposal’s convoluted history. The proposal was introduced with White House support in April — nearly five years after a similar proposal was first floated. In a nutshell, the controversy is this:

  • The DOL has asserted that the rule would curb incentives for brokers to put clients into high-fee products that erode their retirement savings.
  • The industry counters that the rule would be too expansive because of significantly increased liability risk and regulatory costs, potentially discouraging brokers from serving investors with modest accounts.

That measure was withdrawn in 2011 amid fierce backlash from the financial services industry. The DOL is now trying again to push the rule through before President Barack Obama’s administration leaves office.

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DOL fields fiduciary feedback in marathon hearings

Part of Invesco’s Legislative Insights series

DOL fields fiduciary feedback in marathon hearings

On Monday, the Department of Labor (DOL) kicked off a week of hearings for testimony from advisors, trade groups, legal experts and other industry representatives about the potential effects and possible revisions of its proposed fiduciary rule.

The speakers, broken up into groups of about three, will address the DOL during the 25 separate panel discussions. Many will likely restate points they made in lengthy comment letters about the proposed rule and its related exemptions proposal. Each panelist speaks for 10 minutes, followed by a question-and-answer session with DOL staff.

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Collective trusts: Three truths plan sponsors need to know

Correcting common misperceptions about these retirement plan vehicles: Part 3

Collective trusts: Three truths plan sponsors need to know

In previous blogs, I have sought to dispel common misperceptions about collective investment trusts (CITs), also known as collective trust funds. I’ve offered the truth about regulations, transparency and eligibility, and have provided the true story about documents and reporting. Now, I would like to correct three final myths I see, which may be keeping some plan sponsors from offering this vehicle to investors within qualified retirement plans. I spell out the real story below.

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Gray divorce: We can’t work it out

Part of Invesco’s Retirement Strategies series

Gray divorce: We can’t work it out

Raised on sitcoms where mom wore pearls and father knew best, most early baby boomers — born between 1946 and 1955 — pegged their futures on domestic tranquility. But late boomers born between 1956 and 1964, who grew up watching the blended Bradys and the motherless family in Mayberry, may have had a less “happily ever after” outlook.

Whatever their expectations, it appears that “me generation” is becoming a self-fulfilling prophecy as its members uncouple in unprecedented numbers. While the divorce rate among non-boomers dropped between 1990 and 2010, it doubled for Americans over age 50 and more than doubled for those over age 65.1

Observers cite a number of causes for this “gray divorce” trend — among them, the cultural values of baby boomers, society’s acceptance of divorce, greater emphasis on self-fulfillment, evolving gender roles, longer life expectancies and women’s increasing financial independence. Regardless of causes, however, late-life divorce will almost certainly derail retirement plans and strategies to fund them.

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Collective trusts: The truth about documents and reporting

Correcting common misconceptions about these retirement plan vehicles: Part 2

Collective trusts: The truth about documents and reporting

Misperceptions abound about collective investment trusts (CITs), also known as collective trust funds. In my last blog, Collective trusts: The truth about regulations, transparency and eligibility, I corrected three common myths about these vehicles. Below, I provide the true story behind two more critical topics: documents and reporting.

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