Displaying items by tag: retirement

Stable value funds are a conservative investment option that aim to deliver higher returns than cash while preserving principal. They invest in high-quality bonds that are insured through contracts like guaranteed investment contracts or group annuities, which protect investors from losing money. 

These funds are available only in tax-advantaged retirement plans such as 401(k)s, and according to MetLife, more than 80% of defined contribution plans offer them. Stable value funds are often compared to money market funds, since both are designed for safety and stability. Over the 15 years ending March 2023, stable value funds delivered an annualized return of 2.99%, significantly higher than the 0.55% produced by money market funds. 

While money markets adjust quickly to interest rate changes, stable value funds respond more gradually, which can lead to short-term underperformance when rates are rising. Researching stable value funds involves looking at the fund’s goals, portfolio composition, fees, and historical performance.

Finsum: Advisors should also evaluate management tenure and ensure the fund’s returns align with its stated objectives for clients

Assets under management is one way to value an advisory firm, but buyers also want stability, leadership depth, and client retention. Consultant Linda Bready, author of The Exit Equation, says successful sales depend on seven “pillars,” including clear exit goals, strong financials, next-generation leadership, scalable operations, client stability, effective technology, and reduced compliance risks. 

Buyers look for firms that can run smoothly without the founder and have systems in place to support future growth. To prepare, Bready advises advisors to organize their financials, document processes, and consider continuity beyond the founder. 

She also stresses the importance of knowing what life after the sale will look like, since that influences buyer fit. 

Finsum: Asking pointed questions of potential buyers and addressing risks upfront can strengthen both valuation and trust in the process.

The IRS and Treasury finalized Secure 2.0 rules on catch-up contributions for 401(k) and similar plans, which apply to workers age 50 and older. Beginning in 2027, those earning more than $145,000 from their current employer must make catch-up contributions on a Roth (after-tax) basis, though some plans may implement the change as early as 2026. 

Until then, investors can still choose between pretax and Roth contributions if their plan allows. Experts say now is the time to work with advisors to run multi-year tax projections to determine whether to accelerate pretax contributions before the rule takes effect or embrace Roth sooner.

For 2025, contribution limits rise to $23,500 with an additional $7,500 catch-up for those 50+, and workers ages 60–63 can make a “super catch-up” of $11,250. 

Finsum: The key takeaway, according to advisors, is not to sit on the sidelines as the new rules approach, but instead actively plan for the transition.

Indexed annuities are becoming increasingly popular as retirement tools because they blend growth potential with protections not found in traditional fixed annuities. These products allow investors to defer taxes on gains until distributions begin, making them attractive for long-term retirement income strategies. 

Equity-indexed annuities (EIAs) and registered index-linked annuities (RILAs) tie returns to market indexes, with EIAs offering a guaranteed minimum return and RILAs providing downside buffers or floors to manage risk. However, features like caps, participation rates, and fees can limit upside potential, so retirees must carefully review contracts to understand how returns will be credited. 

Indexed annuities are designed for long-term holding, and early withdrawals can lead to surrender charges and tax penalties that erode principal. 

Finsum: For retirement savers, these products can serve as a middle ground between fixed and variable annuities, offering balance, income potential, and risk management over the long haul.

The target date market surged in the first half of 2025, with combined assets across mutual funds, CITs, and custom solutions rising 10% to more than $4.7 trillion. Vanguard extended its dominance, adding $121 billion to reach $1.6 trillion, far ahead of Fidelity’s $623 billion. 

A major development is the rapid rise of income-enabled target date funds, whose assets climbed to $103 billion, led by TIAA’s RetirePlus model and BlackRock’s LifePath Paycheck series. 

These products reflect growing demand for pension-like security within modern 401(k) structures, blending glide paths with annuity-based income features. Co-manufacturing partnerships between recordkeepers, insurers, and asset managers are fueling much of this innovation, while CIT-based target date funds have overtaken mutual funds, now holding 53% of assets. 

Finsum: Target date funds are a great way to start a portfolio for clients and then to build customization around the edges.