What the experts say

Plugging leaky 401(k)s; Bill payers for the elderly; Healthy assets

Plugging leaky 401(k)s

More Americans than ever are dipping into their retirement accounts, said Dan Kadlec in Time.com. In 2010, a record 22 percent of 401(k) plans had loans outstanding against them, and an increasing number of those loans are never repaid. A new study estimates that loan defaults deplete retirement accounts by as much as $37 billion a year—a grim cost “given the retirement savings crisis in America.” Since most of these defaults occur because of a job loss, policymakers are considering whether plans should require participants to purchase insurance before they can take out loans on their 401(k)s. The policies, which would guarantee that the loan is repaid if the borrower loses his job because of death, illness, or termination, “may be the best way to protect retirement savers from themselves.”

Bill payers for the elderly

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Peggy Simpson realized that her father, now 99 years old, needed help when he “made a costly error” with his phone bill, said Anne Tergesen in The Wall Street Journal. Overlooking the decimal point, he paid $15,000 for a $150 charge. So she hired Help Unlimited, a “daily money-management firm” in Silver Spring, Md., to pay her father’s bills and keep track of his medical expenses. Managing money for the elderly is a rapidly growing business, but since the field is unregulated, “it’s important to perform due diligence.” Financial planners can often offer referrals, and checking references is critical. The American Association of Daily Money Managers certifies planners who pass a criminal background check and an exam on bookkeeping and medical insurance.

Healthy assets

“Every portfolio should have a strong dose” of health-care stocks, said Matt Schifrin in Forbes. Aging baby boomers will fuel the sector for years to come, and “the numbers get even bigger when you consider health-care demand in China and India.” A $10,000 investment in the Dow Jones Healthcare Sector Index ETF in 2000 would now be worth $14,000, compared with around $11,150 for the S&P 500. A safe bet is an investment in a major fund like the $22 billion Vanguard Health Care Fund, which has a 25-year average annual return of 14.5 percent. For those willing to take more risk, biotech stocks look tempting. Either way, “the time to be in health care is now.”

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