What the experts say

Retirement math redux

A lot of “silver-haired folks” are coming to the realization that their assumptions about retirement were all wrong, said SmartMoney. The trouble starts with the notion that retirees spend less. Sure, certain expenses do shrink. But for new retirees “eager to celebrate their freedom,” travel and entertainment can break the bank, while health costs are often greater than anticipated. Meanwhile, mediocre returns from portfolios that are top-heavy with bonds are making matters worse, especially now that bond prices are high and yields are so low. For that part of the equation, we have a solution: Don’t blindly follow the “own your age” guideline that the percentage of bonds in your portfolio should equal your age. “Historically, bonds have returned about 5 percent a year, while stocks have returned nearly twice that.”

When inside trades matter

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When a company buys back its own stock, it’s not always on the verge of a big run, said John Waggoner in USA Today. “Companies have many reasons for buying back shares,” and not all are even good at the timing. In fact, corporate buybacks hit a record high in June 2007, before the market tanked, and were at their lowest in June 2009, when many stocks were “dead cheap.” A more useful indicator is trading by top executives, which you can track via the SEC’s Edgar system. Don’t read too much into sales by insiders, since such sales can be driven by tax planning or plans for a big purchase. “But when a CEO actually digs into his own wallet to buy his stock, well, that’s worth paying attention to.”

Tax refund: Save or splurge?

Tax refunds this year will average about $3,000 a return, but using this windfall to pay off debt “is so 2007,” said Jessica Dickler in CNNMoney.com. The share of taxpayers who will send their refunds to creditors (42 percent) has declined for the third year in a row, according to a National Retail Federation survey. This year, a bigger chunk of refunds (43 percent) seems destined for savings—a sign, say experts, that more Americans are planning long term. Then again, the share of people “indulging in a little retail therapy” has also increased slightly this year, with 13.2 percent planning big-ticket purchases, versus 12.5 percent last year.