A digest of timely information and insight about finance, investing, and retirement.

Social Security going up 2 percent in 2018, average recipient to get extra $25 a month | Denver PostMillions of Social Security recipients and other retirees will get a 2 percent increase in benefits next year. It’s the largest increase since 2012 but comes to only $25 a month for the average beneficiary. Over the past eight years, the annual COLA has averaged just above 1 percent. In the previous decade, it averaged 3 percent. The average monthly Social Security payment is $1,258, or about $15,000 a year.

Bad news: Your 401(k) won’t give you a decent retirement | Los Angeles TimesFor nearly 40 years now, we’ve been hearing that 401(k) plans are the key to a comfortable retirement. By giving a tax break to workers contributing part of their paychecks to their retirement nest eggs, the plans were designed to supplement Social Security benefits and employer pensions. A new survey from Boston College’s Center for Retirement Research demonstrates, however, that 401(k) plans are destined to fail millions of Americans. They’re not offered by enough employers, they’re not taken up by enough workers, and for most people, their balances aren’t large enough to provide for a decent retirement.

Thank Richard Thaler for Your Retirement Savings | Bloomberg
Over the last few decades, as more and more American employers killed off their pensions, workers were offered 401(k)s or similar retirement plans, with defined contributions instead of defined benefits. These voluntary accounts should have worked, in theory. Standard economic theory assumes people act rationally: Workers, left to their own devices, should save and invest properly to meet their long-term goals. But Thaler and other adherents of behavioral economics pointed out that workers saving for retirement can be their own worst enemies. Without help, Thaler argued, they’ll never retire.

Pre-tax Retirement Contributions at Risk in Trump Tax Reform | MarketWatchTax reform proposals of past years from both political parties have targeted the break people get for 401(k)s because it is a gigantic source of untaxed money – perhaps more than $580 billion over five years, according to a 2016 Joint Committee on Taxation estimate. If Congress gets rid of this system, saving for retirement would be more like saving in a Roth IRA or Roth 401(k). With a Roth, you do not get any tax benefit when you contribute, but the money grows tax-free in the accounts. These accounts are also not subject to required minimum distributions, which retirees must take from 401(k)s beginning at age 70 1/2.

How Much Does Out-of-Pocket Medical Spending Eat Away at Retirement Income? | Center for Retirement Research at Boston CollegeThe adequacy of retirement income – from Social Security benefits and other sources – is substantially reduced by Medicare’s high out-of-pocket (OOP) costs, according to a new report.

DB Plans Far From Being Eliminated | Plansponsor
While headlines have stated the disappearance of defined benefit (DB) retirement plans, a report from Aon shows only 6 percent of U.S. corporate DB plan obligations have actually been settled since 2012. “While the number of closed and frozen defined benefit plans continues to increase, plan sponsors still have an obligation to fund these plans, which means they are far from being eliminated altogether,” says Rick Jones, retirement and investment senior partner at Aon.