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12:59

Daniel Galli - Good Afternoon. I'm Dan Galli and I am looking forward to taking your questions about all of the various retirement plans that employers provide: 401(k), 403(b), 457, SIMPLE-IRA's, Keogh Plans, Profit Sharing Plans, SAR-SEP plans, pension plans, etc.

Having worked with employer based plans for many years, I have learned that they can be different from one employer to the next. However, they usually represent our best opportunity to save for our retirement. They provide income tax advantages, disciplined savings and investment opportunities.

Let's get started........

12:59

[Comment From david]
what percent growth should one assume in a retirement portfolio?

1:00

Daniel Galli -

David, the rate of return you can project for retirement accounts is directly related to how much risk you take in the account. Over the long run (decades) stocks have averaged 10%-12% while bonds have averaged approximately 5%. Cash has averaged slightly less than bonds. For a very conservative investment mix (all cash and government bonds) you might use an assumed rate of return of 4%. Mix in some stocks and bonds (approximately 60% stocks and 40% bonds and cash) and you might be able to project 7%-7.5%. However, different time periods can radically affect returns, as we have seen in this decade. The longer the time frame, the more chance your numbers will be met. I’m not sure how old you are, but for someone in their twenties or thirties, a mix of stocks, bonds and cash should allow for a projected return of 7% over the long run.

1:01

[Comment From dlp10]
Hi Dan - I have around $25k in government savings bonds that are getting around 4% interest... I have not cashed them in as 4% was more than I could get with a savings acocunt. But now I want to earmark most of it for retirement. What's the best place to transfer this money to -- is a Roth IRA the way to go right now, or should I just hold on to the bonds until the recession is over?

1:04	Daniel Galli - As I'm sure you do, I like the 4% interest in today's environment. However, the Roth-IRA option is very attractive as a retirement savings vehicle. Your age plays a role in my answer as well as how long you have held the bonds. Any help with those two issues?

1:06	[Comment From dlp10] I am 31 and have had the bonds since I was a wee toddler (they were gifts)

1:11

Daniel Galli - You have to take into account the tax hit (no state tax but federal will be due on the interest) from cashing them in, unless you were paying the interest along the way. You will also have to decide on how to invest them in the Roth-IRA. Interest rates are very low right now so you may want to consider investing in the markets usinig some index funds. You have enough time to invest in markets, the question may be, "Do you want to take the risk?"

1:11	[Comment From bill] what type of stocks are considered good long-term investments these days?

1:13	Daniel Galli - I'm not one to try to predict these types of things. Growth stocks have done better than value stocks so far this year but over the long run, I use a mix of mutual funds that cover a range of stock types and let the managers decide on what individual stocks to concentrate on.

1:13	[Comment From workaholic] Can someone in their 20s even count on receiving any social security benefits when they retire? i feel like with the loss of pensions, 401(k) matches, etc., that my generation is really behind the 8 ball when it comes to retirement.

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