CHICAGO, June 26 (Reuters) – Mutual fund costs will be Topic A this fall around many kitchen tables when workplace retirement savers start receiving the new government-mandated quarterly statements spelling out exactly what they are paying for their 401(k)s. But a kitchen table chat is also in order for retirees.

After all, smart portfolio management is important in retirement, too. Retirees draw down assets to pay living expenses. Fees are still being levied on those accounts – and they can have a much larger impact on retirement lifestyles and portfolio longevity than most people understand.

“There’s a portion of your assets that are being spent to pay the investment managers” says John Ameriks, who heads up investment counseling and research at Vanguard. “And there’s a portion of the assets that are being spent to pay you. When we do drawdown analysis, we just look at aggregate spending. But to the extent the expense ratio is higher, that cuts into what you can spend.”

Ameriks ran the numbers recently to demonstrate the impact that investment costs can have on retirees. The results suggest many retirees could get more mileage from their nest eggs by paring costs – either by jumping ship from a former employer’s high-cost 401(k) plan, or by ditching high-cost actively managed funds.

Ameriks started with some basic assumptions. An investor retires at age 60 with a $100,000 portfolio, and plans to spend 4 percent of her portfolio balance at the beginning of each year thereafter. She can choose one of three identical portfolios to generate 5 percent before-cost total investment return; the only difference among the three is investment cost – 0.25 percent, 1 percent or 2 percent. For purposes of simplicity, Ameriks assumed reinvestment of all dividends and distributions and no taxes on the returns.

The three portfolios each start with the same $4,000 withdrawal, but diverge sharply from there. By the time our retiree hits 65, the high-expense portfolio is generating a withdrawal 8.3 percent lower than the amount for the low-expense portfolio. After 15 years, the gap widens to more than 20 percent – a huge reduction in spending power.

“The differences sound small to most people,” he says. “I’m going to withdraw 4 percent, and I’m going to pay 1 percent in fees. But that 1 percent is equivalent to 25 percent of what you’re paying yourself. And what people seem to forget is that expense ratio hits over and over again – year in and year out. It hits the base of your portfolio, and since you’re withdrawing a fraction of the base, it’s also going to hit your income.”

CHICAGO (Reuters) – June is Gay Pride Month in the United States. And you can tell the times they are a changing when U.S. Secretary of Defense Leon Panetta salutes the event by taping a video personally thanking gay members of the military for their service.

But when it comes to retirement security, LGBT Americans still have a long way to go. The federal Defense of Marriage Act (DOMA) is a core obstacle to equality for a range of important benefits and legal protections, because it defines the word “spouse” as applying only to different-sex married couples for any purpose involving interpretation of federal law.

The ground is shifting quickly, though. Legal challenges related to DOMA and same-sex marriage are making their way toward the Supreme Court. And the workplace is changing quickly as companies reshape their benefit programs to ensure equality.

But LGBT individuals and couples also can take action on their own to improve their retirement security. Here’s a checklist of five key areas LGBT Americans should be sure to address.

401(k) BENEFICIARIES

Until 2010, it wasn’t possible for a workplace retirement saver to name a non-spouse beneficiary. That changed starting in 2010 due to provisions of the Pension Protection Act of 2006. Non-spouse beneficiaries, including employees’ partners, are permitted to roll their inherited retirement benefits directly to an individual retirement account or an annuity.

Gay workers who started with their employers before 2010 should re-visit their beneficiary designations. But they also should check to make sure their employers are complying with the new law. Only 86 percent of corporations that have rollover provisions have made the adjustments needed to extend benefits to same-sex partners, according to the 2012 Corporate Equality Index, an annual survey of corporations by the Human Rights Campaign Foundation (HRC), a non-profit research, education and advocacy group.

(The writer is a Reuters columnist. The opinions expressed are his own.)

By Mark Miller

CHICAGO, June 20(Reuters) – The message from voters about public pension plans is clear: They’re ready to cut the retirement benefits of police, firefighters, teachers and other state and municipal workers.

The latest indicators include the failed recall of Gov. Scott Walker in Wisconsin – which started with his efforts to cut pensions – and referendums in San Jose and San Diego, where voters overwhelmingly backed pension reform measures.

A recent study by the U.S. Government Accountability Office found that 35 states have reduced pension benefits since the 2008 financial crisis, mostly for future employees. Eighteen states have reduced or eliminated cost-of-living adjustments (COLA) – and some states have even applied these changes retroactively to current retirees.

This week, the Pew Center on the States reported that states are continuing to lose ground in their efforts to cover long-term retiree obligations. In fiscal year 2010, the gap between states’ assets and their obligations for retirement benefits was $1.38 trillion, up nearly 9 percent from fiscal 2009. Of that figure, $757 billion was for pensions, and $627 billion was for retiree health care (see link.reuters.com/xyh88s).

Pensions are, no doubt, consuming a larger share of some state and local budgets. The bill has come due for years when plan sponsors did not make their full plan contributions; in the years leading up to the 2008 financial crisis, many papered that over by relying on strong stock market returns. Many plans also took major hits in the 2008 crash, and returns have since been hurt by low interest rates.

CHICAGO, Date (Reuters) – Kathryn Anne Edwards doesn’t look at Social Security like most 26-year-olds.

Her cohort takes a dim view of the program’s prospects, according to a slew of surveys. Some 76 percent of young Americans don’t think Social Security will be able to pay them a benefit when they retire (Gallup); 86 percent would like to divert the taxes they pay to Social Security into private accounts (Pew Research Center); 48 percent of Americans under 40 think the system is in crisis and about to go bankrupt (Lake Research Partners).

But Edwards isn’t buying any of that. “I’m convinced if young people knew the facts, they wouldn’t have any reason to be against Social Security. It’s effective, efficient, sustaining and important.”

What makes Edwards different is that she knows more about how Social Security works than most people her age – or any age, for that matter. She’s a Ph.D. candidate in economics at the University of Wisconsin, and co-authored a guide to Social Security for young people (here) while working at the Economic Policy Institute, the liberal Washington think tank.

Edwards and other young Americans do have this much in common: they’re all very interested in having a guaranteed source of income in retirement.

A survey released last month by The Hartford found that 95 percent of workers younger than 30 found it “very” or “somewhat” appealing to be able to turn at least a portion of their retirement savings into guaranteed income – a higher percentage than any other age group surveyed.

Another study released this week by Bank of America Merrill Lynch found that 82 percent of employees would give up five percent or more of their salaries if it meant getting “reliable income to help them live comfortably” during their later years; 42 percent were willing to give up 10 percent or more of salary.

CHICAGO, June 7 (Reuters) – Can you fly the coop on your company’s 401(k) plan if you don’t like its investment choices? A growing number of plans offer a “brokerage window” that lets retirement savers sidestep the standard investment menu and access a much larger number of mutual funds or stocks offered by their plan providers.

But plan providers are complaining after the U.S. Department of Labor (DOL) released unexpected new rules for plan sponsors that cover brokerage window. The regulatory “guidance” is part of a broader document dealing with important new rules that take effect this summer requiring greater transparency of the fees that participants are charged.

Brokerage windows occupy a small corner of the 401(k) world, but they are gaining in popularity. Twenty-nine percent of plans offered a brokerage window last year, compared with just 12 percent in 2001, according to consulting firm Aon Hewitt. But just 6 percent of workers at companies offering a brokerage window use them.

Most are higher-income investors who do not want to be limited by mutual fund choices vetted by plan sponsors. By opening up a brokerage account, these investors can pick from a much wider array of choices available through the plan’s service provider. Aon Hewitt’s survey data shows that 10 percent of participants who make over $100,000 use brokerage windows, while 6 percent of those making $40,000 to $60,000 use the accounts.

Jumping through the brokerage window also can mean lower fees and better investment choices for employees stuck in high-cost plans with mediocre fund options. About half of brokerage windows restrict investing to mutual funds, with the rest allowing investment in individual stocks, Aon Hewitt says. Brokerage windows typically come with a small annual fee of around $150, plus trading fees.

Under the new rules, which go into effect at the end of the summer, plan sponsors would be required to track the investments made by individuals in their brokerage accounts. If more than 1 percent of all plan participants invest in a single fund or stock (or five investors at plans with less than 500 participants), that investment would cross a threshold that requires the disclosure of information about the investment to all participants.

Plan sponsors also would have to consider whether the investment should be endorsed as an mainline choice for all plan participants. The threshold isn’t likely to be crossed often in large plans, but sponsors still would be saddled with the monitoring and compliance requirements.

CHICAGO (Reuters) – Opponents of President Barack Obama’s health care law have been predicting dire consequences for seniors on Medicare ever since the legislation was signed last year. The warnings are mostly political spin, but there could be real problems if the U.S. Supreme Court strikes down the Affordable Care Act this month.

The ACA, a cornerstone of President Obama’s health care plan, would extend health insurance to an additional 23 million Americans by 2019. But it’s run into significant roadblocks as opponents argue that key components are un-Constitutional.

The Supreme Court could decide to uphold the law, strike down specific portions or toss it out entirely. A decision is expected by late June.

Important improvements to Medicare would disappear if the high court decides to toss out the entire law. The decision could paralyze the Medicare system because the act lays out the benefits, payment rates and delivery systems. Some of the changes already have been implemented, and others are works in progress.

“If the law is struck down, there will be a high level of chaos and confusion the very next day, especially in Medicare,” predicts Bonnie Washington, senior vice president of Avalere Health, a health policy consulting firm. “Every single provider payment that Medicare makes now has been modified one way or the other by the Affordable Care Act.”

The Centers for Medicare & Medicaid Services, which runs Medicare, is not commenting on how it might proceed if the law is nullified. But the administration has warned the court of “extraordinary disruption” to the system.

CMS might attempt to assert its own administrative authority – and perhaps use executive orders from President Obama – to continue paying claims and providing benefits so the Medicare system doesn’t freeze up. But disruption will be virtually unavoidable.

CHICAGO, June 1 (Reuters) – Retirement savers will get an eyeful when 401(k) account statements hit their mailboxes this summer.

A new format mandated by federal regulators will give investors a more transparent view of the fees they pay and a study released this week suggests many will be shocked by what they see.

Demos, a progressive think tank, argues that even in best-case scenarios, fees take an enormous bite from retirement nest eggs. The report kicked off immediate blow-back from the industry, which criticized its methodology.

The study looked at a median-earning couple that makes substantial, escalating 401(k) contributions over a 40-year period. The couple – each invested 50-50 in stock and bond index funds – accumulates a $510,000 portfolio over that period, but would end up paying a whopping $155,000 in fees, a number that is disputed by some critics.

While the fee disclosures mandated under new U.S. Department of Labor rules are a good start, Demos argues that transparency is not nearly enough. The report suggests a more radical step - scrapping the defined contribution system entirely and replacing it with a new plan focused on low cost and guaranteed returns.

It is hard to dispute the critical importance of fees in reaching retirement goals – or that fees are not well understood by investors and even plan sponsors.

A recent AARP survey found that 71 percent of retirement savers do not think they pay any investment fees at all. And a report issued last month by the U.S. Government Accountability Office found broad misunderstanding and ignorance among plan sponsors about the fees charged by retirement plan providers.

CHICAGO, May 24 (Reuters) – As a retirement columnist, I know it makes sense to wait at least until my full retirement age to file for Social Security. Here’s what I didn’t know: My wife and I could boost our combined lifetime benefits nearly 15 percent through a coordinated series of delayed and spousal benefit filings.

I figured this out using one of several useful tools that have sprung up in recent years to help people maximize Social Security benefits. The options vary from basic free online tools to more robust fee-based services.

Some offer online assistance only, while others will do a personal review by phone for a fee that can range from $20 to a few hundred dollars. Several can link up your Social Security strategy with broader financial planning services so that you can think about your benefits against a backdrop of tax liabilities, your portfolio and other key factors.

The payback in lifetime benefits can total hundreds of thousands of dollars, depending on your longevity.

For individuals, the key decision is the timing of filing for benefits. Filing at the first age of eligibility (62) gets you just 75 percent of your full benefit; waiting until the full retirement age (currently 66) gets you 100 percent; waiting until age 70 gets you 132 percent of your benefit.

And for married couples, an array of other benefit boosters are available based on spousal and survivor strategies.

This is terra incognita for many financial advisers. “Most of the planners I talk to know a little — just enough to be dangerous,” says Jim Blankenship, a planner with special expertise in Social Security and author of “A Social Security Owner’s Manual: Your Guide to Social Security Retirement, Dependent’s, and Survivor’s Benefits.”

CHICAGO (Reuters) – Career change often begins with a jolting disruption, like a job loss, a health problem or family issues.

For Becky Loyacano, 57, change began with one of the worst disasters in U.S. history. When Hurricane Katrina destroyed Loyacano’s home in Slidell, Louisiana in 2005, it also crushed the New Orleans native’s work selling disability insurance.

“After Katrina, there was no job because there were no accounts to go call on,” she says.

Following the storm, Loyacano moved twice, but despite her experience in insurance sales and as a buyer and manager for a sporting goods retailer, the recession made finding work a challenge – especially as an older worker.

Still, Loyacano’s story has a happy ending, and highlights a solution to a critical issue facing the country: How to help older workers stay on the job.

Participating in a three-year initiative in 10 cities that offered strategies for supporting older workers, Loyacano found new work through a plan that placed workers in paid temporary internships. The program, which allowed workers to try new jobs while gaining experience and education, is a model that could be replicated in other parts of the country.

Working longer is one of the most effective ways to boost retirement income, reduces reliance on nest-egg funds, and allows more contributions to retirement accounts and higher monthly Social Security income through delayed filing. Indeed, staying employed longer will be more important if retirement benefits like Social Security and Medicare are reduced.

CHICAGO (Reuters) – When President Obama embraced same-sex marriage last week, he tried to frame it as an issue for the states to resolve. But federal laws and policies are very much front and center in the battle for a level financial playing field for lesbian, gay, bisexual and transgender (LGBT) Americans – especially seniors. And the Obama administration is taking a more active role in that battle than the president let on in his historic interview.

One of the key pocketbook issues is that it is impossible for LGBT couples to access the valuable spousal, survivor and death benefits from Social Security, although they pay the same FICA taxes as heterosexual workers, and are nearly twice as likely to live in poverty than heterosexual seniors. Average Social Security benefits are 32 percent lower for LGBT couples than for heterosexual couples, according to The Williams Institute, a think tank focused on sexual orientation and gender identity law and public policy at the UCLA School of Law.

The Social Security problems center on the federal Defense of Marriage Act (DOMA), which defines marriage as existing only between a man and a woman. Under Social Security’s rules, spouses can receive the greater of their own benefit or half of a spouse’s benefit. And a surviving spouse can receive the greater of his or her own benefit, or 100 percent of the spouse’s benefit.

No states had enacted same-sex marriage laws before the passage of the DOMA during the Clinton years. Now, in a state such as Massachusetts, it’s possible to have two couples – one straight, one gay – both with the same marriage papers. One couple can access Social Security’s spousal and survivor benefits, but the other can’t.

The Obama administration views that as a clear violation of the Constitution’s equal protection clause, and has said it won’t defend DOMA, which is facing several court challenges and may find its way to the U.S. Supreme Court.

On another front, a move is afoot to change the Social Security Act itself. A coalition of advocacy groups has proposed the Social Security Equality Act, which would let couples in relationships recognized by their state of residence to receive the same Social Security benefits as heterosexual married couples. The bill, sponsored by Rep. Linda Sanchez, a Democrat from California, would recognize domestic partnership, civil union and marriage.

Last week, the National Committee to Protect Social Security and Medicare proposed removing gender-specific definitions of the words “husband” and “wife” in the Act as part of a broader proposal to enhance and reform Social Security benefits.